The Research On OEM/ODM Outsourcing Strategy And Government Subsidy In The Three-tier Supply Chain

In recent years,China's OEM industry has shown a new development trend,many enterprises began to transform from OEM to ODM.This is because the traditional OEM mode has low technology content and less operating profit.With the rise of labor cost in China,Southeast Asia,with lower labor cost,has replaced China as a new OEM market.The profit of the traditional primary OEM market has been compressed,and OEM enterprises are struggling.In this case,enterprises urgently need to seek change,that is to change to the ODM mode of higher value chain.In the process of transformation and upgrading,more and more enterprises realize that only through R&D activities to improve product design level can they win ODM orders and gain greater competitive advantage.Governments at all levels have also issued policies to give certain R&D subsidies and tax preferences to technology upgrading OEM enterprises,aiming to encourage the transformation and upgrading of OEM enterprises.:However,for OEM enterprises,it is still.a strategic issue to choose the OEM mode.Although ODM transformation can.obtain more benefits and get rid of the dependence on brand enterprises,it also faces huge R&D investment in the early stage of transformation and the risk of transformation failure in the later stage.Therefore,it is necessary to study the profit difference between OEM and ODM,and how the government R&D subsidy will affect the choice of OEM enterprises.In view of this,through theoretical research,model construction and numerical example analysis,after reviewing the research literature of OEM and ODM by scholars in the past,taking OEM enterprises as the starting point and government R&D subsidies as the background,this paper studies how enterprises should choose OEM strategies before and after government subsidies and whether government subsidy policies will affect enterprise decision-making.First of all,this paper constructs a three-level supply chain composed of raw material suppliers,manufacturers and OEM manufacturers.According to the ownership of raw material purchase right and product design.right,three structures:agency,contract and ODM,are formed.The optimal OEM strategy of supply chain members without subsidy is discussed.Then,in order to discuss whether the government subsidy can effectively stimulate the innovation of OEM enterprises,the government R&D innovation subsidy coefficient is introduced into the model,and the reverse recurrence method is used to solve the model to study the optimal OEM decision-making in the case of subsidy.At the same time,the results of the model without subsidy are analyzed and compared to explore the impact of R&D subsidy on enterprise decision-making.Secondly,in order to get the optimal subsidy rate of the government,we calculate the social welfare under three structures,and analyze the optimal subsidy of the government.Finally,numerical examples and graphs are used to show the results of each model,and the final results are explained in detail.The results show that the government R&D subsidy can effectively encourage the OEM to ODM transformation and upgrading,and the greater the government subsidy,the more incentive the OEM enterprises to increase innovation investment.Therefore,if the government wants to promote the transformation and development of domestic OEM enterprises to the direction of high quality and high technology,it can increase the R&D and innovation subsidies when formulating relevant policies,which can effectively improve the innovation enthusiasm of OEM enterprises and enhance the R&D level of enterprises.At the end of this paper,an example is given to analyze the optimal subsidy rate and discuss the subsidy coefficient of R&D innovation that should be adopted by the government when the social welfare is maximized.The conclusion can also provide some theoretical basis and reference for the government to formulate subsidy policies.The specific research conclusions and results are as follows:(1)In the absence of government subsidies,the design innovation input of OEM manufacturers is monotonically decreasing with the degree of market competition,and the innovation input of manufacturers(CM)is related to the design cost and product substitution coefficient.When the unit design cost is low and the market competition is strong or the unit design cost is very high,ODM mode becomes the best dominant strategy.For manufacturers(CM),in any case,the consignment model is always the best strategy for manufacturers,that is,manufacturers lack the motivation to achieve enterprise transformation and upgrading without subsidies.(2)In the case of government subsidies,R&D innovation subsidies can promote OEM manufacturers and manufacturers(CM)to increase innovation investment.Similarly,in the OEM mode,the consignment mode is always the best dominant strategy.When the government R&D subsidy rate and unit design cost are relatively small,and the market competition is low or moderate,the OEM manufacturers prefer the ODM mode.In the case of the government subsidy,the manufacturers(CM)tend to choose the ODM mode,which indicates that the government R&D subsidy can improve the enthusiasm of the transformation and upgrading.When the government subsidy rate is large and the unit design cost is low,manufacturers(CM)prefer to choose ODM mode.It is worth noting that the government's R&D subsidy is not the bigger the better.The optimal subsidy value changes with the unit design cost,design cost and market competition.