IME 2020, Frankfurt:
Latest Trends in Foreign Investment
A deep dive session on FDI trends at IME 2020:
“Global FDI flows have stagnated globally in the past couple of years as disruptive change is affecting the typical patterns of global trade and investment. Political and economic power is shifting eastwards as new leaders in the West of the likes of Donald Trump in the US and Boris Johnson in the UK are questioning the multilateral order built in the past decades. Besides, industry 4.0 changes the narrative around attracting foreign investment and leaves governments and IPAs scrambling to update their investment promotion strategies. What are the latest figures on FDI telling us? What are the elements of a successful internationalisation strategy in today’s ever changing global market? How should national and local IPAs adjust?” (IME 2020)
- Juergen Raizner, CEO Steinbeis Transfer Mangement S.r.l.
- Sarah Russis, Director, fDi Intelligence, Financial Times Group
- Paola Suárez Buhrmann, Manager at FDI Center,
- Günther Fehlinger , Secretary General CEE-B
Juergen Raizner reminded that current situation is not first crisis. Personal experience: Coup in Soviet Union 1991. Juergen Raizner was living and working in Moscow that time. To prognose trends in foreign investment would have been impossible. Crisis of 21st century: Corona Pandemic, Financial/EURO Crisis, Ukraine-Russian Territorial Conflict, Syrian Civil War, North Stream 2 Controversy, Turkey-Greek Tensions, … – each one with strong potential to affect foreign investment. Related questions are how to plan investments and who is ready to take the risks? AND: Is it more difficult to invest than before? Juergen Raizner pointed out that investing is in the nature of entrepreneurship. Particularly SME have to develop business on basis of individual opportunities – and do not follow general trends so much.
Main reason for FDI is to be closer to customers. There was a period of about 25 years, when companies did FDI mainly because of reducing costs by locating in low-cost countries. Those opportunities still exist – but tendency for new FDI is more related to attractiveness of foreign markets. New opportunities came up but can be seen as challenges in same time, e.g. Chinese Belt & Road Initiative, Industry 4.0, new technologies. It is up to each company how to benefit from new situation. Juergen Raizner pointed out also, that communication is easier than ever before and new models of collaboration are applied, e.g. Learning Energy Efficiency Networks (by LEEN GmbH), micro testbeds (by Ferdinand Steinbeis Institute), Arena of Integration (by State Association Mechatronics Baden-Wuerttemberg). STC is working with such models and is convinced that each can lead to successful FDI.
Recommendation to IPAs in this regard is to be prepared for individual questions of potential investors much more than ever before. It is not enough to present a country/region profile. For investors, STC is available to discuss new situation on foreign markets.