Managing Director Michael Weikert (SGF):
“We are moving closer to our existing and future customer base with our new plant in Thailand!”
The Upper Bavarian specialist manufacturer of vibration components Süddeutsche Gelenkscheibenfabrik GmbH & Co. KG (SGF) is settling into their new home in the automobile hub of Southeast Asia with their own newly established production site.
Michael Weikert, the Managing Director of SGF, took time for an interview with Sanet to discuss their business goals as well as SGF’s foreign investment project.
Sanet: Mr. Weikert, the launch date for SGF’s new production plant is getting close. What inspired this internationalization via a move to Asia despite just having established a state-of-the-art factory in Germany in 2016?
Michael Weikert: As a mid-sized market leader, we need to be setting our sights on the international market so that we can have the positioning to serve all geographically significant markets. Our customers are already predominately located in Asia, so we are hoping to establish an even better relationship with this preexisting customer base. Furthermore, our production activity in Asia is most certainly going to create new potential customers in the region, since it will be saying to both current and future customers: “Hey, we’re here!”
Sanet: Were you set on Thailand from the very beginning as your location site or were there other options?
Michael Weikert: Aside from Thailand, we also considered producing in China. We also were interested in Vietnam both because of costs as well as in terms of mentality. In the 80s there were even training programs ran in cooperation with German companies, which was another reason we were leaning towards Vietnam.
Sanet: So what was it that made you choose Thailand in the end?
Michael Weikert: Compared to China, a production site in Southeast Asia allows us to supply Japan and Korea duty-free thanks to free trade agreements with ASEAN. In the end it was Sanet’s feasibility study for a production site in all three countries which led us to decide on Thailand. Not only the well-developed automobile industry in Thailand but also the additional legal security and state investment incentives as well as the possibility to acquire land were all influential factors. The warmth of the culture itself also played a role.
„It was Sanet’s feasibility study for a production site in all three countries which led us to decide on Thailand.”
Sanet: How did you go about communicating your plans to the company and inform them of the decision?
Michael Weikert: It was important to us to be transparent about our plans to not just our shareholders but also our staff from the very beginning. We are trying to compete at the international level. If we had decided not to produce outside of Germany, then we would get passed over on future bids or we’d just be unable to compete. Deciding not to internationalize would have meant losses for SGF in the end. So really, by producing in Asia we are protecting our parent plant in Upper Bavaria. Our staff understands this.
Sanet: You mentioned investment incentives as one of the reasons for moving to Thailand. Is funding easily obtained through the Thai Board of Investment?
Michael Weikert: In theory, yes, but in reality, it is relatively difficult without professional assistance. The application process is pretty complicated overall despite the binding regulations in place. There are a lot of parameters to consider. We realized rather quickly that, without professional support both in terms of consulting as well as from the legal side of things, we were in for quite a hassle.
The new plant in Thailand enables SGF to export duty-free to existing and future customer bases in Southeast Asia, China, Japan and South Korea
Sanet: How did you tackle the large-scale project of setting up a production site in Asia as a mid-sized company? MSEs do not have the entire teams at their disposal to handle the planning and implementation of such a project like international corporations do. And everyone knows how difficult it can be to find the right advisors.
Michael Weikert: That is correct. Setting up production in Asia is indeed a major project for an MSE like SGF. We knew from the beginning that we would not be able to pull off the move to Asia without the help of professionals. We needed a reliable partner on site who really knew their stuff both in terms of the local laws as well as the customs. Since trust needs to be the basis of such a cooperative endeavor, it was important for us to see whether we had chemistry with each potential partner by meeting for a face-to-face interview.
Sanet: From start to finish the entire project only took about 24 months. What were the most important internal factors which ensured such efficient, successful implementation?
Michael Weikert: The fact that we had a realistic project plan, especially in terms of the time schedule, was important. The strategy workshop we did with Sanet was instrumental in this. During the workshop, we set concrete intermediate goals within the schedule. The decision to make a single project leader responsible for both internal and external communication was also crucial to the project’s swift success, as it helped avoid misinformation and other setbacks. A further factor in our success was that we were always able to rely on the recommendations of our project pilot, Sanet, though of course SGF always had the final say.
“Without Sanet’s extensive network, including government officials, suppliers, banks and industrial parks, our investment project would certainly not have run as smoothly as it has.”
Sanet: What did you view as one of the biggest challenges?
Michael Weikert: One really does underestimate how much paperwork there can be. Even if much of the communication is in English, there are still lots of bureaucratic matters which are conducted in the local language. You have to rely on someone else’s explanation to understand the contents of documents which need your signature. As already mentioned, this is why it is important to have a local partner you can trust. It would have been impossible without someone to trust and depend on.
Sanet: You chose the Sanet ASEAN ADVISORS to guide your project locally. Would you retrospectively say that you made the right decision? Perhaps you can talk about three specifics from the past cooperation?
Michael Weikert: I think the rapid implementation of our foreign investment speaks for itself. One thing to highlight is the wealth of experience possessed by Sanet with its more than 20 years’ experience in the ASEAN region. It was important for us to be able to get a realistic idea of how the process would unfold. The second thing was Sanet’s commitment and high reliability in terms of both arrangements as well as the division of labor. We could always rely on Sanet’s flexibility whenever unexpected situations arose. The third point to mention is how extensive Sanet’s network is, which includes government officials, suppliers, banks, and industry parks. Our project would definitely not have run as smoothly without these connections.