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.