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According to the foreign media, the Chinese electronics OEM manufacturers, which used to rely on overseas orders, have quietly begun to transform. By investing more in research and development, they hope to find the electronic equipment that the next consumer must have.
In the past few decades, most of the products produced by Chinese electronic product manufacturers have been designed by global technology companies. Now, they have begun to look for entrepreneurs and self-designed products, hoping to find the electronic equipment that the next consumer must have.
Factories like Guangdong Huizhou Jetta Company Ltd. (hereinafter referred to as "Jetta") are cutting off the traditional role of venture capital companies by taking the risk of developing new products. They look for ideas from trade shows and promotions, and then the company’s internal team develops and tests prototypes, and even evaluates the market using small quantities of equipment.
With President trump of the United States trying to achieve the goal of trade balance between China and the United States, and the increasing competition from low-cost labor factories in Southeast Asia, China’s electronics OEM manufacturers are trying to adapt to the new market situation. Paul Travers, founder of Vuzix, a New York start-up that makes augmented reality lenses, said supporting the start-ups would enable Chinese electronics OEM manufacturers to withstand these challenges. "The venture capital structure provides manufacturers with an investment model, and investment also ensures future business," Travis said. Vuzix has been working with Jetta for four years.
Benjamin Joffe, a partner at hardware start-up hax in Shenzhen, said the trend was driving the biggest wave of new devices. Visiting the electronic market in Huaqiangbei, Shenzhen, we can see how the tide has changed.
A large number of small electronic products are placed on the shelves in the market, from neon flashing single wheel bicycles to embedded Bluetooth speakers with music, as well as smart phones that can act as electric razors and so on. Although most products are unlikely to succeed, just like venture capital companies, electronic factories need only a few popular products, which is worth taking risks.
"China’s OEM support for innovative companies has nothing to do with money, but with manufacturing capabilities and sometimes generous terms of payment for the latter," Yoffe said. "They think home runs come from more frequent swings."
One of Jetta’s most successful investments is sphero’s bb-8 robot. Long ago, the robots in Star Wars were the Christmas presents of choice for many people. By teaming up with sphero, Jetta realized the vision of Paul berberian, the co-founder of sphero, to create a ball that can be controlled by a smartphone.
Jetta’s main customers include Hasbro and Mattel, the world’s largest toy manufacturer. The company uses 600 engineers and developers to help develop a remote control ball that can roll one meter per second in a straight line. The popularity of sphero eventually brought bb-8 robot manufacturing to 3 million, which also prompted other start-ups to rush to establish partnerships with Jetta.
"It’s a wonderful symbiosis," says berberian. "Jetta has the ability to make beautiful equipment. When we put our software into the device, it really took off. "
"Electronics foundry manufacturers are starting to look at startups’ projects with caution, and in the past they have never looked at such companies," said Xiong Weiming, partner of Huachuang capital, a venture capital firm that owns about $650 million in assets. He said that although some electronic equipment OEM manufacturers have recognized the value of traditional venture capital practices, the market still needs venture capital because they can provide funds and experience in some areas, such as supplier selection, channel negotiation and talent mining.
Yang Siping, Jetta’s product manager, said that for the company, if it liked a new product idea, it sometimes asked its technicians to help develop the prototype without charge. This helps the company build its reputation through word-of-mouth.
"We try to identify startups five to six years before they get bigger, and then we try to nurture them and help them grow," said lewie Leung, assistant director of research and development at Jetta.
"It’s very important for us to grasp the trend of new technology, and we think it’s something we need to learn."
Jetta’s relationship with sphero shows how startups now protect their intellectual property. Although Jetta helps sphero develop hardware, the core of bb-8, the encryption software that can access the Internet, is still controlled by sphero.
Robokind, a Dallas based humanoid robot company, also uses this model. Richard Margolin, the company’s chief technology officer, said reliability was one of the most important factors in choosing manufacturing partners. "There are many untrustworthy companies that can promise anything, but what kind of products they can produce is another thing."
Many manufacturing plants in Guangdong Province are now investing in customer product development, said Andrew Wen, Vuzix’s Manufacturing Director. Large companies such as Goethe acoustics and many small manufacturing enterprises have begun to focus on the transformation from traditional OEM design.
Jia Yang, manager of investment relations in Shandong Province, Goethe acoustics, said, "we are developing projects that have a significant impact on innovation, especially for the future business