"As industry dividends gradually fade and OEMs enter the market, a new round of reshuffling may occur." It's no surprise that an iPhone comes off a Foxconn assembly line, but many consumers haven't noticed that many "internet-famous" snacks also have large-scale OEM factories. Nowadays, more and more OEM self-operated products are appearing on major online shopping platforms. The same snacks, the same craftsmanship, taste, and texture, but at a much lower price than big brands. Will the OEMs' move from "behind the scenes" to "center stage" stir up the already red-ocean leisure snack market? **-01-**Stealing Business? Slightly Tweaking Recipes and Selling at Low Prices A few years ago, "internet-famous" brands like Three Squirrels, Bestore, and Be&Cheery all started with OEM production. Now, the OEMs behind these brands are also reaching out to consumers. Hand-torn bread is a very popular product from Three Squirrels. On Tmall's flagship store, a 1 kg package was priced at 29.9 yuan during the "6·18" promotion—many fans think this is already much cheaper than the original price of 75 yuan. But looking closely at the ingredient list on the back of the packaging, you can see six "commissioned units" and their addresses listed on the right side, spread across Hubei, Fujian, and Anhui—these are the OEMs producing this snack. In one Taobao store called "Lejinji," the same hand-torn bread as Three Squirrels is sold at 34.8 yuan for a box of 3 jin—about 30% cheaper. Although the ingredient lists show that the main ingredients are ordinary wheat flour and special wheat flour respectively, and Three Squirrels adds vitamin C and other food additives, netizens' reviews suggest that the taste and texture of the two breads are not much different. For many consumers seeking value for money, snacks produced by these OEMs fully meet their needs. To buy affordable snacks, many netizens have compiled "money-saving guides" listing the OEMs behind various brands, covering dozens of common snacks. It's clear that most products from "internet-famous" brands are produced through OEM, with price differences ranging from 20-30% to over half. **-02-**OEMs Move from Behind the Scenes to Center Stage In fact, OEM production is very common in industrial products. As typical internet snack platforms that rose rapidly in recent years, brands like Three Squirrels, Be&Cheery, and Bestore started with e-commerce. Their IP images are major assets, and marketing and advertising are key development strategies—completely different from traditional manufacturers' focus on production, making cooperation natural. It is understood that many large snack brands have relatively small production facilities, or even no factories of their own. Adopting OEM reduces the risk of uncertainty from new production lines, shortens production cycles, and allows brand building without huge investments. Since 2017, OEM has been embraced by many emerging brands, many of which have gradually established themselves in the industry through this model. For OEMs, their processing techniques are mature and they have advantages in scale production. As long as they receive a steady stream of orders from brand owners, they can ensure a certain scale of output and long-term profits, creating a win-win situation. Many manufacturers are happy to do OEM for brands. But with intensifying competition and rapidly lowering e-commerce barriers, many manufacturers are no longer satisfied with simple OEM and are quietly transforming. By opening online stores and doing marketing themselves, they are moving from "behind the scenes" to "center stage." Lejinji, Liuhexin, Zhiweixuan, and other OEMs hidden behind brands like Three Squirrels, Bestore, and Be&Cheery are emerging and becoming known to consumers. Our reporter found that many common OEM stores have follower counts in the hundreds of thousands. Although far from the tens of millions of followers of the official brands, they are still impressive compared to ordinary snack stores. Driven by the "product promotion" effect of internet-famous brands, the snack OEM economy is booming. For example, Cuicui Foods, which makes products for cartoon characters like Peppa Pig and Frozen, is already on the path to an IPO. **-03-**Disruptor or Mutual Benefit? Although they frequently try to reach consumers, according to financial data disclosed in Cuicui Foods' prospectus, OEM remains its pillar business. At the same time, whether OEMs' strategy of slightly tweaking recipes and taking a low-price route to capture the market infringes on brand owners' legal rights has raised questions in the industry. In fact, our reporter learned that OEMs are no longer just contract manufacturers; their R&D capabilities are improving. There is also a degree of sharing of production techniques and recipes between big brands and manufacturers. For many OEMs, opening online stores to build reputation and attract attention is a more important goal than profit growth. "Cooperative OEM production remains the core pillar business," said a person in charge of an unnamed OEM factory. At this stage, competition in the leisure snack market is increasingly fierce. Besides the early "BAT of leisure snacks"—Three Squirrels, Haoxiangni, and Bestore—there are also many other leisure snack giants like Laiyifen, Yanjin Shop, and Juewei Food in the A-share market. "As industry dividends gradually fade and OEMs enter the market, a new round of reshuffling may occur, " an industry insider analyzed. Source: Beijing Daily, Author: Yang Tianyue