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In this video, the difference between OEM and ODM is explained. These terms are often used interchangeably, causing confusion. The flow chart shows the relationship between a company and OEM or ODM. If a product idea is validated through market research, the company must consider budget availability for research and development. If there is a budget, they proceed to OEM for manufacturing and shipping. If there is no budget, they go to ODM for research, development, manufacturing, and shipping.