FDI locations: few surprises at the top but interesting in the middle
Anyone who has tracked cross border corporate growth announcements over the last six months will not be surprised that the top locations for both generating and receiving FDI attention are the usual suspects.
Storming it is the US with 187 announcements posted on www.corpexpansion.com. Out in front are technology company announcements, in particular Silicon Valley companies seeking international expansion; or European companies forging their way into the US market.
Next comes the UK. We have seen 83 announcements reported over the last six months, a fair proportion of which twin London with US cities for FDI efforts. Time and again we see the technology, biotech and services sectors joining up London with the US when it comes to cross border company growth. Within Europe, Germany, Sweden, the Netherlands and France are regular partners with the UK for FDI activity; and within Asia Pacific, China and Singapore are particularly significant to UK companies.
Germany stands out too
Germany also stands out as both a generator of FDI activity and a honeypot for FDI investment. What is notable here is the range of sectors engaged in overseas expansion, either into or from Germany. Of course technology companies are on a growth curve, and so too are biotech, med tech and other science companies, but German FDI includes a significant proportion of manufacturing and industrial companies.
The Schenck Process Group, the BORGWARD Group, DEKRA, Jungheinrich and PENTAX Europe are all examples of German manufacturing and industrial companies which have been busy with cross border expansion in recent weeks. What is key about these sectors is that they tend to be established, capital intensive but significant generators of jobs – a key plank of FDI strategy across the globe.
Who occupies the middle ranks?
Occupying the middle ranks are perhaps more surprising locations, all of which are to be applauded for their international efforts. Sweden ranks alongside China, France and the Netherlands for the number of announcements relating to international expansion into or from those countries.
Swedish companies have been particularly active on the merger and acquisition front in recent months. Indutrade, Addtech, Boliden, IFS, Recipharm, Lifco, Hexagon and Molnlycke Health Care are just a few examples of Swedish companies that have been on the acquisition trail. In keeping with German activity, Swedish FDI efforts span many sectors. Over the last six months we have seen announcements relating to Swedish companies from a whole range of sectors: industry, manufacturing, property, software, clean tech, energy, pharma, technology, hardware, pharma…and the list goes on.
It is fair to say that French FDI activity has a science/biotech/pharma and aerospace flavour about it, alongside technology, services and manufacturing growth. China is heavily focused on technology and manufacturing if recent announcements are an indicator of the country’s growth interests. But no clear picture is emerging from announcements relating to Netherlands-based companies; it is a case of all kinds of everything.
Acquisitions in Finnish markets
Perhaps special mention should be given to smaller countries who have strived hard to augment their economic development activity. Finland raises its head above the parapet time and again but for all sorts of reasons. Finnish companies have been the targets of several acquisitions by Swedish companies in recent weeks. For example, Swedish Addtech has bought Finnish Sammet Dampers Oy, Swedish Boliden has entered into an agreement with First Quantum to acquire the Kevitsa nickel-copper-gold-PGM mine in Northern Finland, and Swedish IFS acquired MainIoT Software Oy.
But we have also seen US company SPYR form a Finnish company to expand its mobile games activity, Picosun of Espoo, Finland, has continued its growth and expanded to Japan, and US-company Nakina Systems has announced its planned acquisition by global technology leader Nokia of Finland.
Activities in other countries
Japan, Spain, India and Canada are also key players with large numbers of announcements relating to their companies either growing overseas or attracting inward investment. Companies from newer economies are yet to emerge in bulk as significant dealmakers across national borders and international regions; or perhaps they are less comfortable with making a splash.
Of course we only know what we are being told but, in the scheme of things, are we being told a lot. That is: companies large and small are interested in pursuing growth outside their national borders whatever else is going on around the world, and limiting factors are not really showing themselves at present.
Jo Murray, Editor, www.corpexpansion.com, 18 April 2016