Introduction to Project Life Cycle Management

Transcription

1 Introduction to Project Life Cycle Management From intelligence & lead generation to project handling and after-care Med-Academy Intro to FDI Issues Bénédict de Saint-Laurent Marseille, 14 January 2009

2 Investment Project Life Cycle January 2009 inmed-anima

3 Needed information to adress inquiries from potential investors Exercise. Can you imagine what resources you have to collect? In order to address the needs of the average investor? Anyway, does he/she exist, the average investor? Then, what to do? How can you prepare the most probable requests? January 2009 inmed-anima

4 What type of resources? Resource data base/faqs Selling points Sector overviews Digests on labour /law /subsidies Companies already installed (per region, sector, country of origin) Statistics Maps, photos, images Pre-investment data Cost of factors (energy, labour, transport etc.) updated Immediately available land/offices for projects In some cases (Ireland), pre-defined business models (IRR etc.) Case study: The Invest in France resource centre January 2009 inmed-anima

5 January 2009 inmed-anima Example: Invest in France resource centre In-sourced: General data Economic, sectoral, national Out-sourced: Specific data and market studies Location infos Network of partners: consultants, other ministries (fiscal matters), real estate. Regional and local data Partnership: in France, with regions; worldwide, with trade missions («missions économiques») Built around an intranet hundreds of pages thousands of documents (same for ANIMA about MEDA) Managed by 1 central operational unit in Paris

6 January 2009 inmed-anima Investment intelligence Knowledge management "Manual" management via media, contacts, consultants Resource databases Information tracking, in particular via internet Computer-aided tools (Autonomy etc.) Selection and evaluation of information, exploitation of alarms Case study: the ANIMA intelligence system

7 Example: ANIMA intelligence Factiva economic newsflow (>15,000 news per day) Reuters -Dow Jones etc. Open databases e. g. Kompass, Google, etc. Internet Webwatcher / Monitoring of companies Others sources Newsletters, events, listings Semantic Analysis via AFII Selection of ± 2,000 news and alerts per year for MED MIPO Mediterranean Investment Project Observatory Vigie Invest in France FDI data base on 30 European countries Direct information ANIMA team Records IPAs & other partners FDI projects Prospects Small projects (franchise, rep. office) Benchmarking e. g. with East. Europe January 2009 inmed-anima

8 January 2009 inmed-anima Sources: a. Data banks Professional data banks, e. g. Lexis-Nexis : more than 33,000 press sources Factiva (Reuters/Dow- Jones): 10,000 news a day Dun & Bradstreet: financial information on about 63 million companies and allows to know the localisation of all their branches

9 January 2009 inmed-anima Sources: b. Internet Internet Follow-up of all the internet sites from companies identified from other sources In addition, search engines working on the major internet portals (professional sites, financial news ) Fidélisation

10 Sources: c. Newsletters & RSS January 2009 inmed-anima

11 January 2009 inmed-anima Examples of FDI intelligence outputs: Value-added investments Industrial polarisation effect Intra- MEDA FDIs Creation of a MEDA financial market Novel projects Selection among 800 projects for 2007 (MIPO, ANIMA) Company Host Size Project Renault-Nissan Large automotive export complex in Tangiers Morocco 600 m (France) free zone Delphi (USA) Morocco Relocation of Spanish automotive production jobs in Tangiers Al Ezz (Egypt) Algeria US$ 750 m New steel plant in the Jijel region El Sewedy (Egypt) Libya US$ 64 m New cable factory with State-owned partners TAV (Turkey) Tunisia 500m BOT for the Enfidha airport National Bank of Competitive tender to buy Egypt's Al Watany Egypt US$ 516 m Kuwait (Kuweit) Bank Orascom / OCI (Egypt) Turkey US$ 508 m Buy out of Turkish Baticim (cement) SanDisk (USA) Israel US$ 400 m New stake in Tower Semiconductors Téléperformance New 600 positions call centre for Englishspeaking customers Egypt 600 jobs (France) Theolia (France) Morocco 250 jobs The renewable energy specialist creates a group with 4 subsidiaries in Casablanca

