Evaluate the proposal of expanding to China and consider the

options available for the move – joint venture or setting up

own factory.

Joint Venture Setting up own factory

• Pros :
i. Cheaper
ii. Takes lesser time to be
operational (6month)
iii. Doesn’t need to find a
new customer
iv. Risk sharing
• Cons :
i. Profit sharing ( sharing
ratio of 70 : 30)
ii. Higher risk of dispute
(clash of culture)
• Pros:
i. Long-term profit
ii. Independent
• Cons:
i. Higher cost
ii. Takes longer time to set up
(Estimated time to complete
construction is within 18
months)
 Option of continue or shut down of Malaysia/Thailand operations.

• Option 1 – Close all operation in both Malaysia and Thailand

-should consider:
i. Cost of pulling down company
- costly around RM4.3m

ii. Compensation for dismissal employees

-redundancy payments around RM3 million at minimum
 Option of continue or shut down of Malaysia/Thailand
operations.

• Option 2 – Close two factories

i. Sell Penang & Butterworth – can fetch reasonable profit

ii. Sell Jitra & Chieng Mai – had very low resale value

- Cost of shutting down both Jitra & Chieng Mai factories are
1.2million.
 Should HCF consider starting its own label ?

• Should consider :
i. The cost for setup up the label is RM32.1 million ( fixed
costs and advertising cost)

ii. The probability of producing own label is small about

70% while the successful is only 30%.
-When HCF Bhd getting more stable and start making profit,
R&D for own label should begin.