A good production line costs several million, for diaper brands, if they build their own line, at least a few years in a row to make a profit. At this time many brands who want to enter the "game" and earn the money, in order to save costs and maximize profits, will generally choose to cooperate with diaper OEM factory. OEM factories are responsible for production, and the brands are responsible for brand promotion and channel sales.
Because the foundry has limited profits, its gross profit is often much lower than that of the brand owner. Generally speaking, the selling price of diapers is regulated by the market and the brands, and usually does not fluctuate greatly. Foundries are not only influenced by brands, but also by upstream raw material suppliers.Because of the warehouse and material preparation, manufacturers need to be self-sufficient and cannot raise prices to the brands. If the upstream raw material price increases, the generation factory must be under pressure to produce. As a substitute factory, they are caught in the middle of upstream suppliers and downstream brands, with a meager profit support. If the brand can not pay in time after delivery, some small and medium-sized OEMs are even worse.
Foreign well-known brands, such as elleair, after entering China, did not choose a foundry, but built factories. Domestic brands are also building factories to introduce production lines in order to stabilize their products, and those who choose foundry factories are often small brands that have just entered the market.
The influx of a large number of small and medium-sized brands has led to excess diaper capacity. While the brands are getting more popular, the competition among foundries is also getting fiercer. Because most of the micro merchandise brands are mainly distributed, it is difficult for the OEM factories to judge the relationship between market demand and production capacity, so it leads to many diaper OEM factories to fall into the same problem of overcapacity. And there are some small and medium-sized diaper manufacturers to fight for orders, and even go so far as to disrupt the status quo of the market, constantly narrowing their profit margins, so that the OEM market has unfair competition.
After receiving an order, the general diaper foundry will produce according to the brand's requirements, and the quality control of the foundry is especially important. When a foundry receives many orders, the factory will form quality control indicators and change them according to factors such as experience, professional ability, equipment and cost. Because there is no core technology of its own, the quality indicators of the foundry are good, but to some extent the brand cannot guarantee the quality of its products.
The vast majority of OEM factories enterprises do not have the core technology, in the case of diaper brand commissioners do not deeply involved, OEM factories can only use old equipment and familiar processes to produce of their own familiar style, resulting in diapers eventually towards homogenization. Because diapers have no characteristics, it is difficult to have other breakthroughs in marketing, so many small brands can only rely on subsidized channels in order to survive. But when other brands take their products seriously, those who only want to enter through a low threshold and want to "make a lot of money" will sooner or later be eliminated from the market.
Consumer upgrade is also forcing the upgrade of the factory industry, many diaper brands of business in order to enhance competitiveness also seek differentiation in product quality. This situation has also prompted the OEM factory upgrades. The OEM factory production line quality is not stable, bad quality control can only be out of the game. Therefore many manufacturers have been transformed, some of them continue to improve the competitive barriers to realize technology-based business transformation.