Planning Projects for Investments in Asia - this is how it's done with Sanet

Companies are not planning Foreign Direct Investments (FDI) every year, and the best "Blueprints" cannot be adopted for a new project without risk. Thorough organizational planning for a project is crucial to the game not only for the smooth running of the project.

A lack of preparedness inevitably leads to costly, follow-up adjustments, delays in the Start of Production (SoP) and finally the Return of Investment. For about 20 years, the Sanet Group in Bangkok with its founder Dr. Gunter Denk has been assisting Investors, often from the very first planning stages up to the "Grand Opening" and SoP.".

In practice, it has proven time and again that Management must pay full attention to the following strategic planning principles:

• Communicating the project to all the stakeholders.
• Careful composition of the project team
• Setting clear project and reporting guidelines
• Consider the involvement and selection of external facilitation.

For each of these key project planning criteria, there are a set of measures considered as an integral part of the risk management and success planning process.

Any space is filled with information. If you do not input information by yourself, the space fills with rumors!

Therefore, an early developed communication strategy is mandatory. Indeed, when a company moves abroad, it may not cause a "storm of enthusiasm" among everyone concerned. Employees may fear the loss of their jobs. Suppliers may be afraid of losing a customer completely or partially. Banks are concerned that they might be financing the investment abroad directly or indirectly with no access to buildings or machinery as security. Finally, customers may worry that quality or lead times will suffer if production is relocated abroad.

It is therefore essential to develop honest and transparent communication policies for each of these stakeholders. This is about showing empathy for the situation of the partners and not about trying to push their concerns aside by announcing "blooming landscapes for all".

So be proactive in addressing their concerns and be specific about whether and how you will consider and address these risks to your stakeholders!

If managers fail to diligently take this step even well before the project kicks off, you can almost certainly expect two results:

• Where you fail to inform, others fill the room with rumors. Dealing with those is certainly harder than having well-prepared communication.

• During the project implementation, your shortcomings will fall flat on your face. Stakeholders will keep throwing their concerns in your way as roadblocks because they don't feel included openly and fairly from the start.

• Consequently: no kick-off meeting without prior open communication!

Never include Heads of Department in your project team!

The composition of the Project Team is probably one of the key management considerations.
While it might seem obvious to appoint the Heads of all the Departments concerned to the Project Team, this is actually a misconception. Moreover, it is a clear mistake.

Heads of Department love to see their department at the foreign subsidiary mirrored in the way they have implemented it at the parent company. All the systems should be transferred 1:1. They calculate that in this way, they will retain a high degree of control, and there will be no one to challenge their leadership, and smooth operation seems to be guaranteed.

But far from it. Only reluctantly, the middle management might acknowledge what is guaranteed to happen in this way:

- Not only the good, but also the dearly held wrongs of the home organization will be carried over 1:1 to the new facility!

- Accustomed working, cultural and technical practices will be transferred to an operational unit in a distant country, which will not suit this new location.

In the worst case, hot showers might be designed and built in the sanitary rooms and fully insulated walls for the new factory building near the equator. It may, this way, be completely ignored that employees in Thailand or Vietnam may have other priorities than taking hot showers at 30° outside in the shade. Or, or that sayings like "what keeps you warm keeps you cold" might be also correct in the tropics, but in fact the insulation of the building makes it so heavy that foundation and construction quickly multiply the building costs.

In these regions, good air circulation is simply more important than insulated exterior walls. Yet, the building contractors are happy about it, because they earn more money.

Believe it or not, those were some true real-world examples that would have become a fact without decisively conducted counseling.

- Almost more crucial is the self-perception of the Project Team. It is precisely not its job to ensure that all departments in the parent company are exactly reflected in the new production facility.

The project team should rather regard itself in the role of "service provider" for the new subsidiary and should do everything to ensure that it can operate independently, in line with the country's requirements and thus be successful in its business. It must not be a question as to which degree a Head of Department at the parent company who has the greatest success in in coining or dominating the new production facility.

- The golden rule when appointing the project team is therefore to assign a highly motivated second-row employee from every resort into the project team.

This ensures that the team is strongly engaged, considers the project as its own and will do its utmost to make it a success. In the best-case scenario, one or the other team member enjoys the project so much that they are eager to join the management team of the new plant afterwards.

This would be the ideal scene when it comes to gaining both strong ties to the parent company and loyal management abroad.

Foreign investments are a management matters!

Because the manager usually has more management responsibilities, he or she does not belong on the operational project team. As the boss, however, he must set the rules for the team. This is done in a kick-off meeting led by the manager himself.

