Best Practice in Lead Generation Attract Foreign Direct Investment. Economic Development Council of Colorado Vail, Colorado Chris Knight

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1 Best Practice in Lead Generation Attract Foreign Direct Investment Economic Development Council of Colorado Vail, Colorado Chris Knight

2 About us fdi Intelligence, a division of the Financial Times Ltd, is the largest FDI COE globally with over 50 FDI staff. Specialising in all areas relating to FDI and investment promotion:- 1. Location advertising to generate brand awareness; 2. Industry-leading intelligence tools to develop FDI strategies and identify potential investors; 3. Tailored FDI events and investor roundtables to meet target companies and generate business leads; and 4. Bespoke research studies to develop and implement investment promotion strategy

3 Why is FDI important? Does investment promotion work? The net present value of pro-active investment promotion to be almost $4 for every $1 expended A 10% increase in investment promotion budget leads to a 2.5% increase in FDI flows or in other words $60,000 of promotion leads to a $5 million increase in FDI There a 2-5 year lag for the impact of increased promotion to feed through to increased FDI, which shows that investment promotion activities need to take place as part of a 2-3 year strategy and evaluation cycle Source: World Bank studies

4 Why is FDI important? What is the economic impact? Impact on the economy Studies have shown that typically: $1 in FDI leads to $1 in domestic investment A 10% increase in investment promotion budget leads to a 2.5% increase 1 manufacturing FDI flows or in other FDI words job creates $60,000 3 of promotion indirect jobs leads in to a $5 million increase in FDI the local economy There a 2-5 year lag for the impact of increased promotion to feed through to increased FDI, Outsourcing which shows that investment projects have promotion a activities need to take bigger multiplier place as part of a 2-3 impact on the year strategy and evaluation economy cycle But the impact is company, project and location specific and also depends on government policies to help foreign investors do more in the country

5 Why is FDI important? FDI into the USA: Domestic investment versus foreign investment $1 in FDI leads to $1 in domestic investment A 10% increase in investment promotion budget leads to a 2.5% increase 1 manufacturing FDI flows or in other FDI words job creates $60,000 3 of promotion indirect jobs leads in to a $5 million increase in FDI the local economy There a 2-5 year lag for the impact of increased promotion to feed through to increased FDI, Outsourcing which shows that investment projects have promotion a activities need to take bigger multiplier place as part of a 2-3 impact on the year strategy and evaluation economy cycle Source: fdi Markets

6 Best Practices in Lead Generation Myth versus Reality

7 Where we are coming from

8 About WAVTEQ World leader in helping locations attract FDI WAVTEQ is a specialist consulting firm working with economic development agencies to attract FDI and providing corporate location services to companies. The WAVTEQ Group is the largest FDI team worldwide with the most extensive global presence Over 75 FDI consultants, with lead genera.on teams in Austria, Canada, China, Germany, Hong Kong, India, Ireland, Japan, Korea, Spain, UK and USA We have helped over 1,000 companies establish over $50 billion of greenfield investments covering all industries and types of project, including manufacturing, logistics, HQs, and R&D WAVTEQ develops the world s leading FDI tracking and corporate location databases WAVTEQ is the technology and consulting partner of fdi Intelligence, Financial Times, with the Canada, Asia and Middle East Franchise

9 WAVTEQ Global locations Montreal Ottawa Shanghai London San Francisco Phoenix Cork Vienna Beijing Seoul Tokyo Hong Kong Madrid Mumbai Bangalore /company/ q info@wavteq.co m

10 Thought leadership in how to attract FDI About WAVTEQ WAVTEQ's team is at the forefront of knowledge on FDI, with over 100 FDI publications. WAVTEQ provides a free publication portal for FDI studies ( subscribed to by over 500 EDOs and IPAs. Our most recent publications are shown on this slide. These studies used extensively by EDOs, IPAs and international organizations to inform their investment promotion strategies.

11 The clients we have worked with About us - Recent WAVTEQ lead generation clients ( ) Countries States/ provinces Counties Cities/zones Corporate / IOs

12 The challenge of lead generation

13 The Minister/Mayor wants to see. Shinmei opens first US plant in West Sacremento

14 Winning new investment What % of companies considering your location for a project will actually invest? IDB and SEDB 50% Best Practice 25% Typical EDO 10-20%

15 How to create 500 new jobs I need to win 5 projects (av. US FDI project = 100 jobs) 20% So I need 25 projects currently considering my location 20% That means I need to have 125 qualified prospects 20% And prospect 625 leads to find them!!

16 It gets worse What is the average length of time from first contact with a qualified lead to when they have a project and have selected your location? 24 months What is the average time until a project is operational? 12 months Its going to take 3 years before you can cut that ribbon!

