Oct 2, 2017
Having custom electronics designed and manufactured can be very expensive if you don’t know the ropes.
Here I’ll explain:
- How to get your bespoke device designed in the most affordable way
- How to get bespoke electronics manufactured at a low cost.
- The pros and cons of the various ways to lower the cost to manufacture your custom electronic device.
In these days of globalization and auction sites, it would seem a smart idea to first ask ten design firms to bid on designing your custom product.
Next, take the resulting design, and ask ten factories to bid on manufacturing your bespoke electronic device.
But alas, in reality, it is not nearly as easy as it sounds.
Be Careful of a Disconnect Between Designers and Factories
Splitting up a project in this way is a recipe for long delays. This especially so if you are not experienced in managing electronic design firms. The risk of miscommunication and finger-pointing is very high.
The designer in California will say the China mold maker totally screwed up his amazing concept.
The Chinese mold maker will say that the 3D files he got were physically impossible to manufacture, so he was just helping the project get to market fast by quickly (i.e. without asking) making some “improvements”.
On the electronics side, there are many issues as well. Specifying battery cells from Toshiba becomes problematic when you suddenly learn that these are taxed 30% when imported into China for final assembly.
Every factory has contracts with certain component vendors which give him a big rebate if he manages to buy a certain quantity per year.
You can get a better unit cost, and avoid long component lead-times if you play along.
Don’t Send your Design to Everyone
Preparing a quotation on the design & manufacturing of a yet-to-be-designed custom device takes considerable time.
It often involves the most senior engineers in a factory.
So the more manufacturers you ask to quote, the more factory bosses will feel frustrated at not getting the project after having put in 2 weeks of study.
It’s pretty well known that the best prices for electronics, standard or custom, can be had in China.
In Taiwan IP is generally well protected, but in China, this is still a work in progress, so there is always the chance that a frustrated boss or engineer decides to implement the design anyway, with or without you… IP protection in China is less about crafting long agreements which you can expect to be honored to the letter.
Rather we recommend more practical measures to protect yourself. So sharing less is more, especially at the start of a relation.
By the way, sending de following email to 10 factories in the CC is not likely to get an enthusiastic response:
“Dear Sir, we give you the fantastic opportunity to quote on the very first product of our dynamic young start-up run by 2 students without experience. We will soon launch our website. We have not started market research yet so we have no idea whether our product will sell, so please quote on 1, 5, 10, 100, 1000, and 50,000 pieces per order. That last number is just to know your rock bottom cost. Make sure you put all your fully itemized numbers in our excel sheet. This way it’s less work for us to compare and cherry-pick your offer against your 10 competitors.”
Design for Low Production Cost
There are a lot of very clever and yet affordable electronic engineers in Eastern Europe, Russia, and India.
Unfortunately, their designs often turn out to be relatively expensive to make. 80% of the cost of an electronic device is in the BOM (Bill Of Materials, the list of the electronic components).
Chinese manufacturers make the cheapest products in the world, because they use the components with the best value for money, and the majority of those are made in China and Taiwan.
For example, these days there are quite a few Chinese firms, such as Xiaomi, selling cameras at very low prices. They can afford to offer such a low price because they use a very low-cost camera module made in China.
Additional reading on how much manufacturing costs might be > Have a look at “How Much Will It Cost to Have a New Electronic Product Developed in China” which goes into more detail about the cost of developing and manufacturing custom electronic devices in China.
How things can go wrong from the start with Western companies’ products (an example)
Here’s an example of how things can go wrong, leading to costs that are just too high.
Your CTO in Munich selects a great German camera module he has found on a component website such as Digikey.
The German module maker is very helpfull in giving him advice on how to overcome all the problems the engineering team has in making the module work for this particular application.
Once a first working prototype is ready, your firmware engineers will get to work optimizing the performance of the camera.
This can easily take them a year (bear in mind that Apple has 1,000 engineers working on their camera firmware, that sets minimum expectations for everyone else).
