10 Apr Globalization trends and the impact on FDI decisions
Just recently, I had the pleasure to shake hands with Mr. Wim Elfrink, Cisco’s Chief Globalization Officer. He highlighted some major (FDI) globalization trends, and I like to share with you the 10 most striking ones that are open for discussion:
- This will be the decade of China, the future, however, will be India
- In 2020, 3 billion people will be connected to the Internet and this will affect our communication behavior, knowledge, access to resources and quality of life.
- 50% of the world’s population will be urbanized, this means for instance 500 million urban dwellers in India
- The key reason for Cisco, setting up a second Headoffice in Bangalore was proximity: within a 5 hrs flight radius, 70% of the world’s population can be reached.
- Other key criteria for choosing India, were growing talent pool, co-operative government, proximity to innovation, sizable domestic market, law and patent protection, top 5 economy in 2020, proximity of global partners, and an active investment community.
- Population in countries such as Germany, Sweden and Japan is decreasing. The percentage of 65+ in developed countries is (rapidly) increasing to more than 20%. This is significantly slowing down the economy.
- Also China will face difficulties to accommodate the increasing demand for the right talents due to its one-child policy.
- Countries such as Pakistan, Iraq, Yemen, Saudi Arabia, Kenya, Bangladesh, Nigeria and to a lesser extent India show huge population growth figures. That is what counts to embrace further economic development.
- 300 highly educated persons are leaving the Netherlands each day (!) to pursue career opportunities abroad.
- Think out of the box, develop a vision and execute. Do not engage in FDI for labor arbitrage or cost reductions only! It should always be a combination of Costs and Capabilities, in order to remain competitive in the long run.
This leaves the question: Will Iraq, Bangladesh or Nigeria be the next hot spot for FDI in 2020? Any comments or suggestions are welcomed.