17 Business versus Political reality Attracting FDI is long term But politics is short-term How can we bridge this?

18 Most FDI is market-seeking so cannot be directly influenced by EDO s

19 Motives for FDI in 2015 Opening new markets for products/ Gaining market share Seeking foreign markets due to Producing more cost effectively Improving R&D/technology Finding capital Acquiring foreign brands Moving to business-friendly location Access raw materials/energy Other motives Source: EIU, Corporate overseas expansion: Opportunities and barriers (2015) based on a survey of 155 senior corporate executives

20 Motives for FDI in 2016 Source: Based on corporate press releases for 1,222 FDI projects in first 7

21 Improving the regulatory & business climate, skills and infrastructure are long term policy advocacy goals of EDO s

22 In the short to medium term investment promotion strategy should focus on effective lead generation to increase the number of prospects, active projects and re-investments and investment facilitation to increase conversion rates. (WAVTEQ) For the long term, the focus should be on product development to improve location competitiveness and maximize the benefits of FDI for the country (WAVTEQ)

23 How to grow your FDI sales pipeline

24 Investor perspective: Most effective marketing techniques used by EDOs (% rating 4 or 5 out of 5) Source: DCI, Winning Strategies, 2017 based on 331 corporate executives and location advisors)

25 Investor perspective: Leading sources of information influencing executives perceptions of an area s business climate Source: DCI, Winning Strategies, 2017 based on 331 corporate executives and location advisors)

26 Most effective IPA techniques FT survey of IPA s Technique most effective % Agencies using Average score of effectiveness (5=most) After-care services for existing firms 100% 4.1 Sales representatives overseas 75% 4.0 Outsourcing LG to consultancy firms 50% 3.5 Diaspora inward investment targeting 13% 3.5 Conferences, seminars 100% 3.4 Inward investment website 100% 3.3 Inward FDI missions 63% 3.3 Outward FDI missions 63% 3.3 Referrals from the national IPA 38% 3.3 Conventions, exhibitions 100% 3.1 Direct mail to targeted companies 63% 3.0 Outward trade missions 38% 3.0

27 Recommendations 1. Invest in your website to generate leads 2. Intelligence gathering to generate leads 3. Meet corporate executives 4. Consider overseas representation / outsourcing 5. Effective media strategy 6. Engage with existing investors 7. Engage with intermediaries

28 Quick wins: Investor Development (aftercare)

29 Quick wins: Aftercare Expansions & co-locations as % US FDI (Jan Aug. 2017) Type of operation % projects % jobs % capex Manufacturing 57% 53% 45% BPO 45% 50% 30% R&D 32% 33% 30% Source: fdi Markets

30 How to create 500 jobs from existing investors I need to win 5 projects (av. US FDI project = 100 jobs) 50% So I need 10 projects currently considering my location 50% That means I need to have 20 qualified prospects 50% And prospect 40 existing investors!! 6.4% of the effort as new business!!

31 How to grow your sales pipeline: Investor Intelligence

32 Over 30 companies are about to make their first investment overseas or are considering a new investment EVERY DAY + + There is a lot of low hanging fruit out there in the FDI market! The challenge is to find it and act on it fdi Intelligence investor signals service Screening over 20,000 FT and other sources daily Tracked nearly 20,000 companies which our analysts in the FT believe will invest overseas many have now invested Nearly 2,000 companies are considering FDI into Asia Pacific We are tracking many FDI signals, with the most important signals being: Company X has a new FDI project or expansion strategy but has not decided where to locate (yet) Company X is receiving new financing for international expansion, but has not decided on the site

33 Example signal (1) UK based, Allergy Therapeutics, a speciality pharmaceutical company focused on the treatment and prevention of allergy, is preparing to enter the US market as part of a global expansion strategy Contact: Murray Skinner Position: Chief Scientific Officer

34 Example signal (2) California based, Eaze, a developer of on-demand delivery technology for the medical marajuana industry has raised $27 million in funding to expand to other US states Contact: Jim Patterson Position: Chief Executive Officer

35 Example signal (3) Denmark-based, Danfoss, a manufacturer of electronic and mechanical components for air-conditioning, heating, refrigeration, is establishing new global centres for 3D printing technology. The centres will be located in Denmark, North America and Asia and will be equiped with 3D printing technologies enabling the additive manufacturing of prototypes and components. Contact: Andre Borouchaki Position: Chief Technology Officer

36 How to grow your sales pipeline: Intermediaries targeting Low cost lead generation

37 Role of intermediaries in how companies setup overseas 51% of corporate executives rely on resources provided by local government/chamber of commerce 43% of corporate executives outsource all or part of the set-up process to external service providers 40% of companies in US are planning to outsource site selection Source: Economist Intelligence Unit, Corporate overseas expansion: Opportunities and barriers (2015) based on a survey of 155 senior corporate executives and Development Counsellors International Winning Strategies (2014) based on a survey of 356 corporate executives

38 Importance of developing a multiplier strategy + Intermediaries such as site selectors, accountants and journalists influence 1000s of companies on where to invest and are therefore referred to as investment multipliers. + The most important type of intermediaries varies by country, from site selectors being very important in the US to government institutions being very important in China + The most successful EDOs/IPAs in attracting FDI have developed a multiplier strategy to engage with intermediaries

39 Case study: UKTI (DIT) UKTI initially began its intermediary strategy in 2011, as it became increasingly clear that foreign investors were coming into the UK via channels other than with UKTI s direct support. UKTI fully launched a dedicated Investment Services intermediary division named Commercial Partnerships at the beginning of 2012 The key objective of the program is to provide a new channel of FDI leads to bolster the existing inward investment pipeline and to realize new investment successes from new and existing UK foreign investors A further objective is being able to match FDI clients with key advisers to support them on their entry to the UK or their growth within Building an intermediary network also enables UKTI to support M&A by signposting to advisors and then keep contact with the investor post-m&a to assist with re-investment and expansion projects. The intermediary team began with a team of three people growing to 10 people as of 2016.