12 Outputs: Building int al infrastructure Top ten FDI projects in 2007 so far (MIPO, ANIMA) Real estate, logistics Oil and industry Banking Company Host Amount Project Emaar (Emirates) Algeria US$ 20 bn Major real estate projects in Greater Algiers ENI (Italy) Egypt US$12 bn Egyptian natural gas projects Reliance (India) Egypt US$ 10 bn Petrochemical plants in Egypt Dubai Holding (Emirates) Turkey 5 bn BP (UK) Egypt US$ 5 bn New Dubai towers and other real estate projects in Istanbul Various investments in Egyptian oil industry over 5 yrs TAQA (Emirates) Algeria US$ 4 bn New petrochemical plant in Arzew Mubadala & Dubal (Emirates) Malay. Airports (Malaysia) Algeria Turkey US$ 3.74 bn US$ 3.45 bn Aluminium smelter through a JV with Sonatrach-Sonelgaz Building and operation of a new terminal for the Sabiha Gokcen Airport Emaar (Emirates) Egypt US$ 3 bn Mega-project in real estate in Cairo Citigroup (USA) Turkey US$ 3.1 bn Acquisition of 20% of Akbank Fraport (Germany) Turkey m BOT for 3 terminals at Antalya, Turkey's 2ndlargest airport January 2009 inmed-anima

13 January 2009 inmed-anima Outputs: 1,000 world companies having recently invested in MEDA Source: MIPO

14 January 2009 inmed-anima Outputs:A growing piece of the cake 5% 4% 3% 2% 1% 0% 0.7% Tunisia Morocco 450 projects MEDA share of world FDI 1.5% 0.9% 1.9% 1.7% Algeria 279 projects FDI inward flows, m, MIPO % projects 4.1% Malta 22 projects Turkey 274 projects Lebanon Cyprus 25 projects Egypte 284 projects projects 77 projects Palestine Auth. 11 projects Jordan projects Syria Israel 211 projects

15 January 2009 inmed-anima Israel High tech Origin US Outputs: Country & sector positioning MIPO Machreq Mega-projects Finance, real estate, tourism Origin Gulf & Asia Method: principal components analysis over 2,088 projects Maghreb & Turkey Traditional industries, Telecom, off-shoring & sub-contracting Origin Europe

16 January 2009 inmed-anima Project generation Goals Target investors Search, identify and qualify projects Means Targeting Use of economic intelligence (analysis, alerts etc.) Use of promotion tools Development of a prospection network Co-operation between prospectors or consultants, the national agency, the host sites Use of the existing resources of the country (e.g. commercial attachés of the Embassies, acting as "business developers ) Training (information tracking, listening, negotiation, cultural approach)

17 Targeting: a must Frequent error: engage in pro-active promotion without targeting Targeting by sector, product and nationality Based on a clear understanding of comparative and competitive advantages A pre-requisite for success Firm-specific targeting Customised approach of individual investors The most effective promotional technique Private sector must be involved to ensure success Targeting is especially critical for small IPAs/countries with limited resources Case study: Invest in Denmark January 2009 inmed-anima

18 January 2009 inmed-anima Reasons for targeting 1. No country or territory is good in all sectors or, if so, it does not need any EDA or invesment promotion! 2. Competition is intensifying in FDI business 3. Focus your efforts on your best FDI prospects 4. Targeting implies to be specific: targeted companies to discuss precise niches or business opportunities in the host country 5. Targeting obliges you to understand how your partner/investor is reasoning 6. Investors respond best to material relevant to them 7. Targeting provides higher rates of projects effectively implemented 8. Targeting is more cost effective than untargeted marketing

19 General targeting Sectors and functions Industrial firms: production, assembling, R&D, logistics Service firms: software, e-business, engineering, call-centre, service centre Additional segmentations for manufacturing projects: nature of product, market, technologies and skills needed Category of investment Investment greenfield New plant Acquisition of existing plant (re-conversion) Re-investment (extension) Wide use of internet and data bases January 2009 inmed-anima

