Your Value Proposition to Foreign Companies & Generating Leads October 17 th 2013 VEDA 2013 Fall Conference Newport News, Virginia BRABANT, EUROPE S HEART OF SMART SOLUTIONS
Ben Engel, Sr. Project Manager Strategic Acquisition BOM Foreign Investments
Content I. Introduction Brabant, the Netherlands: who are we? II. III. IV. Developments in the FDI market Development of focused Value Propositions & Generating Leads Brabant and High Tech Systems & Materials
I. Who are we? BOM or Brabantse Ontwikkelings Maatschappij = Brabant Development Agency, established in 1983 Shareholders: Ministry of Economic Affairs, Dutch State Province of North Brabant Mission: To strengthen the economic structure of North Brabant 4 core activities: Foreign Direct Investment Attraction Venture capital (start-ups growing & well-developed companies) New Business Development (innovation projects & cluster development) Restructuring Industrial Estates (earmarked investment fund)
Brabant, the Netherlands, Europe The Netherlands Population: 16.4 mln GDP 670 bln 41,543 km2 Province of Brabant Population: 2.4 mln GDP 100 bln 5,082 km2 Amsterdam
International accessibility
Brabant in a Dutch Perspective Brabant in the Dutch economy: Brabant is the Hightech region of the Netherlands ~50% ~30% ~20% ~15% Economic activity Industrial employment Manufacturing sector Company R&D spending
A sample. Brabant s Business Environment
Foreign companies in Brabant > 1,400 Foreign companies with 100,000 employees 20% of Foreign Direct Investments (FDI) in the Netherlands > 25 new entrants each year investing > 100 million R&D, manufacturing, marketing & sales, services, logistics Recent foreign investors:
II. Developments in the FDI market Disparity in economic growth between the established markets in EU and USA and upcoming and developing market in e.g. South- East Asia, South America, Central and Eastern Europe Increased life expectancy and population growth in developing markets Increased spending power by a growing middle class in developing nations Challenges as a result of an ageing population in Europe Changing paradigms in strategic business development such as globalization and open innovation Changing global FDI flows and destinations as a result of the banking crises, USA government debt increase and EU Euro crisis All of this leads to increased competition in FDI attraction efforts between metropolitan areas and regions across the globe
Time to Market (Months) New Product Revenue (Percent) Challenges innovation-based industries In relatively high-cost, knowledge-based and technology-driven economies, the following strategic challenge can be observed Technology-driven, knowledge-based companies are faced with two demands at the same time in their innovation and business cycle: Time-to-market must be reduced Revenue share of new products in the total product portfolio is increasing 18 16 50% 14 12 10 8 6 40% 30% 20% Time to Market (Months) Revenues from new product (Percent) 4 2 0-3 Years Now + 3 Years 10% 0 % Source: Deloitte/adjusted BCI
MNCs response to the challenge And multi-national corporations (MNCs) respond to the challenge: they evolve from closed innovation systems to Open Innovation Source: High Tech Campus Eindhoven
Challenge to regions & EDOs This in turn affects the work of Investment Promotion Agencies (IPAs) and Economic Development Organizations (EDOs): The challenge: accomplish more with less Source: BCI Global
How to distinguish one-self as a region? Globally competing nations and regions keep a close look on each other s weaknesses, strengths and ambitions. Successful approaches to FDI attraction are copied As a result a type of convergence of investment profiles of regions can be observed with regards to several location factors To distinguish one-self as a region, the contrary to convergence is called for: active differentiation. Regions have to invest time, effort and money in strengthening and highlighting those location factors where they can still make the difference (divergence) The following graph provides an overview of the various location factors determining the attractiveness of the investment climate of a region. The factors in red are those factors where regions in US and Western Europe can still develop a competitive edge
Active differentiation cities & regions Location Factors Divergence Convergence Economic profile Markets Taxes & incentives Regulations Labor climate Technology & know how Utilities Business sectors & clusters Quality of life Infrastructure, ICT & Logistics Sites, parks & offices (real estate) Source: BCI Global
4 location factors will make the difference Labor climate Technology & Know how Business sectors & clusters Infrastructure, ICT & Logistics People: labor quality (education), availability, costs, flexibility, productivity in both the business and services sectors and the educational system (pipeline) Quality-level and accessibility (technology transfer and commercialization) of technological expertise and applied scientific expertise in a region, both in industry and business and in the leading universities & institutes Established business networks of related and co-operative OEM companies, suppliers, service providers with a (number of) shared priority business or research domain(s) Connectivity: accessibility of the region (key personnel & goods) and ease of information exchange by means of the available physical and non-physical infrastructure & services
What does that imply? Decision-makers of MNCs involved in location selection (C-level) are looking for: Excellence on a global scale in costs (low costs; high productivity), quality (people, expertise, networks, co-operation) and risks (aversion of political, financial and natural risk) Clear propositions: what is it exactly a region has to offer and why can it be considered world-class? As a result, IPAs and EDOs must have in-depth knowledge of the strengths and weaknesses of their region and the ability to convey this message effectively to the right target group of companies: The region s proposition should answer the executive s question: What s in it for our company?. Intelligent, targeted and transparent content is key Information on the region s investment and business climate and industry sectors / clusters should be concise, targeted and in-depth Focused value propositions have to be developed by IPAs and EDOs, preferably in a joint effort with their private and scientific partners in a region
An example: Why focus; why in-depth knowledge? The medical devices sector consists of 12 categories, 10,000 generic groups and 500,000 technologies according to the GMDN classification Code 01 02 03 04 05 06 07 08 09 10 11 12 Term Active implantable technology Anaesthetic and respiratory technology Dental technology Electromechanical med. tech Hospital hardware In-vitro diagnostic technology Non-active implantable technologies Ophthalmic and optical technologies Reusable instruments Single use technology Technical aids for disabled persons Diagnostic and therapeutic radiation Examples Cardiac pacemakers, neurostimulator, etc. Oxygen mask, anaesthesia breathing circuit, gas delivery unit, etc. Dentistry tools, alloys, resins, dental floss, brush, etc. X-ray machine, scanner, laser, etc. Hospital bed, etc. Pregnancy, blood glucose, genetic tests, etc. Hip, knee joint replacement, cardiac stent Eye glasses, contact lenses, ophthalmoscope, etc. Various surgical instruments Syringes, needles, gloves, balloon catheters, etc. Wheelchair, walking aid, hearing aid, electrical bed, etc. Cardiac pacemakers, neurostimulator, etc.
