An industrial set-up in South-East Asia does not start with a plot of land or a construction quote. It starts with the product, the flows and the way you manufacture. Subcontract, assemble or produce: the right choice is made before the walls are drawn, and early mistakes are paid for long after start-up.
When a European business owner considers producing in Asia, the question often comes too late: "What are we actually going to do in this plant?" People are already talking about land, floor space and machines, while the industrial model has not been defined.
You have to start with the product. An agricultural machine, a piece of fabricated equipment or a welded assembly does not just break down into parts: it breaks down into operations, skills, materials, inspections and logistics flows. Some parts can be made locally. Others will be better imported, particularly when they are very specific, already amortised in Europe or tied to know-how that is hard to reproduce immediately. The issue is to determine what has to come into the country, what has to be bought locally and what has to be processed on site.
That is the real make or buy decision. You have to compare the total cost, not just the hourly rate: material, transport, customs, inspection, stock, lead times, scrap, rework, tied-up cash and the risk of a shortage. A part that is cheaper to buy can become more expensive when it forces three extra weeks of stock or an urgent shipment.
Three models are then possible: subcontract part of the manufacturing, assemble imported components locally, or gradually produce the whole thing. The right choice depends on the product, the volume, the level of control you want and your ability to secure suppliers. A successful set-up is not necessarily the one that makes the most things: it is the one that makes them in the right place.
The choice of country then has to be linked to the production model. In Thailand, the Eastern Seaboard, around Chonburi and Rayong, is a particularly interesting environment for industrial projects needing access to ports, suppliers and infrastructure. Being close to Laem Chabang simplifies imports of materials and components, but also re-exports. In an industrial project, a few hours of transport saved on every delivery ends up making a significant difference over a year.
You also have to look at the pool of subcontractors available around the site. For metalwork, machining, electrical or automation activities, the question is not simply "are there suppliers?". You need to know whether they can produce the parts to the expected quality level, in the necessary volumes, with sufficient inspection capability and consistency. The choice of industrial estate is therefore made according to flows, available skills, infrastructure, room to expand and customs constraints. A cheaper plot, far from the suppliers and the port, can cost far more to operate.
Setting up an industrial operation is not just about creating a company and renting a building. You have to determine the right legal structure, the investment conditions, the permits required and the regime applying to imports and exports. Investment promotion schemes can be relevant depending on the nature of the project, the activities planned and the markets targeted. Industrial estates and certain customs regimes can also significantly change the economics of the project, particularly when some components are imported and then re-exported as a finished product.
These subjects have to be dealt with before the industrial model is fixed. The rules of origin applying to re-exports to Europe, the documents required, the duty regimes and the traceability obligations can all influence how you manufacture: an operation carried out locally does not automatically mean the product acquires the origin you want. The right reflex is to make the industrial, logistics, legal and customs functions work together. A decision taken on manufacturing cost alone can be overturned by import costs or by a re-export constraint.
Choosing suppliers is one of the most sensitive points of a new plant. A subcontractor can have an immaculate website, photos of modern equipment and an impressive list of capabilities. That is not enough to guarantee it can make your part.
Qualification has to happen in its workshop. You have to look at the machines actually available, the state of the equipment, how the work is organised, how materials are managed, the inspection means, the traceability and the way the operators work. You also have to understand who really carries out the operations claimed: the company itself, or another subcontractor.
You qualify a subcontractor in its workshop, not on its website.
The first part is an essential test. It shows whether the drawing has been understood, whether tolerances can be held, the quality of the welds, the finish, the inspection and the consistency of the process. But qualification does not stop at that first delivery: a supplier can succeed with a prototype and run into difficulty as soon as volumes increase. Quality control continues delivery after delivery, with clear criteria and the ability to deal with deviations quickly. The aim is not to inspect every part for ever: it is to build, step by step, a system of trust based on results.
