Companies should conduct a feasibility study before making the decision to build in China.
JACKSONVILLE, FLA. — With a population of 1.3 billion and a packaged food market valued at $226 billion, according to Euromonitor International, China has become a lucrative market for baking and snack manufacturers as its consumers continue to gravitate toward western-style cakes, cookies and pastries.
This opportunity for global growth has led many manufacturers to make plans haphazardly when building plants there without considering an array of factors that impact construction and site design.
|Enrico L. Chua, engineering manager, Stellar|
Baking and Snack: What costs should be considered before opening a plant in China?
Enrico L. Chua: Accounting for costs and time for creating a detailed feasibility study and conceptual design is a must before making a decision to open a plant in China.
Doing as much research and preparatory work as early as possible is definitely money that will be well spent as it creates a good starting point for any effort going forward.
When considering site locations, how should companies start the process and narrow their search?
Mr. Chua: I would always advise that, as early as possible, companies looking for a location should create and manage a set of site criteria that support what they want the plant to be.
A value scale can then be applied to these criteria in order to compare different sites and — most importantly — weed out any sites that should not even be considered at all. This can save companies a lot of time in their search for a site.
Working with a good real estate company and having design and engineering on board as early as possible can also be of extreme value. The real estate company can streamline the process of getting qualified sites, and the design and engineering aspect provides another level of vetting the technical aspects of any operation.
Specific site criteria should be established early in the planning process.
What factors do companies need to keep in mind when starting the process? Are there any particular regulations bakeries should be aware of?
Mr. Chua: Establishing a relationship with the different government entities that would be involved in a company’s project is always good to do from the start.
Regulations are mostly brought from the top-down in China, but interpretation and enforcement are more from a ground-up approach, which is why opening channels of communication early and often is always extremely helpful to ensure success of any undertaking.
This is very true when one strives to keep abreast of any regulations that would apply to a project. What is always certain is that these regulations may change at any time, and the way to manage it is to try to keep a constant pulse on the ones tasked with pushing out and enforcing these regulations.
Establishing relationships with contractors and government entities can help ensure a smooth build.
How does construction differ in China than in other parts of the world?
Mr. Chua: The availability and quality of building materials and equipment in China, as well as building methods, greatly differ with common materials and methods in other countries. To a large extent, this is because of China’s own unique history in construction as well as its legal, economic and socio-political norms.
There is a general tilt toward European methods in most cases, but sometimes what is permissible or possible to do there is simply a matter of what is prescribed by Chinese law, what is available locally or what local labor can perform.
At Stellar, we find that companies tend to transition better to local Chinese construction realities when their standards are performance-based rather than product- or method-specific.
How can businesses find contractors that align with their goals?
Mr. Chua: Putting together a good Request for Proposal (RFP) is an excellent way to vet potential contractors, not only with matters concerning qualifications and proper certifications but also in establishing common goals and objectives that the whole project team must agree to.
It is also important to interview potential contractors to get to know them on a deeper level and to establish a system where bids can be clarified or revised when needed.
Construction methods in China are sometimes different than those in other countries.
Why should bakeries select project management teams?
Mr. Chua: Choosing the right project management team or consultant to act as your agent and assist you on the ground and handle issues as they arise can be crucial to the success of your project.
You will need a project management team with the ability to guide, direct or manage people and resources toward your project’s goal.
In a complex project undertaking such as establishing a food plant, having the people with the proper experience and skills — with values and understanding attuned to your company’s visions and goals — matters.
It is also recommended that you have a team with a good mix of international and Chinese members who can help bridge the cultural gap and lend strength to one another.
What do companies typically overlook when designing a site in China?
Mr. Chua: China, through recent government efforts and legislation, has been putting more emphasis on improving the environment. Some companies may forget to factor this in, as this was not historically important before and awareness of these initiatives may not yet be widespread in certain sectors. A project’s impact on air and water quality must not be overlooked because this can impact the overall design and budget. The possible cost of soil remediation — be it in regard to its quality or composition — must also be taken into consideration.
Another cost that companies may overlook is the possibility that the company may actually need to house and feed its workers within the site. Space and cost for dormitories and an adequate kitchen and dining space are things that foreign companies tend not to consider in the beginning, as they most likely do not typically provide these back in their home countries.