Introducing your client, «Mr. Investor»

Introducing your client, «Mr. Investor» Cairo Seminar Jérôme Bonnet January 2003 ANIMA Réseau Euroméditerranéen d Agences de Promotion des Investissements Euromediterranean Network of Investment Promotion Agencies

General content 1. Introduction to changes in demand d affecting IPA activities 2. Understanding your client, Mr. Investor => Investor s expectations ti from the IPA -=> Segmentation of the global FDI market January 2003 Cairo Anima 2003 All rights reserved 2

1.11 Brief reminder of IPA s history According to literature, IPAs main concern has changed over years: Before 1980: single project approach (waterfall) 1980-1999: M&A, technoparks, search for greenfields 2000-2003: after-care, interest in brownfields, restructuring Numerous projects now originate from: Extension of existing units, mergers, partnerships Value added in specific niches Consolidation around a platform or a cluster Attention to local suppliers, to biz. environment quality Hence the importance of after-care, linkages and network animation (HR, R&D, logistics, etc.) January 2003 Cairo Anima 2003 All rights reserved 4

1.2 The changing profile of an IPA Agency 80 s Agency 90 s Agency 00 s Objectives Objectives job creation, job creation, mass selective unemployment unemployment selective retainment of jobs Methods Methods lead generation selective lead generation promotion marketing mix campaigns PR research, materials, websites, selling Organization Organization single agency multiple agencies extensive office coordination network dedicated office networks Source: Buck Consultants International Objectives job creation, qualitative unemployment retainment of jobs Methods dedicated lead generation on-line, interactive promotion multipliers Organization networking agency partnering January 2003 Cairo Anima 2003 All rights reserved 5

1.3 What is Investment Promotion Investment Promotion includes: Investor targeting Investment Marketing Investor Servicing Investor Protection Investor Communication Investment Facilitation Aftercare Policy advocacy January 2003 Cairo Anima 2003 All rights reserved 6

1.4 The Investment Process Decision to Invest Investment Pre-Entry Phase -targeting -marketing -communication Entry Phase -service - facilitation Source : LCI Investment Marketing January 2003 Cairo Anima 2003 All rights reserved 7

2.1a Investor s profile Multinational firms Hierarchical and complex organisation Different levels of interlocutors Different expectations Highest level of precision January 2003 Cairo Anima 2003 All rights reserved 9

Medium and Small Companies 2.1b Investor s profile Simplified organisation Unique interlocutor / CEO Subjective expectations Instinctive approach of the project January 2003 Cairo Anima 2003 All rights reserved 10

22I 2.2 Investor s expectations ti from the IPA General information for Business Plan building (Costs, sectors, economic environment, tax and law environment) - Validation Unique reliable interlocutor during the whole decision process Capacity of tailoring an adapted and complete offer / suiting investor s criteria Facilitated procedures Technical and cultural assistance January 2003 Cairo Anima 2003 All rights reserved 11

2.3 Investment motivations Access to new market opportunities Access to resources (raw material, human resources, technology, R&D ) Access to specific production conditions (labour costs, utilities cost ) Strategic alliances/ moves related to specific clients, suppliers or competitors January 2003 Cairo Anima 2003 All rights reserved 12

2.4 Investor s FAQ Questions on general investment conditions (costs, land availability and cost ) Questions on labour availability, cost and productivity Questions on incentives (subsidies, fiscal incentive ) Questions on the law environment Questions on industrial sector/territory January 2003 Cairo Anima 2003 All rights reserved 13

25 2.5a Fundamental questions What is a «project»? Links with the company s strategy Links with the local economy The question of location: mobile or not? Simple and complex projects January 2003 Cairo Anima 2003 All rights reserved 15

2.5a Financial vs industrial Majority of investments flows are financial Forms : lending, minority participations,.. No operating role, no industrial strategy Search for optimisation of risk/profit mix Not materialized on territories Handled by stock-exchange associations IPAs can only marginally help January 2003 Cairo Anima 2003 All rights reserved 16

25 2.5a Non-capital versus capital Exports : traditional way to expand Other access to market: licencing, franchising Wish to expand without costs : agrements Alliances (for market power, economies of scale ) Not central focus of IPAs, but can get involved January 2003 Cairo Anima 2003 All rights reserved 17

2.5a Internal versus external Mergers and acquisitions (M&A): rapid expansion to new activities or markets Tremendous development over the past years Major factor of internationalisation Limited direct impact on local capabilities and jobs But potentially high indirect impact Process linked to privatisation IPAs are only marginally involved January 2003 Cairo Anima 2003 All rights reserved 18

2.5a Mobile versus non mobile Importance of greenfield investments Direct and indirect impact on local economy However, they do not always involve territorial competition Debate over involvement of IPAs on non-mobile projects January 2003 Cairo Anima 2003 All rights reserved 19

Some illustrative examples Non-mobile project: restaurants, hotels, shops, hydropower plant The product or service has to be made and sold at the same place Mobile project: toy factory, garment factory, semiconductor factory The product can be sold on various markets January 2003 Cairo Anima 2003 All rights reserved 20

2.5b What is a mobile project? Can be completed the same way in various locations Direct competition between sites and territories Core business of IPAs January 2003 Cairo Anima 2003 All rights reserved 22

2.5b International vs national A mobile project is not always international An international project is not always mobile Should IPA focus on all mobile projects (whatever nationality of the investor)? January 2003 Cairo Anima 2003 All rights reserved 23

2.5b Segmentation of projects Ab basic segmentation per function: R&D, production, logistics, support... Additional segmentations for manufacturing projects: nature of product, market, technologies and skills needed Diversity of criteria by type of projects January 2003 Cairo Anima 2003 All rights reserved 24

2.5b Representations of the decision-making process The global portofolio approach The site-selection selection process approach The dynamic adjustment approach The question of limited rationality December 2002 Marseille Seminar Anima / Fabrice Hatem 2002 25

2.5b Criteria for project location A multicriteria approach Quantitative versus qualitative Profit expectation versus risk aversion Level of geographical focus Rationality of criteria? January 2003 Cairo Anima 2003 All rights reserved 26