What is foreign direct investment?

Business Aarhus
Foreign Direct Investments in Aarhus
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Business Aarhus
What is foreign direct investment?
A controlling ownership in a company in one country – here Aarhus, Denmark –
by an entity based in another country
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Business Aarhus
Why should cities focus on foreign direct investments?
Attraction and retention of jobs & increased GDP:
An international oriented white-collar job has a value of approx. DKK 5 million.*
Loyalty towards a location is decreasing and localization has increasing strategic importance
(Cost reduction, access to new markets and competences)
Foreign corporate investors often brings increased market access, competences and finance
=> Improve competitiveness and productivity in the local entity
Why should cities focus on investment promotion?
Boards of directors and executive management do not have ‘perfect information’
=> Proactive support, service and marketing can make a difference
There are 1,000+ investment promotion agencies in Europe,
so the competition for investments will not become less intense in the future
*) Oxford Research & Copenhagen Economics for Copenhagen Capacity
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Business Aarhus
Overview of foreign direct investments in Business Region Aarhus
1,471 entities
775 entities have 50% or more foreign ownership (Controlling ownership)
It’s only 3% and 1,5% out of the total 42,438 private entities
(A/S, ApS and branch office – personal ownership, I/S, IVS not even included)
Source and background:
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NN Markedsdata
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Business Region Aarhus-area
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Ultimate mother-company with foreign ownership
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Danes living abroad is also included
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Business Aarhus
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Overview of foreign direct investments in Aarhus
Share of Full Time Employees (FTE) in foreign owned companies in private sector, 2010
All industries
Manufacturing
Construction
Wholesale, retail
and transportion
ICT
Consultancy,
Financial service etc.
Other industries
Source: estatistik.dk based on Statitics Denmark
Business Aarhus
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Overview of foreign direct investments in Aarhus
Legal entities vs. Affiliates
Types of affiliates
with large difference in setup
Business Aarhus
Overview of foreign direct investments in Aarhus
Top 10
ownership
countries
counts 89% of all
entities
Clear focus on
Northern Europe
and US
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Business Aarhus
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How do foreign corporate investors come to Aarhus?
Mergers & Acquisitions
and Joint Ventures
Outsourcing partners
Greenfield
Access to the Danish and local market
Business Aarhus
An archetype of a foreign corporate investor recent years
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Acquired an existing company
The acquired company has a niche technology with global market potential
White-collar / R&D oriented jobs
The foreign corporate investor buys competencies to supplement existing portfolio or
place in the value chain (i.e. the investor is often an industrial buyer, not capital fund)
The entity became a Global Center of Excellence within the new corporate structure
The corporate investor often brings in:
• Market access through existing channels / global sales setup
• Financials
• Investment in new jobs through expansions
A positive side effect:
If the former owner was a private person, some of them are turned into business angels for
new companies.
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Business Aarhus
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What is investment promotion?
Sales, service, and marketing activities
aimed at attracting, expanding and retaining
companies, jobs and investments in Aarhus
Business Aarhus | FDI Workshop | 11
IPA roles and responsibilities
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Advertising
PR & media
Branding
Sponsorship
Internet site
Social media
Newsletters
Testimonials
Studies and brochures
• Key account
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management
Satisfaction surveys
Respond to early
warnings
Troubleshooting
Matchmaking
Lobbying
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Investor targeting
Lead generation
Cold calls
Direct mailings
Industry events
Investor seminars
Industry networks
Foreign offices
Multipliers
• Location data
• Site visits
• Permits and other
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regulatory issues
Incentives
Property
Workforce
Contacts
Business Aarhus | FDI Workshop | 12
The FDI market
Total global
number of
greenfield
projects in
2014
12 096
Source for number of projects: UNCTAD, fDi Markets
Number of
IPAs in the
world
Your share
of the
market
?000
?
Business Aarhus
What should be our Investment Promotion Strategy going forward?
