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Developing markets of Eastern Europe to buck downward global FDI trend and attract US investors

Date: 05/25/2017
Source: TMF Romania

According to new research from TMF Group, in association with Forbes Insights, 3 in 10 US-based multinationals now see Eastern Europe as central to their corporate investment and growth plans – an uplift of 3.2% on the previous two years.

The study, ‘Venture Further: what drives international expansion and investment by US businesses?’, canvassed the views of 250 US-based C-Suite Executives to explore the motivations and challenges of US-headquartered multinationals in taking their organization into a new international market. Respondents were drawn from a wide selection of industries and from organizations with annual revenues ranging in size from $250 million to over $5 billion. Respondents were asked into what regions their organizations had invested in the last two years, as well as where they planned to invest in 2017/18.

Key findings included:

• Despite global FDI downturn, Eastern Europe will see 3.2% uplift in investment from US-based multinationals
• 1 in 4 investors are looking for new talent or sources of capital
• 1 in 3 stress the importance of thorough research and local market knowledge

Commenting on the findings Juraj Gerzeni, Regional Head of EMEA for TMF Group, said: “Respondents reported that in the period 2015-2016, over a quarter (26%) had undertaken expansion or investment activity in Eastern Europe. This year and next year, however, they forecast that figure to rise; increasing by 3.2% to put the region at the centre of growth plans for nearly three in ten (29.2%) companies.”

He continued: “This uplift in investment would seem to mirror the IMF’s economic forecast for the region in 2017 of 3.1%, almost double that of the Eurozone at 1.6%.

“As a region, Eastern Europe is very much pinning its growth plans on technology: proactively encouraging innovation and entrepreneurial start-ups through various local government and EU funded programs. There is a high level of technical talent to draw on too, with 285,000 engineers graduating from Poland, Slovakia, the Ukraine and the Czech Republic each year.”

He went on: “The opportunity for investors is in providing funding for these innovations, as well as the more established industries and factories that support them and the Universities that are providing these much-needed skills.

“The region is also a flourishing technology hub and outsourcing center. Competition to recruit local in-house talent is becoming increasingly fierce, so many global companies operating within CEE now choose to outsource a number of key functions such as accounting and financial reporting, legal administration and entity management (to keep abreast of sudden changes) and an array of HR and payroll activities.”

In addition, the survey investigated what motivated US-businesses to explore new foreign markets and what challenges they had faced. It also asked respondents what one piece of advice they would give to a peer considering international expansion.

Alongside expanding operations and increasing market share, findings showed that respondents were looking also to find new talent and skills and new sources of capital. They also faced similar challenges in selecting and establishing a new entity, including the establishment of financial processes and compliance with local regulation.

Gerzeni concluded: “The importance of local knowledge when entering a new market cannot be underestimated. Whether you are looking to extend or enhance existing operations or looking for new opportunities, it is important to fully understand the local complexities of any given market to make sure your operations are – and remain – fully compliant with what could be a rapidly changing regulatory landscape.”

To find out more about TMF Group and to download the full report: tmf-group.com/venturefurther

- ENDS -

NOTES TO EDITORS

For more information please contact:
Carlie Bonavia, PR & Communications Executive: carlie.bonavia@tmf-group.com


TMF Group helps global companies expand and invest seamlessly across international borders. Its expert accountants, legal, HR and payroll professionals located around the world assist clients with their corporate structures, finance vehicles and investments. With business services offered in more than 80 countries, TMF Group is the global expert that understands local needs. www.tmf-group.com
Forbes Insights is the strategic research and thought leadership practice of Forbes Media. By leveraging proprietary databases of senior-level executives in the Forbes community, Forbes Insights conducts research on a host of topics of interest to C-level executives, senior marketing professionals, small business owners and those who aspire to positions of leadership, as well as providing deep insights into issues and trends surrounding wealth creation and wealth management. www.forbes.com/forbesinsights/
VENTURE FURTHER: What drives international expansion and investment by US businesses?
In March 2017, TMF Group - in association with Forbes Insights - canvassed the views (via an online poll) of 250 C-suite Executives from US-headquartered multinational companies to understand their motivations and challenges in taking their organization into a new international market. The respondents were drawn from a wide selection of industries and from organizations with annual revenues ranging in size from $250 million to over $5 billion.
• 250 US-based C-Suite Executives from multinational companies: CEO, CFO, COO and CLO.
• Nearly three-quarters of respondents (71.6%) worked for organizations with annual revenues of over $1 billion.
• The majority (70.8%) were also responsible for overseeing operations in more than 6 countries, while one in four (24.8%) for operations in over 10 international markets.

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