Differences between these categories are very significant. MNCs active in this sector therefore look for specialized environments, partners and facilities IPAs and EDOs can only play a role in this location selection process if they know exactly what their region has to offer in the various niches and sub-categories
Source: BCI Global What do MNCs want to know?
Why such detailed specifications? Corporate requirements in site selection are often very specific IPA s answers should be specific as well: on the right a selection of the relevant specifications of a German chemical site for pharmaceutical manufacturing plants Other past projects with distinguishing characteristics: A 55 meter high milk powder plant A ceramic disk brake factory using 65,000 MW of electricity/year
III. A possible approach for IPAs / EDOs Development of focused Value Propositions (VPs) & Generating Leads A. Prioritization of a region s economic clusters B. In-depth assessment of the region s prioritized clusters C. Development of (a) focused value proposition(s) for the priority clusters D. Development of (a) matching target database(s) E. Development & implementation of the FDI attraction action plan
A. Determine within the Triple Helix (industry science & education government) what the (future) economic priority clusters in the region are on the basis of jointly determined criteria No. jobs Added value Competitiveness PM Focused VPs & targeted marketing B. Analyze what the competitive strengths of your region s priority sectors or clusters are, from a corporate perspective C. Develop a demand-driven value proposition: What s in it for the potential investor?
D. Find target companies with a corporate profile that matches your regional cluster s profile exactly E. Develop the action plan with the inward investment promotion and marketing activities, tools and instruments that deliver: the right message (content) in the right language (style) to the right person (responsibility) within the right company (matching profile) at the right time (what s the company s current market situation?)
A. Prioritization of a region s economic clusters Relevant questions: In determining your priority sectors / clusters, are you guided by what has happened in the past or by the future you hope to shape? Are there any partners you can team up with? Is it always an advantage if your city or region is already a Center of Excellence for a particular sector?
B. Assessment region s priority clusters Step B. In-depth assessment of a region s priority cluster(s) Analysis and assessment of all relevant building blocks of a specific sector or cluster in a region One could use Netherlands location advisory company BCI Global s proprietary Cluster Proposition Clock as a guideline: Source: BCI Global
Key building blocks of a successful cluster Talent pool Education Technology & knowhow Market Business networks Capital Facilities Office, R&D & industrial sites Supportive authorities Availability, skills and experience of the workforce in the specific priority target sector Availability & reputation of educational institutes at various levels in the specific priority target sector Assessment of the specific technologies available at academic and research institutes as well as within R&D centers of companies. What are the key strengths? What is the regional/national market for this specific sector, including launching customers Presence, size and activities of companies in this particular target sector; life-cycle development stage and level of organization of existing clusters in the sector Available venture capital & loans available for business activities in the specific priority target sector (Shared) Advanced research and business facilities open for third party use in this target sector Dedicated research, manufacturing and/or office space available in innovation-oriented surroundings Coherent supportive programs on local and regional level to enhance the development of start-ups and SME s and to promote the cluster
Secondary supporting building blocks Vibrant business climate Quality of life Overall economic growth and level of innovation in the area Quality of life for knowledge workers, including expatriates Branding / marketing Effort to brand and market the region (and its priority target sectors) nationally and internationally
Activities in this phase Desk research and analysis of all business intelligence in the region (reports, studies) with regards to the specific cluster(s) involved Analysis international FDI flows in the cluster s business sector Intensive interaction (brainstorm, strategic discussion(s), workshop(s)) with IPA / EDO specialists and cluster partners (government, industry / business and science) Personal interviews with key cluster opinion leaders in the region: Industry & services Science & education Government (Optional) Personal interviews with key opinion leaders in the sector on an international level: validation of key findings and observations (Optional) International benchmark of the cluster s/region s competitiveness vis-à-vis its main competitors
C. Development focused value proposition(s) On the basis of phases A & B, EDO will develop a value proposition for the priority sector or cluster involved. All relevant cluster building blocks will be included Value propositions exist in many different sizes and shapes, but it should be concise, specialized, fact-based and demand-driven It is tailor-made for a specific target group (for example a subsector in a specific industry), is client focused and consists of specific (technological) information The value proposition places a particular emphasis on the four distinguishing location factors: 1. Labor climate 2. Technology & Know how 3. Business sectors & clusters 4. Infrastructure, ICT & Logistics
