I am looking to develop a prototype of an electronic gadget and ready with the design specifications. Have a few questions to people who have successfully got their products manufactured in China.
How do I go about looking for companies in China that can develop the prototype for me?
How much does it cost to develop a prototype vis a vis actual product cost at scale (say 1000 pieces)
How is my IP protected?
There are a number of different questions here, so I'll try to answer what I think you're really asking.
My background is in electronic product development in a corporate B2B environment, so the question of 'Should I go to China' almost invariably comes up in conversation.
My first question would really be: Why China? What appeals to you about developing / manufacturing in China over the country where you live? Is it just cost?
There are a few general things to note:
1) Manufacturing (note: manufacturing) in China CAN be cheaper than first world countries like the USA or UK, but this is not always the case.
For one thing, Chinese manufacturers will produce EXACTLY what you ask them to make. If something is wrong with YOUR design, it'll be included in the final product. Few will make adjustments to correct anything that's wrong (I'm not sure if they just don't care, or it's a general philosophy, but it's what I've seen). Western manufacturers are much more vocal about identifying any issues for rectification before proceeding. Not all, but more than in China. Basically this means that if your design isn't perfect the first time around, you are going to end up with wastage in the manufacturing process. Hardware is something you don't want to be doing through 'trial and error', so make sure your manufacturing processes are spot on before going to China.
From a design perspective, product development is a highly interactive experience, especially if you are engaging with an external team (such as a Chinese one). Therefore whoever you engage with need to have EXCEPTIONAL communication skills, both in language and general ability to communicate with you. If they don't, the process is going to take months, if not years longer than it needs to, and cost a lot more as well (even if labour rates are much lower in China for equivalent talent).
I realise I haven't put a concrete value around how much it will cost, but as anyone in product development will tell you: It depends. Without having an understanding of what exactly your electronic device is, there is no way to put a number to it. I've seen simple developments start at $20k for a prototype, all the way through to $500k for a fully fledged intrinsically safe camera system. That's in US dollars, but China won't necessary be that much cheaper, ESPECIALLY if you have to fly over there for meetings with designers, manufacturers, do multiple re-spins of everything due to communication errors, etc.
2) In terms of IP, China is definitely getting better than what it was, but it's worth noting that you have to be very very clear about IP with manufacturers. You have to explicitly state in contracts that they are not allowed to make copies for their own use or sale. What is being manufactured on their line is yours, and yours alone. As the advice always is when it comes to stuff like this, talk to a lawyer.
It's also worth finding companies who have engaged with Chinese manufacturing before, to see who they've used and how they found the experience. We've been involved with In-Tech Electronics (HQ in Hong Kong, factory in Shenzhen, and speak a lot of English, which helps), and they've been very good. Some of our larger clients have also used them previously.
It varies and it's very very specific to what you want to develop. The concrete design of your circuit matters. Also prototype building costs are usually a factor 10-100 higher than series. If you already have your prototype then you can shop around various manufacturing companies. To do that, you need Gerber files (your PCB design) and a bill of materials. You also need to think about casing: designing it and creating the mold is expensive. If you don't have your prototype yet, I recommend having it engineered in eastern Europe. Custom engineering is cheap there and high quality. IP protection is a problem. One thing to do is to distribute the work to different manufacturers. For the design phase you are safer if you design your prototype in Europe or the US where international patent laws apply. I could give you more specific advise in a phone call, getting to know a bit better what you are trying to build.
I have developed & manufactured electronics in Asia for the last 20 years.
Most people go through different versions of prototypes, putting it in the hands of target users is essential, keeping your idea secret is a big mistake.You will get a lot of feedback which more often than not lead to drastic rethinks of the whole device. So I strongly suggest to go to China only after you are VERY sure what you want. At home you can iterate a lot faster. Best would be for you to start playing around yourself with Arduino, which is a very newbe friendly way to make and program hardware. If that's really not for you then find some enthusiast at a local makerspace to do it, they're all over now http://spaces.makerspace.com/makerspace-directory.
You can also quickly iterate on the housing design using free 3D CAD software and 3D printers.
Do realize that Arduino is a great way to validate your specification, but not a cost effective architecture for a mass manufactured product, so a lot of the work will need to be done all over again, see https://www.linkedin.com/pulse/kickstarter-prototype-production-100k-enough-keesjan-engelen
So don't spend months and months to get your firmware just right, to get your cost to an acceptable level you likely will have to switch to another processor which needs to be programmed in a different language.
