Thursday 22 May 2014

Foreign Direct Investment ... vs ... supporting locally-owned small businesses

The "most powerful private sector voice for Devon and Cornwall"
Home | Devon and Cornwall Business Council
has just welcomed a delegation of potential investors:
Bert is very busy … | Sidmouth Independent News
Exeter Airport rolls out the red carpet for delegation of Chinese investors | Exeter Express and Echo
INTERVIEW: Courting the Foreign Investors – Next City

The County Council promotes Devon through Devon Delivers/Invest in Devon: 

Welcome to Invest Devon

Whether you have a well-established organisation that’s seeking the right location for the next stage of development or are an entrepreneur looking for a place to establish and grow a new business, you’ll find Devon can really deliver.
Devon offers great value, vital connections, a skilled workforce and a quality of life that is consistently ranked number one in the country.
Being in our county makes perfect business sense.

Invest Devon | Devon Delivers

And central government has its own set of policies
Increasing the UK’s exports and attracting inward investment - Policy - GOV.UK
... having sent a delegation headed by the PM to China to encourage investment in the UK:
PM’s Visit to China: Diary of a Business Delegate - Export Britain
... including businesses from the West Country:
David Cameron Aston Manor cider Tiverton | Tiverton Mid Devon Gazette

But is this 'investment' necessarily a good thing?
Do you think foreign direct investment helps economic development? | Debate.org

The Pros & Cons of Foreign Direct Investment International Businesses

by Judit Kozenkow, Demand Media

In the 21st century, FDI affects business operations at all levels.
In the 21st century, FDI affects business operations at all levels.

Foreign direct investment, or FDI, is a company's physical investment into building a plant in another country, acquisition of a foreign firm or investment in a joint venture or strategic alliance with a foreign company in its local market. Global foreign investment flows have exceeded $1 trillion in the 21st century -- from $14 billion in the 1970s -- according to the United Nations Conference on Trade and Development. These investments impact the host country and the home country of the investing business. Small businesses experience the effects of FDI by hosting foreign companies in their local markets or by investing internationally.
Advantages of FDI Inflows
Investment of a foreign company in the American market can provide new technologies, capital, products, organizational technologies, management skills and potential cooperation and business opportunities for local businesses. For example, Volkswagen, a European automotive manufacturing company, is building a plant in Tennessee. Its investment needs local small businesses as suppliers -- from the construction sector during building, from suppliers of equipment and accessories in the automotive industry and from other businesses, such as cleaning services and plumbers.
Disadvantages of FDI Inflows
Investment of a foreign company with its new technologies and products has several disadvantages for local businesses. New products arriving at lower prices create competition and force local businesses to lower their prices and reorganize their operations in terms of costs. Local businesses may lose their customers or even their business relations with other companies as they start cooperating with the new foreign one.
The Pros & Cons of Foreign Direct Investment International Businesses | Chron.com

On the other hand, the US 'network of local, independently owned Whatcom County businesses and supporters', Sustainable Connections, lists ten reasons to support local, independent businesses:

Why Buy Locally Owned?

There are many well-documented benefits to our communities and to each of us to choosing local, independently owned businesses. We realize it is not always possible to buy what you need locally and so merely ask you to Think Local FIRST!

Top Ten reasons to Think Local - Buy Local - Be Local

  1. Buy Local -- Support yourself: Several studies have shown that when you buy from an independent, locally owned business, rather than a nationally owned businesses, significantly more of your money is used to make purchases from other local businesses, service providers and farms -- continuing to strengthen the economic base of the community.(Click here to see summaries of a variety of economic impact studies; these include case studies showing that locally-owned businesses generate a premium in enhanced economic impact to the community and our tax base.)
  2. Support community groups: Non-profit organizations receive an average 250% more support from smaller business owners than they do from large businesses.
  3. Keep our community unique: Where we shop, where we eat and have fun -- all of it makes our community home. Our one-of-a-kind businesses are an integral part of the distinctive character of this place. Our tourism businesses also benefit.  “When people go on vacation they generally seek out destinations that offer them the sense of being someplace, not just anyplace.” ~ Richard Moe, President, National Historic Preservation Trust
  4. Reduce environmental impact: Locally owned businesses can make more local purchases requiring less transportation and generally set up shop in town or city centers as opposed to developing on the fringe. This generally means contributing less to sprawl, congestion, habitat loss and pollution.
  5. Create more good jobs: Small local businesses are the largest employer nationally and in our community, provide the most jobs to residents.
  6. Get better service: Local businesses often hire people with a better understanding of the products they are selling and take more time to get to know customers. 
  7. Invest in community: Local businesses are owned by people who live in this community, are less likely to leave, and are more invested in the community’s future.
  8. Put your taxes to good use: Local businesses in town centers require comparatively little infrastructure investment and make more efficient use of public services as compared to nationally owned stores entering the community.
  9. Buy what you want, not what someone wants you to buy: A marketplace of tens of thousands of small businesses is the best way to ensure innovation and low prices over the long-term.  A multitude of small businesses, each selecting products based not on a national sales plan but on their own interests and the needs of their local customers, guarantees a much broader range of product choices.
  10. Encourage local prosperity: A growing body of economic research shows that in an increasingly homogenized world, entrepreneurs and skilled workers are more likely to invest and settle in communities that preserve their one-of-a-kind businesses and distinctive character.
Think local first + Buy local when you can = Being a local!

Why Buy Locally Owned? — Sustainable Connections

See also:
Futures Forum: "Statistics show us that small and medium-size businesses (including those in tourism) are our life blood."

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