MOFCOM Promotes "International Design Center" in 5 Cities: Transition from OEM to ODM

by qq8150138 on 2009-11-22 22:43:23

Zhang Bin, Ren Qian - This newspaper has learned that the Ministry of Commerce is about to take the lead in establishing international design centers in five cities: Wenzhou, Shanghai, Dongguan, Xiamen, and Chengdu.

A person from the Ministry of Commerce said: "It is expected to officially hang the sign in December."

The establishment of the "International Design Center" mainly aims to strengthen the "design" link for Chinese enterprises, transforming the previous simple OEM into ODM + own brand, extending the industrial chain.

"Simply put, it is about bringing the links previously controlled by foreign countries back to China, lengthening the short production chain in China which is mainly based on processing trade," he said.

Next, the Ministry of Commerce will introduce a series of preferential policies for the international design center, including aspects such as the introduction fees for international designers.

Emerging in line with trends

The biggest difference between OEM and ODM does not only lie in the names.

OEM products are all custom-made for brand manufacturers. After production, they can only use the brand name, absolutely cannot be rebranded and produced again. On the other hand, ODM depends on whether the brand company has bought out the product copyright from the manufacturer. If not, the manufacturer has the right to produce again on their own, as long as there is no design identification from the brand company.

"The Chinese enterprises have reached the stage of transitioning from OEM to ODM and ODM+brand," said the aforementioned person from the Ministry of Commerce.

After a brand occupies a place in the international market, most of them no longer produce or even design. Outsourcing design, outsourcing production, and even outsourcing sales.

The previous model was that the design was entirely done by the other party, and China just produced according to the design. The survival space for this way is getting smaller and smaller. The current model tends more towards enterprises having a big plan, designing themselves, then showing the sample to the other party, and only placing orders after the other party agrees. This is the currently popular way, OEM+ODM.

Therefore, many manufacturing enterprises and some design-related enterprises are exploring how to design for their own brands, instead of simply copying some designs from overseas.

During some research processes, the Ministry of Commerce found that much information resources were asymmetrical, including from policy and market resources aspects. Currently, there is no platform in society that can achieve the connection between designers, production enterprises, and relevant markets. A single enterprise lacks sufficient social resources to build such a platform.

For example, some enterprises want to hire foreign designers but lack the ability and information channels, including relatively high design fees; on the other hand, some international designers also pay attention to whether the enterprises have credibility.

Under this background, the Ministry of Commerce proposed the concept of a national design center.

Shanghai Model

The International Design Center is led by the Ministry of Commerce and dominated by the governments of each pilot city.

The Shanghai municipal government, district government, an international team, and some enterprises including the Shanghai Red坊 Group and Peninsula 1919 are jointly building the Shanghai International Design Center.

Deng Gang, the general manager of Peninsula 1919, as one of the main participants in the Shanghai International Design Center, introduced the "Shanghai Model" to our newspaper.

Deng Gang said: "We will jointly establish a council and create a physical platform called the Shanghai International Design Center."

The council acts as a coordinating organization, using a commissioned operation method to entrust a market-oriented enterprise to promote this work. This enterprise is an institution composed of several interested parties, possibly divided into two levels: one level represents the industry, government, and contract manufacturing enterprises, mainly focusing on directional control; the second level is the operational level, with a specialized operating company handling it.

"The International Design Center itself is still a very new experimental body. In terms of enterprise organization, whether it is in the form of membership or other ways, it needs to be specifically decided by national operations. Membership is one model, contractual relationship is another way, but it probably won't be a simple membership system," Deng Gang said.

Based on the "Shanghai Model", the functions of the International Design Center are divided into four aspects: first, it is an exhibition and display platform for information exchange, whether physical or non-physical; second, it is a training center that bridges international designers with domestic enterprises in terms of talent training; third, it is similar to market resource bridging, known as market consultation; fourth, it provides a material environment for designers to conduct research and development.

Deng Gang has also had in-depth exchanges with the main responsible parties of other pilot cities.

"The design center has different entry points," Deng Gang said: "The social resources and demands of different cities are also different. It's impossible to simply follow the same model."

He said that each government's attitude towards this matter and the promotion methods vary. Whether other cities will adopt the council + operation management company model is still uncertain. It is understood that they also hope to implement it specifically in a park.

"I think the country establishes it in a guiding manner, and the participating enterprises do the integration work, which will have more market credibility and can get more help from information resource channels," Deng Gang said.

Currently, the Shanghai International Design Center is negotiating with companies specializing in cultural management and cultural investment from Italy, Shanghai, the UK, etc., and hopes to turn this model into specific cases as soon as possible.

The secretary-general of the Sichuan Furniture Chamber of Commerce, Rong Yuwei, told our newspaper: "The International Design Center will be very beneficial to us. Enterprises that want to participate are very enthusiastic, not just import-export enterprises, but also enterprises doing domestic trade."

He said that now Sichuan furniture exports and upgrades face this bottleneck. Because unlike other industries, furniture must have design. Doing European orders requires European designers; doing Japanese orders requires Japanese and Korean designers; doing South American orders requires Spanish designers.

He indicated that enterprises have the concept of "design creates value," but they have the desire but lack the ability. Because "equipment is imported from Germany, raw materials are also imported from Germany, it's just because our design is slightly inferior, so we seem slightly inferior. Graphic design is slightly inferior, packaging design is slightly inferior, product design is slightly inferior, each aspect is slightly inferior, adding up makes a big difference." Rong Yuwei said.

"If we bring in the phoenix of the design center, many birds will revolve around it. I believe it will greatly improve the quality and brand in the entire central and western regions," Rong Yuwei said.