Strategies for Foreign Investment

Foreign investment refers to the process in which one country makes a physical investment with another company. This establishment is done by an enterprise. There are many multi national companies called as MNC’S which serve and indulge into different types of foreign investment. It consists of a parent enterprise and foreign affiliate.

Foreign investment strategies have direct and greater access to foreign markets. They involve exporting, importing, direct investments in distributive firms, foreign goods processing, arrangements on international licensing and joint ventures. Foreign investment is one of the primary key for reaching the international markets. These investments may be defined as the ownership of the assets by a foreign affiliate or the firm for exercising the control on the use of the assets. The investment is mainly held by the main firm for the ownership interest and not by the majority of ownership. Foreign investments have passive management roles as compared to the foreign portfolio investments. They do not take over the decision making of the firm.

There are different types of strategic foreign investments. These include individual, group of related individuals, corporate entity, public company, private company, government body, estate law or combination of any of these.

Foreign direct investment incentives or strategic foreign investments ensure low corporate tax rates, low income tax rates, tax concessions, low tariffs, provision for soft loan, loan guarantees, provision for subsidies, provides for infrastructural subsidies, free land subsidies, job subsidies, etc.

Foreign investment strategies are those strategies which help in supporting the corporations in decision making for global deployment. At the same time they help the government to enhance the capital investments and new employments. These strategies have different factors which affect their decision making. While formulating these strategies, it is important to carefully analyse the market, make adequate competitive assessments, steps being taken by government to improve the infrastructure and impact on different policies, analysis of the overall investment climate, branding and marketing analysis, etc. It is also important to undertake the analysis of the factors which are of qualitative nature, analysis of the competitor costs and the analysis of the overall risk involved.

The various foreign investment strategies can therefore help an investor in facilitating foreign trade investments and can make him an expert in foreign trade as well.

Majority of the foreign investment strategies occur when merging of one firm exists with the other existing firms. This happens instead of constructing over new facilities. The countries which receive such kinds of strategies can be able to gain knowledge in information services, finance, management, marketing and technology. These strategies are generally accomplished through acquisitions, procurement practices, environmental controls, quality controls, etc.

Foreign investment strategies are used by some countries who want to attract foreign investors. The other strategies that can be used in addition to the ones above include the investing favourably, exchange rates should be realistic in nature, promoting infrastructure building, confiscation of the private properties, incentives, bilateral taxes, etc.

It is important to ensure the implementation of careful foreign investment strategies in order to ensure continued success and long term gains from such types of investments.