• First of all, he appoints the Project Manager. The project manager is exclusively available for the project, reports directly to the boss or the Board of Directors and enjoys the full trust of the manager, which should be evident to everyone.

• Furthermore, the boss sets the reporting rules. The members of the project team report exclusively to the team and/or the Project Manager. The project manager, in turn, reports to the boss or a Board Member.

Under no circumstances should the members of the project team report to their supervisors. Otherwise, there is a high risk that special interests of the department heads as mentioned above will be carried back into the project team through the back door.

Very likely. the management would then also be inundated with "preventive warnings" from all the "people with concerns".

• The manager then discusses and determines the budget for the Project Team (not to be confused with the budget for the investment). The guidelines for business trips, expenses, and third-party expenditures should also be defined at this time.

• Finally, the management defines the reporting cycles, milestones and exit points. The project manager, of course, should always find an open door with the management if he or she needs to ask for the decision or even for the opinion regarding important project steps.

Milestones have to be defined where a decision has to be made about continuation, adaptation or exit of the project. These include, for example, ascertaining the legal feasibility, the decision on the location, the approval or rejection of government incentives, or the results of the construction bidding process.

Setting these parameters avoids conflicts during the project process and ensures that management is kept constantly informed about the state of play of the project.

Even experienced captains get the pilot on board when they enter uncharted waters!

Refraining from using external assistance is not a sign of self-confidence, but rather of an affinity for high-risk situations.

Of course, choosing an external consultant is a matter for the Manager. The advisor with a competent local team (!) is the time-limited "right hand" of the management on site in the country of investment.

The chemistry between the Company Manager and the Consultant must be excellent. Otherwise one should save the money.

No reasonably advising expert on site will pretend to know more about your business and production than you do as a manager. So no competent consultant will interfere with the goals or processes of your investment process, but should understand them very well and include them in his advice. After all, no two consulting projects are the same. The sound consultant will always learn along the way to understand the client's objectives.

But certainly the external consultant should have a better knowledge than the project team of how to implement these objectives in the specific investment country legally, culturally, and in practical day-to-day business.

- In any case, he must be residing in the country, have an understanding of business and negotiation culture there, and have the best possible network in the business world.

In this respect, it is not networking with chambers or with the German community that counts, but rather familiarity with the local industry and its decision-makers. Those "Experts" who rush from networking events to official "Sundowners" with a driver and their "Package" granted by the German government organization to pay for their prime residential and business area are seldom of greater help in this respect.

Retired presidents or heads of large companies are also of limited help for this task. Of course, they often give valuable tips and arrange good contacts here and there. In most cases, however, there is a lack of existing structures, employees and cross-industry experience.

Finally, you have to seek out experts or consultants,

- who have a clear praxis-oriented mindset and experience background,

- who possess long-standing active experience in project support for European businesses and their investments, and

- who have strong local support teams that understand how to deal with subordinate government officials and service providers.

Be aware that there are no simple "Blueprints" for the shoals and pitfalls of foreign investment. They are different in every country. The Sanet Group in Bangkok, for example, looks at 87 criteria alone when it comes to finding the right investment location and property. Therefore, refrain from certain consultants often to be met with large consulting firms who have never seen or even managed a company from inside.

At the end, you don't want to rely on guys who "know the entire Kama Sutra by heart, but never got to meet a girl".

The cost of a full-service consultancy should be estimated at around 5% of the investment sum for projects of USD 5 million or more.

The service usually includes company formation, investment promotion, feasibility studies, site and land selection, assisting in land acquisition negotiations, organizing construction bidding, pre-selection of service providers, recruiting of core personnel up to the "Grand Opening".
Sanet offers a free initial consultation via its website, which gives you an idea of who you are dealing with.

Mag. Fabian Sonntagbauer
2/1 Rom Klao 25/2
Bangkok 10520
Thailand
comlaw@sanet-legal.com
Tel. +66 2 73 76420

SANET ASEAN ADVISORS is a German-Austrian-Thai managed consulting group, which has been advising and assisting companies foreign investors in Thailand and the ASEAN countries in their activities since 2004. In its core business, Sanet advises its clients on direct investment and market entry through strategy consulting, feasibility studies and full-service project responsibility.

With Sanet Legal Ltd., the group has a law firm with a focus on legal issues related to company formation, investment promotion, corporate law, labor law and immigration law. As a trading company, Sanet Trade & Services looks after the trading activities of Western companies and offers various market entry concepts.

CREATING CAREERS finally is the human resources agency of the Sanet Group, focusing on intercultural recruiting of executives, middle management and sales staff of international companies.

This release was published on openPR.