Top 10 Investment Promotion Practices
Foreign direct investment (FDI) has proven to be a great tool for countries to boost their economic growth, acquire management and technological know-how, create jobs, and accelerate international cooperation. To promote FDI inflows into a country, investment promotion agencies are established by either the government or the private sector with an aim to advertising a destination, facilitating investment procedures, and advising the local authority on how to improve a locality’s investment climate and competitiveness. Various studies indicated that the operation of an investment promotion agency has proved to be conducive to investment attraction of a location by filling in the informational gaps, matching potential investors with investment opportunities, and enhancing a location’s image as well as investment environment. Successful investment promotion agencies share common practices and characteristics as follow:
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1. Maintain an Updated Website
In the ever-increasing popularity of the Internet, a website is the first place investors come to learn about a location and its potentials. A website not only enhances the connectivity of an agency but also increases its credibility. The website has to be user-friendly with a navigable sitemap and provide high-quality contents for readers. Typically, a promotional website provides such information as comparative advantages, investment procedures, legislation, media and events, business opportunities, research/ case studies, successful stories, the agency’s services, contact information and links to other useful resources. Some websites maintain a database including some basic or complicated data on a location’s economic and investment statistics, enabling potential investors to do some preliminary research on the location. If an agency targets different markets, it should create sub-domains in different languages. To evaluate its website’s performance, the agency should constantly collect information about its users such as demographics, interests, and needs so that it can update its website accordingly.
2. Compile Lists of Frequently Asked Questions
Though varied in their needs and motivations, when investigating a location’s potentials, investors are all concerned about its general technical infrastructure, investment environment, legal framework, local governance and administrative system, investors’ binding legal obligations and responsibilities, supporting services, and quality of life. Hence, it is very useful for investment promotion agencies to accumulate lists of frequently asked questions and regularly update their answers. In addition, these lists can be published on the agency’s website or included in the agency’s periodical announcements or promotional materials so investors can conveniently access these resources.
3. Provide Information in a Timely Manner
As investors often have to gather materials and make decisions in a short amount of time and are frequently approached and solicited by other agencies, they would favor agencies that also value their time and answer their questions or requests timely. Investors take slow response or no response as a sign of indifference or unprofessionalism. Hence, each investment promotion agency should develop an internal guideline to handle investors’ inquiries or requests, specifying the timeline of processing and handling requests, especially of new investors. If the staff cannot answer the question quickly, it is useful to send an email to the investor to acknowledge receiving the inquiry and inform him/her of the current situation and what to expect.
4. Host Professional Meetings
As in any relationship, the first meeting is crucial to establishing the bond with a potential investor or customer. To prepare for the first meeting, the agency should gather as much information as possible about the investors, their needs, and the stage of their intended projects. This can be completed by communicating with them prior to the meeting to understand their concerns and intentions. The meeting venue needs to be in a good condition, clean and comfortable, equipped with necessary equipment such as microphone, computers, projectors, etc. In addition, the agency should prepare promotional materials to give investors after the meeting. In conducting the meeting, business etiquette is expected to maintain professionalism and show respect to the investors. Proper courtesies such as punctuality, handshaking, formal attires, tone and business language should be shown at all times. Since investors are often under strict schedule, the agency should give a brief presentation with the most relevant and useful information to the investors. Minutes of the meeting need to be taken and reviewed to prepare for the following meeting. After the meeting, the staff should send a thank-you or follow-up email to thank for the investor’s time and answer any unresolved questions/requests during the meeting. It is essential that the investors keep all the promises made in the meeting.
5. Maintain Personal Contacts
It is almost an unwritten law that investors rely extensively on personal contacts when searching for business opportunities in a new city or country. Especially, in a time of uncertainty, more priority will be given to long-term partners who have proved to be trustworthy and beneficial. Hence, it is helpful for investment promotion agency to know its potential investors and partners on a personal level and create a long-lasting relationship with them. Relationship needs much time and efforts to build strong trust. Hence, the agency must work hard and commit to their investors to nurture their network.
