Foreign Direct Investment
Recently I had the pleasure of meeting site selectors from the European American Investment Council (EAIC) while on a stop in Victoria. Site selection is a unique class of consultant service whose commercial clients would like to expand elsewhere but lack the geographic, political and cultural understanding to undertake the research themselves. The EAIC represents over 600 European companies, some multi-generational, who have active interest in expansion to the USA. These companies are often suppliers to major European companies doing business in the USA, such as BWM and Aldi, and are already actively exporting to the USA. Eventually it is more profitable to expand operations to the USA than to ship from the mother country. This is called Foreign Direct Investment (FDI). In 2016, according to the Bureau of Economic Analysis, FDI amounted to $373.4 billion, of which 70% came from European countries.
From the foreign investor’s perspective, setting up shop in another country is rife with risks. Americans must be adaptable and understanding when working with Europeans. For instance, land use is highly regulated throughout Europe. While most Americans would think nothing about clearing a wooded lot for development, it would be a criminal act in most of Europe. The European investor needs assurance that he will not spend months or years in a Texas prison! The site selector helps bridge the gap by understanding both cultures and patiently working through the concerns of both parties. Next writing: how to make our community attractive for Foreign Direct Investment.