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Business Aarhus
SWOT-analysis
Input for discussion
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Denmark on the business charts
• No. 1 least corrupt country
(Transparency International Corruption Perceptions Index 2014)
• No. 1 in the world for doing business
(Forbes Magazine 2014)
• No. 2 country to invest and develop local talent and having readily available skilled
labor
(IMD World Talent Report 2014)
• No. 4 in the Ease of Doing Business index out of 189 economies
(World Bank 2015)
• No. 6 in the Global Entrepreneurship and Development Index
(Global Entrepreneurship and Development Institute 2015)
• No. 7 in the Glass-Ceiling Index
(The Economist index for women and work in the OECD member countries)
• No. 7 in the EU on the Global Competitiveness Index
(World Economic Forum Global Competitive Report 2014-2015 – No. 13 globally)
• No. 10 in the global Business Environment Rankings
(The Economist Intelligence Unit World Investment Prospects 2014-2018)
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Business Aarhus
For Invest in Denmark
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Business Aarhus
For Invest in Denmark
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Business Aarhus
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Who is the competitors?
Examples
Business functions
• Bookkeeping:
Poland
• Manufacturing, facility:
Hungary / Eastern Europe / Baltic countries
• Manufacturing,
outsourcing to sub suppliers: Asia
• Contact Center:
Eastern Europe
• Regional HQ:
Copenhagen & Stockholm (Takes all Greenfield investments)
Sectors
• Food innovation:
• Wind Power:
The Netherlands
Hamburg (R&D) and UK (Market access)
Business Aarhus
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Input to discussion
Strengths
• Human resource base
• University city
• Innovation hub
Weaknesses
• International accessibility and
connectivity
Opportunities
• Technology field on Aarhus University
• Cluster development
• New location of the airport
Threats
• Bottleneck on specialists and
skilled labour
Potential focus areas and initiatives
• Make the Northern European version of Raleigh, US or Sophia Antopolis, France
• Proactive attraction activities on specialists and skilled labour according to companies
needs (Enlarge the pool)
• Go another mile for the expats
(jobs/activities for spouses/families + rental and serviced housing)
Business Aarhus
Investment promotion strategy
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Business Aarhus
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Overall segmentation
In the Aarhus area
In Denmark
Outside Denmark
Business Aarhus
Business Aarhus
Invest in Denmark
Retention, Support and Growth
Attraction
Attraction
Proactive outreach /
Key Account Management
In response to inquiries
Cooperation
Business Aarhus
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The strategy is focused on retention and support
… using promotion as support to that
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Advertising
PR & media
Branding
Sponsorship
Internet site
Social media
Newsletters
Testimonials
Studies and brochures
• Key account
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management
Satisfaction surveys
Respond to early
warnings
Troubleshooting
Matchmaking
Lobbying
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•
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•
Investor targeting
Lead generation
Cold calls
Direct mailings
Industry events
Investor seminars
Industry networks
Foreign offices
Multipliers
• Location data
• Site visits
• Permits and other
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regulatory issues
Incentives
Property
Workforce
Contacts
Business Aarhus
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Mission
Vision
Ensure best-in-class experience
in establishing and operating their company
in Aarhus and in cooperating with
the City of Aarhus
To contribute to the creation of 2,000 new
jobs in Aarhus per year
Primary target group
Internationally oriented companies
(Both foreign and domestic owned)
Retention and development of
foreign direct investments
Resources
2.8 focused FTE
Administration & marketing covered by
the business fund
Business Aarhus
Selected references
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Business Aarhus
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Target groups in Aarhus
Size
Value-proposition
Responsible organisation
Many employees
Sales, service and support
TOP
100
Sales, service and support
Business Aarhus
SME 75
Business development package
Other SMEs
Entrepreneurs
Advice/dialogue on
business model/strategy
Bubbles
No employees
Business Link
Central Denmark
Business Aarhus
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A client-centered approach
What is your situation? What are your
opportunities and challenges?
What can we do for you?
