Establishing Manufacturing & Sourcing in Vietnam

Webinar:

Establishing Manufacturing & Sourcing in Vietnam

Establishing Manufacturing & Sourcing in Vietnam

About The Webinar


Who Should Watch?

Executives of US companies who are facing manufacturing, contract manufacturing or sourcing challenges in China or other countries

Executives of US companies expanding Southeast Asian operational and supply chain capabilities to better service customers


US companies are establishing or relocating to Vietnam for a number of reasons, not the least is diversification from China. Vietnam has become a preferred destination as China labor costs and geopolitical concerns increase, and as US/China tariffs remain.

Vietnam has a significant manufacturing base, which was traditionally focused on textiles, apparel, and furniture.

Vietnam has increased their manufacturing capabilities and are now major producers of consumer electronics, telecom equipment, machinery and auto parts. Samsung produces a third of their total output in Vietnam and is the country’s largest exporter.

East West Associates’ speakers addressed these questions, including:

    • Why – and How – are US companies developing manufacturing, contract manufacturing & sourcing capabilities in Vietnam?
    • What industry sectors are finding sourcing & manufacturing success in Vietnam?
    • What are the advantages of Vietnam as compared to the other ASEAN Countries?
    • What financial & operational incentives does the Vietnamese government provide to US companies to establish operations on leased or owned facilities?
    • How should our investment strategy be designed to best meet the Vietnamese Investment goals?
    • How does Vietnam compare to China & Thailand? Lease rates? Building costs? What are the relative advantages of Vietnamese Business Park options?
    • Can you summarize the Vietnamese/US trade relations and tariff policies?

Our speakers briefly presented two recent case studies:

    • How a Minnesota-based manufacturing client established a Vietnamese contract manufacturing arrangement to diversify from China and service the US market
    • Key experiences of a Michigan-based automotive manufacturing plant for an operational and supply chain audit
Establishing Manufacturing & Sourcing in Vietnam

Speakers

Mark Plum | Director, East West Associates
  • Former President of Briggs & Stratton Asia (NYSE: BGG)
  • VP Sales & Marketing, American Standard Thailand & American Standard China
    Establishing Manufacturing & Sourcing in Vietnam

    Presentation

    Jacob Miller | Director, East West Associates (Vietnam)
    • Former Operations Engineer for Caterpillar
    • Focus in Supply Chain development, procrurement process improvements and facility establishment
    • Currently based in Ho Chi Minh
    Establishing Manufacturing & Sourcing in Vietnam

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    Establishing Manufacturing & Sourcing in Thailand

    Webinar:

    Establishing Manufacturing & Sourcing in Thailand

    Establishing Manufacturing & Sourcing in Thailand

    About The Webinar

    East West Associates Roundtable with Senior Executives


    Who Should Watch?

    Executives of US companies who are facing manufacturing, contract manufacturing or sourcing challenges in China or other countries.

    Why Should You Watch?
    For ideas and guidance to help navigate new business manufacturing and supply chain in Thailand.


    US companies are establishing or relocating to Thailand for a number of reasons, not the least is diversification from China. Thailand has become a preferred destination as China labor costs and geopolitical concerns increase, and as US/China tariffs remain.

    Thailand has a significant manufacturing base and available skilled labor. For example, in 2021 Thailand became the largest motor vehicle-producing country in Asia Pacific, producing 1.9M vehicles.

     

    East West Associates’ speakers will answer questions, including:

    1. Why – and How – are US companies developing manufacturing, contract manufacturing & sourcing capabilities in Thailand?
    2. What industry sectors are finding manufacturing & sourcing success in Thailand?
    3. What financial & operational incentives does the Thai government provide to US companies to establish operations on leased or owned facilities?
    4. How should our investment strategy be designed to best meet the Thailand Board of Investment goals?
    5. How does Thailand labor compare to China & Vietnam? Lease rates? Building costs? What are the relative advantages of Thai Business Park options?
    6. Can you summarize the Thai/US trade relations and tariff policies?

    Our speakers briefly present two recent case studies:

      • How an Ohio-based industrial company successfully established a Thai contract manufacturer relationship
      • Key experiences of a Michigan-based electronics manufacturer when relocating its China-based manufacturing to Thailand
    Establishing Manufacturing & Sourcing in Thailand

    Speakers

    Mark Plum | Director, East West Associates
    • Former President of Briggs & Stratton Asia (NYSE: BGG)
    • VP Sales & Marketing, American Standard Thailand & American Standard China
    Steve Blyth | Nederman Corporation (Thailand)
    • Former Managing Director of Southeast Asia, Nederman Corporation (Thailand)
    • Former Sales & Commercial Director, Volvo Cars (Thailand) Ltd.

