Case Study

Case Study A : Evaluate China Operating Strategy

Company background
US$300 million, leading global manufacturer and marketer of air treatment products, for the residential, commercial and industrial markets. Headquartered in NJ, the company has production facilities in US, China, India and the Philippines. Its multiple brands are well distributed throughout North America through distributors and major specialty retailers.

Challenge
With increasing competition and eroding margins of its North American business, the Company embarked on a business transformation strategy to expand its manufacturing to lower cost countries such as China and India, and to setup distribution operations to capitalize on the significant growth of those economies. The Company has entered a series of JV over the years with limited success, due to the lack of control over the management of the local companies.

GCS Mandate
GCS was engaged to evaluate its China strategy with respect to its manufacturing and supply chain operations, as well as its distribution strategy. The evaluation included a review of the efficacy of its China sales and manufacturing operations, the systems of inventory management, product planning and forecasting, and logistics.

GCS Value Delivered
Detailed financial analyses and strategic assessments were conducted with the China operations of the Company. The Assessment Study indicated that its China and India operations were not effective as they were controlled by the local Manufacturing JV partners, in meeting their own objectives rather than those of the US parent company. A recommendation was made to close all JV operations, to consider building sourcing strategic alliances with leading Chinese manufacturers and to become their Marketing and Distribution partner in North America.

Case Study B: China Business Setup and Build China Factory

Company background
A US$100 million, US based world-class contract manufacturer and manufacturing services supplier of complex precision machined, fabricated and assembled components, serving the world's most prestigious original equipment manufacturers (OEMs).

Challenge
In order to satisfy their global customers? requirements, where they would work with only one supplier, rather than many, on a global scale, the Company decided to establish a China operation to service their global customers in China. Their established operating processes enable the Company to service customers across some of the most prominent industries in the world: Aerospace, Agriculture & Construction, Commercial, Industrial, Medical, Power Generation, and Truck & Automotive.

GCS Mandate
GCS received the mandate to establish a manufacturing plant, fully equipped and operational with the proper infrastructure and staffed with local management team. The mandate included obtaining all the necessary business licenses and operating permits, and a Wholly-Owned Foreign Enterprise (WOFE) license in China.

GCS Value Delivered
In close collaboration with the Company, GCS identified and recommended a site in the Shanghai area., and delivered the factory with all licenses and permits within the agreed budget. The budget was US S5 million.

Estimated Reduction in Product Manufacturing Costs - 35% LESS as compared to US, mostly due to the following savings:
" Labor rate reduction over 80% compared to US for both direct & indirect labor
" Building rental rate reduction over 60%

Case Study C: Market Research, Business Setup and Build China Factory

USS40 million, reputable premium manufacturer of snap fasteners and button closures for apparel industry in the US. Its products range from high fashion to infants wear, career apparel, to designer jeans wear, leather products and sporting goods. Many of the world famous brand apparel manufacturers are their customers.

Challenge
To remain globally competitive to serve their existing customers require them to shift production to China as many international famous brand apparel manufacturers have relocated their operations to China.

GCS Mandate
GCS to conduct a market research and to deliver a urn key? factory in China, including the factory building, acquisition and installation of equipment, identification of a management team, hiring of a labor force, and obtaining all business licenses and operating permits.

GCS Value Delivered
In close collaboration with the Company, GCS identified and recommended a site in Shenzhen, and delivered the factory with all licenses and permits three months early and within the agreed budget. The original agreement was signed in July 2003, and the factory was delivered on September 28, 2004. The budget was approximately US $4 million.
Estimated labor savings were 50% and all materials and operating costs were reduced by 30% as compared with their previous cost structure in the US.

Case Study D: Market Research and Partner Selection

Company background
The Company is one of the oldest and largest synthetic yam spinners in it:e United States. The Company operates 6 yarn plants, one weaving plant, and a dyeing and finishing plant Revenue declined to US$100 million from US$250 million over a 5 year period, operating with 1,200 employees.

Challenge
The significant business decline was a direct result of the shift of the manufacturing operations to Chind and Pakistan by the fabric and apparel companies. In addition, the lack of high and consistent quality suppliers in China reported by its former customers pushed the Company to explore opportunities to supply high end and quality products by producing in China.

GCS Mandate
GCS to develop a China Market Entey strategy which ccr.sists of 2 phases:
Phase one is a market research project detailing potential customers and suppliers, competitors and prices in China.
Phase two consists of additional research and due diligence on potential partners for the Company as identified in Phase One. GCS assisted the Company attendance as an exhibitor at a textile industry exposition in Shanghai, and set up numerous meetings with Chinese textile industry insiders who are interested in working together with the Company in China.

GCS Value Delivered
In close collaboration with the Client, GCS research team built up & joint venture potential partner scare sheet composed of selection criteria such as facilities, experiences, capital, government relations. After contacting more than 30 textile companies, GCS selected five candidates for final consideration by the Company.

Case Study E: Market Research and Feasibility Studies

Company background
US$50 million, food Company well known for its product quality and innovation. This Quebec, Canada based company has been consistently rewarded with product innovation and development honors in creating customized products for the major supermarket retailers in the US and Canada.

Challenge
With the growth of the economies and consumers purchasing power in Asia Pacific, the Company is aggressively exploring expansion opportunities in the Asia Pacific markets, particularly China and Japan.

GCS Mandate
GCS was engaged to conduct a market feasibility study for the Company product in China as a first phase of the Market Entry strategy for the Company. The Study addressed the strategic directions and formed the basis of a Business Plan for the Company to establish a business presence in China.

GCS Value Delivered
GCS completed a three month, four cities comprehensive study which entailed consumer research, distribution channel, supply chain, and competitor analyses. GCS introduced a number of potential customers, suppliers and business partners to the Company; assisted the Company attendance as an
exhibitor at a Food Trade Show in Shanghai with great success. GCS is currently in discussion with the Company to finalize the launch of Phase 2 of the program
which will consist of developing business proposals with targeted customers, suppliers and business partners. Assistance will also be provided to the Company to identify the strategic directions, negotiate with potential partners, articulating the opportunities and resource requirements in finalizing the China Business Plan.

Case Study F : China Sourcing Strategy

Company background
US$ 100 million, reputable furniture company well known for its infant and juvenile furniture product innovation and quality. This Quebec, Canada based company has production facilities in Canada, US and UK; employing close to 1,000 people. Its brand is well distributed throughout the world through distributors and major specialty retailers.

Challenge
With recent explosion of product imports from China, the Company has been facing tremendous pressure from customers to reduce its prices. As a result, the Company has been developing an import program over the past 3 years with parts and components initially, with the final product assembly at the Company main production plant to safeguard its design and technology, as well as to ensure the quality of its finished products meets the standards of the Company.

GCS Mandate
GCS was engaged to assist the Company to develop an Asian sourcing strategy with the proper structure of an organization to manage its supply chain and oversea all supplier activities. The Strategy will pinpoint the strategic directions of its sourcing activities and the future of its manufacturing operations worldwide.

GCS Value Delivered
GCS will assist the Company to form an Asian Sourcing office to coordinate and manage all activities between the Global Marketing Group, Corporate Procurement and all suppliers. The strategy development process would cover management of the entire supply chain, its material and parts suppliers, quality assurance and control processes, shipping and logistics plan, and import management program. In addition, GSC will research about the various import financing programs
both on-shore and off-shore to ensure that the Company acquires the most cost efficient product import program.