Once you're happy with the way the prototype works I would look at manufacturing as follows:
1. China is the best place to manufacture electronic products. If only because they have the most complete supply chain in the world. https://techpinions.com/why-cant-the-us-build-consumer-electronic-products/41950 China has many thousands of factories making any kind of part imaginable. They are especially unmatched in any part which needs to be custom made: housings, batteries, PCB’s, motors, LCD’s, cables….
2. One of the keys to reducing cost, time and risk in product development is to use existing parts as much as possible. Quite a few firms for some reason still regularly have LCD’s custom made. Why pay $250,000 in set-up, and months in mold production and sampling, if you can design around an LCD which is already being manufactured in huge quantities?
3. 60% of the unit cost of a product are decided in the architecture stage, and 20% during the design. As they say at Toyota: ‘‘Skillful improvements at the planning and design stage are ten times more effective that at the manufacturing stage.’’ http://www.design4manufacturability.com/DFM_article.htm
4. Doing your design without close interaction with the China vendors means you’re missing a lot of information, which leads to sub-optimal design decisions. The further you advance in the design process, the more expensive it gets to change anything. So if 98% of a product’s design is already done and validated in testing, you can hire a really smart China manufacturing consultant, but there is only so much they can do because most aspects are frozen already.
5. Another important tenet of Design For Manufacturing (DFM) is early supplier involvement. If you need custom parts better make sure that the factory who will make them actually feels comfortable manufacturing them. This requires a lot of communication in the design stage.
6. If you’re in the US the 13 hours’ time difference and language barriers make a smooth & fast collaboration with Chinese engineers very difficult. Plus if you have never worked with the factory before they’re not going to put much time in optimizing a design they may never get to make. Only for established clients does a factory see a very real chance that they will be responsible to make the part efficiently and reliably, and so they will be very keen to help optimize your design for their processes and capabilities. The flip side is that you are optimizing your design for this particular factory, so you’d better be sure that they can indeed deliver.
7. Picking a factory is not easy, the proof is always in the pudding: how responsive are they, how do they react when there is a problem. Are they going to say: “Oooh you do not want the batteries to explode, you never specified that, well that actually costs a lot more”. You have to kiss a lot of frogs to find your princess. Except that in manufacturing kissing is not good enough, you actually have to get into bed with them, only after you have wired your deposit and have been working with them for 6 months do you really know your bedfellow. This goes not just for the factory doing the final assembly, but for every factory making custom components for you. Building a reliable roster of suppliers takes many years, and a lot of “tuition”. In China going for the lowest bidder in the end invariably ends up being the most expensive option.
8. The more complex your product, the more inter-dependencies between parts, the bigger the mess trying to get a product manufactured in China when it has been designed in a vacuum somewhere else (and it’s not just Kickstarters who run into this problem).
9. The first samples for most any custom made part in most cases need some improvements. Some companies work will send their “China manufacturing guy” but it takes a lot for 1 person to master all the intricate considerations which went into the design of the cosmetic appearance, the construction of the injection mold, the layout of the circuit allowing it to pass FCC certifications, the adjustments needed in the calibration software… So at IBM for example knowledge transfer in manufacturing is considered a dirty word, the original designer of an aspect of the design has to see his design through all the way into manufacturing. Flying each of the 12 different functional experts over to China quickly becomes expensive, and not every engineer wants to camp out in a China factory dorm for months.
10. So doing electronic product design as close as possible to the factories making the parts and doing the final assembly will significantly lower your development costs, your unit costs, your time to market and overall risk.
11. The knee-jerk reaction to get this done is to asking a China ODM factory to adapt one of their products to your wishes. This can work well if your changes are minor. But if you want them to do more there are some serious risk with this approach: you don’t have any ownership of the design IP, and it more likely than not it will take ages. https://www.linkedin.com/pulse/china-factory-designs-7-pitfalls-avoid-keesjan-engelen
12. If you're ready to camp out in China for a good 6 months then https://hax.co/ would be a great place to be mentored. https://www.hwtrek.com/ provides a lot of China & Taiwan resources for HW start-ups. You could also give the job to a consultancy such as www.detekt.com which specializes in helping start-ups.
13. Setting up your own design team in Asia can be tricky, the success hinges heavily on picking the right CTO to manage and build out the team. And in China this kind of talent tends to switch jobs very often, especially after they have obtained a foreign “stamp of approval” on their resume.
14. It is true that hardware can get copied very quickly, but copycats are unlikely to invest their efforts in an unproven product. So this risk comes up only after your product starts being successful in the market. By that time everybody can copy it, no matter whether you manufacture in the US or in China. In fact products manufactured in the US likely have to sell at a higher price, making them a more attractive target for copycats.
