An original design manufacturer (ODM) is a company, like PInverTech, that designs and manufactures a product(i.e. Micro Inverter), as specified, that is eventually rebranded by another firm for sale. companies allow the firm that owns or licenses the brand to produce products (either as a supplement or solely) without having to engage in the organization or running of a factory. ODMs have grown in size in recent years and, as of 2015, many have the scale to handle production in-house for the products that are branded by the buying firm. This is in contrast to a contract manufacturer (CM).
This model is especially used in international trade, where a local ODM is used to produce goods for a foreign company that sees some advantage in the transaction, such as low labor-inputs, transport links or proximity to markets. Innovative and/or patented technologies developed/owned by the ODM are another cause for this product distribution model. ODM models are also used where local ownership-laws possibly prohibit direct ownership of assets by foreigners, allowing a local firm to produce for a brand company – either for the domestic market or for export.
This type of business is part of “outsourcing”. For example: Compal Electronics makes notebook computers and monitors, and operates as a mass producer for numerous brand companies, assisted by low labor-costs, low-cost transport, and the near-commodity nature of the physical inputs (in Compal’s case, computer components). As of 2011, Taiwanese ODMs made ninety-four percent of all notebook computers.