Companies can take charge of researching, designing, manufacturing to commercialize a smartphone, or hiring a third party to do so.
In order to produce a smartphone, most manufacturers currently do not take the entire process. Instead, they hire partners to take on a number of separate stages, depending on actual needs to shorten the product launch route or save costs.
OEM (Original Equipment Manufacturing) is a common concept in the phone manufacturing industry. This is a pure production model, used to refer to companies and factories that create products according to pre-designed designs and specifications. This form often applies to businesses that have a research and development (R&D) department. OEMs only accept contracts from partners, follow the same rules and do not change even the smallest details.
For example, Foxconn is Apple’s OEM. Chinese companies responsible for manufacturing and assembling iPhones owned by US electronics companies in design, configuration, features … are not allowed to tweak inside. Besides Foxconn, Apple also hires other partners in the supply chain, factories, plant operations, production equipment deployment, testing equipment, labor training … and appointing supervisors. these stages. That helps the iPhone company minimize a lot of costs, while optimizing the supply chain.
Besides, businesses like Apple also hire EMS (Electronic Manufacturing Service – electronic contract manufacturer). Basically, EMS is similar to OEM in terms of functionality, or provides OEM components to assemble products for partners, for example Apple.
However, if the R&D section is incomplete, can only take on a part of the work, the company can shake hands with the IDH (Independent Design House) that helps them in the process of creating a good image. original products, such as designs, mechanical frames, internal circuit boards … Basically, IDH acts as a professional design company with long experience in this segment.
Depending on the agreement, many businesses can shake hands with IDH to use the same design to save costs. At this time, they will have the same product design copyright, implemented by IDH. This is why there are cases where two smartphones can have the same design, but with different brands.
In fact, IDH plays a very important role in the smartphone industry. Not only small businesses, names like Samsung, Huawei or Xiaomi rely on IDH quite a lot, in order to “burn” the development time of products and increase the number of devices to launch. According to the 2016 China Direct Chamber of Commerce (DCCC) statistics, 50% of handsets consumed in the country are designed by IDH and that rate is rising sharply.
However, if a company only has a sales department and wants “instant” products for immediate sale, they will find ODM (Original Design Manufacturer). Basically, ODM will play the role of research, design and production but does not sell equipment under its brand. They will list the sample products, then choose the customer, customize it slightly and close the logo to market.
Thus, if you work with ODM, anyone can set up your own smartphone company by designing the logo, customizing the device design to be satisfactory, registering the brand name and eventually selling the product. market. Success or failure will come from marketing in the right direction or in the wrong direction. Of course, the ownership of products, industrial designs, inventions … belong to ODM, enterprises buying products only hold commercial ownership.
The most well-known ODM is Wingtech (Hong Kong) with 25% of the global market share (IDH alone accounts for 50%). The company currently produces a series of phones for Samsung such as Galaxy A6, Xiaomi Redmi series, Oppo A3s or Huawei Y6 …
If created overseas, such devices could return to Vietnam under the CBU (Completely Build-up – complete import). Telephone is a kind of goods subject to 0% import tax, ie whether domestic or imported production, the value of the product has not changed. However, some other electronic items, such as TVs, have a higher import tax than the whole when importing separate components for assembly (SKD).
Thus, creating a smartphone is not just about taking care of all the processes. Instead, businesses can come up with their own strategies, such as research and development and outsourcing to save costs, or order equipment production and sell under their own brand.