MANAGING THE EXTENDED SUPPLY CHAIN WHEN MANUFACTURING IN ASIA

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MANAGING THE EXTENDED SUPPLY CHAIN WHEN
MANUFACTURING IN ASIA

• Stephen Reid SSA Global2nd August 2006

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Manufacturing in Australia a glimpse of the
future

• Australian manufacturers are set to send 30,000
  jobs offshore in the next 12 months as global
  pressures intensify.
• A new survey of 800 manufacturers and 200
  corporate chiefs by the Australian Industry Group
  has found the amount of activity conducted by
  Australian businesses offshore is set to rise
  from 15 per cent to 25 per cent over the next
  year.
• The high exchange rate and the rise of China as
  an economic powerhouse are adding pressure to
  businesses already facing pain from falling
  prices and market share.
• They have to get cost out of their
  businesses..
• And part of that activity, not all of it, has
  to be actually engaging global supply chains.
• Heather Ridout Australian Industry Group 20th
  April 2006

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Breville..a short history

• 1932 Breville Radio founded
• 1940s Breville manufactured mine detectors
• 1950s Radio business sold focus turned to
  small appliances
• 1960s Introduced Braun, Pifco and Friedland
  brands...and
• .Breville Research and Development centre
  founded
• 1974 the Breville Snack'n'Sandwich Toaster was
  released
• 1980s Expanded range, Hong Kong office
  established
• 1990s Healthy, low fat cooking and café culture
• 2000 to today World leading innovations, new
  markets in North America

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Lessons learned.

• Manufacturing in China
• Understanding Chinas Free Trade Zones
• Logistics of getting goods to market
• Developing new Export Markets

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Manufacturing in China

• Australian companies smaller buyers
• Manufacturing is not necessarily at a single
  factory!
• Quality Assurance is crucial!
• Threat to IP!

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Understanding Chinas Free Trade Zones

• Many types of zones and bonded areas at the
  state, provincial, city, and district level.
• 7 major categories of National Level zones
• Economic and technological development zones
• Free-trade zones (FTZ)
• High-technology industrial development zones
• Border and economic cooperation zones
• Export-processing zones (EPZ)
• Tourist and holiday resort zones
• Taiwan investment zones

From Zoning In by Julie Walton - Business
Advisory Services associate at The US-China
Business Council in Washington, DC.
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Understanding Chinas Free Trade Zones

• Free Trade Zones (FTZ) and Export Processing
  Zones (EPZ) offer the incentives most attractive
  to a broad class of foreign investors.
• Free Trade Zones
• Generally allow only simple processing
• Various tax incentives
• Various customs incentives
• FTZs remain the only locations in which a foreign
  company may establish a wholly foreign-owned
  trading company

From Zoning In by Julie Walton - Business
Advisory Services associate at The US-China
Business Council in Washington, DC.
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Understanding Chinas Free Trade Zones

• Export Processing Zones
• Set up to promote exports and crack-down on the
  illegal sale of duty-free imports of raw
  materials.
• EPZs permit fewer types of business activities.
• Incentives to export processors that are not
  available in the FTZs or at a standalone, bonded
  facility.
• No VAT charges on public utilities.
• Only companies that export more than 70 percent
  of their output are eligible for income tax
  breaks
• All companies located in an EPZ qualify for
  trading rights

From Zoning In by Julie Walton - Business
Advisory Services associate at The US-China
Business Council in Washington, DC.
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Logistics - getting goods to market

• Customs Clearance both export and import
• Excess stock
• Lead times
• Shipping from many ports
• Shipping leverage
• Who will you work with?

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Developing new Export Markets

• Local support
• Local logistics partners
• Demand amplification doesnt necessarily work!

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MANAGING THE EXTENDED SUPPLY CHAIN WHEN
MANUFACTURING IN ASIA

• Stephen Reid SSA Global2nd August 2006