Welcome to our November 2011 newsletter

The November 2011 issue of the newsletter contains the following exciting article:

1. What could investment promotion agencies do to grow FDI and attract investors in the current economic climate?

2. 5 Recommendations for your Economic Development Strategy in 2012

3. Global-Arena.com Expands its Capabilities to Change the Way Global Companies and Business Locations Connect Around Growth Opportunities

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Kind regards,

Peter Storm, CEO Global Arena

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1. What could investment promotion agencies do to grow FDI and attract investors in the current economic climate?

On October 25, Peter Storm (CEO) and Jan Siemons (Advisory Board) from Global-Arena.com joined the European Association of Development Agencies (EURADA) working group on FDI and regional marketing in Brussels. The EURADA work group members met with a group of executives from consultancy organizations and online business services providers like Global-Arena.com. The purpose of the panel discussion was to discuss how investment promotion agencies could respond to the current economic climate.

In an opening remark Carlos Bronzatto, executive director of the World Association of Investment Promotion Agencies (WAIPA), stated that a recent survey carried out by WAIPA showed that most agencies expect to achieve flat to maximum 10% growth in the current global economic climate. This FDI growth forecast, while already historically low, does not factor in likely job losses in their existing portfolio of international companies and clusters. Most agencies in the developed countries will have to deal with a net loss of jobs and lack of new job creation in their economies.

There was consensus among panel members about following major trends:

• First, FDI projects are getting smaller in size, more demanding and harder to win.
• Second, technology innovation drives the biggest areas of opportunity, but they are hard to target and develop because they do not follow traditional sector classifications. Good examples are clean-tech, nanotechnology, and advanced manufacturing.
• Third, investors increasingly come from Emerging Markets where agency influence is minimal.
• Finally, online activities rapidly gain importance for location promotion, investor targeting, cluster eco-system development, and investor relationship management.

Another panel observation was the trend that promotion agencies, along with the private sector, develop innovative investor services like soft landing zones (also known as incubators, welcome offices, or touch-down services) to make it easy for inbound investors to have a local presence in the early stages of their evaluation and implementation project. These services are often provided through public/private partnerships.

Focus is the best way to sustain growth in the current economic climate. This was the general consensus among the panel members. For most agencies focus is also a requirement in response to budgetary and staffing limitations. A number of agencies are looking for more synergy and efficiency between their export development and inbound investment services. The panel agreed that the approach to follow should concentrate on synergies in the type of economic activity (i.e. the focus areas) rather than on organizational synergies around activities in agencies.

It seems obvious to say that the focus should concentrate on foreign investor needs. One need is paramount in business today: many executives need growth from international expansion because their domestic markets are either flat or have reached the peak of growth potential. Agencies could become much more disciplined to highlight and focus exclusively on areas with real sector/activity growth opportunities. Areas of lower economic impact should receive equally lower attention, freeing up resources for high growth opportunities. Real pockets of economic growth and innovative high growth areas will attract the private sector. Therefore these activities can be developed and promoted in public/private partnerships. This approach both saves money and brings better return on the investment actually made.

Research indicates that online location promotion and relationship management enables agencies to effectively balancing resource and knowledge constraints. It is therefore strongly recommended that online location promotion becomes a part of an agency’s focus. Companies increasingly base their perceptions and their research about site locations on online information sources. Long listing and evaluating site locations can be done more and more using online information sources. The online platforms use sources that are not controlled by agencies, so results will be unbiased.

The panel members agree that FDI is people business. However, increasingly the online presence and strategy of a location will determine which sites executives will choose to look into. Only after the shortlist is made companies start to invest time in personal connections. Given that personal connections can also be made online, business social media is again the most (cost) effective way to develop international relationships, to influence perceptions, and to communicate focused messages. As Jan Siemons (former managing partner Buck Consultants International and managing director Ernst & Young) said “the Internet is going to lead the matching and matchmaking between companies and locations and all people relationships involved”.

In summary, in answer to the question what investment promotion agencies can do to grow and attract investors in this challenging economic climate, the EURADA work group members identified three priorities:

• First, focus on real (proven) economic growth in areas with growing market demand or high growth innovation.
• Second, develop a multichannel online strategy to establish and develop your location brand, reach out to international markets and support your location claims with independent, objective and transparent information.
• Third, drive all activities in a public/private model.

Market circumstances are difficult, and data indicates that we may have not yet reached the bottom, only focused agencies will thrive in the fiercely competitive global economy.

By Lex Dekkers, The Netherlands.

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2. 5 Recommendations for Your Economic Development Strategy in 2012

2011 is still on its way, but Global-Arena.com already looks a bit ahead. This year we attended a variety of events for US Economic Development Organisations (EDO). Based on the inspiring encounters and powerful presentations there and the meetings with our customers we made a list of 5 recommendations for the development of your economic development strategy for 2012. Keywords for 2012 will be: welcome, collaborate and connect. Please find them below.

