The Survival Dilemma of China's Small Home Appliance OEMs: Insights from the Closure of Weidi Electric and the Pain of Industrial Transformation

The Twilight of the OEM Empire: A Chronicle of Weidi Electric's Bankruptcy

In March 2025, a small to medium-sized home appliance OEM named Weidi Electric in Zhongshan City, Guangdong Province officially entered bankruptcy liquidation. This little-known company had maintained a 25-year partnership with major appliance giant Midea Group for manufacturing. At its peak, Weidi produced over one million juicers, blenders, and other small kitchen appliances annually for Midea. However, this seemingly stable factory ultimately faded away due to a sharp decline in orders and a broken cash flow.

The closure of Weidi is not an isolated incident. According to statistics from the China Household Electrical Appliances Association, more than 100 small to medium-sized home appliance factories in the Pearl River Delta and Yangtze River Delta regions have shut down between 2022-2025. Most companies share similar fates as Weidi: long-term dependence on large brands while relying on mass production and low labor costs for meager profits; they ultimately struggled when market conditions changed dramatically.

The Rise and Fall of the OEM Model: An Evolutionary History of Industry Ecology

Looking back at China's small home appliance industry development history, 2000-2015 was considered a golden era for the OEM model. During this period, domestic markets saw annual growth rates exceeding 15%. Brands like Midea and Joyoung widely adopted outsourcing models for light asset operations to rapidly expand their product lines. Meanwhile, OEM factories found their survival space within supply chains by leveraging economies of scale and cheap labor.

This symbiotic relationship began undergoing fundamental changes after 2016. The explosive growth of e-commerce platforms accelerated price transparency across products; average industry profit margins plummeted from around 20% to less than 8%. To maintain profit levels amidst rising costs pressures were continuously passed onto manufacturers by brand owners. Concurrently, as domestic markets became saturated—with per household ownership increasing from four items in 2010 to twelve by 2025—the competition shifted focus from incremental gains towards existing stock battles; thus rendering low-price strategies ineffective.

Threefold Predicament Facing Manufacturing Enterprises: In-depth Analysis Of Structural Crises

Diminishing Cost Advantages Average monthly wages for workers in Zhongshan’s electrical appliance sector surged from ¥3,500 in 2015 to ¥8,000 by 2025—an increase exceeding 128%. Simultaneously prices fluctuated sharply among key raw materials such as aluminum alloy or plastics while quoted processing fees only rose about 15%. This ‘scissors effect’ continually eroded already thin profit margins faced by these manufacturers who now find themselves losing comparative advantages against Southeast Asian counterparts where lower labor costs prevail. Many international brands have begun shifting orders toward countries like Vietnam or Mexico with cheaper workforces.

Severe Lagging In Technological Upgrades Amidst waves pushing smart transformations throughout electrical industries leading players are investing heavily into digitalized factories—Midea Group’s automated manufacturing demonstration facility boasts automation rates surpassing 70%, significantly enhancing productivity consistency versus most smaller firms still reliant upon traditional assembly line methods lacking precision efficiency improvements needed today amid shortened innovation cycles averaging just six-to-eight months requiring rapid response capabilities that many lack sufficient R&D funding support necessary meeting fast-evolving demands ahead moving forward .

Intrinsic Defects Within Value Chain Positioning nOEM models inherently confine manufacturers at lowest tiers within value chains absorbing fixed asset investments worker training quality management high-risk segments yet can only earn fixed proportions based solely on processing fees received resulting vulnerability exacerbated during downturns wherein brand owners often shift operational burdens via pricing pressure extended payment terms leaving producers bearing brunt inequitable partnerships hence suffering first under adverse circumstances affecting overall stability resilience throughout respective sectors involved therein collectively . n n### Exploring Pathways For Transition : Breaking Through Obstacles Faced By Manufacturers Seeking Change nConfronted harsh realities some visionary enterprises are beginning explore upgrade pathways including transitioning ODM (Original Design Manufacturer) model cross-border e-commerce building independent branding initiatives successfully . One notable case involves rice cooker manufacturer located Foshan which invested eight percent annual revenue establishing specialized laboratories collaborating institutions such South China University Technology achieving breakthroughs new inner pot coating technologies providing customized solutions raising gross margin products upwards twenty-five percent ascending higher up value chain accordingly . Cross-border e-commerce presents fresh opportunities creating own brands circumventing fierce local competition utilizing established experience targeting overseas consumers adapting habits producing differentiated offerings carving out new growth trajectories altogether instead thereof effectively addressing challenges arising presently encountered along journey undertaken thereafter going forth into future endeavors envisioned ahead likewise extending horizons further beyond limits previously imposed beforehand … etc…