    • Currently based in Bangkok, Thailand

    Establishing Manufacturing & Sourcing in Thailand

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    Establishing Manufacturing & Sourcing in Thailand

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    Major Investments In Thailand Focus on Electronic Vehicle Manufacturing

    Major Investments In Thailand Focus on Electronic Vehicle Manufacturing

    The global shift to electric and sustainable vehicles is set to bring about incredible transformation for the planet and its transportation needs, and Thailand is among those leading this charge.

    Thailand strives to be a global player in electric and sustainable vehicles.

    The Thai government strives to become one of the largest world players in Electric Vehicles by 2030, accounting for 30% of their domestic vehicle production. Through subsidized production, import tax reductions, and other incentives, the country is creating a supportive environment for manufacturers to invest in EV production.

    The Thai government started subsidizing Electronic Vehicle manufacturing in September of 2022 – granting subsidies for promoting the use of EVs as well as incentives for excise, road, and import tax reduction, production of batteries, and the establishment of charging facilities.

    Thailand has an established and robust EV supply chain, making it a prime location for global manufacturers. As demand for EVs increases, Thailand is poised to be a competitive marketplace for cutting-edge technology focused on sustainability. With rising investments in Thailand coming from a wide range of local conglomerates, automobile manufacturers are positioning themselves for a strong foothold in the EV industry. Not only are they advancing the technological capabilities of their products but also taking into account the unique challenges posed by a traditional reliance on combustion engines.

    Thailand is poised to be a competitive marketplace for cutting-edge technology focused on sustainability.

    Thailand’s Commitment to Electric Vehicle Manufacturing

    Thailand has recently made a big commitment to the production of electric vehicles (EVs), and the Thailand Board of Investment is playing a key role in promoting this initiative and working hard to create an environment that is attractive to investors and EV manufacturers alike. This effort helped create a robust supply chain for EVs in Thailand, that can handle the demands of an industry set for significant growth.

    Thailand Board of Investment (BOI) is working to promote this initiative and attract investors and manufacturers to the country. The BOI has been working with major global automotive companies from China, Japan, and Europe to centralize EV production and strengthen Thailand’s position as an EV hub in the region. By promoting Thailand’s manufacturing capabilities, the BOI is gearing up to attract billions of dollars in investment, creating jobs, and helping the country to meet its sustainable development goals. They place sustainability as top-of-mind and wish to be seen as competitive in the marketplace creating cutting-edge technology to curb carbon emissions and improve fuel efficiency.

    As demand for EV sales goes up and the cost to the end-user continues to go down, the Thai government hopes subsidies to manufacturers will drive more interest in centralizing EV production. There is currently a strong automotive existing ecosystem with support from Chinese, Japanese, and European EV car makers already in place, making it a safe place to invest and bet on Thailand being a central hub for EV production for years to come.

    Thailand has a clear vision for the future of their automotive industry, and the government’s initiatives in supporting the production of EVs demonstrate their commitment to sustainable development. The initiatives that the government is undertaking make Thailand an attractive destination for global players and improve the country’s competitiveness in the EV space. They are looking to become a one-stop service facilitator to EV companies that want to set their regional headquarters in Thailand.

    The BOI’s approach towards increasing EV usage in Thailand also takes into account supply chain and infrastructure aspects aimed to make EVs accessible and more practical across the country.

    Recently, the BOI just approved a tax holiday package of three to five years for charging service providers. While Bangkok enjoys more than half of the country’s total charging stations, this tax holiday will offset that imbalance and attract investments from all corners of the country, leading to an extensive and robust infrastructure for charging EVs across Thailand and opportunities for more investments to come.

    As Thailand continues to attract major global players, it is exciting to see the country’s role in the EV market increase. With the growing popularity of eco-friendly vehicles, Thailand is well on its way to turning this vision into a reality and becoming a key player in the global EV industry. Industries need more governments actively looking to increase access to EVs, and Thailand is showing us how that can be done.

    BOI-EV-Charging-Stations

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    Webinar Executive Summary | How To Approach China Alternatives

    WEBINAR EXECUTIVE SUMMARY:

    How to Approach China Alternatives: Mexico, Southeast Asia & Central Eastern Europe

    East West experts Mark Plum and Dan McLeod discuss how companies can approach finding alternatives to China for their manufacturing and supply chains, providing examples of companies they assisted diversifying from China while answering questions from the audience.

