Consulting team discussing business
by Asia Perspective

China Factory Relocation for Plywood Machinery Provider

The client, a global market leader in plywood machinery, established a workshop in Shanghai more than a decade ago. Since then, a trend of increasing operational costs and labor shortage has affected the client, making them look towards new opportunities and locations for their production site.

With their scope being set, the client contacted Asia Perspective to conduct a market study analysis on cities in the Yangtze River Delta (Nanjing, Hangzhou, Suzhou, Ningbo, Wuxi, etc.), to find a new suitable production location, meeting all of the client’s requirements.

Plywood factory

Cities in the Yangtze River Delta have well-established logistical and transportation capabilities, as well as a large potential sub-contractor base and low labor cost levels compared to Shanghai. Relocating the production facility to any of these cities would result in major cuts in operational cost.

Local government and industrial parks in these cities are highly welcoming towards foreign investments in the manufacturing industry, thus offering lucrative tax incentives, e.g. corporate income tax cuts for certain years (depending on type of projects, industry, etc).

The project was conducted in three steps: Preparation and Research, In-depth Analysis and Final Evaluation. A long list of attractive locations was generated from primary research and initial contacts, based on key criteria of industrial parks, current labor cost levels and identified development trends and logistical capabilities. After conducting the first high-level filtering, an in-depth analysis was conducted to evaluate the potential locations, to identify all their strengths and weaknesses. A short list of alternatives was presented to the client for further assessment and analysis of potential fit for relocation the factory, based on previous requirements, but also staff and sub-contractor availability and overall cost benchmark analysis.

All short-listed alternatives were suitable locations for relocating the factory to, and the final report provided the client with a top three cities together with four back-up locations to go further with. The final evaluation was made upon key aspects of available suppliers, local wage levels, rental fees, available vacant workshops which could meet the client’s specific leasing requirement and needs.

By completing previous steps, Asia Perspective helped the client to lay the foundation and gather all necessary insights, giving the client all the right tools to make a correct and well-informed decision. By letting Asia Perspective conduct the ground-work and analysis, the client also saved valuable time which could be used elsewhere.

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