Business Aarhus
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Examples of cases and activity levels per year
Retention and development
Attraction
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Introduction to Aarhus and guest programs
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Decision-making
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Location services
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Establishing contacts to relevant partners, networks,
institutions and decision-makers
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One single point of entry and liaison to the City of
Aarhus in connection with construction projects and
the like.
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Recruitment of employees
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Welcome meetings
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PR regarding establishment
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To find the right location in Aarhus
To serve as a point of entry and liaison to the City of
Aarhus (including purchasing sites, building projects
and labor)
To introduce relevant partners, networks and key
persons
To provide a short-cut to highly qualified labor
To discuss/launch initiatives which are necessary for
the investment case
To involve the company in initiatives and forums of
strategic interest
To assist in maintaining, developing and expanding
activities in the Aarhus area - including branding and
developing the infrastructure around the business
To establish contact to knowledge, research, and
educational institutions
120-150 Key Accounts
150 outreach meetings per year
75 Projects/cases per year*
* ) The number we have been directly involved in. We don’t use ‘number of jobs created’.
** ) Every second year / primarily from other parts of Denmark
20 meetings/contacts
20 SMEs > 100 jobs in total per year *
1 larger > 300 jobs per year * / **
Business Aarhus
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Promotion platform
Executive Dinner
for top executives
Annual magazine
New Year’s briefing
Dialogue meetings
22.9.2011
Business Aarhus nyhedsbrev 22. september 2011
Bankernes Kontant Service placerer nyt topmoderne kontantcenter med
250 arbejdspladser i Aarhus. Atea bygger nyt stort domicil i Aarhus N, og
Delacour Dania flytter i nyt domicil på Åboulevarden. Med andre ord –
Aarhus fortsætter sit byggeboom.
Nyheder
22.9.2011
Bankernes Kontantservice kommer til Aarhus
Nyt topmoderne kontantcenter med 250 arbejdspladser placeres i Aarhus. Dermed bliver
sikkerheden med håndteringen af kontanter for danske banker styrket, og Aarhus fortsætter sit
byggeboom.
22.9.2011
Atea bygger nyt domicil i Aarhus
www.businessaarhus.dk /.com
Newsletter
Hand-out
LinkedIn company profile
Business Aarhus
Partnership/ambassador strategy
Who typically has contact with companies in connection with location services:
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Business realtors
Developers, investors
Architects
Building consultants
Lawyers
Accountants
Banks
GTS Advanced Technology Groups
Executive search, HR consultants, etc.
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Business Aarhus
Potential initiatives to strengthen investment promotion
Maintain and develop
• The strategic focus on business conditions and in terms of investment promotion on aftercare
• Direct access to the Mayor is crucial for local based aftercare
• Division of Labour between Business Aarhus and Invest in Denmark
Operational improvement implemented at the moment
• Full implementation of Key Account Management
• Upgrading the English part of the marketing platform
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Business Aarhus
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Potential initiatives to strengthen investment promotion
How to strengthen investment promotions
Without additional resources
• Revitalize and rethink the cooperation between Business Aarhus, Invest in Denmark/FVI and partners in Aarhus
(including form, roles, go-to-market and success criteria)
• More proactive towards
• the owners/boards/management in foreign companies when they are in town
(Of course, in full cooperation with the local management)
• asking for leads
• M&A- and Joint Venture-cases
• Improve relationships and cooperation with selected Chambers of Commerce (For instance Top10-countries)
• Improve Tender & Vendor Management to support Investment Promotion (Be realistic in terms focus on attractions
and aftercare)
With additional resources
• Invest more in customer centric aftercare and support
Resource situation must be analyzed
• Establish investment promotion strategy in relation to Business Region Aarhus
• Establish investment promotion network(s) and partnership(s) (as on tourism) to coordinate and activate partners
(Cluster organizations, Incubators, Service providers, University/Researchers etc.)
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Business Aarhus
www.businessaarhus.com
Manager Soren Boel Pedersen
T: +45 8940 2205
E: [email protected]
www.businessaarhus.com