The global pandemic has challenged Investment Promotion Agencies (IPAs) like never before. But from this adversity, has emerged new ways of working, communicating and transacting with clients.
We were keen to learn more, capture best practice and quantify it’s impact and so we developed the OCO Global Innovation Index.
We interviewed 20 IPAs from around the world, from both developed and emerging economies. Our findings indicate a number of shifts in IPA approaches to FDI attraction. The level of ambition and importance of FDI to national economies has increased for many and new players are firing a shot across the bows of the more established status quo.
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Key Findings From The Report
Global economies undergoing a period of unprecedented change
The coronavirus pandemic has accelerated changes in business practices and government policy…
The Global FDI market has collapsed in 2020
And whilst there are signs of recovery in certain sectors, the outlook overall is uncertain
Types of Investment
$ value
2020 vs 2019
35% decline in Greenfield
10% decline in M&A
Geographic Mix
Greenfield $ value
2020 vs 2019
15% decline in Europe
29% decline in USA
38% decline in Asia
Outlook
- US picture expected to improve under new administration
- M&A H2 recovery in Tech and Life Sciences seen as positive indicator for these sectors
- Industrial / Manufacturing:
slow recovery expected as value chains re-configured over time
Some sectors have fared better than others…
RESILIENT
NEUTRAL
EXPOSED
However the short term impact is only part of the story; more relevant is how the pandemic and its aftermath shapes business models in both the resilient and exposed sectors; from the latter we expect acceleration of innovation (eg EVs in Automotive) and new investment environment to emerge.
Source : fDi Markets, no. projects, 2019 compared to 2020
Companies are used to innovating in periods of downturn, but are Investment Promotion Agencies (IPAs)?
Developing an innovation strategy that reacts to or even anticipates a downturn, doesn’t just weather the storm but creates a competitive edge for the future. We looked at 30 Fortune 1000 companies that accelerated during 2008 and all of them invested in new growth options instead of just cutting costs. Bain & Company came to a similar conclusion after analysing 5,000 companies over 10 years. Gartner, 2020
The OCO Global Innovation Index examines how effectively IPAs are adapting to the challenges of Pandemic recovery, sustainability and digitisation.
The OCO Global Innovation Index, aims to:- identify and assess those changes initiated by IPAs, in light of the challenges raised by the Covid pandemic
- assess how IPAs are positioning themselves for the post Covid investment landscape
Methodology: The Innovation Index Explained
The OCO Global Innovation Index broken down: 10 categories across 3 areas (Strategy, Operations & Technology). Scored on whether the IPA made a change or not in response to Covid-19, and new strategic opportunitiesOPERATIONS
- New Sectors
- New Markets
- New Services
STRATEGY
- New/updated Plan
- Proactive M&A
- Engagement VC/JV
- Account Mgmt Focus
TECHNOLOGY
- CRM/Tools Upgrade
- Virtual events/Conferences
- Virtual Tours
Sometimes it takes a crisis…IPAs have been forced to adapt strategies, flex operating models and embrace technology to maintain relevance
01
Time for an Update
By happy coincidence for some IPAs the turn of the decade heralds the 5 year strategy update, and for all others a rewrite has been necessitated by the pandemic
02
Innovative Upstarts
Some of the more resilient strategies (that required little update) belong to younger IPAs in emerging markets like Dubai, Trinidad, and Costa Rica rather than the more mature economies
03
Regional Dispersion
The exodus from the cities and success of remote and homeworking has opened up new possibilities for regional dispersion and deeper regional engagement features in a number of IPA strategy updates
04
Yes Minister
Investment attraction has gone up the political agenda both in terms of security, and as a stimulus for recovery so we can expect more senior political engagement and not all of it positive!
Operationally, there has been a pivot to resilient sectors & different modes of investment, whilst IPAs are keeping faith with their historical source markets
05
Double down on existing clients
With diminished new business pipelines all respondent IPAs have been righting an historical imbalance of support for aftercare and account management, versus new investment
06
Sector Refresh
IPAs have pivoted to resilient sectors such as fintech, health tech, renewables, food and drink, while tourism, retail and manufacturing has consolidated. Sustainability/Green growth is a new and recurring theme
07
Sector Markets
No discernible shift in global footprints but IPAs beginning to question the need for such expansive overseas offices and less might be more in a virtual world. China, India and Gulf rising in priority
08
Open-to-all Investments
Some reactive positions moving to proactive on M&A with pitchbooks, distressed cos and supply gap filling, while all IPAs now recognise value of Venture Capital as an channel to market
Digitisation used to extend to the website & social media activity, now it is pervasive across the value chain of operations for many IPAs
09
New Products
Family Offices, Incentives for green investment, Special Economic Zones, and ‘special access’ for most significant investors are common, and some near shoring, homeworking products by IPAs close to the US
10
Virtual Efficiencies
Virtual tours, use of drones and Zoom allows investors to visit geographically dispersed sites in a morning as opposed to a 3 day fam tour and opportunity to showcase regions more inclusively
11
Lean IPA Processes
The linear investment process from first contact to deal closure has become ‘lean’. More effective early stage zoom meetings with key decision makers, tighter agendas and disciplined follow up has shortened sales cycles
12
CRM Engagement
Building deeper relationships with fewer but better investors requires sharper intelligence and coordination. Many IPAs have upgraded their contact relationship management tools (CRMs)
