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Setting Up a New Factory? First Ask What Problem You’re Really Solving [Podcast]

Posted on by sofeast

More companies are taking a serious look at setting up a new factory, relocating production, or bringing manufacturing back under their own control.

The reasons are understandable. COVID exposed supply chain risks. Tariffs and trade policies have made some China-based production less attractive. Some companies are too dependent on one supplier. Others are worried about IP leakage, rising costs, or losing control over how their products are made.

But setting up a new factory is not simply a question of choosing China, Vietnam, Mexico, India, or another “lower-cost” location.

As David Collins, CEO of Manufacturing Transformation Group, explains in this episode of China Manufacturing Decoded from Sofeast, the first question should be: what are you really trying to solve?

A factory move can be a rare chance to redesign your manufacturing system properly. Or it can become a very expensive way to copy the same poor layout, weak processes, inventory problems, supplier risks, and equipment mistakes into a new building.

In this post, we look at the key questions to ask before committing to a new factory location, including supplier access, workforce skills, logistics, BOM control, feasibility studies, automation, greenfield vs brownfield projects, and equipment selection.

Listen here

Listen to the episode or watch on YouTube

Podcast sections

  • 00:00 – Introduction: setting up a new factory
  • 01:43 – Who David Collins and Manufacturing Transformation Group are
  • 05:04 – Why more companies are considering factory relocation
  • 05:50 – China, Vietnam, Mexico, and the real trade-offs between locations
  • 08:10 – Why some companies want to own manufacturing again
  • 09:32 – Don’t just move the mess to a new factory
  • 11:45 – The first question: what are you trying to accomplish?
  • 12:02 – Supplier location, workforce skills, logistics, and infrastructure
  • 14:18 – Why a real BOM and cost model are essential
  • 15:27 – Feasibility studies and idealised factory planning
  • 16:07 – Why automation is not always the right answer
  • 17:34 – Comparing factory setup scenarios and locations
  • 18:16 – Why labour cost should not be the only driver
  • 20:48 – IP risks and supplier dependency
  • 22:15 – Learning from the problems in your current factory
  • 23:46 – Project management during a factory move
  • 24:03 – Greenfield vs brownfield factory projects
  • 26:09 – Layout planning, implementation, and local specialists
  • 27:13 – On-the-ground project management and construction risks
  • 28:33 – Equipment commissioning and factory acceptance testing
  • 29:50 – Choosing equipment that fits your real needs
  • 31:41 – Equipment maintenance, spare parts, and supplier risks
  • 32:40 – Why factory setup is a once-in-a-decade decision
  • 34:12 – Disciplined planning and avoiding old mistakes
  • 36:45 – Closing thoughts

Further content

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Build Operate Transfer for factories: Can it be implemented in China?

Posted on by sofeast

The Build-Operate-Transfer model can be a beneficial approach for larger businesses that are looking to start manufacturing products in a new location while shielding themselves from some of the typical risks faced when setting up a new factory from scratch.

China is an obvious choice to start manufacturing in for certain businesses due to its deep & wide pool of component manufacturers and relatively inexpensive engineers, as well as mature transport and logistics infrastructure. That’s especially true when some of the output will be sold on the local market (made in China for China) and the impact of the China-USA trade/tech war is limited.

However, it can be hard for businesses to break into the market and set up a factory due to a lack of knowledge of local regulations, areas, customs, and business practices; not to mention the language barrier.

That’s not to say that foreign-owned businesses can’t set up a factory in China…we did it but fortunately, we started small and grew organically over the years. For a company new to China, could the Build Operate Transfer (BOT) model be a good alternative?

Continue reading “Build Operate Transfer for factories: Can it be implemented in China?”

