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Social Media is becoming increasingly important for Economic Development Promotion, said IEDC and DCI

Thursday, September 22nd, 2011

According to a recent survey presented at the International Economic Development Council  (IEDC) Annual Conference this week in Charlotte (NC), USA, more Economic Development professionals are embracing Social Medias to promote their business locations at regional level as well as at national and international level.

The survey, which involved 307 professionals in the Economic Development sector, was carried out by IEDC and Development Counsellors International (DCI). The findings indicate that a growing number of economic development agencies are implementing Social Media. 63% of the professionals confirmed that their organization is using social media since less than one year, while 30% of them said that they have been using social media for 1 to 2 years now. A good number of the professionals recognized that social media will become increasingly important in the coming three year.

The results in numbers:

  • 57 % of the 307 interviewed responded that their organization use social media within their communication efforts.
  • 77% of the staff members managing social media are full time and have other responsibilities.
  • 41% use social media to communicate frequently or very frequency at regional level, while 30% uses social media with the same frequency to communicate nationally and internationally.
  • LinkedIn and Facebook, in this order, are considered the most valuable social media to communicate inside and outside their regions.
  • Social Medias are used, within the region to communicate: organization news (28%), Project wins/ Expansions/ Retentions (21%), support for local businesses (19%), and local events (18%).
  • Economic Development organizations that were mentioned as using social medias in the most effective way are: Indy Partnership, Metro Orlando Economic Development Commission, Metro Denver Economic Development Corporation, and Gwinnett Chamber.

Global Arena recognizes these findings in its own experiences. The fact is that more economic development organizations (EDOs) and investment promotion agencies are looking for new ways of promoting their business locations online. From our personal experiences offering Location Marketing Solutions, we can say that American economic development agencies having taken a proactive step in this matter during the past 12 months. European and Asian investment promotion agencies (IPAs) are still holding a step back regarding the importance of promoting their business locations online.

In the context of IEDC and DCI survey results, Global Arena encourages IPAs worldwide to take the leadership and spread the word regarding what the regions and business locations have to offer to investors. If IPAs and EDOs don’t communicate the competitiveness and business advantages of their regions for investment attraction, who will?

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Understanding Operational Efficiency in High Growth Markets

Wednesday, August 3rd, 2011

A relentless focus on operational efficiency has been a feature of the last business decade. Organizations addressed the challenge by converting work into commodity packages that could be out-sourced or off-shored. Beginning with routine, easy stuff, there was rapid growth in labor arbitrage – moving work to low-cost locations. The immediate and positive impact on the cost line accelerated efforts to commoditize increasingly complex work packages. The snowball effect accelerated the process: companies scrambled to move more and more work to cheap and cheaper locations.

In my opinion, it wasn’t the snowball effect, it was the lemming effect.

  • Efficiency is not the same as effectiveness.

Is it wise to do the wrong thing the cheapest way? Instead of embarking on an effort to reduce the help desk cost per call, would it be better to invest in an engineering effort aimed at eliminating defects that lead to help desk calls in the first place?

  • The location may be low-cost, but its people won’t want to remain low-paid.

Off-shore locations have huge retention challenges: annual turnover of 40% is ‘good’. This means that two people must be hired to handle each job. If labor movement is easy, the situation becomes even more difficult. For example, a multinational enterprise recently decided to place a shared service center in Poland because of a large, highly educated, and English-speaking workforce. That workforce emigrated before the center was finished and workers had to be imported from Romania. It is always a mistake to ignore the drives of human initiative.

As business activity in the low-cost locations increases, costs become less low; companies respond by moving to the newest low-cost location. Carried to an extreme, companies discover that their only core competency is job movement.

  • Organizations rely on people who are social. 

No matter how many Emails, Tweets, Skype calls and Video Conferences are read, written, heard or viewed, people work best when they are close to their colleagues. As work is commoditized, employees come to be viewed (and sometimes view themselves) as replaceable automatons devoid of unique and valuable capability or wisdom.

It may not be trendy to say, but business success (especially innovation) depends on teamwork and social cohesion. As the song goes: “People need people”.

Compartmentalization has an insidious underside. Near-term cost advantages are easily visible; long-term negative impacts take longer to surface. This often means that the person who took the ‘hard decision’ to move work to a low-labor cost destination is promoted before the long-term implications of the decision becomes clear. Others, working to clean up the mess, may even find themselves blamed for the mess.

