- Agreements with foreign manufacturers to produce your product, as opposed to exporting your product, are referred to as contract manufacturing.
- It is an easy foreign market entry method when your manufacturer is already producing your product for its domestic market.
- It can also be the initial instrument used to create a subsidiary in a foreign country.
- Several issues need to be addressed before getting into contracting.
- How much intellectual knowledge should you deliver to the manufacturing firm to make contracting possible.
- Can your contract manufacturer reverse engineer your product?
- Third party disclosure of confidential product information.
- How well will you interact with this new and independent manufacturer of your product?
- With contract manufacturing you lose control over:
- Product quality
- How the product is marketed
- How the product is sold
- How the product is serviced
© 2004 John Michael Pierobon