FIND OUT MORE ABOUT DEVELOPING BUSINESS IN THE PHILLIPINES
Dewhirst’s Investment Experience in Asia
- Indonesia $30m over 10 years 5,300 people
- Bangladesh $25m during 2010 6,350 people
- Cambodia $10m during 2011 2,000 people
Factors Dewhirst Considers When Evaluating Investment in a New Location
Deciding to Move
- Rising costs of manufacture in current location, not just in the short term but considering the underlying trends for the foreseeable future as well.
- Savings in new location have to outweigh the upheaval and capital costs over an acceptable time frame.
Criteria for Correct Location
- For a high volume, low tech segment requiring lots of people, cost of labour is a significant factor. A garment factory needs to be close to a strong source of local population where there is relatively little competition for labour and the cost of living is affordable.
- Proximity to raw materials is essential to build an agile and efficient supply chain which allows response to seasonality/fashion trends.
- Accessibility to road/rail/ports for incoming raw materials and outgoing finished goods.
- Consistent and affordable power supply.
- Tax regimes which make allowances for the high set up costs of a new investment at the outset.
- Current and forecast duty free access into target markets. Traditionally buyers favour manufacturing lowest value goods in duty-free locations, but this misses out on maximising the benefit of the 10%/12% duty saving. 10% of £40 is worth more than 10% of £15!
Constructing the Deal/Escape Routes
- Selecting a local partner for JV has been a good way for us to learn about local laws and mitigate risk.
- Agreeing in advance the phasing of the payments from say an initial 30% up to 100% over a time scale with escape clauses is a good way to reduce upfront costs and reduce the risks of operating in unfamiliar territory.
- How can you get out if you need to? The investment does not need to be in hard cash at the start, it can be in the value of the equipment and machinery which gives the flexibility to remove assets if ultimately it does not work out.