These challenges can be ameliorated if companies deliver on the promise that “our people are our most important asset”. A company achieves great results when a team of people work together toward a common objective. An article (“Here’s something to write home about!” by Thorsten Amann) in April 2011 KPMG’s High Growth Market Newsletter, explains one way that companies can create value by (literally) mobilizing their executive workforce.

In the coming years, success will depend on shared effort of teams of human beings that can work together. After a long walk, eh, sprint through the wilderness, the business world is beginning to change: the pendulum has begun a return journey.

By Dan Martin, CIO @Global-Arena.com

 

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12 Tips to succeed in High Growth Markets

Thursday, May 26th, 2011

At the Annual Investment Meeting Dubai 2011, where our CEO, Peter Storm delivered a key-note speech on future FDI developments, we met with many CEO’s of multinational companies and high-ranking government officials from Emerging Countries, or, as they prefer to call themselves, High Growth Countries. One of the topics we discussed was the large variation in success achieved by multinational companies expanding into High Growth Countries and Regions.  I think that this exchange of ideas is worth sharing, so I’ll try to summarize the conclusions in this article.

Why are some companies more successful than others in establishing a market position in Growth Markets? Or  another way of putting it is: Why are some very well established companies not able to reach the same position in High Growth Countries? In this last statement you find the key to the mistake most commonly made: What works well in Established Markets, will also work in the New Markets. Said that, bellow you will find 12 Tips to succeed in High Growth Markets divided in 3 different areas: market entry, corporate control, and product development.

Market Entry:
•    Unless you are amongst the likes of Gucci, Ferrari or Prada, a brand name in the Western World is of little significance in an High Growth Country
•    When you enter a market early, a good branding policy and overall presence can give the perception of a market leader, also when you are not a world player
•    Branding and presence should preferably be done by staff originating from the market you are trying to penetrate, connecting to your potential clients is essential.
•    Set long term goals and do not expect positive returns any sooner than in your other markets
•    Expect economic downturns to be steeper than you are used to, but also the bounce-back will be stronger. Many companies gave up on the first local crisis because it looked so severe, keep thinking long-term

Corporate Control
•    Make sure that local management consists of local managers that you assign a coach from your international management. Give your local management team long term goals and a mandate to adept to rapid changing market conditions. Small, agile marketing teams with “room to manoeuvre” prove to be best performing in Growth Markets.
•    On Head-Quarter level, have a dedicated Director for High Growth Markets. Flexibility is the key to success here, long established Sales & Marketing routines will limit you too much.
•    As Mr. Kleisterlee, who just stepped down as CEO of Philips put it: “We only see significant growth possible in Emerging Markets, and we have to reflect that approach in our Board as well, I expect at least two members from Emerging Markets to join the Board of Philips soon”

Product Development
•    Set up R & D centers in the region that you want to penetrate, staffed by local employees. This gives you a strong connection to your potential clients
•    Set up brands that are perceived as local brands, consumers in High Growth Countries do tend to take pride in buying locally developed and produced products.
•    Include not only your product in “localizing” efforts. Packaging, Advertising and choice of Sales Channels are equally important to success
•    Consider to “downgrade” your product portfolio to serve market needs. Achievable products creating a quick win for their users will precede more complex and capable ones.

I hope this summary adds to your considerations and discussions in relation to how to succeed in High Growth Markets.

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Develop Talent in the High Growth Countries

Tuesday, May 24th, 2011

The only constant about modern business is change. Whilst change may be inevitable, it is not easy. In the past several years, the entire way that companies operate has been transformed. Things that used to be core competencies like manufacturing, design and sales have been outsourced. One major computer manufacturer notes that more than 75% of the computers that they sell are never touched by any of their employees: manufacturing is outsourced while sales and maintenance are provided by partners. A long, long time ago help desks were staffed locally; now they usually located (in a galaxy) far, far away.

Making this all work requires people. Traditionally, many of these people, especially in emerging markets, were expatriate managers. In a recent posting of McKinsey Quartely, called “Beyond expats: Better managers for emerging markets”,  Jeffrey A. Joerres, CEO of Manpower, introduced the concept of ‘reverse expatriation’ – and the coming end of the traditional western expatriate manager because:

  • It’s not scalable.