40 Case study: UKTI (DIT) Results The team was solely focused on working with intermediaries to uncover new FDI leads. Now the team is tasked with outreach to existing and potential new foreign investors in the UK which previously had no relationship with UKTI, using intermediaries as a channel. Since 2012, over 1,200 new FDI project leads from both entirely new and existing UK investors have been uncovered. This has resulted in around 300 realised investment successes for the UK. UKTI Investment Services Team has live and nurtured relationships with around 200 intermediaries. In total, over 500 individual, intermediary contacts have been connected with since the programme started in 2012 The best yielding intermediaries for FDI leads tend to be the foreign chambers of commerce, other foreign investment promotion agencies and the top-level site selectors and big consultancy firms. Banks, legal and accountancy also provide good sources of FDI leads although these tend to be projects or investments that are coming to the UK anyway so it s most about investor facilitation rather than winning the project.

41 Key objective of a multiplier strategy? The key objectives of a multiplier strategy are: 1 Influence the perception of intermediaries about their location and get their location on the investor s map 2 By demonstrating the professional and value added services the EDO/IPA offers, become a trusted business partner of the intermediary and gain FDI referrals 3 Provide better facilitation services to investors by knowing the key organisations and individuals who can assist them with the FDI location and setup process

42 Developing a multiplier strategy: Key target markets and intermediary types Source:

43 Role of intermediaries in FDI Corporate Location Strategy + Specialist site selection firms + Major accounting firms + Major consulting firms + Major real estate firms + Media + Major HR firms + Major banks + Major utility providers + VC and other financers + Home country governments + International Organisations Investment Facilitation EDOs and IPAs Legal firms Real estate firms Accountants Recruitment & HR firms Infrastructure & utility firms Business associations

44 Developing a multiplier strategy: Identifying target organisations

45 Developing a multiplier strategy: Identifying target people Examples site selector contact in PwC in Europe Source:

46 Unique new database of global FDI advisors and influencers

47 Lead generation: Innovation

48 Global Affairs Canada City Investment Promotion To encourage coordination at the federal and local levels and to improve the capacity of cities and regions in Canada to attract FDI there are 2 key initiatives: 1. Invest in Canada Bureau places an investment offices in each province to improve coordination and investment facilitation 2. The Community Initiatives Program has a multi-million dollar budget to co-fund 50:50 investment promotion activities of local IPAs. This means that they have an oversight and say in local efforts and that local IPAs have more budget for investment promotion. Local IPAs submit applications every year to Invest in Canada Bureau for matching funding 3. The key focus is on lead generation activities for cities and regions in Canada

49 IDA Ireland Connect Ireland IDA Ireland is supporting Connect Ireland Connect Ireland pays you to generate jobs in Ireland It is open to anyone in the world If you know of a company which may invest in Ireland and you put Connect Ireland in contact with the company you will receive up to 3,000 per job created (maximum 300,000) All companies identified by the Connect Ireland network are handled by IDA You can track their progress in following-up with each company The aim is to generate jobs in Ireland by making everyone, wherever and whoever they are, into a sales rep of IDA! It is cost effective, 100% performance linked, and it is global It means 1000 s of people promoting FDI into Ireland rather than a just staff of the government investment promotion agency

50 Start-ups and global entrepreneurs 1. Start-ups created 44 million jobs in US in last 3 decades account for all new net job creation 2. They bring inspiration, innovation, ideas, talented people and technology transfer to an economy 3. MNEs like to invest in startups to remain competitive 4. They often choose their HQ and R&D function in a city that has a strong cluster of innovative startups 5. The Chilean government was the first to seize the opportunity and launch a comprehensive FDI start-up program (see next slide) 6. It served as the inspiration for: Invest HK s Canada s start-up program New York s start-up program

51 Chile - startups Start-Up Chile, was launched in 2010 Its goal was to reduce the country s dependence on commodities by becoming Latin America s innovation and technology hub The Chilean government offers entrepreneurs $40,000, one-year visas issued in a day, fast-tracked paperwork to allow them to open bank accounts in a fortnight Almost 18,000 start-ups from 130 countries have applied About 1,050 firms from 77 countries, 20% of them Chilean, have been accepted Start-Up Chile spent $40 million on grants In 2015, it started a follow-up fund to provide select companies with an additional $100,000. This time, though, the firms have to incorporate in Chile, agree to stay at least a year, provide mentoring to prospective entrepreneurs and meet other requirements

52 Chris Knight Global Commercial Director T + 44 (0) Chris.knight@ft.com Twitter: chrisknightfdi fdiintelligence.com