In scouting out profitable investments away from one’s homeland there are number of factors to consider. Opportunities include investing in foreign stocks, foreign real estate investments, setting up the management aspect of a business in a tax friendly locale, setting up shop for one’s entire business offshore, and more. With any of these international investment strategies one ought to consider access to markets, manpower needs and costs, access to appropriate technology, and growth potential.
Coming out of the 2008 Great Recession, Asia has largely been the engine of growth. However, the US economy is also slowly recovering. The key word for the US economy, as well as Europe and Japan, is “slowly.” Mature markets in North America and Europe rarely provide rapid growth whereas evolving economies in Asia, Latin America, Russia, India, China and other parts of the Asia Pacific. The so called BRICS nations (Brazil, Russia, India, China) have room to grow which presents offshore investors with opportunity. International investment strategies in these locations may provide a greater rate of return on investment and time spent than similar endeavors in the more mature economies of the world. When value investing for long term profits, going where the growth is, is the beginning of a good strategy.
Access to Technology
The United States, Europe, and Japan are still world leaders in technology. However, Korea, China, India, Russia, Brazil and others are gaining ground. One clear effect of US homeland security policy has been to make it hard for smart people from around the world t come to the USA to work. The recent Bush administration policy of limiting government funding and therefore access to cell lines for stem cell research drove much of that research offshore. In today’s world it may be much easier to get stem cell related treatment for diseases by going to Thailand, Korea, or Brazil. Depending on the market niche, international investment strategies for high tech industry may drive businesses to Latin America or Asia instead of the USA.
Access to Markets
Close access to growing markets is a decided plus when the cost of transporting goods or providing services at a distance is significant. In addition, setting up business in a nation that is within a specific free trade zone may provide significant advantages over trying to sell into that market from the outside. International investment strategies, such as doing business out a nation such as Colombia which has trade relationships across the hemisphere, could be more profitable than doing business from home.
An all too simplistic view of manufacturing offshore is that labor is cheap. For a nation such as China, cheap labor can be a plus. However, a well trained and intelligent worker can easily out produce his underpaid counterpart anywhere. When considering international investment strategies, it is often wiser to look for a well educated and often English speaking work force than one that works for cheap but has a poor skill set. This is a good reason for the success of India in doing work for companies in the West. A large part the fundamental analysis required for setting up or investing in offshore businesses is making sure that the workforce involved has the skill set necessary.