Abstract: This case describes the upgrading dilemma facing Bense Furniture, a traditional medium-sized original equipment manufacturer (OEM) in Zhejiang Province. When China is transforming from a manufacturing country to an innovation-driven country, resource costs are increasing while profit margin of OEM is continuously compressed. In such labor-intensive and cluster industry, should they stick to OEM and ODM, or decisively transform to OBM? It is a fatal choice to numbers of similar SMEs. Firstly, we introduce briefly the company’s situation and its environment. Then we discuss the dilemma originated from Bense’s business model. Lastly, we propose some alternatives and compares their opportunities and threats.

Keywords: small and medium-sized enterprises (SMEs); original Equipment Manufacturer (OEM); original Brand Manufacturer (OBM); transformation and upgrading; strategic management