15. Furthermore, the painful truth is that excellence in hardware no longer gives your company a lasting competitive advantage, to build barriers to entry hardware companies these days need to work not just on brand and distribution, but also on Community, DataBase and Software. https://www.linkedin.com/pulse/toasters-roller-coasters-how-hardware-startups-can-john-melas-kyriazi Doing this well is no mean feat, so I would focus most of your effort there, most of my clients are companies which realize that hardware no longer is their core activity.
My firm www.titoma.com works with well established companies, the reason is that 7 or 8 vendor partners put a lot of effort in collaborating with us from the very beginning to optimize every aspect of the design for manufacturing. They invest this time because from experience they know that the products we design will be manufactured with them parts for years. Unfortunately not every start-up becomes a runaway success, such is life, but I cannot afford to burn bridges with my partners, sorry!
When looking for good partners in China you will need to spend (and keep spending) a lot of effort on selling the factories on the fantastic prospects for your product, otherwise your 1K pieces project will quickly become their No. Last priority. So being there very often is essential.
I wouldn't develop the prototype in China for the very reason that you are worried about IP protection.
Producing products has it's benifits but it isn't always the best option, especially for product development.
I would develop the prototype here in the U.S. While protecting myself with a simple NDA.
Here's a quick article about NDA's and a free NDA template.
Next, I would hire an independent electrical engineer. I know, your probably saying that it's expensive and you're not there, etc. etc.
This will cost less than you think. Hiring an engineer will give you some VERY important things right from the beginning: A BOM (Bill of Material) and DFM (Design for Manufacturing).
A quality engineer will have experience working on projects like yours and will know the components and processes needed to efficiently produce your product. With a BOM you will know EXACTLY what materials and components your project will need and easily know how much they will cost in different quantities. Note: most of these components are produced in China so connecting the dots to a Chinese Manufacturer won't be time consuming also your manufacturer will know where to purchase quality components.
With DFM you have an exact roadmap to mass producing your product. You won't have to take the Chinese manufacturers word for it. You will present them with precise guidelines for production when sending an RFQ request for quote.
Many times your engineer will help build or point you in the right direction about building your prototype.
Even if your not ready to hire an engineer, just going through the interview process of hiring one will tell you a WHOLE LOT about your product idea.
Here's step-by-step guide to hiring design engineers and a free downloadable pdf interview template.
I would also take a look at John Teel's blog for more recommendations.
One other thing to think about is certifications for an electronics product. You will have to test the product for electronic interference, etc. at an approved lab and then apply for the FCC or EU certs.
This is a whole lot easier when your engineer knows local, compentent labs and how the process works.
After going through this process you are ready to move into manufacturing. Having all of your ducks in a row before contacting manufacturers will save a TON of time and money.
As you can see there is a lot to think about before thinking about reaching out to overseas suppliers and manufacturers.
I hope this helps.
If you're building in China, your IP isn't protected. You also incur travel costs, long transit times, quality issues that increase product development time, Chinese New Year shut down (for weeks), etc. and the wage gap between the US & China is closing. A lot of 'leading' companies do not fully understand the real cost of offshoring. Search 'Reshoring Initiative TCO' and use the total cost of ownership calculator. Cost is not the only reason, product development is also a factor. There's a reason why Toyota moves to local markets. It's the same reason many Chinese companies move to the US.
QUESTION: How do you get a product prototype developed in China?
I am looking to develop prototypes for electronic gadgets and prepare design specifications. Ask a few questions to people who make products in China. How do I find a Chinese company that can prototype me? How much does it cost to develop a prototype relative to large-scale actual product costs (such as 1,000 pieces)? How is my IP protected?
This is a very good question and I am very happy to answer it. You asked three questions, and I will try to answer you one-by-one.
Your first question is how to find a Chinese company that can develop prototypes for you? Generally speaking, building a successful product-centric enterprise requires innovation, time and money, and more importantly, a supplier. And it's no surprise why intelligent manufacturing has become an important choice for countries in the context of global value chain restructuring and international division of labor.
Developed countries have now stepped up their efforts to revert manufacturing and enhance the strategic position of manufacturing in the national economy. However, China's intelligent transformation seems to stand out from the competition.
The Chinese government has strengthened the top-level design of intelligent manufacturing by carrying out pilot demonstrations and standard system construction. Chinese enterprises have also accelerated digital transformation and improved system solution capabilities. In case you didn’t know, China has been slowing down from the stereotype of basic manufacturing industry more than a decade ago. The country is slowly entering the high-speed growth period of intelligent manufacturing.
The advantages of working with Chinese companies are quite obvious. China has been the largest consumer of industrial robots for six consecutive years. In fact, according to IFR (International Federation of Robotics), the size of China's industrial robot market is US$4.2 billion in 2017, accounting for 27% of the global market. It is also expected to expand to US$5.9 billion in 2020.