    As manufacturing for export and sourcing in China is becoming more difficult for Western companies due to cost of inflation going up, increasing labor costs, high production expenses, volatile tariffs, political tensions, not to mention new and challenging rules and regulations that continue to evolve – companies are looking for other locations.

    These trends are applicable to companies who are operating on the ground in China facilities and relocating them outside or sourcing them out of China for components or raw materials.

    The questions to ask when looking to relocate are these:

      • Where is your market?
      • Where are your components and finished goods?
      • Where are they to be consumed?

    These three questions will help determine the best solution for your operations.

    Attractive alternatives exist for relocating China supply chain & operations, including Mexico, Southeast Asia, and Central/Eastern Europe.

     

    Client Case Study #1

    Moving Operations to Mexico, Client is in US and North America

    The first example was a very successful US-based manufacturer of electronic equipment selling into industrial markets and was established in China since the early 2000s. In addition to manufacturing, they had developed a sourcing office there, and they were sourcing components for their US factories. They had a strong operation with a strong domestic market, growing steadily, and were satisfied with the performance of their operations.

    We were engaged a few years ago to initiate a search for suppliers in Mexico after the introduction of the tariffs in China. They also experienced logistics challenges, increased cost and transit times, problems with container availability, along with becoming increasingly concerned about the political situation between China and the US.

    The company was looking forward into the future and had some concerns, particularly where their marketplace was somewhat of a high-tech product, were concerned about China’s 2025 policies and the potential for the loss of intellectual property and the loss of control of production.

    We provided the company with options for suppliers Mexico to be closer to their clients in the US and North America and visited the top candidates. 

    Currently, in Mexico, we are finding:

      • Suppliers are fielding more requests than the previous 5-10 years. This is stressing capacity and their ability to respond. Having good relationships with suppliers in Mexico is key to getting their attention, and having local people able to facilitate these relationships is critical.
      • Finding local individuals who can support your negotiations, particularly around freight and logistics, standard terms and conditions, and trade compliance issues is important.
      • For companies that move to Mexico, they can reduce the number of distribution centers they operate in North America since they’ve shortened their supply times by getting closer to the market and have a quicker response time. This also can reduce their inventory holdings.
      • Incentives are not as transparent as other parts of the world – and more time and investment can be required. There is much more raw, undeveloped land on the market that requires more investment in time and capital to get set up as a manufacturing site.
      • Many more small-to-medium sized suppliers, where capital is tight and when faced with the need to expand to supply a significant customer, there are discussions about financing the expansion, unlike you would with a supplier in China for example.
      • When transferring technology to Mexico, it requires more work to develop the specifications and techniques than expected, which can slow the transition process down. This creates a requirement for technical skills within your company to help the transition.
    Client Case Study #2

    Moving Operations to Poland and Czech Republic, Clients are in Western Europe

    Our next example was US global HVAC business, with manufacturing in the Guangzhou province in the 90s. Back then they were able to reduce their bill material cost and total cost between 25-30%. They could have long shipping lead times of 9-11 weeks to get to their different global distribution centers.

    We were engaged to look at a new facility to help move it closer to their European markets to ease the shipping times to those markets. We determined the best area was along the Polish and Czech Republic boarder to get their goods into Western Europe, bringing the shipping times down to 10 hours by highway with a strong labor force in place.

    Currently, in Eastern Europe, we find:

      • Excellent suppliers for metal fabrication – bending metals, heavy construction, is extremely good, with a strong, skilled workforce.
      • A good source of electronic components relating to automobiles, such as PCB boards, basic chips, etc.
      • A high quality of labor, with a strong work ethic, skilled in industrial, appliances, and automotives. Only difficulty can be with availability, and this is where having someone local who can help sourcing can assist.
    Client Case Study #3

    Moving Operations to Thailand, Clients in Southeast Asia

    Our last example was a very large iconic manufacturer of electronic equipment selling into industrial markets and was established in China since the early 2000s in Guangdong Province, with growth of their markets in ASEAN.

    We were asked to do a study to find a larger facility close to their current one so they would be able to keep their labor force. We demonstrated to them it would be better for their market base if we broadened it to ASEAN to keep their facilities on the cutting-edge, looking at Vietnam, Thailand, and Malaysia.

