Inexperience, Low Acceptance Stall OBM Growth
China suppliers must overcome many obstacles to be able to market their in-house labels internationally. Insufficient funds can make it difficult to implement marketing and brand-building strategies.
Many Chinese exporters find it exciting to be able to market their brands overseas. This brings with it higher profits and less dependence on OEM orders. While there are some OBM companies that are successful, many others struggle to get a foothold in this market.
Most OEM-oriented suppliers invest most of their time improving their production capacity and capabilities. ODM suppliers may also allocate resources for R&D and design expertise. However, few have the marketing experience required to promote China brands on international markets.
Zhong Honglu is the sales manager of Loctek Visual Technology Corp… The company supplies mounting and furniture solutions for televisions and other consumer electronics. Located will continue to promote its brand. Zhong stated that ODM and OEM work is profitable, but it is not always steady. Buyers can choose any supplier they like.
Just this year, the company began exporting under the Loctek brand.
However, sufficient marketing knowledge does not always come with the label’s age. Lianfeng Plastic Products Fty has had its Akai label since 1997. However, the toys and tableware manufacturer attaches labels only to products that do not require custom logos or brands. The company doesn’t have a dedicated team for brand marketing or a comprehensive strategy to build awareness of the label. Even though the company decided to spend more time on brand promotion early in the year, the only marketing activities that have been undertaken so far include increasing the label’s visibility online and at trade shows.
Located on the other hand plans to expand its market reach and look for agents overseas for the brand. Zhong stated that “we don’t have the resources and people to expand our brand abroad.” This company hopes that international agents can help boost the brand Loctec’s visibility. The supplier also offers lower prices, a smaller MOQ, and priority delivery for OBM models.
Poor reception in developed countries
Competing with established brands internationally is not only a challenge for marketers, but it is also a challenge that they must overcome.
Firefly Lighting Co. Ltd. sees good sales in the Philippines for its OBM energy-saving lamp. This market has low prices and often outsells well-known brands. The company is having difficulty reaching countries like Japan, Germany, and the US because Philips has monopolized that market for energy-saving lamps. Despite ten years of OBM expertise, Firefly is only 5 percent of the company’s total sales. OEM accounting accounts for the remainder.
Located was able to identify agents in Africa and the Middle East. Located has developed product specifications in 10 languages to cater to these markets. It is still trying to establish a foothold in the US. It recently launched a US company where it will be focusing its marketing efforts. The supplier has placed ads and advertorials into US newspapers and magazines.
Zettler China, a manufacturer of power modules, transformers, and other electronic components, is advertising online in trade magazines and search engines to promote its brand to Europe and the US.
Budget is also a problem. It is necessary to invest substantial amounts in R&D, marketing campaigns, sales channels, and after-sales support. Without sufficient funds, it is difficult to implement comprehensive promotional strategies.
Firefly’s biggest problem is money. Firefly plans to create a website in order to market its brand over the next year. The website will increase visibility for the Firefly brand in all trade show materials. However, if the supplier had more money, it could do more to build the Firefly brand’s reputation and the associated products.
Foshan Yunying Paper Co. Ltd faces a similar problem. The company cannot use its own brand if buyers don’t specify custom labels, just like Lianfeng toys and tableware suppliers. The supplier is trying to raise money via trade shows and websites to promote the brand and increase OBM’s export share from 50% to 70%.