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Expanding Options in Overseas Markets

The nations of the European Union and the Asia-Pacific region offer prime opportunities for foreign direct investment.

Dec/Jan 07
According to IBM's Global Business Services, the overall pattern of global investment has been relatively steady since 2003. Out of 8,076 foreign direct investment (FDI) projects tracked in 2005, 39 percent were located in Europe, followed by 27 percent in Asia. The United States is still by far the biggest outward FDI investor, staking nearly 2,800 projects in foreign countries (Germany was a distant second with about 700 projects).

The top 15 countries accounted for 70 percent of all recorded inward FDI projects around the world. China led the pack with about 950 projects, followed by India (700), the United Kingdom (680), and France (650). The third position was held by the United States with about 450. The fourth-place cluster (150-200 projects) included Poland, the Czech Republic, and Germany.

Many of these countries are members of the European Union (EU). Foreign investors like the EU for good reason - it is the world's largest trading entity with almost 500 million consumers and a GDP worth US$12.8 billion. Key countries are the United Kingdom, France, Germany, Italy, and Portugal.

United Kingdom
The United Kingdom - England, Scotland, Wales, and Northern Ireland - is the fourth-largest economy in the world, with a GDP of US$2.1billion. The Economist Intelligence Unit predicts the United Kingdom will have the strongest business environment in Europe through 2009. It is second worldwide for total FDI received, driven by some of best incentives for FDI in the industrialized world. In 2005, it received US$219 billion in FDI, which represents one-quarter of all global FDI inflow and 49 percent of all FDI in the European Union.

"Foreign direct investment flows have been monitored in the U.K. since 1970," says Gordon Innes, director of UK Trade & Investment USA. "Since that time, year-on-year for 36 years, the U.K. has been the top recipient of U.S. investment in Europe." Growth sectors are information and communications technology (ICT), manufacturing, business and financial, and biotechnology. The United Kingdom generates more biotech revenues than any other country in the EU and produces nearly 25 percent of the world's top 100 medicines. More than 500 bioscience companies have operations in the U.K., including international players like GlaxoSmithKline (GSK) and AstraZeneca.

Cambridge and London are the main biotechnology clusters. Cambridge has a longstanding history in biotech/pharma and is home to Cambridge Science Park. In London, GSK and Imperial College have partnered to build a new clinical imaging center at Hammersmith Hospital in West London that is part of a new £60 million research campus. The center represents one of the world's largest academic-private sector partnerships and will study life-threatening diseases such as cancer, Parkinson's disease, and multiple sclerosis.

European Continent
France: According to the Invest in France Agency (IFA), 664 FDI projects were completed in 2005, an increase of 12.4 percent over the previous year. These projects totaled €40 billion in value and created more than 33,000 jobs. The leading sources for investment were Western Europe (59 percent jobs created) and North America (31 percent jobs created).

"France remains a favored destination, a leader in the globalized investment market," says Clara Gaymard, president of IFA. "These figures reveal the reality of France's attractiveness to foreign investors." More than 40 percent of the new jobs were created in the regions of Ile de France and Rhone-Alpes. Leading FDI sectors are ICT, business and financial, manufacturing, and biotechnology.

More than three-quarters of the biotech companies in France are spinoffs from research organizations, such the National Council for Scientific Research. About 40 percent of all drugs manufactured in Europe are made in France. Pharmaceutical and other life-science companies are drawn to France because its innovative funding and other incentives for startup companies are some of the most generous in the world.

Germany: Biotechnology is also one of the hottest FDI sectors in Germany, which has more than 350 biotech and life sciences companies - the highest number in Europe. Clusters are based in Berlin (centered around the Max Planck Institute), Heidelberg (European Molecular Biology Laboratory), and Munich (Ludwig Maximilian University and Technical University of Munich).

Renowned institutions such as the Fraunhofer Society conduct world-class research on advanced materials, electronics, high-performance medical implants, diagnostic/drug-delivery systems, bio-fuel, and renewable resources.

"Our industrial biotech sector is eagerly seeking international partners to jointly develop and market new products," says Gerhart Maier, managing director of Invest in Germany. "At the same time, the federal government is massively boosting its support for the industry. These corporate and public-sector initiatives are creating unprecedented opportunities for cross-border cooperation."

Another sector - logistics - has quietly become the third-largest industry in Germany with an annual revenue of €170 billion. Germany ranks first in Europe as a logistics location because of its proximity to nine major European markets. "No other European country has comparable logistics expertise or such an outstanding transportation infrastructure," says Wolfgang Tiefensee, Germany's minister for Transport, Construction, and Urban Development. "These factors are ideal conditions for all exporting and importing companies."

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