    After negotiating with Thailand’s Board of Investment, we brought our client’s second design center which included their R&D first tier products and the internet of things connected products to Thailand, and the Thai government gave them a 10-year corporate tax holiday and 5 more years at a 50% tax. This saved the company an enormous amount of money compared to if they built a new facility in China.

    Currently, in Southeast Asia, we find:

      • Their productivity levels and R&D are equal to those you would find in China with half the labor rates for manufacturing.
      • Your IP is much more protected, and you don’t have to worry about the government of where you are dealing with to try to compete with you.
      • There is still the Treaty of Amity that goes back 150 years where there are no duties, so if your content is over 60% coming back to the US is zero duties from Vietnam.
    Helpful Tips

    For Closing a Plant or Operation Center

    When you are going to close a production center in China, you need to anticipate the time involved and put together a solid, upfront plan.

    Set aside a two-month period working with corporate management and local leadership to develop solid plans around:

    • Understanding required severance
    • Understanding market practices around severance
    • Communication plans
    • Inventory disposition
    • Whether you need to build up or draw down inventory.

    The need for a multifunctional or cross-functional planning is key for a successful plant closing.

     

    For assistance with a plant closing or if you have additional questions, please call or contact us at 704.807.9531 or abryant@eastwestassoc.com.

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    2023 Headwinds to Manufacturing In-China/For-China

    Webinar:

    2023 Headwinds to Manufacturing In-China/For-China

    Headwinds to Manufacturing In-China/For-China

    About The Webinar

    East West Associates Roundtable with Senior Executives


    Who Should Watch?
    Executives whose US-owned companies are committed to manufacturing in China and selling into in-China markets.

    Why Should They Watch?
    For ideas and guidance to help navigate new business restrictions and other headwinds to your In-China/For China manufacturing operations.


    The Past: How Things Were, in China/for China

    For decades, manufacturing in China for the China market was a happy time. US multinational companies (MNC) took their tried-and-true designs there to address a huge untapped China demand. There were relatively few local competitors. The cost of labor in China was a fraction of anywhere else. The Chinese government provided a friendly regulatory environment and offered attractive incentives.

    Then tailwinds became headwinds.

    Today: Where We Are Now, in China/for China

    Chinese competitors have emerged. US market share in China has eroded. Labor costs have ballooned. Nationalism is on the rise in both US and China. Political tensions and tariffs. New Business Park limitations. Buy-China attitudes, unpredictable laws and new environmental regs make it tougher and tougher for US-owned companies in China.

    But there you are, in China, for the China market. What do you do now?

    Our seasoned executives have real-life manufacturing experience in China and addressed four scenarios during the webinar.
    Are you experiencing one, some, or all of these scenarios?

    1. Manufacturing operations in China Business Parks are facing growing pressures, including limitations on expanding manufacturing capabilities, and increased environmental restrictions.
    2. The Chinese government is imposing an array of“no-fly list” restrictions on imports of sensitive products or components or raw materials you need to manufacture in China.
    3. Implications of “Made in China 2025” indicate you might need to stay below the radar to survive there.
    4. You might be concerned that your operations in China could be under-performing.

    Our speakers also answered audience questions, such as:

      • Are there industrial parks or developing regions within China where we might find lower manufacturing costs and/or growing market potential?
      • What opportunities are emerging in the western regions of China? Is it easier to do business there?
      • China has recently spoken about welcoming foreign investment again. What can we realistically expect?
      • Should we re-evaluate our ownership model and move to a minority position (< 50%) to address Chinese concerns? How do we deal with cash flow, profit repatriation, corruption, IP/TS concerns?
      • Should we consider a move to a SE Asia regional headquarters? Like in Singapore or Hong Kong or even South Korea?
      • How do we deal with declining operational performance? How can we monitor & motivate & compensate ex-pats and local staff, given new circumstances in China for US citizens and US-owned operations?
      • Can you share a real-life example of how a certain In-China, For-China company is re-shaping its operations to reflect a changing China?
    Headwinds to Manufacturing In-China/For-China

    Speakers

    Mark Plum | Director, East West Associates
    • Former President of Briggs & Stratton Asia (NYSE: BGG)
    • VP Sales & Marketing, American Standard Thailand & American Standard China
    Dan McLeod | Director, East West Associates
    • Former Director Asia Pacific Operations- Ashland Specialty Ingredients
    • General Manager-Eaton Corporation (SE Asia)
    • Director of Asia Pacific Manufacturing and Supply Chain-Hercules
    Headwinds to Manufacturing In-China/For-China

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