Increasingly different parts of almost every company’s value chain are done in different places. Simply speaking, there are not enough skilled people to sustain the expatriate tradition.

  • It’s not effective

High Growth market contributions are expanding so quickly that the knowledge and expertise necessary to productively manage the effort is more likely to be locally grown than externally injected.

  • It’s not smart

Limiting opportunity for local staff is a sure way to create an employee retention challenge. Many companies in emerging markets face employee turnover rates in the high double digits. Continuous replacement of trained and experienced employees with brilliant, but naive newcomers is not a recipe for success.

Joerres proposes formal mechanisms to bring the skills of the emerging market manager into the larger corporation.  The basic approach is to rotate local managers through corporate offices and functions.

I believe that it is equally important to rotate people from traditional offices through high growth market locations because people must be in a position to learn from each other. Companies will want to institutionalize their core values throughout their organizational domain whilst simultaneously discovering and embedding new approaches to, for example, improve execution.

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FDI in the Aerospace sector – prioritizing quality and guaranteed throughput

Thursday, May 19th, 2011

Airlines are now transporting more passengers at better yields and s they climb out of the doldrums caused by the global economic slump, changes – with relevance for the FDI market – are underway. As an insider of the airspace sector, I want to share with you my finding on the FDI trends within the sector – specifically in the areas of aircraft manufacturing and maintenance and repair organizations.

The Aircraft Manufacture and its risk-sharing partnerships

It may seem that commercial airplane manufacturing is dominated by two global organizations (Airbus and Boeing) surrounded by a handful  of, for the most part, regional aircraft in Brazil, Canada, China and Russia. However, aircraft development and production has evolved. All major players have put risk-sharing partnerships in place – partnerships that develop and build significant components and subsystems. This approach, which means that any component might be built anywhere, generates logical challenges while simultaneously offering significant business advantage. The approach provides opportunity for companies using innovative production techniques to become part of the supply chain of much larger manufacturers. The use of global supply chains makes it easier to rapidly utilize and and industrialize research anywhere in the world. An example is the cooperation between EADS (parent of Airbus) and GKN Aerospace to develop production of complex 3D shapes from powder material.  This was made possible by university research centers that created the ability to create lighter structures with less parts. Another good example is Stork Fokker in the Netherlands.

Maintenance and Repair Organizations (MRO’s)

Airlines are backing off from earlier approaches that pushed manpower-intensive maintenance to low-cost countries. The current preference is to keep maintenance close to the airline bases, in order to increase the availability of the airplanes. Higher wages for staff are one consequence of this change. The higher wages are offset using smart maintenance programs that are defined between airlines, aviation authorities and MRO’s. A smart maintenance program can provide significantly improved efficiency – especially for aging aircraft,. An example: Gol, Brazil’s largest airline, and Delta Airlines TechOps have a defined a cooperative effort wherein Gol will benefit from Delta’s quality standards and efficiency, while Delta benefits from high quality, but low-cost, maintenance performed on the Boeing 737 fleet in Brazil.

Component repair is another booming business as companies focus on very specialized work packages. This relentless focus allows these companies to optimize their specific area of expertise resulting in high quality, rapid delivery. The result are compelling enough to outweigh the logistics of having components sent to and from a remote facility.

The world is getting smaller. As long as an organization can deliver quality products that meet industry demand, they no longer have to be geographically close to their customers. Consistent quality and guaranteed throughput much more important. The aerospace industry is among the leaders in taking advantage of this change.

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FDI bounces back, but in a changing landscape

Monday, January 24th, 2011

“FDI will increase, some even envision a growth of 20%” , this can be read in the report “Winning in a polycentric world” by Ernst & Young, in cooperation with the Economist Intelligence Unit. An interesting differentiation is made between the emerging and the developed world, where companies have well developed business models and asset bases, but have to deal with slow growth opportunities. In the emerging markets, this situation is often reversed. Multinational companies should have business models that allow multiple speeds, depending on the location of business. Emerging markets require agility, and fast response-to-markets, where developed markets are more dependent on efficiency and incremental growth. Meeting this range of demands requires a flexibility at Board level that can be met by creating diversity in the Board, both on geographical background and on experience.

