International Reset; updating strategy for the post crisis landscape World Trade Week Irvine Conference 14 th May 2015 .

International Reset; updating strategy for the

post crisis landscape

World Trade WeekIrvine Conference

14th May 2015

www.ocoglobal.com

ContentsContents

About OCO Context US FDI and trade trends League tables of FDI and trade Challenges facing US Companies

and EDs Building an International

strategy Conclusions and Q&A

About OCO

PUNE

SHANGHAI

DUBAI

SAN JOSE

MEXICO CITY

SAO PAULO

SEOUL

BOGOTA

NEW YORK

OCO Office Partner

National, state, regional and local economic development organisations

Collaboration with large consulting firms, delivering economic development solutions

Private sector clients, including market research, trade development, company analytics and corporate location work

Our Clients

FDI Trends Analysis & US league tables

Context

Resurgent US economic indicators California renaissance A successful Select USA Summit- US open for business Brookings and JPMC raising the bar on Metro ambitions (4 West Coast) Energy prices and surplus have reset US competitiveness for manufacturing Incentives narrative evolving to a richer skills and cluster proposition ‘New economy’ investors need more intensive EDO support and embedding-

similar to export/trade clients Internet of things is spurring new sectors and growth of sub-regional

locations and specialists Millennials motivated by different employment and lifestyle opportunities

GDP returning to circa 4% year-on-year growth Unemployment is returning to pre-recession levels

Resurgent US Economy

02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13

-4

-2

0

2

4

6

8

USA California

Source: Bureau of Economic Analysis

2005 2006 2007 2008 2009 2010 2011 2012 2013 20140.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

USA California

Source: Labor Force Statistics, California Labor market Info

Growth in projects numbers leading to 13% growth in the number of jobs created

Resurgent US Economy

The US continues to dominate the FDI landscape with 10% growth in the number of US bound FDI projects

between 2009-11 and 2012-14

2009-11 2012-143,900

4,000

4,100

4,200

4,300

4,400

4,500

4,600

4,700

FDI P

roje

cts

+10%

2009-11 2012-14330

340

350

360

370

380

390

400

410

420

Jobs

Cre

ated

+13%

Source: fDi Markets

FDI TrendsFDI into USA 2009 - 2014

The US is the top destination market for FDI, accounting for 11% of global projects between 2009 and 2014

The Top 10 US source markets account for 70% of projects into the US

Average projects from top 10 markets 2009-14: 612 projects Average Capex from top 10 markets 2009-14: $22bn

4% 6% 8% 10% 12% 14% 16% 18% 20% 22%404142434445464748495051525354555657585960

US Share of Top 10 Global Sectors and FDI Propensity

US Share of Global FDI

FDI P

rope

nsity

IT & Software

Chemicals & Petrochem

Financial Services

Business & Professional Services

Transportation

Food & Drink

Logistics & Distribution

Electronics

Telecomms

FDI Sector Trends

>10,000

5,000 – 9,999

2,500 – 4,999

< 2,500

Global FDI ProjectsAdvanced Manufacturing

Low

High

Low High

NH

SC

IN DENJ

ME

CTRI

MA

Top 10 for Volume of Employment by Foreign Firms

Top 10 FDI States

Source: Bureau of Economic Analysis, 2012

1 2 3

654

97 8

10

Top 10 for Volume of Employment by Foreign Firms, Proportional to Population

Excludes District of Columbia

HI

But at what cost?Incentives

Source: New York Times, 2012

Total Incentive Spend Spend per Capita

$80.4 billion in 2012 Texas highest with $19.1bn, South Dakota lowest with $27.8m

Per capita: Alaska highest with $991, Nevada lowest with $12

MI

SC

LA

DE

VT

AK

ND

TX

WA

Top 10 for Value of Exports

Top 10 Export States

Source: Bureau of Economic Analysis, 2012

1 2 3

654

97 8

10

Top 10 for Value of Exports, Proportional to Population

Excludes District of Columbia

KY

Building Competitiveness

Source: Brookings Institute web-site

• Brookings Global cities initiative providing a programme to build out regional strategies to boost global trade and investment

• Chosen cities so far span entire US, but many outside of the traditional FDI and Trade Top 10 ‘heartlands’

• Challenge now for these cities to begin implementing their strategies

• AND for other cities to replicate Brookings type activity

Challenges

Changing global environment New capabilities required

Multiple priorities and scarce resources ….and factors beyond your control

• Emerging economies

• Trade agreements (TTP and T-TIP)

• Competitiveness (strength of US $)

• Political landscape

• Regulation

• Governor elections

• Leveraging social media effectively

• Maintaining an agile, flexible and effective overseas network

• Keeping your offer/propositions fresh & compelling and relevant

• Working with the right companies (exporters) Targeting the right markets

Building a Successful International Strategy

Export Development Cycle

Process

Phases

Client Types

OCO Services

Target

Sources of market knowledge

Media/trade pressCompany intelligenceForeignTrade & Investment AgenciesSocial media networksCompetitor watchCompetitor hiresAgents/Distributors

Free Almost Free Not Free

US Commercial ServiceSubscription dataMarket visitsChamber organisationsSeminarsShipping and distribution firmsBanks

Consulting firmsOverseas trade showsLawyersIntermediariesWrong Agent/DistributorPeople you met on a plane

Export Readiness Diagnostic

Pull strategy

• More significant clients• Specialist input• More insights and deeper

client relationship• Focus on business

opportunities• Measure outcomes $$$• Lower volume of

transactions• Longer term results

Push strategy

Smaller/early stage clients (who need support)Generalist supportSelling capability/capacityFocus on geographies and sectorsMeasure inputs and activityHigher volumes of transactions Shorter term cycle

Push V Pull

Maximising your marketing $$

Events Campaigns

Photos: TOP Governor Rick Scott with Ian King, CEO of BAE System (meeting scheduled by EFI UK); BOTTOM Governor Rick Scott, Gavin Cleary (OCO) and Manny Mencia (EFI) with Nigel Stein (CEO of GKN Group), Mike McCann (SVP Business Development of GKN) and Marcus Bryson (President/CEO GKN Aerospace)

Its what happens before you get there that makes the difference

Company Engagement

Pick Winners

Embedding & Expanding

Conclusions

• The most successful regions achieve growth, jobs and prosperity though a combination of enterprise growth, export sales and attracting foreign investment.

• California’s strength is also its weakness; highly innovative entrepreneurial base, with access to abundant VC/finance, but high cost base makes it challenging to grow your business, and a large internal market which may distract from export opportunities

• The old model ED of reactive trade ‘assists’ to companies who participate in missions or trade programmes is ceding ground to more selective targeting of companies in competitive sectors that will achieve lasting impact

• To promote FDI, you need to understand your clusters and strategic assets, the same ingredients for a successful trade and enterprise programme, so there is merit and efficiency in working together

• The role of US Commercial Service is changing and now encompasses trade and investment and is under severe capacity constraints overseas

• The most effective government led initiatives tend to involve private sector partnerships and Chambers of Commerce have a unique and special role in connecting these ambitions

FDI & Export Services

OCO Network

• The OCO network connects companies with international opportunities