C3. Early Support Services

Governments can provide early support services to companies considering overseas investments. Associated services are offered by a broad variety of government agencies, often led by the main coordinating institutions and IPAs. These services are primarily aimed at overcoming knowledge deficiencies among companies about overseas investments. They make potential investors familiar with the situation in overseas markets, establish networks and contacts for the investor with businesses and government officials abroad, and prepare investors for the establishment of overseas subsidiaries (Sauvant et al. 2014). The services can take various forms:

The provision of information regarding OFDI is among the first services governments can provide to potential investors. Such information is often provided in the form of publications, reports and databases. There are different types of information:

1. Information on host countries covers the characteristics of potential target countries, including their economic conditions, industries and the quality of the investment environment, which includes details about investment laws and regulations. Information about specific opportunities available to investors might also be provided. Government agencies of the home country can put this information and data together by drawing on available information in host countries, especially from these countries’ inward investment promotion agencies, and by drawing on international databases.
2. Information on the OFDI process includes information on financing, legal aspects and other laws and requirements in both home and host countries.
3. Information on HCMs can be made available to potential investors.

Investment missions to potential host countries could then be organised as a next step. These missions are aimed to provide interested companies with an opportunity to explore the investment conditions in the countries of interest. Investment missions involve meetings and exchanges with government officials and businesses, visits to potential investment locations and provision of further information. Sometimes these missions are combined with trade or other relevant missions, and often they are organised jointly by several institutions (Sauvant et al. 2014).

Matchmaking services can then support interested companies establish networks with governments and businesses in the host country. There are two approaches to accomplishing this:

1. Connections with governments and businesses overseas are established directly by putting relevant individuals and the companies or institutions they belong to in contact. The responsible government agency in the home country can help identify and reach out to relevant contacts and arrange the networking meetings.
2. Maintaining business matchmaking databases, or even lists of relevant government officials and other contacts overseas, produces a repository of relevant contacts on which potential investors could draw on as needed.

Cooperation between the IPAs, or main coordinating institutions, of home and host countries is a way to facilitate investment missions and effective matchmaking.

In addition, governments can offer education and training services to potential investors, involving focused seminars, larger conferences or online training. These trainings can discuss issues relevant to the OFDI process, such as investment opportunities, relevant laws and regulations, and details about managing subsidiaries in other countries. Such events can be opportunities to hear the experiences from investors who have already engaged in OFDI.

In-depth consultancy services and business advice could also be offered to investors. This would involve government institutions engaging more intensively with the planning of overseas investments and associated strategic considerations of the firms involved. These services could include the preparation of feasibility studies.

The more general and less costly early support services, such as information provision, tend to be free of charge. The more costly the service and the more it is tailored to individual investors and companies, the more likely it becomes that a fee will be levied and/or that paid institutional membership is a requirement to benefit from the service.

All these services provide the institutions of the home government with an opportunity to raise the issue of sustainable development implications with companies and encourage them to integrate considerations about home-country effects into their investment planning (UNESCAP 2020). Early support services are also an opportunity to make investors aware of the corporate and social responsibilities they have when investing abroad, including on environmental, labour and other standards.

Key insights

• Almost all advanced economies, and a large number of emerging economies, provide at least some form of early support services to prospective outward investors (Sauvant et al. 2014).
• Basic early support services, such as information provision, can be provided with limited resources, and thus by governments that have limited capacity. The more tailored the services become to individual companies, and the more such services involve travel, trainings or advisory work, the more costly they become, though it would be feasible to charge a (membership) fee for these services.
• Early support services can be utilised to sensitise companies to the desirability that their investments generate home-country effects and to the need for responsible corporate conduct when operating overseas.