Domestic robot sales will be 16, 19.5, and 238,000 units in 2018-2020, and CAGR will reach 22% in the next three years. The automotive, high-end equipment manufacturing and electronics industries are still major users of industrial robots.
What are the unique advantages of choosing China? Well, the first is the amount of data. The machine learning technology behind the current artificial intelligence boom is extremely dependent on data. Identifying faces, translating languages, and experimenting with driverless cars require a lot of “training data”.
Due to China's large population and huge number of equipment, Chinese companies managed to have a unique, natural advantage in accessing data. Another advantage is that the hardware equipment and factories of Chinese manufacturing enterprises are generally new compared with European and American companies. The result of conversion to products in China likely is low cost and manufacturing speed is fast. No wonder why new technology and good quality become distinguishable traits of Chinese products.
Now, if you are looking for a Chinese supplier, please pay attention to the following points:
Use the Internet to publish and search for information using channels like Alibaba. When looking for a production partner, it's best to use the old-fashioned method. Start by sending an introduction about yourself via the email because, the web is no different from looking for an investor.
In China, Alibaba is a good resource. However, it is almost impossible to distinguish good and bad contract manufacturers. Sometimes, companies on Alibaba sell your products to other companies, even though you may have some patents.
Find an experienced person to introduce. If someone introduces you to some companies, one of the first things you have to do is to confirm that the person who introduced you actually worked with the company introduced to do business.
If that person is currently doing business with a manufacturer in a related field (for example, when you want to make a Wi-Fi sensor, the introducer is a Wi-Fi router), then the company he introduces should be the most effective.
When you evaluate a production partner, the size of the manufacturer's company should match the size of your company. Of course, everyone feels that a large manufacturer like Foxconn may be a good partner as they are able to provide high quality products. However, as a new customer with an annual sales volume of less than 10,000 units, the service they give to your customers may be very different compared to a large customer with an annual sales volume of more than 100,000 units.
Participate in various consumer electronics exhibitions. The participation in various consumer electronics exhibitions can help you meet potential manufacturers. You can set up a booth and display products, which can help you to play a role in the filter. You can introduce the manufacturer according to the degree of success. Many times, they are also looking for new business. If the show is in your country, then you don't need to jump on the plane to go to China.
Pay attention to the culture of the other party. To build a close relationship with your production partners, you must first learn their basic customs and traditions. You also need to understand the holidays of your partners, especially when they are abroad.
Keep close communication. Communication is very important in production because a small detail can either make or break your product. When you choose your partner, make sure their development and project manager speak your native language! The project manager will often contact the manufacturer, and a clear communication between the project manager and the project team is essential to manufacturing your product to your specifications.
Keep up with the progress by having a summary email. This will also help keep up with language communication to make sure everyone understands what is being discussed. Pictures and videos are an important part of the communication process and can also be used to report manufacturing defects in a timely manner. Don't worry about over-communication with partners. It's much better than the lack of communication, which can lead to catastrophic consequences.
The second question is how much does it cost to develop a prototype relative to large-scale actual product costs (such as 1,000 pieces)?
What kind of product do you have in mind? What kind of chip will be used? Do you already have plans regarding storage? These key components need to be identified based on your product capabilities.
For small batches of products, what are your testing requirements? You have to know this to know whether it is necessary to perform functional tests, stress tests, performance tests, anti-interference tests, product life tests, high and low temperature tests and other reliability and performance tests.
You can visit our website (Labx7) or contact our business people, where you can get the best overall performance and cost-optimized solution.
Your last question is about how your IP protected will be protected.
In our case at LABX7, integrity, honesty, openness and reliability are the core concepts of our cooperation with our customers and suppliers. We take the initiative to sign a confidentiality agreement with our customers and intellectual property protection. We fulfill our commitments and protect every labor results. Embracing, openness, transparency, and communication are the criteria for long-term relationships that we have built mutual trust and success, and the goal is to give our customers peace of mind.
Now, let us introduce ourselves to you, hoping to help you with your needs and product requirements. Labx7 is a global technology service innovation company headquartered in Shenzhen, China, and is a national high-tech enterprise.
As the world's leading IoT development and cloud service platform, we focus on product design engineering, development management, supplier resources, intelligent manufacturing, personalization, product distribution and other product management services to help our partners from concept to the product landed. We provide precise service at every step of the project.
LabX7 is committed to helping our partners deliver a superior customer experience, creating innovative, intelligent hardware products that enable them to maintain lasting, solid growth value and added value in the marketplace.
Visit us here: http://www.labx7.com/