Location manufacturing China

A leading manufacturer with global network of production sites, including plants in China and the rest of Asia-Pacific is in need of additional capacity.

Assignment

Our client is one of the leading manufacturers of industrial tooling products. The company faced substantial growth in Asia for a significant part of their product portfolio. As growing further in one of their current sites in China was not possible due to lack of space and local regulations, the company decided to start a project to determine in which country to build a new plant and at which exact location.

Project summary

The client company is a leading manufacturer of industrial tools and related consumable products. The company has a global network of production sites, including plants in China and the rest of Asia-Pacific.

The company is facing significant market growth around the world, including Asia and was in need of additional capacity at a new manufacturing site.

Our approach

In this project we followed our proven approach to location and site selection. The project was executed in close cooperation with the company’s project team, who were in parallel also working on the technical feasibility study and overall investment business case.

The steps taken in the location selection process are as follows:

  1. Kick-off phase: scoping the project and the potential new manufacturing site from a size, labor, expansion and key location requirements perspective.
  2. Full Asia analysis: a longlist of 20 potential manufacturing locations across 6 countries in scope  was defined based on initial research by BCI. The countries in scope were China, Malaysia, Vietnam, Thailand, India and Indonesia. A desk research analysis was conducted to compare and rank these locations based on a limited set of critical locations factors. The result of this step was a shortlist of 10 locations in 2 countries for further research.
  3. Business Case: based on the outcome of the full Asia analysis, the company was able to make the business case for investing further in China versus in another country in Asia. The conclusion was that, due to the sheer size of the Chinese market for them, the best decision was to find another location in China.
  4. In-China location selection: within China 15 locations were selected and analyzed based on a detailed set of Cost, Quality of the Business Environment and Risk factors. We conducted detailed desk research on each of the locations, using our own databases, public sources, information from economic development agencies / authorities / business park owners in scope, recruitment 1.     firms, real estate brokers, etc. The result of this detailed analysis was the selection of the top-3 locations for fieldwork analysis.
  5. Fieldwork: a combined BCI/client team went on visits to the selected three top locations. Actual site options matching the client’s criteria were visited, meetings with economic development agencies, local authorities, recruiters, similar companies, etc. were held and detailed due diligence was done.

Final selection: the final selection was made based on this last step and a roadmap for the implementation phase was developed

Result

The company selected a location in the South of China and started the implementation planning including detailed plant engineering.

“The combination of experience from BCI’s global team and the regional and national Singapore and Shanghai offices brought us the robust approach that we required in order to come to this important decision”