With many companies struggling today to become more competitive globally and meet consumer demands for lower prices, many of the methods for reaching global markets and joint ventures with foreign companies are appearing increasingly attractive. One of the options available to the manufacturers of products is the electronic contract manufacturing with foreign producers. Like licensing, electronic contract manufacturing involves a foreign company that produces goods for another company. However, where licensing involves the manufacturer using the brand or the brand name under license and the sale of consulting services by the licensor, the electronic contract manufacturing involves a company that already produces a proprietary product and another by attaching the brand name or trademark.
In the electronic contract manufacturing, the manufacturer has no rights over the brand. The electronic contract manufacturing is often a form of offshore outsourcing, where a company produces a product for a specific brand. Examples of this can be seen in several large US corporations. Singapore’s outsourced manufacturers often produce cell phones and other electronics for various US brands, and China is one of the top contracted manufacturers of US computers and laptops, such as Dell.
The benefits of the electronic contract manufacturing for start-ups or small businesses can be great as the manufacturing contract often allows these companies to experience different product variations in different markets without having production costs associated with a local factory. In addition, for established companies, the production of successful products can be easily expanded to meet new demands without incurring additional costs and overheads.
In addition to the electronic contract manufacturing southern California, the formation of international joint ventures and strategic alliances are also great ways to expand into the global marketplace. However, these types of joint ventures have traditionally been used by larger corporations. A joint venture is a type of agreement in which two companies come together for a specific project. Examples of this are often seen in the auto industry, where American auto companies enter into a joint venture with Asian automakers in order to produce vehicles for all markets. The two companies, often from two different countries, share technology and risks associated with the project, as well as marketing and management skills.
The advantage of these types of ventures is that many companies that would not be able to enter some markets can work in conjunction with local companies that have access to these markets. A strategic alliance is almost the same thing, uniting two or more companies with a common goal. However, in a strategic alliance, companies typically do not share costs, management or profits. While these types of agreements can be beneficial to reach other markets, the drawbacks are very similar to a licensing agreement where a company can use the technology and experience of other companies, break out of the agreement and use the ideas to promote its own company or profits.