20 Specific targeting Selection of a first panel of firms Economic criteria such as total turnover and number of employees Creation of a Golden List on a data bank Built on the basis of investment intelligence and daily economic watch Specific selection of key accounts / local industrial groups January 2009 inmed-anima

21 January 2009 inmed-anima Reactive project generation Responding to investor enquiries Advantages: Enquiries are serious and from companies with a real interest for your location The potential for winning the project is realistic Disadvantages: You will undoubtedly miss opportunities for your location from investors that have not pre-selected you, but for whom your location offers opportunities This activity alone does not contribute to a long term economic development strategy with a focus on stimulating inward investment in certain sectors Source: IBM-PLI

22 January 2009 inmed-anima Proactive project generation Identifying Investment Prospects before they become enquiries Advantages: Proactive marketing strongly contributes to the national economic development strategy by stimulating investment in certain industries There are chances of winning the project by being the first IPA to contact the company In times of global competition it is essential to be ahead of the game Disadvantages: Requires more and dedicated resources Requires greater sectoral and commercial understanding Source: IBM-PLI

23 January 2009 inmed-anima A good recipe: copy the investor! The investor decision process 1. Strategic decision & project parameters Produce what and how, market 2. Create long-list of candidate locations Then identify shortlist 3. Evaluate short-listed locations Then select preferred location 4. Due diligence and negotiations The ED marketing process 1. Positioning SWOT, comparative advantages, country industrial strategies 2. Product definition What do we sell? 3. Selection of target group & identification of potential investors Company targeting 4. Site proposal Information & negotiation 5. Implementation Source: Richard Banks and others 5. After-care

24 Abundant seeds, limited crop Source: TSG Goal FDI 1,000 jobs National Objectives Investment Approvals Investment Applications Investor Reconnaissance Visits Meetings with Individual Prospective Investors Investor Contacts Generated by Promotional Activities 10 new investments 18 approvals 20 applications 100 site visits 1,000 meetings 10,000 contacts No. of Investments Require No. of Project Approvals Require No. of Project Applications Require No. of Site Visits Require No. of Meetings /Presentations Require No. of Investor Contacts January 2009 inmed-anima

25 January 2009 inmed-anima Prospection network Example of Invest in France Attracting international investment Countries of interest South Africa Argentina Australia Austria Brazil Chili Denmark Egypt U.A.E. Finland Greece Irland Island Kuweit Malaisia Mexico Norway Poland Portugal Saudi Arabia Singapour Thailand Czechoslovakia Turkey IFA Offices Amsterdam Atlanta (in 2007) Barcelona Brussels Chicago Dusseldorf Frankfort London Madrid Milan Nagoya New York Osaka Palo Alto Shanghai Stockholm Tokyo Zurich IFA branches in Economic missions Delhi Hong Kong Moscow (in 2007) Seoul Taipei Tel Aviv (in 2007) Toronto (in 2006)

26 Prospection network Example of Invest Sweden - ISA January 2009 inmed-anima

27 Project qualification Strategic interest of the project For the investor For the country Project stage (feasibility, financing, implementation) Estimated timetable (decision date, main deadlines) Subjective elements influencing the decision Probability Of an effective launch of the project To get the project for the country /the site Possible doubts and questions on the project (economic feasibility, technology risk, fragility of the mother company, investor s track records etc.) Proposed attitude for the IPA Stop, or yellow light (go if), or green light (reasonable effort to be done to get the project) January 2009 inmed-anima

28 January 2009 inmed-anima Effort in project qualification: the «contract review» Materiality & credibility of the project Due diligence & project economics (is it viable, serious?) Estimating the probability of winning Timescale (decision schedule) Non-economic considerations Allocating IPA effort reasonably Content of an offer Clear specifications from prospectors Local vs. national elements Fixed vs. variable elements Electronic vs. paper offers Need for synthesis in case of offers on multiple sites How to add value to an offer?

