When you need to get a custom electronic device manufactured its cost is a very important concern. First the cost to design the product, and even more so the cost of manufacturing the device. But what can lead to higher than welcome costs, and how to obtain the lowest costs when manufacturing 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 custom electronic device.
But alas, in reality, this is not nearly as easy as it sounds.
Be Careful of a Disconnect Between Departments
Splitting up a project in this way is a recipe for long delays, especially if you are not experienced in managing electronic design projects. 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 impossible to manufacture, so he was just helping the project by quickly (i.e. without asking) making some “improvements”.
On the electronics side, there are many issues as well. For instance, if you import components from the West you may face a 30% import tax, and the list goes on and on.
Don’t Send your Design to Everyone
The preparation of a quotation takes considerable time, often involving the most senior people in a company. So the more factories you ask to quote, the more manufacturers are going to feel frustrated at not getting the project after having put in 2 weeks of study.
This being China, there is always the chance that they decide to implement the design anyway, with or without you…so less can be more when protection of IP is involved.
Design for Low Production Cost
There are a lot of very clever electronic engineers in the West, Russia, and in India, but 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 cheapest components, and many of those are made in Taiwan and China.
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 which are just too high.
A Western engineer often simply picks the best camera module he can find on the Digikey website.
Once he has a first working prototype ready, your firmware engineers will get to work optimizing the performance which can easily take them a year (remember that Apple has 1,000 engineers working on their camera firmware, so that sets some minimum expectations).
After the whole design is then finally prototyped, optimized, tested, certified and approved, you go asking factories for quotes. You will then find that your Western camera module costs three times as much as a module of equivalent quality from China.
Now you are stuck with 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. Or spend another year on a redesign, knowing that a year from now the specification of your device will be outdated.
Be Cautious of the Communication Roadblocks with the Chinese Module Factories
So then for your next generation device, you know which factory in China to use for affordable modules, and you give that name to your design team.
They will then likely find the documentation to be very sparse and unlikely to be in English. So for the many, many questions your engineers will have on how to drive this module, you will need to contact their support engineers.
Unfortunately the local engineers often only speak Chinese. This is one of the main reasons that even a product like Nest, with their top-notch team of engineers, had to be completely redesigned in Taiwan. Just like 91% of the world’s notebooks.
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 local purchasing offices of, say, HP or Wal-Mart.
A smaller electronic design firm from San Francisco or Paris will, therefore, be very low on their priority list. This means it can take a very long time to even get an answer to an email, if at all.
Know that Good Chinese Engineers do not work for Chinese Hourly Rates
All right, so to get affordable custom electronic devices you need engineers who speak Chinese, and preferably work in the China time zone. So you get an independent design firm in China to make you a “build to print” design, and then shop that around in China. If only you could find such an electronic design firm in China…
The problem is that the whole world comes to China to manufacture their electronics.
All big customers such as Apple, HP, and Cisco require a lot 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 (rarest of all) show some creativity, work for the largest factories.
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 products they design.
This means that there are very few good engineers interested in working in a smaller electronic design consultancy in China, where they only receive a salary and do not get a profit share.
Focus on Dedicated Design For China Manufacturing
You can, of course, add a Chinese speaking engineer to your own or outsourced design team in, say, California.
To help you with this our CEO Case Engelen has condensed his 20 years of designing electronic devices in China & Taiwan 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.
The biggest issues are actually often to be found in the mechanical parts where, 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 are happy:
- the industrial designer
- the assembly factory
- the ruggedization testing team
- the various certifying agencies (FCC, CE, UL etc.)
- the cost accountant
Paying US design consultants by the hour to stay in China for months on end quickly becomes very expensive as you can imagine.
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 they do take 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 be locked in and also will not have any ownership of the resulting design. To avoid these and other potential issues have a look at 7 pitfalls to avoid 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: The Cheapest Way to get your Custom Electronic Device Manufactured
To be competitive in electronics you need to manufacture in China, using parts from China.
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 manufactured in China. Our Western engineers and project managers work on-site in Taiwan and China, in close cooperation with the various factories and vendors involved. We make it our job to know exactly what you need and the quality you expect, 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 and we’ll listen to you and gladly provide you with a quotation for our service if you feel we’re a good fit for you.