Sourcing USB Drives from China

How to make money sourcing USBs from China?

The global market for USB Flash Drives is rising and projected to exceed 3 billion units by 2018 and more than 5 billion by 2020, due to increased demand for faster data transmission speed (Source: Global industry analysts).

China is a major hub of manufacturing USB flash drives with players like SanDisk, Kingston, Transcend, Verbatim, HP, and Sony. These major players combined sales constitute one-third of the worldwide sales of the USB flash drives.

Market Condition and Trends

Asia-Pacific is fastest growing market with a Compound Annual Growth Rate (CAGR) of 8.2% over the analysis period (Source: Global industry analyst report-2015). Steadily growing economies such as China and India are a key contributor to the growth in the sales. The following trends are evident.

• Growth in smartphones featuring OTG micro USB port

• Customized USB Flash Drives

• Engraved or Printed USB Flash Drives

• USB 3.0

• Functionality and Design Innovations

• Memory Sticks as gifts

The USB flash drive is in its growth stage with matured technologies and manufacturing practices. Organizations competing on high performance and low-cost strategy are at an advantage and are market leaders. Although consumers are paying high for customized USB flash drives such as engraved one but the demand is still low but growing at a phenomenal rate.

Visit to USB Manufacturer: M&F Gifts China Ltd

1) Introduction

Frank Lee is the general manager of M&F Gift China Ltd. The company established in 2007, and manufacture customized USB products; they offer the clients with the high-quality products with the competitive prices. Their company is specialized in manufacturing customized USB flash drives, memory sticks, digital photo frame with small screen, card reader, USB hubs and other USB gadgets. What is worth mentioning is most of their products are used as gifts, and most of their products are used to advertising the clients’ companies. Customers can choose which function to be applied on the USB, i.e. simply copy, auto-run function, non-erasable function, read only function as well as a custom icon for the disk.

2) The Factory

They purchase the flash memory modules from Taiwan or Korean companies and ship the chips through Hong Kong to Shenzhen, and then the chip will go to their partner assemble the PCB and to accompany the flash module. After that M&F programs the USB, housing assembly, quality control, and then package and ship to the customers. They have a professional design team consisting of 5 people to do the customized designs, including the shape of USB flash drives and colours. There are 20 workers on the assembly line, and their annual production capacity is 3 million units, but the minimum order quantity is only 100 units.

3) Quality Control

Even though most of the customers are membership, associate and conference attendees who use the USB as gifts, which means they can afford not to have extensive quality control checks on the output. They still have around 30 computers doing the input quality control testing and have one computer to do the output testing.

4) Customer

80 percent of their sales go to overseas market, and the rest 20 percent go to domestic market. Main export markets are North America, Southeast Asia, Oceania, and Europe. Customers can choose PVC, ABS, and even metal material for different types of the USB. Moreover, the capacity for the gift USBs varies from 1GB to 64GB.

5) Competitive Advantage

For this type of the USB, like a credit card, they purchase the cases in one supplier and the PCB in one supplier, and they put them together use the machine. Therefore, to avoid the suppliers’ hold up, they have a big warehouse to store the raw material. And their good inventory arrangement, (i.e. they have plenty of receiving goods inventory) allows them to have shorter lead time to stay competitive in the market, and fulfill the customers’ requirement.

6) No. 1 Challenge and Response

Their No.1 challenge is how to enlarge their market. The good point is that the gift market is growing; people are getting to know their services and customized products. On the other side, labour costs and rental fees are increasing as well. Besides, customers always want to try something new, like power bank as a gift to send out. Therefore, they mainly focus on the most popular ones, which is cheaper and assembly faster, because most of the customers are the institutions, they do not care more about the products; they are concerned about price, delivery time and their advertisement.

7) Positives

The lead time of 200 units of this type of USB is only two days. They provide different memory capacities for the customers to choose, from 16MB to 16GB. And they have two types of branding method, one is screen printing, and the other is laser engraving. The plastic and aluminium used in the product’s shell come from 100 percent recycled sources. Moreover, their products fully conform to RoHS test.

8) Negatives

Their workshop also contains some issues that need to be fixed, like they should close the window to avoid the dust, and all the chips in receiving inventory should be placed neatly instead of stacking on the top of each other.

9) Surprise

Though the experience, most of the customers chose 1GB to 8GB USB, therefore, they have plenty stocks for the USB from this range, and for the smaller or bigger memory capacity, they only have 1,000 to 2,000 stocks. As for the order they do not have enough in stock, the lead time is only one week. The reason they have shorter lead time is most of the products are for the events and conferences, which have a specific date, so all the finished goods need to deliver on time. Otherwise, all the products become meaningless.

(http://www.chinasourcingacademy.com/latest-news/is-sourcing-usb-drives-from-china-profitable/)