29 January 2009 inmed-anima Data to be collected on the project 1. Project objectives (market share, potential clients) 2. Type of investment (greenfield, extension, partnership) 3. Production considered 4. Transfer of specific technologies 5. Job creation (production, logistics /commercial, admin.) 6. Global economic impact (spillovers, linkages etc.) 7. Amount of investment, funding (and self-financing share) 8. Structure and ownership considered 9. Timing (decision date, investment date, start date) 10. Decision process (status? who decides?) 11. Geographical flexibility (mobile project?) and competitors 12. Localisation strategy (main criteria, priorities, needs) 13. Specific needs (labour, training, land, buildings, sub-contracting, utilities, infrastructure and services, R&D ) 14. Aids and support sought

30 Investor servicing 1. Project handling & Offers to investors 2. Investment facilitation & one-stop shops 3. Follow-up, after-sale, after-care, clubs etc. January 2009 inmed-anima

31 Project handling Goals Nurture potential and existing investors Transform prospects into real projects Speed up implementation and add value Means Answering day to day questions Adapted web site (FAQ, facts, data) Effort in project qualification Preparation of relevant offers Support projects (financial and fiscal aids, facilitation) January 2009 inmed-anima

32 Project handling Among other functions: Feed the decision process within the company Industrial level (sector-based information, technical input..) Financial level (DB, incentives, costs ) Decisional level Feed the project formalisation process Geographical issue (location identification) Real-estate issue (technical criteria) Industrial issue (suppliers, utilities) Human resources issue (typology of employment) etc. Suggest partners, ideas etc. January 2009 inmed-anima

33 Offer preparation strategy Method Packaging More and more, projects are won after tenders Hence the need to prepare formal offers Conditions to win Good qualification good RFPs or brief for the EDA Issues really strategic for the investor Precisely tackled in the IPA offer Use of pre-existing resources Pre-investment data Knowledge management (resource centre) Electronic offers, unless required Simple presentation (often, Power Point) Encapsulated into an Acrobat PDF file January 2009 inmed-anima

34 January 2009 inmed-anima Efficient offers The do Acknowledgement of receipt in 24 hours Standardisation /offer format (PDF, PowerPoint, templates) Pre-investement data Importance of personal contacts /feeling /reporting Appointment of an identified counterpart Regular information and follow-up The don ts Send documents under standard (poor English, bad presentation, errors...) Give illusions via unreliable promises («for me, X. is the country of the eternal potential») Make contact with VIPs/ top level without real content /news Compete badly with other fellow national operators

35 Template for a synoptic offer Lettre d envoi / Letter II. Résumé / Executive summary A. Votre projet, vos besoins / Our Understanding of Your Needs B. Vos priorités / Your Priorities C. Notre engagement à vos côtés / Our Commitment to your Project D. Caractéristiques du secteur en France / Specifics of the Industry in France E. Synthèse des meilleures offres françaises / Synopsis of the Best French Bids F. Vos contacts / Your contacts III. Infos AFII / Invest in France Information Package Site internet / Web site Argumentaires / Investment rationale in France Autres données (fiscales, réglementaires) /Other Info (law etc.) IV. Offre de la région A/Region A Offer Chiffres-clés, plans de situation / Key Figures, Location, Maps Une région attractive. Les «plus» / Region A Attractiveness. The «plusses» Contexte d activité et secteur /Your Business Environment& Sector in Region A Réseau d entreprises, recherche etc. / Company Network, R&D Communication, logistique, services / /Communication, Logistics, Services Education, formation, marché du travail / Education, Training, Labour Market Culture et qualité de vie / Culture and Quality of Life Présence de votre pays /Your Country s Presence Sites proposés / Proposed Locations Les aides / Investment Support V. Offre de la région B / Region B Offer January 2009 inmed-anima

36 January 2009 inmed-anima Objectives Deliver on time precede needs if possible Save money (DHL and printouts are expensive) Save time Get quick feedback Customised offers but standardisation Templates Go to the point Pre-investment data

