What to Research when You Want to Open a Manufacturing Plant in another Country
1. Political context
It is important to assess the political context in the considered destination country. If the regime is a totalitarian one, in which the economy is enclosed, the involvement of the government within the market is increased and the presence of foreign businessmen is not welcomed, that that country will raise major difficulties to penetration. If on the other hand the political climate is characterized by democracies, open economies and the welcoming for foreign investors, than it is highly probable for the new plant to be welcomed.
2. The economic state
The economic background of the country is probably the most important one, as it will inform you of the country's status. In other words, is the income per capita here significantly lower than the income per capita in the United States? If the answer is yes, there is an increased opportunity to register cost efficiencies. If on the other hand the answer is no, then you will probably not be able to reduce your personnel expenditures.
3. Geographical characteristics
Another important aspect refers to the very positioning of the country. Its actual location will help estimate the costs with logistics (transportation and such) and the ease of accessing it. If for instance the country has a coast line, it will also be accessible through waterways; if on the other hand it is bordered at all sides by lands, it will only be accessible through air or land.
The second geographic characteristic is given by the actual neighbors of the country. Are they good neighbors or will they try to impede or gain from the fact that your commodities and final merchandise cross their territory? Additionally, what is the nature of the relationships between the countries? Is there a possibility for a war to break out?
The third geographic characteristic refers to the actual natural resources possessed by the country. Can these in any way support your manufacturing operations?
4. Demographics
You should also research the characteristics of the native born population. How many of them are unemployed and how many of them live below the poverty line? What is the life expectancy at birth and how many years do they spend in school? Also, what is the literacy rate?
5. Infrastructure and IT
Before making the final decision, it is imperative to assess whether the destination country possesses a satisfactory infrastructure. How many airports and heliports do they have? What is the state and quality of their roads and bridges? Relative to technology, it would be useful to identify how many people are able to use a computer and the internet, how many phone lines are currently instated in the country and so on.
