OEM Manufacturing Agreements in China

China is the world's leading manufacturer. It has become so common to find "made in china" at the bottom of our products that it is has become a cultural cliché. It is also a big political issue for consumers and retailers. Chinas manufacturing has been receiving a lot of press because of trace amounts of toxic substances being shipped in from the country. For many companies the only way to afford to enter into OEM manufacturing is by going into a deal with china. How can these small companies enter into OEM manufacturing and still maintain their integrity? The answer is by including in some of the following contract terms in your final agreement..

The Product

By entering into a OEM manufacturing agreement in china you need to be explicitly clear as to what is being manufactured. The products that are going to be manufactured need to be technically described to detail. Have product specifications described in relevant detail on appendixes

Forecasts

OEM manufacturing agreements in China often require you to be able to forecast the demand for the product. You will have to order your merchandise through purchase orders. In order to ensure that these purchase orders are worth the manufacturer's time, there will be a minimum commitment to produce a certain amount of the product in a specified time period. It is important for you to properly understand the real demand of the product before signing any agreement.

Quality

You will have the option of setting terms to guarantee the quality of your product. Picking the right terms can stop you from making head lines by having poisons in your product. Some of the options can include access to the production site on short or no notice. Random testing of batches of the product is also a reasonable demand. Depending on the value of the contract you may be able to have enough leverage to have a full time quality control representative on site. The manufacturer should also be required to provide a list of all the raw materials that are used in the product.

Termination

Set some predefined conditions for instant terminations. These conditions should be so aggredeous that you will not be able to trust the OEM manufacturer as a business partner. For instance unauthorized use of intellectual property rights or a violation of non compete terms.

Constructing a carefully worded contract with the above terms could save you a world of heartbreak and money when deciding to enter OEM Manufacturing agreements in China.Source: http://en.wikipedia.org/wiki/Original_equipment_manufacturer , Wikipedia