After the whole electronic design is then finally prototyped, optimized, prototyped again (and again), tested, CE and FCC certified and approved, you go asking factories for production quotes.
You then find out that the German camera module costs three times as much as a (custom designed) electronic module of equivalent quality from China.
Now you have a very difficult choice. Either manufacture 5,000 products which are not likely to sell all that well, because they’re much more expensive than the competition. Knowing that many electronic devices retail at 3 times their FOB China cost, every extra dollar in the BOM is paid 3 times for by your end-users.
You may decide to absorb the cost difference, but this will really hurt your bottom line. Or spend at least another 6 months on a re-designing your electronics, knowing that a year from now the specification of your device may be outdated, because better products based on better value for money components come out all the time.
Communication Roadblocks with the Chinese Factories
So then for your next-generation device, you know which factory in China to use for affordable modules, and you give that camera module name to your design team.
They will then likely find the documentation to be very sparse, and it exists at all, it is unlikely to be in English.
So for the many, many questions, your engineers will have, on how to drive this module, why this or that is not working, they will need to contact the Chinese FEA’s (support engineers).
Unfortunately, most engineers in China and Taiwan are not excelling in English.
The situation is not likely to change, as custom electronic device manufacturers in China have little interest in hiring expensive English speaking engineers.
This is mainly because nearly all their high quantity orders come from factories within China, or from the China purchasing offices of, say, HP or Wal-Mart.
An electronic design firm from San Francisco or Munich, working on behalf of a client that is not yet a household name in China, will be very low on their priority list.
This means it can take a very long time to get an answer to your email full of difficult questions which they may only half understand.
This is one of the many reasons that even the flagship product from Nest, designed by a star-studded team of engineers worth billions, had to be completely redesigned by an ODM in Taiwan. Just like 91% of the world’s notebooks are designed by Taiwan’s ODM‘s.
Good Chinese Engineers do not work for Chinese Rates
All right, so to get affordable bespoke electronic devices you need engineers who speak Chinese, and work in the China time zone, so they can discuss with the super competitive component vendors, mold makers, and factories in China.
So better idea: find an independent design firm in China to design your custom electronics, make you a “build to print” design package, and then shop that around. If only you could find such an electronic design firm in China…
The problem is that the whole world comes to China to have their electronics manufactured there.
All big customers such as Apple, Cisco, Siemens, and Sony require lots of engineers to support their production orders.
So while China does have a lot of people, there is a real scarcity of good engineers.
Basically, all those who have a decent amount of experience, speak some English, and importantly show some creativity, work for the foreign brands, or for the large ODM factories such as Foxconn who manufacture for these brands.
These factories pay increasingly higher salaries, and more importantly, also pay large end-of-year bonuses tied to company sales, so the engineers benefit from the success of the electronics they design.
This means that there are very few good engineers interested in working in electronic design firms in China, where they only receive a salary and do not get a profit share.
There still are some independent electronic design consultancies in China, but they will insist on also manufacturing the PCB assembly.
To make sure they make their profit on manufacturing the units, they will typically not give you manufacturing files, nor an open BOM and especially not access to the firmware, which is their main key to keep you locked in.
Focus on Dedicated Design For Manufacturing in China
Especially when you need a new-to-the-world product you can consider adding a Chinese speaking engineer to your in-house or design consultancy team in, say, California.
To help you with this our CEO Case Engelen has condensed his 20 years experience running electronic products design consultancies in Taiwan & China into 9 DFM China rules.
Bringing in such an engineer can work well, it’s how Apple does it, but it will involve a lot of flying back and forth, and expensive designers and engineers camping out in China factories for months to ease a custom(ized) electronic product into manufacturing.
The biggest issues are actually often to be found in the mechanical parts to avoid delays, it is always best to have people on the ground in China.
The design of the housing needs to be tweaked and optimized, for as long as it takes until ALL of the following designers and engineers are happy:
- the industrial designer, with the aesthetics
- the plastic injection factory, with the yield rate
- the assembly factory, with the Design For Assembly,
- the factory purchaser, with the manufacturability of various brackets and custom screws
- the testing team, with the ability to withstand drop tests, temperature shocks, etc..
