Contract Manufacturing of Office Chairs
The contract manufacturing industry of office chairs is characterized by significant differences between costs and selling prices, prominent brand premiums, reliance on contract manufacturing by most brands, and industrial clustering in specific regions.
Significant differences between costs and selling prices: For office chairs sold by international well-known brands at prices exceeding 3000 yuan, the actual cost may be less than 600 yuan. This indicates that brand premiums and layered markups in the distribution channels account for a large proportion of the selling price of office chairs. Consumers pay high fees for the brand and distribution channels, while the actual cost of the product itself is relatively low.
Prominent brand premiums: Some products directly supplied by contract manufacturers are identical to those of well-known brands in terms of materials and craftsmanship. However, due to the lack of a brand logo, their prices may be only one-third or even one-fifth of those of well-known brands. Nevertheless, when consumers use these unbranded products, they can still obtain over 90% of the user experience. This shows that brands play an important role in premium pricing in the sales of office chairs, and consumers pay additional fees for the image and reputation represented by the brand.
Reliance on contract manufacturing by most brands: In the office chair industry, many brands actually adopt an OEM (Original Equipment Manufacturing) model, and the vast majority of brands do not have their own factories. These brands only need to change the product logos, and the prices can be multiplied several times. This reflects that the bulk of industry profits is concentrated in the distribution and marketing links. Brand owners obtain high profits through marketing strategies and distribution layouts, while the profits in the production link are relatively low.
Industrial clustering in specific regions: There are office chair contract manufacturing factories in Foshan. The products of these factories can meet various needs such as government procurement, corporate purchases, and individual retail sales. Industrial clustering helps to form economies of scale, reduce production costs, improve production efficiency, and also contribute to the local economic development. When purchasing office chairs, consumers can pay attention to products from these industrial clustering regions, which may offer better cost-effectiveness.
