James Dyson offers some pointers on how to manage a successful offshore manufacturing operation.

Manufacturing goes beyond making things in a factory. For us, assembly comes at the very end of a long period of research, design and development.

The moment when finished goods roll off the production line is the culmination of years of hard work — of concepts, hundreds of prototypes and testing, as well as the odd bout of heated debate.

In 2002 we were presented with a difficult decision. We were unable to get permission to extend our Malmesbury factory, and increasingly our suppliers were based in the far east. And so we were forced to move production to Malaysia. It was a hard choice — and not one we took lightly — but it was the right one.

The answer to rapidly expanding Asian Tiger economies is not to give up on manufacturing and retreat into a service-industry shell. Nine out of the 10 largest companies in the world are in heavy industry. To survive we have to be smarter than our competitors. We need better technology and better engineering. This means investing in research and development.

The same number of people work at Malmesbury as before the move. But now more are in highly skilled jobs in our Research, Design and Development centre. Relocating has allowed us to stay competitive while doing what we do best — designing and engineering new technology. If Malaysia is the manufacturing brawn, Malmesbury is the brain.

And it works. Before 2002, less than a third of our sales were made overseas. Now 75 per cent come from outside the UK. We've doubled the amount of vacuum cleaners we make each year.

When moving to Malaysia it was vital to know the territory. We familiarised ourselves with the Malaysian government and how it worked.

Malaysia was perfect; English was widespread and it had an established and reliable manufacturing base upon which to build.

Setting up was extremely difficult given the large amount of tools and equipment that had to be shipped. Our machines are built for quality and reliability. We had to work with people that understood the importance of quality in manufacturing.

Maintaining high standards is essential. Our factories are bright, air conditioned and clean, while our people work sensible hours and are paid above average for the area.

One of the biggest global challenges is communication. When Dyson started in 1993 we only sold machines in the UK. Now we operate in 44 countries, from Canada to New Zealand.

Although we use BlackBerrys, email and video conferencing none of these are a replacement for face-to-face discussion. Many of our Malmesbury-based engineers now spend a few months of the year in Malaysia or China to oversee the last steps of the manufacturing process. It's important that decisions aren't made in a distant ivory tower.

The results of the move speak for themselves. Since 2002, we've not only launched in the US but also become the market leader there. Our engineers have also developed the small, powerful DC12 for the Japanese market. We're number one in Tokyo, practically unheard of for a western electronics company. Put simply, despite the difficulty of the decision, Dyson couldn't have achieved such expansion without relocating.

However, it is important to remember that our move would have been for nothing if we hadn't used it as an opportunity to invest heavily in R&D at home. The biggest challenge UK industry faces is the battleground of ideas. China is now entering the complex fray that is intellectual property. It is vital that the UK's efforts should be focused on developing the technology and patents that will give us the intellectual advantage.

There is a problem though. There just aren't enough engineers in the UK to fill the positions available. We have 450 engineers and scientists in the UK and we're recruiting 150 more, but they're increasingly hard to find.

That is one reason we're planning the Dyson School of Design Innovation, due to open in Bath in September 2009. This will offer young people practical courses in design and engineering, and hopefully help encourage more to take up this exciting and essential career.

Sir James Dyson is chairman of Dyson. www.dyson.co.uk