China Plus One in Thailand: choosing the second base
HundredEast, an independent advisory firm in Bangkok, advises manufacturers adding a second source in Thailand, from business case to customer approval.
Where this usually starts
A second production location changes the investment case well beyond a comparison of factory costs. Tooling rights may restrict a transfer. Customer qualification can delay revenue while both sites incur costs. Additional inventory and duplicate capacity can absorb the savings used to justify the move.
HundredEast assesses the commercial and operating case for a second source or relocation, including capacity, transfer costs, working capital, and customer approval requirements. The site decision needs to account for total landed cost, the markets it will serve and whether the Thai site can obtain BOI promotion. Rules of origin can decide whether Thai production earns the tariff treatment the move depends on, so specialist trade advice comes in at the start of the assessment.
Execution depends on the sending site, receiving operation, and customer working to a plan they can deliver. HundredEast works with those teams on transfer sequencing, production readiness, and the issues that arise during the transition. The business case must cover the cost of reaching stable output and the consequences of delay.
What gets decided
- Which products and production volumes to dual-source or transfer, and which remain in China
- The second-site business case, including total landed cost and tariff treatment confirmed by trade specialists
- Transfer expenditure, duplicate operating costs and working capital required during the transition
- Customer qualification, audit and approval requirements before production moves or volumes increase
- Which components and suppliers to qualify locally, in what sequence, and which remain sourced from China
- Transfer sequencing, production-readiness criteria and contingency capacity to protect customer deliveries
One engagement
A customer was transferring production from China to Thailand, with design work handled by the Chinese team and the customer based in the United States. Thailand had no production for the program when the work started. On the Thai side of the contract manufacturer, HundredEast's founder directed the production transfer and new product introduction, with P&L responsibility for the account.
The difficulties extended beyond the manufacturing process. The Chinese and Thai teams had different working practices, compounded by language and cultural barriers. He had to work through those differences while managing the relationship between the two sites and the customer's expectations. Program management, supply chain, manufacturing, engineering, and quality all had a part in delivering the transfer.
The customer approved and signed off the transfer before, during, and after, and nothing went into production without that approval. The transfer was completed, and the account grew from zero to $222 million in annual revenue within two years. It moved from an initial loss into profit as production expanded. He was accountable for the commercial result while the teams worked through the transfer and the demands of increasing output.
How an engagement runs
- 01
A first conversation carries no fee and no obligation.
- 02
What follows is an independent review, a health check of the business case for the second source, scoped in working days against a fixed fee agreed before it starts, ending in a written report that carries the diagnosis and the proposal for a mandate.
- 03
Mandate fees are then structured around the number of entities, countries, sites and people the work has to cover.
Hourly rates are excluded.
Coordinated specialists
Legal and intellectual property, audit and tax, customs, data protection, product registration and executive search. Each is handled by a specialist you engage directly, so you see their fees and contract with the people carrying the professional liability.
Around the second site
Subsidiary Governance
Delegated authority and group reporting once the Thai site is running.
Turnaround & Restructuring
For owners and parent groups of loss-making businesses in Thailand and Asia, from the root cause of the losses to a recovery plan.
Board Advisory
Board and governance advice for listed, private equity-owned and international companies in Thailand, Asia and the West.
Deciding where the second site goes?
Most engagements start with somebody describing a situation that looks a lot like the one above.
References are available on request. Introductions can be arranged, in advance.