One Plan to Make Brand America More Competitive for FDI Attraction

My last blog post on barriers to foreign direct investment in Brand America led to some great feedback. Virtually everybody who contacted me reinforced the importance of becoming more competitive for FDI inflow attraction. They liked the idea of having a robust market research study to better understand what potential foreign direct investors like and dislike about Brand America. The benefit of creating a “product development” plan (i.e. public policy reforms, infrastructure investment, asset creation) based on the data felt intuitively right to them. So much so, that the post catalyzed discussion around creating a consortium to pursue fielding a robust market research project to secure these data.

In addition, I received a copy of recent supplemental testimony by Rick Weddle to the U.S. Senate Committee on Banking, Housing & Urban Affairs Subcommittee on Economic Policy, submitted on December 19, 2009.

Rick is a remarkable economic development expert with a notable track record of leadership and success. He is President and CEO of the Research Triangle Foundation of North Carolina, owner and developer of The Research Triangle Park. Rick’s biography is an inspiring read.

Rick basically informed the Subcommittee that Brand America is at risk of being out marketed and the situation needs to be addressed. Rick’s testimony has some interesting data compiled by the IEDC that helps illustrate the challenge. I am going to share a couple of his charts with you, but I really want you to read his entire testimony for a full understanding of his recommendation.

Share of global FDI dollars have declined from a peak of roughly 45% to about 20%. In part this reflects other countries developing into profitable markets that attract multinational company investment to build capability and capacity to serve a growing middle class with increasing disposable income. It also reflects remarkable changes in telecommunications, reductions material weight and improved transportation options making it easier and cost effective to service U.S. consumer demand from international locations. This trend is likely to continue and arguably accelerate over the foreseeable planning horizon. Competition for foreign direct investment is and will continue to increase. When I talk about this in presentations, I point out that whenever I was faced with a business situation where total category dollar growth was stagnant (or declining) and competitive options were increasing the solution was always to differentiate your product and support it with an effective branding effort. I believe the solution for Brand America’s declining FDI inflow share challenge is no different.

Another sobering set of data Rick shared with the Subcommittee was the targeted investment being made by countries competing with Brand America. Many countries have well conceived and well funded initiatives to convince potential foreign direct investors that their location is the best choice to do business from. In the U.S. we do not have a comparably funded effort.

On a positive note though, Rick identifies the Invest in America program as a capability that can potentially be leveraged for Brand America to become even more competitive. I am a fan of the Invest in America program and believe Rick is definitely on target in his thinking.

I have no doubt the Subcommittee was impressed with Rick and that they listened carefully to his perspective and recommendation. Hopefully they will be in a position to take action and will work diligently to resource a strategically focused effort to help Brand America become even more competitive. Reversing the declining FDI inflow share trend will have a positive effect on economic recovery and vitality.

You can download a copy of Rick’s testimony. I encourage you to read it. I know you will be impressed.

I’d like to think it is easy to get people to believe that better marketing Brand America is a right thing to do. But, it is only a first step. To create a sustainable solution, there also needs to be an effective product development component that further differentiates Brand America from the competition. And, the focus of the product development effort needs to be informed by data identifying the most important improvement opportunities as seen through the eyes of the foreign direct investor community. If the coalition I mentioned earlier takes shape, perhaps the data needed will become available and further encourage the Subcommittee to take action on Rick’s recommendation.

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Category FDI, Strategy

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6 Comments so far

  1. Imelda McGrattan

    February 11, 2010

    Rick is undoubtedly correct. Marketing is key. It really is back to basics now. The options that are available to global business are huge now with the country of choice to give it to.

    The benefit America has is experience and the presence it has holds on the world business platform. The reality is that a lot of the work coming in was nearly almost taken for granted that it would not end, that is not the case with other options opening up. People buy a package location, skills, expertise, technology, backup support, reliability, these are the things one cannot put a price on.

  2. Paul O

    February 12, 2010

    President Obama and his closest advisors are now managing brand America. And they have been screwing up. One wishes to yell: you’re fired! Many, in fact, are.

  3. Wayne Bergman

    February 13, 2010

    My take, there are two different investment strategies at play for Brand America… 1. Investors look at countries/markets to compete “IN” for the local share and (not or) 2. Investors look at countries/markets to compete “FROM” in the regional and world markets.

    First: US and State leadership and policy makers have to be aware and careful of the global choices they are making to be attractive and competitive. Investors have a broad number of options to choose from with all the countries or regions ready and willing to welcome the investments and compete, do what ever it takes, in order to develop the infrastucture and training systems/resources to get the new plants, technology and jobs that come with it. The decisons our leaders make now will impact us for a generation.

    Second: Citizens (business owners as well as employees) have to be more aware of the role we play in this competitive global market as well. We need to be aware of what we are really asking for from our leaders. Citizens in other countries are more than ready, willing and able to accept the jobs/work where we may no longer be interested in doing the work, learning/getting the skills to do or charge unrealistic prices (employment costs) for. Again our decisions as citizens will impact us for generations.

    Investors have choices. We do as well. What kind of standard of living are we prepared to have in 20 years and are we prepared to compete for it?

  4. Aaron Brickman

    February 16, 2010

    Thank you very much for including this topic on your blog. I’ve been reading the posts and comments with interest!

  5. Richard Miller

    February 17, 2010

    I found this discussion very interesting, and having built the world’s first online resource dedicated to tourism investment promotion (www.TourismROI.com), I’ve definitely seen greater promotional efforts coming from abroad and not so much from our own states, counties and cities. Hopefully our officials will soon realize that investment promotion is a critical competitive issue.

  6. Dom LaVigne

    February 23, 2010

    FDI Attraction into the US (challenges)

    I have worked with many SMEs throughout the Asia Pacific region, who are interested in doing business and/or setting up facilities in the US. Unfortunately, no centralized resource (beyond Invest in America) exists in the US to help attract FDI as exists in other countries (e.g., MIDA in Malaysia, EDB in Singapore, InvestKorea in Korea).

    Many Asian SMEs, who are used to going through a centralized government resource, think they can use a similar approach in the US,and are very confused to discover that FDI attraction, incentives, tax rates, etc. not only vary on a state-by-state level, but then also on a municipal leve. Often it is very hard to get them to understand that they have to research on specific states and/or cities who are seeking to attract the kinds of (sectoral) investment that applies to them, specific tax incentives, etc.

    There can be a myriad of options which are just overwhelming to firms who have not had much exposure to the US market. I think economic development agencies (EDAs) in the US who are looking to attract FDI from specific types of companies and/or sectors should contact the relevant chambers of commerce in those countries, to establish a personal relationship, and to make them aware of what they have to offer and to be open to receiving inquiries from those assns’ members.

    Another route EDAs should take is to develop relationships with Asian governmental agencies who are tasks with helping local SMEs internatoinalize. Often these orgs are not aware of what US cities and states are looking to attract and the incentives they offer. Two examples of these kinds of agencies would be MATRADE in Malaysia and IE Singapore in Singapore.

    If you have not seen it already. FDI.net is a great central repository for US-based and international FDI agencies. As I looked through the ones in East/SE Asia, the agencies listed are a combination of investment-in and investment-out (you would need to check through them individually to learn more about which EDAs are handling which activities).

    http://www.fdi.net/dir/ipa_index.cfm

    —Dom

    (Dom LaVigne – dom@domlavigne.com)

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