6. Utilize Big Data/Computerize
With the rise of the Internet and data science, information has been accumulated and shared all around the world. Investment promotion agencies can gather data about various economic and financial indicators, potential investors, investment trends, risks and other local statistics. Information about current investors and projects should also be collected to monitor their progresses, offer timely support, and maintain the relationships. Moreover, internal data should also be collected and analyzed to help assess the organization’s performance and efficiency.
While it is understood that information is key to doing business, not all organizations possess the right skills and technologies to extract valuable information from the vast amount of data. In addition, the internal information-sharing system/ mechanisms within an organization should also be optimized to maximize this precious asset, and save time and money. In order to do so, the organization should adopt and invest in data analytical tools to assist with data analysis. These tools can help to process the data and present them in a friendly and insightful format to help the users to understand the data and expedite the decision-making process.
7. Segment Markets and Sectors
Many countries apply targeted investment attraction policies, encouraging only sectors deemed suitable with the country’s development agenda. As countries move up the value chain, high-technology industries and services become desirable, and countries favor investors who bring in advanced technologies, know-how and sustainable capital inflows. Consequently, to increase the efficiency of their activities, investment promotion agencies also segregate their potential investors and markets to customize their approach strategies and promotional activities. For example, participating in regional or international investment conferences can help to spread the agency’s image and message to mass audience. However, to persuade key multinational corporations to invest in a location requires individual contacts, frequent visits to the companies’ headquarters and appealing individual incentive packages. Additionally, many agencies have specialized divisions or teams for strategic markets such as a Japan Desk for supporting Japanese investors, or an European team for supporting European companies, etc. By doing so, they can accommodate specific needs and characteristics of investors from a specific origin.
8. Maintain Highly Qualified Staff
Like any organization, human resource plays an important role in an investment promotion agency’s performance and achievement. Since the agency deals with investors from other countries, and from all walks of life, its staff should have appropriate training and skills. Foreign language skills and multi-cultural understanding are crucial. In addition, since many investors are interested in learning about the local legal system and administrative procedures, knowledge and understanding of these aspects are vital. Moreover, since many project establishment procedures are very complicated and can entail legal liabilities, investment promotion staff needs to update their knowledge regularly to avoid misinformation and related repercussions. Besides, communication and interpersonal skills can help establish a stable relationship with customers.
9. Cooperate with Other Investment Promotion Agencies on a National and International Level
Although all cities and countries try to differentiate themselves and compete with one another in their attempt to attract foreign investment, many investors evaluate the attractiveness of a potential investment location in connection with its surrounding regions. The reason is because in this increasingly interconnected world, businesses, especially manufacturing companies, have become highly specialized, and they do not operate on their own – they need their suppliers, distributors, transporters, and customers. Therefore, it is equally important for investment promotion agencies to work together to promote their region as a whole while emphasizing on the strengths of each individual locations. One successful example is the ASEAN countries, which succeed in forming a common economic community and advertising the region as whole despite their vast individual disparities.
10. Actively Improve Investment Environment
In essence, investment promotion of a location is similar to the marketing of a company: the task of an investment promotion agency is to sell their location as an appealing investment destination. If the location itself is not business-friendly, it is hard to advertise without being labeled as a false advertisement. In other words, if an investor spends their time and resources to do site visits or even start an investment project in a location, and then finds out everything is not up to his/her expectations, the investment promotion can quickly backfire. To make the matter worse, investors often share information with their partners, and they may warn others from investing in that region. Therefore, besides organizing promotional campaigns, investment promotion agencies need to work closely with the existing companies and local government to improve the city/ country’s investment environment. Improvements can be made with the current infrastructure, human resources or legal framework and investment incentives to enhance the investment climate. In addition, since many investment promotion agencies are established wholly or partly by the local governments, they have a close tie with the local authorities and can utilize it to influence the decision makers. Nonetheless, the agency’s endorsements should reflect the location’s long-term socio-economic development strategies and visions, and not be served by some interest groups.
In sum, to acquire and retain investors, investment promotion agencies should adopt practices to increase their efficiency and professionalism. These suggestions can be used in addition to their current agenda to improve their performance.