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8: Preparing your export plan > Preparing an export
marketing strategy for your firm > Export distribution > Contract
manufacture
> Factors affecting the investment decision |
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Factors
affecting the investment decision
Political
- Political stability or uncertainty
- Attitude of the host government towards private
enterprise and, in particular, to foreign private investment
- Special inducement for foreign investors, such as
tax holidays grants, loans at favourable rates, tariff
protection for newly established industries
- Membership of a free trade area, or trade agreements
with other countries that might offer export opportunities
Legal
- Legal discrimination against foreign
companies or their expatriate employees
- Percentage of company that may be foreign-owned
- Patent protection laws and ease of enforcement
- Trademark protection
- Price control legislation
- Restriction on trade practice legislation
Costs
- Cost increases resulting from smaller
scale production, product modification to meet market needs,
etc.
- Wage costs, related to productivity
- Availability and cost of local raw materials and
components
- Availability and cost of transport services
- Freight, packing and insurance savings, if product
previously exported to the country
Exchange Control
- Restrictions on remittances to parent
company, e.g. Maximum percentage of foreign capital invested
- Restrictions on repatriation of capital
- Convertibility of local currency
Taxation
- Existence of a double-taxation agreement
between the host country and parent-company country
- Withholding tax payable on remittances to parent
company
- Level of company taxation
- Method of calculating depreciation allowances, stock
valuation, etc.
Finance
- Local sources of capital and interest
rates payable
- External sources of capital
- Local accounting requirements and conventions
- Rate of inflation
Personnel
- Availability of labour, e.g.
skilled, unskilled and clerical
- Availability of local managerial talent
- Percentage of employees who must be local nationals
- Availability of work permits for expatriates
- Living conditions for expatriates. E.g. Housing,
education, medical facilities, etc.
- Labour laws and regulations, especially regarding
the appointment and dismissal of staff
- Industrial relations, trade unions, worker participation
in management
- Existence of compulsory profit-sharing schemes for
employees
(Source: L S Walsh. International
Marketing)
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