One area where this diversity in local approach will become visible is R&D. Currently, most multinational companies concentrate their R&D in the developed world, with only 16% of their R&D investments in emerging countries. Within 3 years, it is expected that at least 25% of R&D investments will be allocated to emerging countries. A clear signal to Multinationals, but also to Agencies attracting FDI.

Another area that will see a different approach in the coming years is the weighing of the local political environment in investment decisions. Right now, the only factors taken into consideration regularly are taxation and economic growth potential. A better understanding of the political environment, and what that might mean for the future of doing business in a certain country will become much more decisive in the coming years. Global Arena is already investigating what independent and comparable parameters can be used to assist our clients in making investment decisions, taking political environment into this consideration as well.

In short, another indicator that globalization is a strong driver for increased FDI, but globalization will not flatten the market to such an extent that the balance between scale and local relevance allows for a generic approach worldwide. Only companies that have a careful strategy on business allocation and a locally centered business approach will have the full benefit of geographic spread of their activities.

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Chinese FDI in your region; a blessing or a Trojan Horse?

Sunday, January 9th, 2011

Chinese investments abroad will hit US$ 60 billion over 2010 (According to MOFCOM, the Chinese Ministry of commerce), and if you add investments abroad originating from Honk Kong, have even topped US$ 100 billion. In some regions the question arises whether Chinese Investments are not becoming a threat for a balanced economic landscape. The acquisition of a large plot of land near Piraeus, Greece, with the intention to create a China controlled point of entry for Chinese goods into Europe certainly aggravated such concerns.

China is transforming from a cheap production location to an economic world power. In that light it is to be expected that China is looking for further control on the product supply and distribution chain, in the same manner Western and Japanese companies have done in the past. The economic signposts are changing, and an increased Chinese presence overseas is a logical consequence.
If we look at what Chinese companies are investing overseas, we seen a vast majority of the FDI investments is made by “state” companies. In China, every company regarded strategic is de-facto a state company. Private companies are maturing in a rapid pace, but still see major growth opportunities inside China, due to the steady rise of consumer spending there. The state companies are more prone to long term government visions, they tend to invest with a scope of at least 20 years ahead.

With this in mind, it is my opinion that the mere fact that China invests overseas is an economic reality to be expected. If it feels threatening to deal with state controlled (overt or covert) state companies with their vast financial resources, do take into consideration the acquisition channels that have been used to source the companies investing in your region. Given the fact that also privately-owned companies in China are considering overseas investments, try and source these parties to attract them to your region. Do keep in mind that every investment abroad over US$ 1 million requires Chinese Government approval

This is exactly the reason why global-arena.com is working on the ChinaConnect initiative. Together with MOFCOM we aim to create a platform where Chinese companies looking for investments abroad and business locations can meet and select the ideal partner, using our GlobalArenaRank matching technology. we hope to inform you soon on a timeline for first commercial use of ChinaConnect

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Global-arena.com upgraded and renamed it’s product portfolio

Thursday, November 25th, 2010

Gearing up for 2011, and listening to client feedback, we decided to update our promotion portfolio. We took the opportunity to align content and names more effectively, reflecting actual business results for our clients.

What we did not change is a free offering:
Global Arena Location Promoter:
Location Promoter is all about being present on the No 1 in online business locations. Create your location’s page as an easy to read management summary (or ask Global-arena.com to do that for you), thus guiding potential investors to your own website and make them contact you.
Global Arena Location Promoter; the most effective free product for online lead generation

The next level makes full use of our unique GlobalArenaRank Matching technology:
Global Arena Location DealMaker:
Location Dealmaker is set up around a tailor-made Comparative Ranking Report. With our unique GlobalArenaRank technology, your location is compared on economic parameters, and thus matched with the requirements of the investor. You also strengthen your impact by including media content, and you can opt to increase your exposure by presenting your location on our Chinese website.
Global Arena Location DealMaker; Matching at a price that beats advertising, adwords and events, at an unparallleled Google Ranking

Finally, we introduce a dedicated product for Metropolitan Area’s:
Global Arena Metropolitan DealMaker:
Drive visibility for your Metropolitan Area targeting select audiences that meet the needs for the available locations in your area. Save time by generating qualified leads only. Include our Chinese website to attract Chinese investors and your online marketing is at a level aiming for success.
Global Arena Metropolitan DealMaker; Matching every target area with focused investors

The Location Promoter product can be expanded with additional fee-based functionalities, such as content editing, keyword optimization, adding media and multi-lingual pages.

