Makers in the province are promoting in-house brands and stressing product innovation to counter industry challenges and stiff competition.
Guangdong suppliers are taking a number of steps to differentiate themselves from their counterparts based in other coastal provinces and fast-developing inland cities. Previously, only large companies used to invest in such measures, but now even small and medium enterprises are attempting to create a niche for themselves.
|Guangdong-based Acever was among the first companies to launch colored mobile phone chargers|
Industry experts suggest makers in the province that are able to upgrade their products and manufacturing processes will flourish in the coming years, while factories with inefficient practices and those competing solely on price could be squeezed out.
To stand out from the competition and build a reputation for themselves, many suppliers are promoting their own brands.
Acever Electronics (Shenzhen) Co. Ltd, an electronics products maker based in Shenzhen, offers a discount of 10 to 15 percent to customers that use the company’s in-house Acever brand. Sales manager, Linda Hu said this discount equals to advertising spending.
The company has also started selling products under its own brand directly to customers in overseas markets through the Internet.
As OBM production increases, the maker is also improving after sales service. Additional accessories are bundled with orders, and faulty products are replaced speedily.
Appointing sole agents in international markets is another strategy adopted by some makers trying to push their own brands.
Current industry challenges such as low demand from key export markets, rising production costs and the yuan appreciation are pushing Guangdong suppliers to upgrade their R&D as they struggle to maintain profits.
Likewise, LED grow light maker BlueSea Lighting (HK) Co. Ltd is enhancing its products to meet the different growing patterns of specific plants. According to the supplier, focusing on this niche industry and introducing innovative products boosts its competitiveness.
Cutting production costs
Reducing costs and improving efficiency will be a top priority for most Guangdong makers in the next five years.
A growing number of SMEs in the province are adopting ERP systems. This streamlines management and production systems, and helps portray a professional image.
Security products supplier, Ocean Electric Ltd has been able to cut costs, boost efficiency, and avoid unnecessary communication and procedures since it started using an ERP system. Export manager Li Li Jun said it is better to implement such measures when the company is small because it easy to scale as the enterprise grows.
Some companies are emphasizing the use of domestic machines and production equipment. In high-tech industries such as semiconductors, LEDs and PV products, manufacturing costs can be reduced to a great extent with this strategy.
Leading LED lighting supplier, Neo-Neon LED Lighting International Ltd is planning to develop a production line in cooperation with domestic equipment maker, Kejie Machinery Automation Co. Ltd. The LED maker believes it can lower export prices substantially by using local packaging and welding machines.
Currently, most equipment for LED production is imported from Singapore and countries in Europe.
Apart from improving production processes, some Guangdong companies are relocating to either inland provinces or other low-cost countries.
Vietnam is a top choice for many suppliers. Not only can they enjoy lower production costs, they can also circumvent anti-dumping duties levied by the US and Europe on China-made products.
According to Lan Wei Bing, director of the China Ceramic Industry Association in Foshan, Guangdong, a number of SME ceramic tile makers have set up factories with one or two production lines in Vietnam.
But a highly developed supply chain, and the availability of skilled workers and technical personnel in Guangdong is a major advantage that most suppliers are not willing to forgo. The province, therefore, will retain its competitive edge and continue to be a leading production hub for many years to come.
Note: This article "Guangdong suppliers emphasize OBM, R&D to maintain competitive edge" was originally published by 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.
All price quotes in this report are in US dollars unless otherwise specified. FOB prices were provided by the companies interviewed only as reference prices at the time of interview and may have changed.
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