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4 Things We Learned About The ODM Business In China

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This weekend Cherry Mobile invited us to Shenzen, China, to visit one of their component manufacturers and ODM partner, Jiayu. We’ve spent the past few days touring the factories where batteries, chargers and one of the production lines for the popular Flare X smartphone, and during that time we’ve managed to learn a lot about how the ODM business works. Here’s five key takeaways that we got from our visit:

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A Flare X being assembled in Shenzen

It’s not as simple as just putting on a label on a device

Most people think that local brands like Cherry Mobile, MyPhone and even Starmobile just choose devices from Shenzen, Shanghai or Beijing and just have the factories stamp their logos on them before shipping them off to the Philippines. In truth, it’s not that simple. We’ve gone in depth about the ODM process before in this article, but let us refresh your memory – each market has its own quirks and needs, and ODMs give a general blueprint of a phone to its partners for them to follow or customize. Now each brand has the option to completely customize a product or leave it be, and just alter the necessary things in the device to meet regulatory standards like antennas and LTE bands. Each brand approaches the problem their own way, but brands that truly care for their customers like Cherry Mobile customize and change the parts inside to their specifications, because….

Catastrophic testing of an original CM battery and a fake one. Guess which one burst into flames?
Catastrophic testing of an original CM battery and a fake one. Guess which one burst into flames?

There are a lot of fly-by-night operations in China

Look, we know everybody wants a cheap phone. Who wouldn’t want a monster 3GB RAM device that’s being offered for very little money, right? Unfortunately, we all live in the real world, and out here brands have to walk a very thin line between affordability and quality to make a profit. There’s a lot of fly-by-night ODMs in China, ODMs that promise low production costs and high profit margins at the expense of quality and sommetimes safety. Unfortunately there are brands that fall for their tricks, either willingly or unwillingly. We’ve actually encountered a phone from another local brand (we’re not going to say who, obviously) that had lower specifications than what they were expecting – something that they only found out once they sent review devices to media. Establishing relationships with reputable manufacturing partners isn’t easy or cheap but is essential to the overall health of a local brand. Sure, your phones may be affordable, but if they have a higher than normal failure rate because of substandard parts and/or manufacturing processes, people WILL catch on sooner and later. A local brands’ reputation is vital if they want to survive the very competitive PH marketplace.

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Cherry Mobile’s battery manufacturer uses multiple IC (integrated circuits) in batteries to make sure they’re absolutely safe for use

The quality of components matter

Our main agenda during our weekend Shenzen visit was to look at the difference between the original Cherry Mobile batteries sold by the brand and the fake ones that are sold in seedy malls and places like Quiapo. We’re still working on the dramatic (and we do mean dramatic) video explaining the differences between the two, but it all boils down to the quality of the components. And this applies to everything, not just batteries – the difference between a good local brand and a great one is recognizing the fact that phones are the sum of the quality of their parts. Cheap out on one part, and your phone, no matter how great or how affordably priced it is, now has a glaring weakness and make enough of those things and sooner or later parts will start to break.

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Volume dictates everything

Remember the part we said about being able to customize a phone depending on a local brand’s needs? Well, it’s not as simple as that. While ODMs try to give their customers as much support and leeway possible when it comes to customizing the devices that leave their factories, they’re still a business, and they will still do what turns them a profit – that includes abandoning a smaller brand when an order from a bigger client comes in. If you’ve ever wondered why some of your favorite local phones seemingly vanish into thin air after being offered for sale, that’s usually the reason – the ODM making it received a much bigger order from another client that required the use of the assembly line that was previously dedicated to a smaller brand.

Because of the sheer volume that Cherry Mobile requires, they usually are able to dictate better terms that benefit their consumer and their bottomline. Things like better components for batteries, better display panels, higher RAM, and cheaper overall prices are achievable because of the economies of scale. Unless a brand is able to commit to large quantities, they’re at the mercy of the ODM’s choice in components.

John Nieves

John is a veteran technology and gadget journalist with more than 10 years of experience both in print and online. When not writing about technology, he frequently gets lost in the boonies playing soldier.

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13 Comments

  1. Question: Bakit sangkaterba pa rin ang pila sa mga service centers ng cherry mobile inspite of this “quality” manufacturing?

    1. Mga di nakakaintindi ng business language ang mga ganun. Akala kasi nila tinatanim lang sa yellow river ang mga components ng gadgets kaya namamahalan sa lahat ng above P4000 gadgets.

    1. Congrats, tama ang grammar at figure of speech na ginamit mo this time. Ipagpatuloy mo lang ang fluent english, practice makes perfect.

  2. irony… tapos ang daming back job ng cherry..
    3 days mo plang na gamit.. kelangan mo ng ibalik kasi something wrong..

    irony..

  3. You learn something new everyday. In China you ask them, “How much?”, and they ask you back, “How much do you want to pay?” and then proceed to build your device to cost and spec.

    You get what you pay for in China, sometimes a little bit more, sometimes a little bit less.

    The ones that determine whether you get screwed by a lemon is not the manufacturer, it’s the Philippine company.

    Seldom is the manufacturer to blame.

  4. Too bad we can’t have an underground electronics industry because we don’t have a lot of engineers. The Pinoy brain is wired to take up subservient courses. Bayan nga naman tayo ng mga katulong. Sad but true.

  5. Good article, its nice for cherry mobile to give us more information on the process on how their phones are created, but i’m sorry, still not convinced to buy your product lol.

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