Sherbourne Consulting

Case Study Establishing a WFOE in China — Aerospace

We incorporated a client's aircraft manufacturing business as a wholly foreign-owned enterprise (WFOE) and managed critical issues.

Photo of an aeroplane docked with a jet bridge in an airport's terminal

Sherbourne Consulting specialise in project management, focussed on all aspects of a company’s market entry into China.

Summary

Our client in aerospace was looking to develop a low-cost manufacturing and spares facility — to service the group and its clients in China and around the world.

  • Challenges included establishing locations where aviation-related industries would be encouraged, and where local government would be supportive of the client’s ambitions and structural business needs. As well as meeting the requirements of a number of businesses within the client group.
  • Our approach was based upon detailed project management — both with the UK head office, and locally on the ground in China. Designed to achieve establishment of the WFOE against agreed milestones and timelines.
  • The result was a successful establishment of the WFOE in a six-month timeframe, and a subsequent successful transition to manufacturing, following the initial period, as a spares support facility.
Photograph of Graham Barker, China consultant

For enquiries, please contact: Mr. Graham Barker
Market Entry Consultant
+44 (0)1789 731 803
LinkedIn | Email

Sherbourne Consulting has extensive experience in the Chinese market, with specialist consultants based in the UK and China. We have the insight and knowledge to get WFOEs and companies set-up and operating, while at the same time, we establish the right relationships with vendors and government officials in order to deliver a long-term sustained competitive advantage.

Please make an enquiry if you would like further information or to arrange an appointment for a more detailed discussion and tailor-made advice.


Our Client in Aerospace — US & Europe

The client — a global supplier of aircraft interiors with manufacturing bases in Europe and the US — recognised it was under increasing pressure to reduce costs, improve after-sales support in the Asia region, and increase profitability.

Photo of the interior of an airplane

They wanted to establish a lower-cost manufacturing operation in China to support all of the companies making up the clientʼs group.


The Challenge — Coordinating a Group

Specifically, the client wanted to address cost pressures, aviation quality requirements and a lack of coordination (and sometimes cooperation) between individual companies within the group.

The challenge was to establish a lower-cost manufacturing facility in China that would supply selected components to all of the group companies.

The client also wished to establish a spares supply and support operation for the Asia region.

TODO

“Business success in China depends on contacts and efficient networking; essentially building relationships. The best prices and deals often come from a strong recommendation.” Dave Roberts, Aerospace Consultant

Our Approach

Our consultants started by identifying all the cities in China where aviation was an encouraged industry. We also checked that there would be suitable skills and vendors.

Meeting Requirements for Manufacturing & Local Government

Once the locations were identified visits were organised and meetings arranged with local government officials, as well as the management of the potential zones. A preferred city was agreed upon, and the process taken forward with the Chinese authorities.

TODO

The clientʼs desire to co-locate trading and manufacturing activities inside the same zone involved additional arrangements with customs and zone management. We explored the limit of the current regulations, and clarified what exceptions (if any) could be made to accommodate our clientʼs needs.

The Chinese authorities agreed to allow our clientʼs company to set up a spares operation on the understanding that, within three months, work would commence on the larger manufacturing facility. When complete, the spares operation would transfer to this new facility.

Handling Legal Matters

Throughout the process of establishing the client as a WFOE, our consultants handled all aspects of legal and official paperwork, including meeting with local government and minimising the client workload.

TODO

This involved coordinating the work of the client’s UK law firm and local Chinese lawyers and resolving issues or misunderstandings about local policy.

All stages of the approval process were managed within agreed timescales and, six months after the first visit to China, the project was approved and the legal WFOE entity was established.

Setting Up the Facility

TODO

To have manufacturing up and running, our consultant also:

TODO

The latter included identification and selection of the business systems, development of operational procedures, establishing relationships with all local key bureaus, and transfer of knowledge from the parent companies to the Chinese subsidiary.


Results — WFOE “Takes Off” in China

The result was a fully operational spares organisation in a key aviation centre, with improved after sales support levels to clients in the region.

A business license was granted with the flexibility to allow expansion into manufacturing — located in the zone of the clientʼs choice. Processes were developed in conjunction with local authorities to allow the spares to operate as a stand-alone unit, until integrated into a larger manufacturing one.

“The consultants achieved everything we asked of them and we are already seeing the benefits.” — Client Divisional Director

TODO

The UK staff were fully trained on how to interact with the Chinese workforce, which was skilled up and supported by established, fully operational processes and business systems.

Major contracts in China for new product were won because of the ability to support locally — many Chinese airlines had started to insist that they would only ask companies with support activities in China to bid on new business.


Back to Top | Contact Us