Factory Formation / Joint Venture Opportunities

When the value of goods purchased is large enough, setting up a dedicated factory in China may be a consideration. It is the preferred option when issues of quality, design security and brand control are paramount. However, the effort required to build and manage a factory from the ground up can be intimidating, especially for those businesses which are new to China. For companies that want greater control over the production process, but prefer to avoid the headaches associated with “going it alone” in China, PassageMaker offers two forms of cooperation:

1. Virtual Joint Venture in China:  Existing PassageMaker floor space, staff and equipment are dedicated solely to the production of the client’s given product. In this fashion, the client can leverage the existing PassageMaker business umbrella (space, staff, management, logistics, accounting). Compensation to PassageMaker depends on the scope of the factory formation project, but can take the form of a fixed monthly retainer and/or percentage of production value.
2. Joint Venture in China: In cases where the production space and staffing requirements are substantial, the client and PassageMaker may form a Joint Venture at a new facility. In simple terms, under a pre-agreed compensation structure

The client provides:

• The start up capital and production training (if outside of PassageMaker’s core competencies) 
• Technical Support (if production methods are outside of PassageMaker’s core competencies)
• Equipment/Material requirements
• A commitment to purchase a given # of units in a year

PassageMaker provides the following:

• Initial Feasibility Study
• Facility Identification & Analysis
• Ad Placements, Interviews and Hiring of Local Staff
• Equipment Procurement
• Construction/ Decoration Coordination
• Local Government Liaison
• Registration/ Tax Planning (working closely with local law firms to ensure legal entity is structured in an efficient manner)
• General Management of Daily Operations

Our Factory Formation experience includes Hardware (primarily metal stamping), Medical Devices, Auto Components (molded rubber) and Custom Moldings (injected plastics).

Security Concerns

General Management, Accounting, Logistics, Government Relations are directly handled by PassageMaker staff to ensure professionalism, accountability, transparency and security.

In cases where certain components to be assembled at the factory are sensitive in terms of supplier confidentiality, design control, pricing data and other Intellectual Property Rights (IPR) issues, Purchasing Engineers located at PassageMaker rather than the Joint Venture can assist with “Sourcing Feasibility Studies ” as well as on-going “Vendor Coordination”.

Conclusion

Many investors with Joint Venture’s in China, especially those with “local partners” complain of a lack of control/ transparency in their China operations. Our Joint Venture model was created with these concerns in mind and we welcome you to visit our profitable & well run operations in China. We also recommend you talk with the clients whom have Joint Ventures in China with us. 

References Available Upon Request