TSI Global Consulting

Building Capacity for Exporting and Manufacturing in Central America

Our Mission: A mid sized United States based ice cream manufacturer approached our firm seeking our assistance in developing an export strategy for the Costa Rican market. The company was looking to set up retail ice cream franchises in that central american nation.

They are currently operating franchises in Venezuela and are in the process of expansion into Peru and Ecuador. As with its other Latin American franchises, the plan was to export ready-made ice cream from its U.S. manufacturing facility to Costa Rican retail outlets. However, the firm's management faced a major trade barrier in the form of 100% tariff rates on imported dairy products. Our firm was retained to develop a market penetration strategy for Costa Rica.

Results: After conducting deep research, we recommended that this client develop a regional export strategy for Central America in a two-phased process. As Phase One, our recommendation involved keeping costs at a minimum by initially developing franchising and distribution in other regional Central American countries that apply a relatively low 15% tariff; namely Guatemala, Honduras, El Salvador and Nicaragua. Once volume sales developed in those countries, the strategy would shift towards developing franchises in Costa Rica. In this second phase of implementation the Costa Rican market would be penetrated by setting up a greenfield or joint venture manufacturing facility either in Costa Rica or in one of the surrounding central american nations where volume exports were already developed under phase one. Due to the existence of the Central American Common Market (CACM), products of Central American origin imported into Costa Rica would qualify for duty free treatment. In essence our strategy focused on entering Costa Rica by manufacturing "behind the tariff wall." Under phase two of the plan, local manufacturing capacity to replace exports could be justified by the already established regional export market that was developed under phase one by franchises in Guatemala, Honduras, El Salvador and Nicaragua. Once up and running, the local production plant could then be used to supply the Costa Rican market as well as all of the regional Central American franchises duty free, thus replacing exports from our client's U.S. manufacturing facility.

Developing an Asian Sourcing/Supply Chain for American Importers and Manufacturers

Our Mission : In the mid-1990s, a $50 million dollar New York based importer of unfinished woven cotton textiles approached our Jakarta-Indonesia office for assistance in developing new sources of supply for high volume imports. Sourcing high volumes out of Indonesia and Southeast Asian suppliers since the 1970s, this client had established a significant share of the US import market for greige fabrics used in the American apparel and home furnishing industries. However, by the mid-1990s the revolution in information technology, communications and transportation had turned this once highly profitable business into a fiercely competitive commodity trade. Most of the major Asian suppliers were limiting their export of raw materials, in favor of exporting higher value added dyed and finished textiles. The company sought our assistance in expanding their sourcing network by tapping into a little known middle market� of medium sized Indonesian and Southeast Asian mill suppliers who had, for over a decade, been exporting to European buyers, but had yet to penetrate the US market. Our client's strategy was to outmaneuver its New York based competitors by using TSI Global Consulting's on-the-ground local expertise to tap into this new, lower cost, middle market network of high volume raw material suppliers.

Our Research and Implementation Efforts: Over a period of several years TSI Global Consulting negotiated and developed high volume exports from fifteen medium sized textile mills located in Indonesia, India and the United Arab Emirates. Our on-the-ground presence in the region during the mid to late 1990s served as a unique source of competitive advantage for our client. Based half a world away in New York, our client was able to focus their efforts on developing domestic sales while we spent countless hours investing the necessary time and effort in upfront face-to-face meetings with the management of Asian mill suppliers in order to develop their supply chain.

Results: Between 1995 and 2000, this new sourcing/distribution chain designed and paved by TSI Global Consulting, fueled new exports to our client in excess of four million dollars per year. Cost and freight (CNF) export prices from our middle market suppliers averaged 15-20% below prices offered by the large, well established Jakarta based mills whom our client and their competitors had been sourcing from since the 1970s. This new sourcing network gave our client a significant cost advantage relative to its competitors who had no access to TSI Global's supply chain that had been built up over a period of years through investment in highly localized on-the-ground relationship building processes. Throughout the late 1990s, we replicated this model for several other American clients including a large South Carolina based home furnishings manufacturer.

Organizing distribution networks in Mexico in the consumer products industry.

Our Mission: Working on behalf of a well established Indiana based manufacturer of household cleaning supplies currently marketed across the United States in major retailers including Wal-Mart, Target, Home Depot, Ace Hardware and Lowes, TSI Global Consulting was contracted to arrange a week long customized trade mission to Mexico City and Monterrey, Mexico for the firm's senior management. Our client's objective was to explore and develop product distribution in Mexico.

Our Research and Implementation Efforts: Along with partner organizations in both Mexico City and Monterrey, TSI Global provided turnkey organization of five intensive days of business development meetings with senior managers in the buying offices of lead Mexican retailers and distribution companies including among others Wal Mart Mexico, Organizacion Soriana, Casa Saba, Total Home, Gigante, Carrefour Grandes and Grupo Corvi.

Results: While Mexican distribution is an ongoing work-in-progress for our client, TSI Global's path breaking customized trade mission has provided the company with a foothold in the Mexican market and several million dollars per year of potential new sales and distribution opportunities.

Other TSI Global Consulting Projects (in-country experience):

Vietnam: Foreign Direct Investment (FDI) feasibility study for Greenfield plant (textiles)
Indonesia (Sumatra) Foreign Direct Investment feasibility study (palm oil plantation)
Dominican Republic: product distribution (cotton textiles)
Bangladesh: product distribution and supply chain development (denim fabric)
Thailand: product distribution (textiles and apparel)
Japan: trade show turn-key management
Hong Kong: trade show turn-key management
India: Supply chain development (cotton textiles)
Indonesia: Export development seminars/consultative services
Indonesia: Anti-dumping Advisory Services
Indonesia: Negotiation of technology licensing agreements

To discuss how we can help your organization,
call us at
210-639-3093
or send us an e-mail info@tsiglobalconsulting.com

Address
11703 Huebner Road, Suite 106-489 San Antonio, Texas, United States of America 78230

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