Inexperience, low acceptance stall OBM growth

A Lastest News about Audio and Video Equipment in China

Last updated: 26 Apr 2011

China suppliers have to hurdle various obstacles in their pursuit to market in-house labels internationally. Inadequate funds exacerbate the difficulty in implementing brand building and marketing strategies.

For many export manufacturers in China, being able to market their own brands in overseas destinations is an exciting prospect, one that comes with the promise of higher profits and less reliance on OEM orders. But while there are a few that have found success, most others are struggling to gain a foothold in the OBM arena.

The majority of OEM-oriented suppliers in the country invest most of their time in improving production capability and capacity. Some of those that also have ODM lines may allocate resources to boosting R&D and design acumen. Few, however, have sufficient marketing experience that is needed to promote China brands in international markets.

"As we are new in OBM, we have so much to learn," said Zhong Honglu, sales manager at Loctek Visual Technology Corp., a supplier of mounting and furniture solutions for TVs and other consumer electronics. Even so, Loctek is determined to push through with its branding efforts. "Although OEM and ODM work is profitable," Zhong said, "It is not always stable. Buyers could choose other suppliers any time they want."

The company started exporting under the in-house Loctek brand just this year.

But sufficient marketing savvy does not necessarily come with the age of the label. Lianfeng Plastic Products Fty, for instance, has had its Akai brand since 1997. The toys and tableware manufacturer, however, attaches the label only to products that require no custom logos or brands. This is because the company does not have a specialized team handling brand marketing nor a comprehensive strategy for building awareness of the label. Even when the decision was made early this year to exert more effort on brand promotion, the only marketing activities being carried out so far are increasing the label's presence online and in trade shows.

Loctek, on the other hand, intends to expand its market reach by looking for overseas agents for the brand. "We do not have a competent workforce and a network to build our brand overseas," Zhong said. The company is hoping cooperation with such agents will bolster the Loctek brand's presence in international markets. Additionally, the supplier is offering lower prices, a smaller MOQ and prioritized delivery for OBM models.

Poor reception in developed countries

Apart from marketing skills, competing with established international brands is a challenge makers have to overcome.

Firefly Lighting Co. Ltd is experiencing good sales for its OBM energy-saving lamps in the Philippines, a market where low prices trump famous brands. But the company is finding it difficult to penetrate countries such as the US, Germany and Japan because well-known brands such as Philips have monopolized the energy-saving lamp market there. Consequently, despite 10 years of OBM experience, the Firefly brand contributes only 5 percent to the company's total sales, with OEM accounting for the rest.

Loctek has been able to find agents in the Middle East and Africa. To cater to these markets, the company writes product specifications in 10 languages, including Arabic. But it is still working to gain some foothold in the US. The supplier has recently set up a company in the US where intensive marketing efforts will take place. It has also placed advertisements and advertorials in US magazines and newspapers.

A maker of transformers, power modules and other electronic components, Zettler China is advertising in online search engines and trade magazines to promote its in-house brand to the US and Europe.


Read the full article at Global Sources, a leading business-to-business media company and a primary facilitator of trade with China manufacturers and India suppliers, providing essential sourcing information to volume buyers through our e-magazines, trade shows and industry research.

Posted: 11 October 2010, last updated 26 April 2011

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