On the other hand, there are some drawbacks of OEM agreements, especially for the small producer who is trying to enter the market with his product. In many cases, even if the product is sold (sometimes even successfully) by the distribution company, the smallest company remains unknown, since the product is more broadly linked to the prestigious distribution company. Therefore, such an agreement could not contribute to the potential growth and success of the small producing company (and perhaps even harm). But at this point, you need a very good reason to take care of an exclusive contract. The first question is exclusivity. This clause is essential for OEM agreements in which the interests of both parties are conflicting (which is generally the case). The smallest company tries to limit exclusivity to the largest company and to use as many distributors as possible to market its products, increasing the chances that its products will enter the market in question. For its part, the large production company is required to market the product under its brand name and would not want several competitors and its marketing and distribution investments to go in vain. The parties can resolve this issue by recognizing the nature of exclusivity (whether limited to a particular area, customers with characteristics or a specified period) or by finding that exclusivity depends on the achievement of certain sales objectives. From the outset, they must have a clear picture of these design and manufacturing rights, prices and production rights, and intellectual property rights. This means that you need an ODM agreement that determines how they are resolved.
One of the best ways to break this barrier is through OEM (Original Equipment Manufacturer) agreements. Manufacturing companies that have difficulty marketing their products independently enter into such an agreement with larger, more established companies trying to sell the small business product or service under their brand name. An exclusivity agreement or agency agreement can be applied in your country and you can therefore submit the supplier for sale of the product to other importers or attempt to import and sell the product through a local subsidiary. OEMs can also try to rebuild ender loyalty distributors. Distributors may be unusually receptive to CMs openings because they are upset about being put under pressure by OEMs looking to save money in the short term. Even in cases where OEMs act generously, distributors` fears about disintermediation and ultimate replacement by electronic channels encourage them to join in what companies promise to treat fairly and long-term relationships.