37 The financial package Subsidies, grants, tax exemptions, loans, land and building facilities etc. EU and WTO rules limiting the distortion of competition Usefulness and limits of economic intervention by the public authorities How to get rid of «aid seekers»? January 2009 inmed-anima

38 Administrative facilitation & other services E-administration One-stop-shops Protecting investors against red tape abuses / corruption Extra services: HR recruitment & training packages, facilitation for expat executives (housing, working visas, international schools), etc. January 2009 inmed-anima

39 January 2009 inmed-anima Why is after-care so important? It is 7 times more expensive to land a new customer than to sell to an existing one Former Chairman of Ford UK Local development benefits from FDI will not come about at once Incremental investment can account for 60% of investment flows in Western European countries According to PWC Consulting, 2/3 of companies say that after-care influences their expansion plans Perception of host country = key trigger for investment Positive impact for potential investors of witnessing existing investor expansion

40 January 2009 inmed-anima After-care: some targets Key projects or issues Re-investment, production unit expansion Co-investment opportunities Sector/cluster development initiatives Risks of closure or vulnerable industry Licences, privatisations Key players in target sectors: foreign-owned firms per sector, country of origin, function Multinationals with foreign/local clients/suppliers Potential for new types of activity, for growth, for suppliers MNCs and foreign-owned firms whose know-how could be used/ developed locally to integrate suppliers Reinforcement of the supply chain value Embedding companies more strongly in the territory Retention of existing companies

41 After-care: methods Knowledge of impatriates Follow-up of prospects and projects (data bases, maps etc.) Cf. British companies in France After-sales service Importance of nurturing companies after investment Cultural differences (e. g. Japanese investors, often gregarious) Information, news, facilitation, clubs for existing investors, taking care of expatriate families Marketing activities Conferences, seminars, exhibitions, conventions Direct mail to companies, satisfaction surveys etc. Links with private firms, networks, resources Links with local Chambers, Employers Associations Links with Universities, vocational training centres January 2009 inmed-anima

42 January 2009 inmed-anima After-care: example Knowledge of the existing foreign basis per nationality Example of UK companies in France Total UK and Irish investments in France: 1,800 companies 200,000 jobs UK and Irish investment flows in France: 40/50 projects per year 2,000/3,000 new jobs per year 12/13 bn per year

43 January 2009 inmed-anima The image of the aircraft (given by a foreign investor in a MEDA country) As a plane, the investor has landed in the country The plane has stopped on the runway and seems abandonned No information about parking No luggage handling No passenger handling Poor condition of the airport Importance of follow-up Re-investment account for less than 10% of FDI flows for MEDA Most IPAs/EDAs are either waiting passively or searching abroad (when the resource is here)

44 Back to Policy advocacy Goal 1: increase country attractiveness Political and social stability Legal framework Social legislation Training of the workforce Goal 2: build a business environment favourable to investors Sectoral regulations for project approval Protection of the investor Taxation, repatriation of profits Tech-parks Real estate, infrastructure and "utilities" Venture capital Facilities offered to expats January 2009 inmed-anima

45 Facilitate investment and exchanges Location criteria for investors Importance of qualitative factors (personal experience and links, confidence, political stability of the system, consistency speech vs. reality) Discrepancies between the "official" framework and local practices Bureaucracy, other obstacles and costs (red tape) Technical barriers to commercial exchanges Standards and qualifications Be the advocate of foreign investors vis-à-vis the Government January 2009 inmed-anima

46 Required changes in mindsets Current attitude A public administration granting authorisations (and sometimes tax exemptions) to those investors who take the risk to come in your country/territory Better than creating bureaucratic obstacles, of course New mindsets 1. Consider that the investor is a client, a customer and must be served (investor servicing, after-sale, after-care) 2. Understand that FDI is now a world market, that it is not the investor who receives a privilege when he gets a licence to invest here (but the contrary: the territory is privileged ) 3. Realise that passive investment promotion and FDI facilitation must be complemented by a pro-active search for targets (often abroad) fitted to your competitive strengths January 2009 inmed-anima