A strong value proposition furthermore includes the following 3 relevant issues, as they relate to potential business opportunities and the ease / security of doing business for a potential foreign investor in your region: 1. Market potential for investors In your region In your country In your country s hinterland 2. Legal barriers / opportunities Establishment subsidiaries / limited company foreign investors 3. Financial / fiscal barriers / opportunities Taxation Free international flow of capital / profits
D. Development of target databases On the basis of the focused value proposition, target databases will have to be developed Developing target databases is basically thorough, hard work (intelligent data crunching) whereby companies are sought with a corporate profile that matches the regional priority cluster s profile exactly Senior experts in the priority cluster in your region can be an effective help in identification of interesting target companies in their sector Screenings can be done in selected target countries but should be primarily focused on the technological content of the value proposition. Geography is of secondary importance
A target database consists of: company name brief corporate profile brief summary of recent international corporate developments contact data and highly important - relevant contact persons Because of that, companies on a target list should undergo a highlevel screening of the company s: critical mass (size) current economic status latest developments international orientation technological and/or business leadership in the sector growth rate/potential
E. The FDI attraction action plan Development & implementation of the FDI attraction action plan As the value proposition and the target database are now available, the optimal FDI Attraction action plan can be developed The VP and target database largely determine which marketing tools and approaches will work most effectively and efficiently. Questions to be answered for the IPA/EDA: What is the best mix of possible marketing instruments? How to best allocate our marketing budget? Source: BCI Global
It is crucial in this phase to select and develop the most effective marketing tools and approaches and to organize the implementation of the action plan as intelligently as possible Essential elements: Co-operation structures with public and private partners and networks: City, region, state Cluster / sector partners from industry Branch organizations Intermediaries (consultants) Financial & business services providers (Air)Port Authorities Universities & other knowlegde / education institutions High-level budget indications Inward investment promotion training of the regional FDI specialists
IV. Brabant & High Tech Systems & Materials The Province of Brabant is the High Tech region of the Netherlands The Brabant region around the city of Eindhoven has been named Brainport Eindhoven In Eindhoven the former closed research center of Philips Electronics is now an Open Innovation site, called the High Tech Campus Eindhoven
Turning technology into business High Tech Campus Eindhoven 37
Smartest region 5 OEM s in the Netherlands 80% of OEM s in Eindhoven region FEI, DAF, Philips, ASML, Canon 14 First tier suppliers 71% in Eindhoven region Bosch Rexroth, Frencken, GIS Europe, GL Group, KMWE, Neways Electronics, Norma, NTS Group, Optiwa, VanBerlo, Prodrive, SKF, VDL ETG, Wilvo 320 Second and third tier suppliers 34% in Eindhoven region 38
Where ideas thrive High Tech Campus Eindhoven Over 120 companies and institutes 8,000 researchers, developers and entrepreneurs 60 nationalities Turning technology into business From industrial research to pilot production 39
Knowledge to inspire Microsystems The development of entire systems on a micrometer scale - systems Embedded which are Systems in constant communication with their environment Networked Systems Life-Tech (Bio-Tech) Understanding of fundamental molecular and cellular High Tech Systems processes and mechanisms of life New Energy Technologies Med- Tech Any technology used to save lives in individuals suffering from a wide range of Ease of use / Design conditions; diagnosing, monitoring and treating of diseases Photonics 40
Campus companies 41
Advanced infrastructure - PINS Industrialization Electronics Design Mechatronics Competence center Microsystems & Device Technology Center Software Design Materials Analysis Lab EMC Center Thin film- Clean room Concept Prototyping RF/DC Measurement Lab Environmental Competence Center Laser Lab Instrumentation Rental Industry Consulting Competence Center Reliability Lab Greenhouse Prototyping & Small Series Production
Knowledge institutes
Facilities for start-ups Bèta & Mμ (accelerator) buildings Modern facilities Representative Benefits Presence of Venture Capitalists Access to networks Shared research facilities Being part of a European R&D hotspot
The Strip
Your Contact Your Contact BOM Foreign Investments Goirleseweg 15, 5026 PB Tilburg PO Box 3240, 5003 De Tilburg The Netherlands T +31 88-83 111 20 I www.foreigninvestments.eu E info@foreigninvestments.eu Mr. Ben Engel Sr. Project Manager Strategic Acquisition T +31 88 83 111 16 M +31 6 52 61 26 71 E bengel@bom.nl