DOM — A Fast-Rising Chinese Business Model

Introduction: You may know OEM and ODM, but you definitely haven't thought of DOM. Relevant information shows that ODM (Original Design Manufacturer) refers to a manufacturer designing a product that may, in some cases, be favored by other companies, which request to produce it under their brand name or slightly modify the design for production. OEM (Original Equipment Manufacturer) refers to producing according to customer design drawings and then labeling with the customer's brand. ODM and OEM have dominated the Chinese business circle for years, contributing to China's reputation as the 'world's factory', a rather embarrassing title.

Chinese e-cigarette news: You may know OEM and ODM, but you definitely haven't thought of DOM. Relevant information shows that ODM (Original Design Manufacturer) refers to a manufacturer designing a product that may, in some cases, be favored by other companies, which request to produce it under their brand name or slightly modify the design for production. OEM (Original Equipment Manufacturer) refers to producing according to customer design drawings and then labeling with the customer's brand. ODM and OEM have dominated the Chinese business circle for years, contributing to China's reputation as the 'world's factory', a rather embarrassing title.

With the change in marketing concepts, Mr. Liu Qiuming proposed the DOM business model based on the current changes in Chinese business development.

In 1992, Mr. Shih Chen-Rong, founder of the important domestic technology company Acer, proposed the 'smile curve'. The smile-shaped curve has its ends pointing upwards, indicating that the highest added value in the industrial chain is reflected at both ends, namely R&D and marketing; the middle segment has the lowest added value, which is manufacturing.

Faced with the sluggish economy under the OEM and ODM business models, Mr. Liu Qiuming proposed the DOM concept. Based on the smile curve, to improve profitability, reduce operating costs, and enhance R&D and marketing focus are the most important, and these are the aspects most lacking in today's business models.

So, how can we enhance R&D?

Mr. Liu Qiuming started with patents and proposed the DOM business model. The two basic characteristics of patents are 'exclusivity' and 'publicity'; exchanging 'publicity' for 'exclusivity' is the core of the patent system, representing the dual aspects of rights and obligations. Properly utilizing patents can lead to wealth; conversely, it can lead to loss.

The key to DOM lies in flexibly applying for patents, skillfully utilizing patents, and rationally deriving patents to promote product perfection and high quality.

Mr. Liu Qiuming pointed out that different products contain different patents. Choosing products and applying for patents for those products is particularly important. For patents in traditional industries, we should seize revolutionary technology patents and develop and explore potential future technology patents. Timely large-scale patent applications are essential to grasp the future technology of products and improve them, thus achieving comprehensive patent coverage and keeping track of product technology dynamics.

For high-tech emerging industries, we need to apply for patents specifically, utilizing the publicity and exclusivity of patents to enhance industry visibility, allowing product patents to be widely used. No matter how good a patent is, if it cannot be widely utilized, it is merely ornamental and useless. Patents must be widely used to promote industry development, trigger good patent alliances, and drive the entire industry's growth.

The recognition of patents is also very important. In the smile curve, R&D operates in the global market, while marketing competes locally. To achieve the highest added value in R&D, global recognition of patents is crucial.

As the saying goes, 'Success and failure depend on the same factors.' Having good patents but failing to utilize them skillfully can lead to significant debts for the industry, even extinguishing it.

Mr. Liu Qiuming pointed out that in the face of patents, we should follow the trend and apply for surrounding patents while respecting others' intellectual property rights, mastering the future of products. Utilizing patents to promote industry technology updates and winning the full replacement rights of technology is essential.

It is said that the power of the masses is strong; forcibly monopolizing patents will only lead to a lonely demise at the top. Establishing a good patent alliance, advancing and retreating together, is the best strategy for the sustainable and stable development of the industry.

Patents need a market to bring wealth and security to the industry. Actively participating in the formulation of international standards in related fields and giving patents a voice is the best way to extend the life of patents.

Based on patents, DOM also has its difficulties. With the advancement of human knowledge, continuous technological updates will inevitably lead to expensive R&D patent costs and high patent application fees. Whether a company can create miracles in the industry under the DOM business model depends significantly on its economic strength and strong R&D capabilities. Huawei has maintained a successful position in the global market for over 20 years by adhering to a ratio of 46% for technical research and development personnel, 33% for marketing and service personnel, 9% for management and other personnel, and 12% for production personnel. This shows that the number of patents derived from technological R&D is a standard for measuring a company's success.

Today, many companies have succeeded under the DOM business model. The flooring lock patent giants UNILIN and VALINGE have paid a high price for the flooring industry in China. Japanese companies NSK and NTN have also better illustrated the protection and wealth brought by patents.

How the DOM business model will progress in the future and the commercial wealth it will generate remains to be seen.