Inward Investment
While some trade representatives focus on promoting trade, others, particularly in smaller embassies, also have responsibility to attract investment in the home country. They mainly focus on foreign direct investment, which usually involves an investor establishing foreign business operations or acquiring a controlling interest in a foreign company.
Martin’s Accurate, Early Information Saves Jobs
Martin had struck up an informal conversation with the CEO of a major local company that had invested in a greenfields project in Martin’s home country. The investor was thinking very seriously about shifting to another country to benefit from economies of scale. Hundreds of jobs in his home country could be lost as a result.
Martin quickly did some research on the current context for the investor company and the global trends for the sector, to understand what was driving the decision to consolidate operations. He then checked out the fiscal support and special FDI sweeteners being offered by both his country and the competing location. They looked fairly similar. Something else was playing into the decision.
His next step was to contact colleagues back home. They established that the company team there had not been fully consulted or able to contribute new information. Within a couple of days, Martin and his colleagues pulled together a report setting out the competitive advantages of their country, including a recent government commitment to invest in much-needed skills.
Being able to tap into these networks abroad, coupled with the prompt response of his teammates at home, brought even better results than expected. His country was chosen as the preferred location for consolidation. Two hundred jobs were saved, and a hundred new ones created.
Key Points
Some trade representatives have a dual role to promote trade and investment, primarily foreign direct investment.
Be proactive to attract investment. Generate leads through investment seminars, road shows, business-to-business meetings and promotional material, facilitating home country visits and ensuring follow-up.
Checklist: Seeking investors
Understand sourcing and investment strategies of major lead firms in the market.
Do not oversell. Listen to what competing investment locations promote, and determine how best to stand out. Understand what investors seek (for example, is it market access, natural resources or cheap labour?). What triggers investment decisions? Also understand greenfield vs. brownfield strategies.
Develop links with law firms, accountants and investment banks so that they refer clients. This requires establishing trust.
Use high-level representatives, business people, experts and officials from the home country to stimulate interest in investments.
Attend conferences and seminars.
Work with host country agencies. There can be shared aims in the home country’s inward investment activity and the host country’s export promotion work, especially when the host country encourages outward direct investment.
Arrange visits by government VIPs to potential investors.
Use your website to attract investors. Emphasize how your office can add value to a potential investor’s planning. It can also contain the economic information investors seek.
Checklist: Pitching for investment
Detailed home country economic data; the political climate.
Success stories of previous investments.
Specific investment locations, including access to scarce resources, as well as availability and price of office and factory space.
Transport links.
Ease of access to other markets, covering both logistics and trade agreements.
Access to nearby universities and research institutions.
Labour, skills, salary levels; labour laws, including those on mobility.
Quality of the banking sector for payments and international funds transfer.
Tax environment, levels of corporation tax, income tax, VAT, etc.
Government incentives for inward investment.
Domestic and other foreign competition in the sector.
Laws on repatriation of profits and protection of international investments.
Attractions of living in the home country for the foreign investors and their families.
Mitigation of potential risks.
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