What Are the Pros and Cons of Contract Manufacturing?

An international cooperative production contract refers to a contract reached between a company in one country and a company in another country or region on the production of a certain product, the research of a project, or the joint design of a certain product for economic cooperation and technology transfer.

International Cooperative Production Contract

Right!

An international cooperative production contract refers to a contract reached between a company in one country and a company in another country or region on the production of a certain product, the research of a project, or the joint design of a certain product for economic cooperation and technology transfer.

International cooperative production is a more common form in international technology transfer. International cooperative production is not only an important means adopted by multinational companies to open up markets in developing countries, but also an important way for developing countries to introduce technology and capital. For example, China and the European aerospace industry cooperate in satellite production, Chinese automobile companies cooperate with South Korea's Hyundai Group to produce cars, and Chinese dairy companies cooperate with international dairy giants to produce high-end formula milk powder. Through transnational cooperative production, Chinese companies have obtained the additional capital and technology needed for production, foreign companies have improved their return on investment, and both parties have expanded the market for their products.

Chinese name

International Cooperative Production Contract

Foreign name

International Cooperative Production Contract

Object

A country company

Corresponding

product

Attributes

Research a project

Compared with pure technology transfer contracts, international cooperative production contracts have the following characteristics: ^[1]

The terms of a cooperative production contract should be determined based on the form of cooperative production. The main terms are as follows: ^[2]

International cooperative production mainly has the following forms: ^[1]

(1) Favorable aspects ^[2]

(1) The recipient can obtain supplier technology and save foreign exchange expenditure. The purchaser purchases a certain number of key components from the supplier, and the supplier can reduce or eliminate the use of technology.

(2) The recipient can use the technology and reputation of the supplier to make the recipient's products smoothly enter the international market.

(3) The recipient can quickly improve its own technical level and manufacturing capacity through the technology transferred by the supplier.

(4) The technology obtained by the recipient is reliable and practical, which avoids the problems of unreliable and impractical direct introduction of technology.

(Two) disadvantages

(1) The technical level of the supplier and the recipient is different, and the starting point of cooperation is different. It is difficult to find the joint point of cooperation.

(2) It is difficult for the recipient to introduce advanced technology using cooperative production methods.

(3) The recipient is slow to introduce technology, because the supplier transfers technology gradually with the product production process.