Paper-thin profits for OEM factories? On TikTok, a group of factory owners are pivoting to “brands”

Chinese factories doing contract manufacturing are finding life increasingly hard. Orders depend on others, profits are squeezed by others, and brands have nothing whatsoever to do with them—this has been a true portrayal of Chinese manufacturing over the past few decades.

In the past two years, platforms like TikTok have quietly changed the way a group of contract manufacturers do business. Before, factories just sat there waiting for customers to place orders: they made whatever they were asked to make and accepted whatever price they were given. Now it’s different. Some factories shoot their own videos, find influencers, and run livestreams, gradually gaining control over design and pricing.

In 2025, TikTok Shop had 400 million active buyers, and transaction volume is nearing $100 billion. As volume grows, opportunities multiply, and some are gradually making their way from contract manufacturing to branding.

Image source: Internet

Why switch? The contract manufacturing numbers no longer add up.

Let’s do the math first. Under the OEM model, the factory earns only processing fees; brand premiums and channel profits have nothing to do with you. When orders are plentiful, it can still hold up, but once customers push prices down or shift orders elsewhere, the factory immediately falls into a passive position. What’s more troublesome is that the better you do at OEM, the harder it is to be remembered by consumers. The products you make are sold under someone else’s brand, and consumers will never know who is behind them.

The "9.9 yuan free shipping" involution in the domestic market is also a mirror. Shenzhen swimwear brand Blooming Jelly fought price wars in the domestic market early on, with heavy inventory backlog, high return rates, and cost pressure that nearly crushed the team. This predicament is all too common among OEM factories; under homogeneous competition, the only weapon is cutting prices, until there is no profit left.

So transformation is not a multiple-choice question, but a survival question.

Image source: Blooming Jelly

From OEM to brand, how exactly do you make the move?

Step 1: Choose the right category and find products suited to being “seen.”

Not all products are suited to content e-commerce. Those categories with effects “visible to the naked eye”—hair styling tools, apparel and fashion, beauty and personal care—enjoy a natural advantage. Wavytalk’s curling irons, Ruimin’s plus-size women’s clothing, and Blooming Jelly’s swimwear all belong to the “understand at a glance” type.

Dongguan plus-size women's clothing brand Ruimin spent years doing OEM. After joining TikTok Shop in 2023, it registered its own brand, Finjani. A livestream in partnership with overseas influencers saw single-session sales volume reach about 1,700 pieces. In 2024, Ruimin's revenue on TikTok Shop exceeded RMB 23 million. From an OEM factory to a brand with annual revenue over RMB 100 million, the turning point was choosing the right track and platform.

Image source: TikTok Shop

Step 2: Use content to directly “educate” the market, rather than waiting for users to search.

TYMO BEAUTY's story is quite telling. This brand, which focuses on taking hair styling tools overseas, found that American users are accustomed to traditional flat irons and have no idea that straightening brushes exist. No matter how many images are placed on shelf e-commerce, it's useless—users won't even search for them.

What broke the deadlock was a 30-second short video: a Black mother used a TYMO straightening brush to comb her daughter’s hair, and the curly, messy hair instantly became smooth. There wasn’t a single sales pitch, but the effect was clear at a glance. The role of content here is not “driving sales,” but “education”—letting users know that this option exists.

Image source: TikTok

Step 3: Use an influencer matrix as a “megaphone” to scale content.

Creating content yourself is costly and yields limited output, but leveraging an influencer network can quickly amplify your voice.

Shenzhen hardware tools brand Fanttik’s strategy is clear: in the two years before launching on TikTok Shop US, it continuously collaborated with creators to build up seeding content, investing about $3,000 per month. After opening its store, its explosive power was astonishing—in just 2 months, it sold 100,000 orders. Today, Fanttik has partnered with more than 20,000 creators, concentrated in verticals such as home and tools.

They specifically choose mid-tier influencers, because these people are more authentic and down-to-earth, and are more likely to help consumers enter the product usage context.

Image source: kalodata

Step 4:Use user feedback for "product iteration" to make your brand increasingly on-target.

What is the biggest difference between building a brand and doing OEM? OEM listens to clients; a brand listens to users.

Ruimin spends 1 hour every day on TikTok scrolling through user reviews. If a negative review says the bust is too big, he revises the design, and buyer comments have become a “free consultant” for apparel iteration. This C2M (consumer-to-factory) reverse customization model was simply impossible in the OEM era—you didn’t even know who your users were.

Hebei Xingyuan Brush Factory uses big data to analyze consumer preferences in different markets: for the European and American markets, it mainly promotes high-end animal-hair brushes; for the Japanese and Korean markets, it focuses on portable fiber brushes; it also incorporates cultural elements such as Dunhuang and the Summer Palace into product design, achieving a severalfold jump in unit price.

Image source: Economic Reference Network

Final Thoughts

From contract manufacturing to branding is essentially about taking back their voice. In the past, Chinese factories earned processing fees; now, through content e-commerce, they can directly reach overseas consumers, build brand awareness, and gain brand premium.

This path has already been proven by pioneers. Good products have always existed; what has been missing is a way for them to be seen, understood, and trusted. Content e-commerce has filled exactly this missing link.