With the conclusion of the U.S. presidential election and the potential return of Donald Trump to office, we anticipate a significant increase in U.S. import tariffs in the coming year. This expected shift in trade policy has made the establishment of overseas production facilities a critical priority for our company. In light of these developments, we are accelerating efforts to secure a robust supply chain and ensure that we continue to provide high-quality products at competitive prices.
Exploring Opportunities in Thailand
In October, we began exploring options for establishing a production facility in Thailand, a country with a favorable manufacturing environment and excellent logistics capabilities. After thorough research and site assessments, we are excited to announce that we will proceed with building a factory in Thailand. This move aligns with our strategy to diversify production sources and strengthen our position in the global market.
Strategic Investment and Partnership
To expedite the establishment of our factory, we have made a direct investment in D&R Home Innovation Co., Ltd., a bamboo and wooden furniture factory founded by Chinese entrepreneurs in Thailand. With the support of the Chinese government, we have acquired a 45% equity stake in this company, which enables us to leverage local expertise and resources to accelerate our production capabilities.
The factory spans 18 acres, with a current workshop of 6,000 square meters and an additional 2,000 square meters under construction. Located in Bangkok, the facility is just 50 kilometers from the Laem Chabang Port, offering convenient access to key transportation routes. The factory’s production capacity is focused on cabinet-related items, with the flexibility to meet third-party audit requirements from major retailers such as COSTCO and WALMART.
Expanding Capabilities for Future Growth
As part of our long-term growth plan, we have agreed with our partner to add a metal home products production line. This new line will complement the existing bamboo and wooden equipment, and the necessary metalworking equipment will be funded by our side. Our factory will produce a diverse range of products, including bamboo and wood home goods, MDF products, and metal products. This strategic expansion will allow us to meet evolving customer demands while maintaining flexibility in our supply chain.
Evaluating Future Investment and Expansion
The factory will begin production as early as January 2025, with a final start date scheduled for March 2025. We will continue to evaluate the factory’s performance and expansion potential based on actual production requirements. One of the key advantages of this expansion is that it allows us to respond effectively to changes in U.S. trade policy. If the U.S. imposes additional tariffs, the overall cost of exporting from Thailand will be lower than from China, ensuring that we remain competitive in the market. Conversely, if tariffs do not increase, exporting from China will remain a viable and cost-effective option.
Conclusion
This investment in Thailand is an important step in our ongoing efforts to adapt to market changes and ensure the sustainability of our global operations. By diversifying our production capabilities and strategically investing in new facilities, we are positioning ourselves for continued success in the ever-changing global market. We are committed to providing our customers with high-quality products and reliable service, no matter what the future holds.
Post time: Dec-10-2024
