Setting up an overseas sales and marketing office or manufacturing facility Investing in an overseas country can prove expensive (particularly

in markets with higher business costs such as the US or Japan) so is seldom the first market entry option for exporters. Nevertheless, in order to gain a competitive edge, companies may need to establish a physical presence in one or more target markets. The most straightforward approach is to open a sales and marketing office. However, in order to set up manufacturing facilities overseas your company will need to have significant business volume to realise a return on investment. Some countries put conditions on foreign-owned businesses and may have laws relating to foreign investment.

Identifying a future vision for a network of manufacturing facilities requires a pragmatic approach involving a systematic and clear process backed up by valid data and analysis. Consider the following process: Give each facility a clearly defined role Co-ordinate the activities of the plants (with each other and with R&D and other key functions) to meet customer needs in the most efficient way Determine the manufacturing location the choice of manufacturing region needs to meet the requirements of each market A large part of the synergies available are derived from a co-ordinated approach across business units

International acquisitions & Joint ventures Running an overseas factory as a joint venture with a local party can reduce the risk to your business and lets you take advantage of local knowledge. Major considerations to consider prior to making an acquisition include: Cultural differences, Analysis of the business environment, price/costs involved & working capital needs, tax planning & valuations and legal implications.

Risks associated with offshore manufacturing There are always risks involved when entering into an agreement with an offshore manufacturer. Some of the key risks include: 1. Losing control over the manufacture of your products. Including governance provisions in the manufacturing agreement can help to reduce this risk

2. Relationships can deteriorate to the point where your business wants to exit the relationship 3. Unauthorized use of your intellectual property or disclosure of your commercially sensitive/confidential information 4. Changes in foreign currency exchange rates Managing overseas operations The first key decision you must make is whether to follow the Japanese model (use a homegrown person to head up an offshore operation) or employ a local manager who is familiar with local customs and business practices. In the latter case, the local manager can be supported by second-tier staff from the home country with the necessary technical or specialist expertise.

How to make it happen? Strategy needs proper execution. The management of an international network of manufacturing facilities involves a large number of closely integrated and inter-dependent projects. These projects need to be executed over a wide geographic spread, across very different time zones, involve large numbers of staff and are usually politically sensitive. Consider other factors such as: Raising capital Legal implications HR issues Internal communications Investor relations