The building must be the consequence of the industrial process, not its starting point. For metal fabrication, you have to think through the cutting, bending, welding, painting and assembly flows before deciding how much floor space you need. Material has to come in, be processed, inspected, stored if necessary, then leave without unnecessary crossings.
A badly placed welding station creates constant walking. A paint area too far from assembly multiplies handling. Badly sized storage blocks circulation. Insufficient access for lorries complicates deliveries. A building that is too low or too narrow prevents the installation of equipment that was planned from the outset.
A badly placed square metre is paid for every day for twenty years.
The cost is not just that of the construction: it is that of walking, handling, stock, waiting time and successive adaptations. You also have to allow for possible extensions. A plant that works well quickly needs a new line, extra storage or a larger assembly area. Designing a building without thinking about how it will grow often means paying twice.
The choice of machines must not be driven by purchase price alone. It has to be linked to volume, the variety of products, the precision expected and the skills available. A new machine makes sense for a critical or highly automated operation. A second-hand machine can suit simpler operations, provided you check its condition, parts availability, maintenance and compatibility with the rest of the line.
You also have to weigh imported equipment against local equipment. Some will be easier to maintain with a local supplier, others will need technical support from Europe. The real cost includes transport, installation, commissioning, training, spare parts and any downtime. Maintenance is often underestimated: a machine standing idle for want of a part or a competent technician costs far more than the saving made at purchase. So the critical parts, consumables, maintenance procedures and necessary skills have to be planned from the start.
A plant does not run because the machines are installed. It runs because teams know how to use them, set them up, maintain them and solve problems. Recruitment therefore has to start early enough: identifying the skills available locally, the positions needing specific training and those where European support will be needed. Operators, technicians, production managers and quality functions must be brought into the project before start-up.
Training is not just about explaining how to use a machine. It passes on manufacturing standards, inspection methods, safety, maintenance and the logic of the flow. You also have to take account of management differences: how an instruction is given, how a problem is reported, how initiative is taken or a decision challenged. In the first few years, having an expatriate site manager is often decisive. His role is not to do everything in the teams' place, but to build the methods, train the local managers and gradually hand over control of the plant.
Realistic timescales cover the whole project: choice of industrial model, supplier qualification, setting up the company, permits, building design, construction, equipment orders, transport, installation, recruitment, training and testing. The classic mistakes are well known: copying the European plant without allowing for local flows, underestimating logistics, neglecting maintenance, forgetting spare parts, recruiting too late, or assuming that the first part produced means the plant is operational.
Start-up is organised as a ramp-up: receipt of the equipment, checking it conforms, dry runs, trials with material, first part, quality control, corrections, then a gradual increase in volumes. Each stage is validated before moving on to the next.
That is also why a single contact should be able to follow the project from the first drawing to the first part. When the building, the machines, the suppliers and the teams are managed separately, problems simply move from one party to another. When someone keeps the overall view, the decisions stay consistent.
A successful industrial set-up in South-East Asia is not about reproducing a European plant more cheaply. It is about building a production facility suited to its product, its flows, its suppliers and its teams. That is the approach Atare applies in supporting industrial projects, from the study of the production model to the start-up of the site. Build and set up your plant → · Atare in Thailand →
An industrial manufacturer does not build growth by stacking up dealers: it builds a brand those dealers have an interest in defending. And when it also supplies its direct competitors, a separate product brand becomes a genuine business development tool.
A company owner knows the business so well that he no longer sees what a new customer discovers in a few minutes. A useful audit follows exactly that journey: search for the company, look at what it shows, compare its competitors and try to contact it like a genuine prospect.
An industrial set-up in South-East Asia does not start with a plot of land or a construction quote. It starts with the product, the flows and the way you manufacture. Subcontract, assemble or produce: the right choice is made before the walls are drawn, and early mistakes are paid for long after start-up.
Let's talk about it directly. Reply within 48 hours, in France, in Asia and worldwide.