• Establish a Soft landing Zone

The soft landing zone ( or sometimes called soft landing spot) has been around for some time, but is starting to gain more attention. Basically, a soft landing zone provides a place for companies which are considering to invest or establish operations in a new location with a physical place to investigate and determine what would be the best way to move forward. It usually includes office space at a nominal or no charge, access to professional services, help with evaluating alternatives and other local expertise. The office space can be with local EDO’s, or with other companies that have space available and like to get in touch with companies early in their selection process. Examples of European soft landing zones can be found here. A good example in the US is the soft landing zone in Akron, Ohio.

• Form cross state or international alliances with other EDO’s

In too many cases, EDO’s see other EDO’s as competitors. The more open minded ones see other ones as a potential partner. Many partnerships exist in metropolitan areas, but not cross state or internationally. If you are interested to attract certain industries from a specific target area, find out which EDO’s are active in that area. If there are complementary industries in the target area, both EDO’s will benefit. By forming a strategic alliance with other EDO(s), you will be able to attract and refer businesses to each other.

• Connect your existing companies to other potential partner companies

Many EDO’s are participating in international trade missions and meet a large number of foreign organizations. Set up some sort of an exchange where companies in your area can post requests and look for business partners in areas you are visiting and vice versa. That way you are adding direct value to your existing and prospective companies without just “selling” your location. An added advantage is that by helping your existing businesses they will become your most valuable spokespeople ( a large percentage of companies rely on the recommendations of business partners for new locations) and will you will reduce turnover in your existing investment base.

• Establish / rekindle Sister cities relationships

Many larger cities have “sister cities” , but when was the last time you had a direct contact with your sister city? Besides a cultural exchange, have you thought of using this platform for ED? If you are targeting industries in a certain area, consider putting a sister relationship in place. It can be a great “outpost” in your target area for little cost. A good starting point for more information is the sister cities international organization.

• Put in place a “Metabridge “

Metabridge was started by a Canadian development agency and has grown into a major activity. Basically, the concept provides screening and later, access to experienced industry leaders for smaller (startup) companies for advice and partnerships. The advantage to the smaller companies is obvious, but industry leaders are also interested to meet and discuss with startups or smaller companies that went through a screening process for the validity of their ideas. For more information, please see one of the MetaBridge press releases or visit the MetaBridge website.

By Erik Wulfers, United States of America.

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3. Global-Arena.com Expands its Capabilities to Change the Way Global Companies and Business Locations Connect Around Growth Opportunities

Global-Arena.com evolves its platform and expands to develop more innovative services that will change the way global companies and business locations connect around growth opportunities and FDI transactions.

Global-Arena.com from Switzerland is the world’s first open platform for the development of international business and foreign investment. On one hand, the Global-Arena.com website helps companies identify growth opportunities and understand business environments in the global economy. Effectively, on the other hand, Global-Arena.com helps economic development agencies to become more competitive and promote their location attractiveness to global operating companies.

Global-Arena.com is making it easy for companies to search and promote international growth locations. To do so, this Swiss company combine all relevant information from objective and independent sources on one online platform. The website provides easy to understand transparent analysis of the quantitative and qualitative characteristics of global business locations. As a result, Global-Arena.com makes Foreign Direct Investment (FDI) easy for companies and governments, shortening time to decision-making, and reducing the risk and cost associated with the implementation of FDI transactions.

Defining characteristics of locations via online tools involves a high level of complexity. The Global-Arena.com tool set is therefore front and center in our operational focus on delivering value to our customers. To keep the platform up to date, and to drive further innovations to this environment, Global-Arena.com has recruited a Chief Innovation Officer (CIO) who will make sure Global-Arena.com remains not only the first, but also the best open platform for FDI matching.

As per November 1st, 2011 Arjen Goetheer will join Global-Arena.com in the role of CIO. Before moving to Zurich earlier this year, Arjen worked as adviser Innovation Intelligence at The Netherlands Agency. As a result he has deep knowledge not just of the platform, but also of the FDI market.

The leadership of Global-Arena.com also realizes that location decisions will never be made based on online analysis only. Location matching is the one step that can be done via online tools, saving companies vast amounts of time and money creating a short list of location targets. The initial discussions about foreign investments, however, desires strategic consulting. Final decision making and implementation takes operational consulting support. To enable a smooth process from the strategic discussion through the research and short-listing of locations and to the implementation, the company is developing at the moment a partner portfolio with consultants and agencies that can provide support during these first and last stages.

To help define and coordinate this strategy, Jan Siemons (48) will join Global Arena in the Netherlands as Advisory Board member as of November 1st, 2011. Jan will focus his leadership in the Global-Arena.com Advisory Board on two areas of innovation. First, the development and coordination of advisory services that help companies and governments to reduce the cost and risks of Foreign Direct Investment projects. Second, to create new ways to maximize commercial real estate occupancy rates by improving matching of characteristics and needs.

The last 17 years Jan Siemons worked as partner at Ernst & Young, where he led the international location and real estate advisory services teams, and as managing partner with Buck Consultants International in the field of location and real estate advice and site selection for multinationals.

By Lex Dekkers, The Netherlands.

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