We are confident that the new product portfolio meets all market demands; from a free solution to simply generate more leads, via Economic Ranking Reports that enable qualified investors to do a thorough location analysis, to a solution for Metropolitan areas who need laser focus programs to attract the right businesses, thus avoiding the risk of stereotypes (after all, London and Frankfurt are not just capitals of Finance, while Paris and Milan are more than just capitals of Fashion).

We will now approach our existing customers and contacts with our upgraded portfolio, and continue to serve companies looking for locations and agencies promoting locations via our international network. Also check our FDIworld partner program for organizations that can help you in many aspects of location issues.

Posted in: China, FDI business, global-arena.com
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Economic Development Marketing in modern times

Friday, November 19th, 2010

The Economic Developers Association of Canada (EDAC), Canada’s national organization of Economic Developers, has published an excellent report on economic development marketing practices. You can find the full report on www.edac.ca

I think the trends observed 2009 – 2010 are global, and not only applicable to Canadian Developers. Some conclusions I would like to share:

  • Business attraction is the top ranked marketing objective. Business retention is a distant second. I recognise this sequence, even to a level where business retention is undervalued. Once established companies do not feel serviced any more by the Agencies that brought them in, and start looking for alternative locations. Never forget your existing clients
  • Those that increase their marketing budgets are planning further increases. Those that have decreased in
    2009 and 2010 are planning more decreases. The gap continues to widen.     How do companies find you when you reduce your marketing efforts? You have to be where they are looking, and that is in well over 50% online. Make sure you can be found, and present relevant information in the earliest possible phase of a search. Longlist-Shortlist-Selection starts with being on the Longlist
  • Half of EDAC members are marketing without a single dedicated staff member. That can only be done by tying in to an organization or platform that fills that gap for you. What is your road to the client?
  • 37% of respondents say their website is the single most effective marketing technique they are using, and 70% have a dedicated, frequently updated web presence. This 37% may very well be higher, since investments originate more and more from Emerging Countries and Regions, and there we find a high focus on Online. Content edditing to survive the “5 sec diagonal scan” and Search Engine Optimisation are processes that should be in order ot truly call your website an effective marketing technique
  • This year’s study asked EDAC members for the first time about marketing measurement: Lead generation, website analytics and event attendance are the top measures used by Canadian Economic Developers. 69% say that their measurement efforts are somewhat effective, but 22% have no idea if their marketing is working at all. If you consider, or are forced, to reduce marketing budgets, then make sure that what you allocate is generating maximum effect. Can your marketing efforts be measured?

We believe that Global-arena.com , the No 1 in online business locations, can increase your marketing results on a decreased budget. For more information, please mail me on ruud.storm@global-arena.com

I would like to thank EDAC for their excellent survey, and for their approach to stimulate to use the results freely.

Posted in: FDI business, Surveys
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Business Alliance between Global Arena AG and Katsura Suzuki Consulting

Tuesday, November 2nd, 2010

Energizing Japanese business to expand globally and business investment between Japan and Switzerland

Katsura Suzuki Consulting (KSC), based in Switzerland offers business consulting services and network support to global-operating Japanese clients and Japanese companies relocating to, or investing in Switzerland and similarly for Swiss companies with business interests in Japan.

Global Arena AG, also headquartered in Switzerland, offers the worlds largest and most extensive global marketplace of business locations and related services through its website (www.global-arena.com). Location decisions are supported with Global Arena Rank™, an advanced algorithm providing objective location rankings. Global-arena.com is the only globally comprehensive resource for Foreign Direct Investment (FDI) information.

Implementation of location and foreign direct investment decision involves a wide variety of partners including corporate real estate, taxation, human resources, finance and legal services.

The KSC/Global Arena alliance makes it easier for Swiss and Japanese companies to go global, by offering FDI marketplace transparency and ranking services to Swiss and Japanese business partners. At the same time, the KSC/Global Arena alliance will reduce FDI transaction costs, as well as simplify and accelerate implementation of these decisions.

To read more about Katsura Suzuki Consulting, please go to www.ksc-global.com

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