I get the impression that a product development company like yours is one
too many layers of abstraction for most small companies to tolerate. It's a middleman that can end up eating your margin. (So: less like PaaS, more like a "website builder" like Wix/Squarespace/etc.) Which is why, I assume, so many small companies attempt manufacturing without the use of a firm like yours; rather than the use of a firm like yours being the "obvious best practice" for smaller product companies.
When I imagine a company (rather than an individual or "brand") that sets out to get a product manufactured, what they likely already have — and so don't want to pay for the redundant employment of — is in-house IxD and general hardware and product engineering expertise. This is the type of talent that's easy to hire for in pretty much any developed country; so it's who they've probably hired at the very beginning of the product development lifecycle.
What such companies don't necessarily have, is 1. domain expertise in engineering the specific type of product and the parts that make it up (because this may be the first time they're entering this particular space); and 2. ground-level "systems engineering of logistical pipelines" knowledge of how to best put the plants, mills, factories, shipping, etc. of a particular region to use.
Big companies like Apple "vertically integrate downward", extending themselves into their chosen manufacturing region, getting boots on the ground for months/years to grow in-house expertise these fields, perhaps headhunting engineers and foremen directly from the factories to oversee things "from their side" but still local to production, etc.
But small companies don't have anyone to send to the manufacturing region. They want to draw the line "on the ocean." What they want, is to find a company local to the manufacturing region, that has taken the sort of local-logistics-oversight and part-specific-engineering competencies that were developed locally as a response to the demands of these big clients, and "struck out on their own", white-labelling this capacity as a service to be provided to anyone willing to pay for it.
To go back to the "general contractor" analogy, these smaller companies are like commercial property developers who already have architects and structural engineers working for them; who are looking to get a design of theirs built in an entirely different country; and who are looking for a construction company (that employs its own general contractor, who will be the property developer's point-of-contact) in that country. The property developer's structural engineer can say whether the building is safe in a technical sense, but they will rely on the construction company to evaluate whether the building is up to code for the area of the world it's actually going to be built in; and therefore to push back on the property developer to get things changed, when the building "won't work" as planned. They'll also rely on the construction company to guide them toward materials and parts choices that are most idiomatic for the chosen area, and most efficient and abundant in the construction company's own supply chain.
I do realize that a product development company might be willing to do a lower-level job like this. But the fact that a firm like yours employs its own product and design and high-level engineering staff (at least, I presume), probably means your firm has higher running costs than a firm that didn't have those staff; and therefore needs to charge an amount that might be untenable to smaller clients who only need that lower-level kind of support.
Which, again, leads me to wonder why there's no kind of company specifically targeting that "vertical slice" of the logistics chain — being only the gluing know-how to bring together on-shore "product developers" who have no off-shore experience/relationships, with the off-shore low-level manufacturing they need to use to make their product real. If a company that was only this existed, I would bet that it would be a "best practice" for small product companies to use them, instead of trying to send their designs off to factories themselves!
And again, I'll state my hypothesis: this glue is so core to the value of many of these products — especially lower-BOM ones — that any company that starts out just providing this service, inevitably vertically integrates upward until they are a product development company; or even becomes a product company themselves. At which point they leave the low-margin "cross-shore oversight" jobs behind — or start charging as much for them as they do for the full-spectrum development jobs.