China’s REAL Business Environment In Late ’23 And How Foreigners Can Set Up A Factory

Posted on by sofeast

Sofeast’s CEO Renaud welcomes China business expert Angel Ho, CEO of Hongda Business Services in Shenzhen, onto the show to talk about what the business environment for foreigners seeking to do business there today is really like, and about the process of setting up a manufacturing facility in China for foreigners and all of the legal and administrative points you’ll need to take care of. They also both share some of the key mistakes that foreign businesses make when setting up their factory.

 

Listen to the episode here 👇

Listen: to the podcast episode

Watch: on Youtube

 

Episode sections

  • 00:00 – Greetings.
  • 01:06 – Angel and Hongda introduction.
  • 02:21 – What’s the general business environment in China after ‘Zero-Covid’ really like for foreign businesses?
  • 07:40 – The Chinese economy is less vibrant than before now. What is the government doing to encourage foreign investment?
  • 11:55 – How easy is it to hire foreigners in China today?
  • 16:41 – If a Western company wants to start their own manufacturing company in China, what’s the process?
  • 21:30 – Selecting the right area and government support for manufacturers.
  • 25:55 – 7 Common mistakes foreign businesses make when setting up a manufacturing facility in China.
  • 35:39 – Wrapping up.

 

Related content…

 

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How We Set Up A New Factory In China From Idea To Operation [Podcast]

Posted on by sofeast

Planning on opening a factory in China in 2021?

how we set up a new factory in chinaTo get some insight and context into just what it takes to set up a new factory in China let’s explore how WE came to open our own factory, Agilian Technology, here in 2018! Renaud will explain the reasoning behind doing so, the goals, and the 6 phases we followed in order to make the idea of having a contract manufacturing subsidiary a reality.

This will give you food for thought and help you start planning the project as it’s possible you won’t have thought about some of the many points included in this podcast just yet.

 

Just hit the play button to start listening..!

Listen to the episode right here 👇👇👇

🎧 How We Set Up A New Factory In China From Idea To Operation 🎧

Here’s a summary of key sections of this episode:

✅ The story behind why we decided to set up our own factory in China

✅ How some learnings from the process turned into benefits and opportunities (examples)

✅ Phase 1: Choosing the right site for your needs and dealing with estate agents, etc.

✅ Phase 2: Making sure you adhere to local regulations – the focus here is especially on safety and the law concerning fire regulations, safe battery storage, legal hiring, insurance, and more.

✅ Phase 3: Decorating the factory – why to plan the areas and accomplish decoration before transferring production, how to handle working with your contractor effectively, and the various tasks you’ll need them to do such as floor style, creating the toilets, decoration, installing ventilation, lights, etc.

✅ Phase 4: Office setup – timely wifi access is crucial these days, but decoration, equipment, lighting, socket access points, etc, are all included here.

✅ Phase 5: Workshop setup – decorating the workshop and including its lighting, ventilation, etc, assuring power usage is realistic, and a focus on a layout that encourages optimal material flow will improve efficiency is helpful, as is line configuration (we use compact U-shaped cells and also longer lines for higher volumes).

✅ Phase 6: Warehouse setup – again, focus on the layout to improve material flow. Regular installation of racking, forklift, doors, fans, lighting, etc. We also discuss security.

✅ The key learning is to try to implement best practices for your needs – over the years we have seen a great many Chinese factories at first hand and we tried to avoid as many of the negatives as possible in our factory setup. An example is that we keep production managers and other staff who are involved in the production as close to the workshop as possible as opposed to them hiding away in their own offices (as is common in China) which reduces the value they bring.

 

Additional content related to today’s episode…

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What other questions do you have about how to set up a new factory in China (or other Asian countries)? We can help! Let us know by leaving a comment, please.

 

Listen, rate, & subscribe to the ‘China Manufacturing Decoded’ podcast on your favorite provider 👍

There are more episodes to come, so remember to rate us and subscribe! You can find us on:

Don’t forget to give us a ⭐️⭐️⭐️⭐️⭐️ rating and share it with your network if you enjoy listening! 😊