Transcript clients - plantthailand

How doing business in Asia ?
Plant Manufacturing in Thailand
CLIENTS
CONSULTANTS
Etienne BIROT
Antoine CAMELIO
Geoffrey DUC
Pierre-Olivier JARRIN
Romain MONS
Johann SEDIVY
Jerome TRAN
Céline BÉZZINA
Marion CHAMPIGNY
Barkan COHEN
Anna MONTAUBAN
Cédric MARTINEZ
Laura MASERO
Maxime WASSELIN
Lennart Rudstrom – SKEMA Business School – March 2011
CLIENTS
Etienne BIROT
Antoine CAMELIO
Geoffrey DUC
Pierre-Olivier JARRIN
Romain MONS
Johann SEDIVY
Jerome TRAN
3
Project definition
Establish
a manufacturing plant in Thailand
4
Company presentation
Establish
a manufacturing plant in Thailand

Problematic
ff
Hard disk drive Market
Business environment in Thailand
How to set up Hard Disk
Drive assembly company in
Thailand?
Stakeholders
6.a
•
Government :
Imposes law taxations. Chambers of commerce: CCIFE, can help the creation
of manufactures abroad
•
Customers :
B2B. A lot of potential customers: computers manufacturers , video games
and playstations companies, etc. Global business
•
Suppliers :
Foxconn, Texas instrument, flextronics, Jabilcircuit, and all the famous
electronic components manufacturers
•
Employees and Trade Unions :
Have been existing since december 24th 2010. Not very powerful for the
moment
•
Investors :
Banks, GIE
6.b
Country Risks
Political instability since 2006.
High political tension in April and May
2010 (fear of civil war).
Business climate plagued by the
continuing links between business and
political circle.
According to the COFACE, Thailande is not
a risky country but suffer from a large
manufacturing concurrence with China.
PESTEL
7
_____________
Political
-Very strong political risks:
military putsch, riots, and other
tensions
-Increases every year, very
touchy since 2009 and the last
ritos
-Consequences: exportations
blocking, strikes, losses =>
Bankruptcy
Legal
-Not possible to set up an
individual society
-> Limited
company (7 associates max)
-Maximum foreign share part: 49%
For 1 foreign employee, 4 local
workers
Economical
-Highest GDP growth in Asia in
2010 : 8 %
-2nd largest economy in Southeast
Asia after Indonesia
-4th richest nation according GDP
per Capita
-Electronic industry is the first
industry in Thailand with 15% of
GDP
-Thailand’s electronic industry
faces competition from Malaysia
and Singapore
-Thailand: member fondator of
ASEAN
Environmental
-Peripheral ITs very polluting =>
long recycling process but a key
issue for air and water pollution
(-95% and -97%)
Ex: Recycling one hard drive saves
enough energy to run your
television for 102 hours
Technological
Social
-Easy access to new technologies:
Asia many IT companies which provide
new technologies and innovation.
-Integration of new/existing
technologies in hard disks,
extensions of line products (Cloud
computing (Iomega), Home Media, Smart
experience/design/connections…)
-Working conditions and labour
issues
-Time: An average working week is
48 hours, from monday to Saturday
-Salaries: average salary: 226 USD,
overtime work paid *1,5 ->*3
-No retirement/pension system
8.a
PORTER ANALYSIS
_____________
High
Low
Medium
High
High
8.b
PORTER ANALYSIS
_____________
High
High
Many customers
High competitive market
Low
Saturated market
Medium
Development of servers,
virtualization
High
CONSULTANTS
Céline BÉZZINA
Marion CHAMPIGNY
Barkan COHEN
Anna MONTAUBAN
Cédric MARTINEZ
Laura MASERO
Maxime WASSELIN
11
Political background
Constitutional monarchy
Many political actors
Demonstrations of Red skirts and Yellow skirts:
- Material damages
Religous confrontation
No decrease of foreign investments
Elections in 2011
12
Legal environment
• In Thailand, foreigners not permitted to own the
land
• Foreigner shareholder: can’t hold more than 49%
=> a lot of restrictions to investors
• But there are… solutions:
– Purchase of land through a Thai spouse
– Long-term leasing in partnership with a Thai
– Becoming a resident in Thailand
• Interrogations : is Thailand the right place to
create from scratch a hard-drive company?
13
Labor legislation
The contracts employment is governed by The Labor
Protection Act 1998 (LPA)
Wages: around 7.730 THB (226 USD)
The employment of foreigners is governed by
regulars to protect the domestic labor market
working hours :
- limited at 8 hours per day or 48 hours per week
Many unions are recognized and there are many labor
organizations
14
Import export business in Thailand
15
Investment regulations In Thailand :
many opportunities !
•
Foreign investment is welcome:
–
Various incentives through the Board
of Investment (BOI) and the Industrial
Estate Authority of Thailand (IEAT)
•
Investment incentives or guarantees :
– Value Added Tax (VAT) is applied at a
rate of 0% to exported goods
– Import duty imposed can be refunded
– Import
duty
reduction/exemption
on
machinery
and
raw
or
essential
materials
corporate
income
tax
exemption for one to eight years
– Double deduction from taxable income of
transportation, electricity, and water
costs
– Tax exemption for dividends paid out of
the exempted profits during the tax
exemption period
– Tax
exemption for fees for goodwill,
copyright, or other rights received
from a promoted activity
• As an Industrial operators :
Facilities to obtain work permits for
foreign technicians and
Facilities to take or remit foreign
currency abroad
Concerning Investment Regulations, you
will get lot of advantages in order to
develop your activity
16
TYPES
OF BUSINESS FOR SETTING UP A PLANT
Joint
venture
2 kinds
Sole
proprieto
rships
Private
Limited
Company
Structures
for
setting up
a plant
Unlimited
Liability
Company
Be careful
about what kind
of business you
want set up.
Always refer
to the Foreign
Business Act
1999.
Partnerships
3 kinds
OUR ADVICE: PRIVATE LIMITED COMPANY
LAST REQUIREMENTS
As a future high technology factory
•
Refer to the Factory Act
•
Be Careful ! Strong power of the government in
manufacturing sectors (decides about the location, the
size, the quantity of raw material, the origin of RM,
the quality of the product you should produce, the
type of energy you will use)
•
Depending on your level of production, government may
decide if it is destined to local use or export.
•
Get your industrial licensing as earlier as possible
•
As foreigners, you must have a Work Permit.
GO / NOGO