- the various certifying agencies (FCC, CE, UL, etc.)
- the cost accountant
As you can imagine, paying US design consultants by the hour to stay in China for months on end quickly becomes very expensive.
Factories Never Prioritize Product Design
Here are three examples of how Chinese factories don’t prioritize product design:
1. Factories are 100% focused on keeping their production lines humming with the limited engineers they have.
So the biggest issue tends to be that for a factory design is never a priority. They always seem to have more important manufacturing issues to be resolved.
Therefore the design projects a factory takes on tend to last a very long time.
2. A factory will never agree to do just the design without a guaranteed production order.
Unless you negotiate very carefully, you will not have any ownership of the resulting custom design, and therefore be locked-in, with all the nasty consequences this can have.
To avoid these and other potential issues have a look at 7 pitfalls to avoid when working with China ODM Factories for Design.
3. If you ask a Chinese factory to design and make you a low-cost product they WILL come up with a very cheap design.
Unfortunately, they tend to get overzealous when pushing for the lowest cost possible. In China you can, for example, buy iPhone rip-offs that cost only $50.
The problem is that the glass shatters the first time you drop it, and the battery only lasts for 18 minutes.
Be vigilant, because even if the first sample sent for your approval doesn’t have this “cheap disease,” you can just wait for it to start sneaking into the first or second production order.
Conclusion: How to get a Custom Electronic Product Manufactured in the Most Affordable Way
To get a bespoke electronic device and be competitive you need to manufacture in China, using parts from China and custom electronic components.
To design your product in a reasonable amount of time, it really helps to do product development in Asia as well.
Make sure throughout there is tight quality management, so expectations continue to be met.
Well, you’ve guessed it, this is where Titoma comes in. As the Time To Market company, we are a complete team, experienced in all the product development skills needed to get a custom device designed and manufactured in China.
Our Western engineers and project managers work on-site in Taiwan and China, in close cooperation with all the different factories and vendors involved.
We make it our job to know exactly what you need and what quality means to you, and deliver just that, faster and more economically than just about anyone else.
We can help you! Just hit the button below to arrange a call with us to speak about your project, needs, and concerns. We’ll listen and gladly provide you with a quotation for our service if we’re a good fit.
We hate to disappoint, so if we’re not a good match for your needs we will tell you so upfront as well, and do our best to refer you to a better suited electronic engineering and/or manufacturing firm.
How to manufacture electronics?
This is the 10 steps process we use to manufacture electronics
- Product Architecture – Define the user and functional requirements of the new electronics
- Industrial product design – This is a key factor for commercial success
- Electronic engineering design – You must choose the right electronic components
- Mechanical engineering design – To make sure the electronic product is manufacturable
- Embedded system firmware design or software design
- Electronic prototyping design and manufacturing – This is vital to test assumptions
- Injection mold making – usually the most expensive part of the process
- Pilot production run – This aims at ensuring quality
- Testing and certifications
- Mass manufacturing
How to get a product manufactured?
If you want to get a product manufactured, all you have to do is reach out to the right manufacturing partner.
If you’re looking to make minor changes to an existing product, such as adding a logo or changing plastic colors, then reach out to an ODM.
Look for the ones already working in the product category you’re interested in, smartwatches, kiosks, laptops, e-bikes, etc.
This list can help you in your search List of ODM Manufacturers 2020
If you need a more complex manufacturing service, say one for a new to the market product for which you’ll need new molds and tooling set up, then bring big orders for ODMs or expect severe delays, oh, and also bring a ready to manufacture design.
Most factories have only very few engineers, and they tend to be manufacturing engineers rather than design engineers.
Their mission is crystal clear: keep the manufacturing lines humming.
For a China ODM factory, new product development will always be a secondary priority.
If you need product design and manufacturing services, then look for an industrial design house first, which will help you with the whole product development process and then find the right manufacturing partner.