If you are looking for the proper strategies to attract investors to your country, it’s a process that takes time, effort, planning, and the willingness to handle rejection. But it is possible. The right investment attraction strategy can allow businesses to enter into a foreign market and with the support of international investors, add value and scope to any company.
But what attracts foreign investment?
International investors are people or companies based outside of a country that invests in a business. Entities invest in businesses based not only on the success in their own country but the projected success in an international market.
Some of these investments, known as foreign direct investments (FDI), have become a cornerstone for governments and corporations around the globe. By acquiring a controlling interest in foreign assets, corporations can acquire new products and technologies and sell their existing products to new markets. By supporting foreign direct investment, governments can create jobs and improve economic growth, resulting in FDI attractiveness.
So, how can businesses attract foreign investment?
Here, we’re going to explain how to attract international investors, FDI opportunities, how to connect with foreign investors, the attraction of investments, how to encourage foreign investment, where to find foreign investors, and more.
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How to attract international investors?
Have a strong business model
Every good firm should be built on a strong and precise business model, which is the primary design for the successful operation of any business. Identify the sources of your revenue, client base, and fiances.
A good business model proves that a company has the potential to be profitable in the international market by showing how successful it has been in its respective country. Expanding into international markets is often riskier than investing domestically because of the new variables to contend with including different government regulations and the uncertainty of the markets, in general. International investors tend to be more careful when taking on new investments. A detailed business model that can preemptively answer international investor’s questions can pay dividends in determining a business’ credibility as an investment.
Before a company seeks international investors, it should prepare as much research, data, analytics, and information as possible. Understanding the international market and specifically how your business will perform in a foreign market is key. A business’ preparation inspires investor’s confidence and demonstrates it can navigate through an extensive foreign market.
Here are a few measures to attract FDI and what to prepare:
- Have analytics that demonstrates your businesses success in your own domestic market
- Prepare projections on how your business plans to continue success with supportive data
- Documentation of how your business could work under a foreign country’s government regulations
- A list of any potential setbacks and how your business plans to rectify them
- Potential profits an investor could gain by forming a partnership
Consider between vertical and horizontal foreign investment
There are two principal types of foreign direct investment, horizontal and vertical.
The most common type, horizontal investment, occurs when a company merges with another company that offers the same products or services from a different country to become stronger in that market. The main objective is to reduce competition and gain pieces of foreign market share.
Vertical investment is when an investor merges with an investee of a different country for the purpose of adding value to their supply chain and complementing their business. (Example: a company produces a component/strategy that the investor needs.)
To decide, consider what products your business provides and what your business is looking for from a foreign market.
Build an international network
With a sound business model as a foundation, building a network is the catalyst for growth. In general, it’s difficult for a business to grow without a good network but it’s even more difficult for a business looking to go international.
In today’s world, the easy place to start is on the Internet. Use professional networking sites (like LinkedIn) to find industry leaders and investors within your field to connect.
A strong and honest social media presence that accurately conveys your business can solidify your investment opportunities and is a great (and inexpensive) way to build a good network. Become proficient at understanding what attracts foreign investors to a country by producing and sharing relevant content on your social media profiles. Remember that you get out what you put in — so being a non-active follower and having an idle social media presence won’t do the job. Merely having a LinkedIn page, for example, doesn’t translate to having a good network.
Outside of the digital world, grow your in-person network by attending events and conferences.
What government should do to attract foreign investment?
How do foreign governments encourage foreign investment?
Foreign governments encourage international investments by the political stability of a country. A business’s prosperity is based on a government’s favourable legislation and political goodwill. This includes having (and maintaining) a good transport and infrastructure network to help transport products and raw materials to marketplaces.
Historically, countries that have access to the ocean can easily facilitate investments versus their landlocked counterparts.
Favourable tax rates will also promote investments as investors look for nations with lower corporate taxes. Moreover, a weak exchange rate is ideal for foreign investors because it is cheaper for investors and companies to buy assets.
In the end…
Attracting international investors takes a lot of effort and the right strategy but by setting clear and attainable goals, you can take control of your business’s investment attraction strategy. Here at ResearchFDI, we offer services and design unique policies and programs to help businesses achieve them.