New U.S. Trade Offices in Africa

from http://allafrica.com/

“As a new member of the Department of Commerce team, I’m very excited to be a part of this major expansion,” U.S. Assistant Secretary of Commerce for Global Markets Arun Kumar said in an April 28 Commerce Department blog post.

U.S. Secretary of Commerce Penny Pritzker announced the expansion of trade offices on April 17. She said that, in 2014, the Commerce Department’s International Trade Administration will open offices in Angola, Ethiopia, Mozambique and Tanzania, in cooperation with the U.S. Department of State. These four new offices, in addition to one to be opened in Burma, will bring the knowledge and experience of U.S. trade specialists into some of the world’s most rapidly developing economies.

Sub-Saharan Africa is one of the fastest-growing economic regions in the world, Kumar pointed out in his blog post, adding that the International Monetary Fund predicts continued growth throughout the continent, as part of a broad continental economic transformation.

Expanding into Global Markets: Direct Investment

Some companies find that they cannot meet their global marketing objectives by continuing to export, so they make direct investments in international markets to gain access to manufacturing facilities, supplies, or labor, among other reasons. They become multinational corporations which the United Nations defines as “enterprises which own or control production or service facilities outside the country in which they are based.” While this definition makes all foreign direct investors “multinational corporations,” large corporations are the key players.

Building and managing operations outside the domestic market requires skills and resources beyond those used for exporting. Multinational firms with subsidiaries and other investments in other countries also deal with issues ranging from local versus headquarters control, to product or service standardization versus customization for individual market needs. At the highest level of marketing globalization, companies integrate thie international and domestic operations into relatively seamless enterprises that have portfolios of nations that they market to with unified strategies.

Putting products into the hands of customers overseas involves some degree of direct financial investment, whether it is done by acquiring assets in other countries or gaining access to another company’s assets through contracts. International marketers invest directly via full ownership, strategic alliances, or joint ventures to create or expand a permanent interest in an enterprise. It typically requires substantial capital and an ability to absorb risk, so the most visible players in this arena are large multinational corporations who invest either to enter new markets or to ensure reliable supply sources.

Foreign direct investment is defined by the United Nations as “enterprises which own or control production or service facilities out of the country in which they are based.” U.S. firms have significant investments in the developed world as well as in some developing countries. It is a major avenue for global market entry and expansion.

The top multinational companies come from a wide range of countries and depend heavily on their international sales, with their original home market accounting for only a fraction of total sales. Some have revenues larger than the domestic output of some countries. Many operate in more than 100 countries and do not even reference “global” and “domestic” anymore. Through their direct investment, these companies bring economic vitality and jobs to their host countries, often paying higher wages than the average domestically owned firms. At the same time, though, trade follows investment, and companies that invest in other nations often bring with them imports that could weaken a nation’s international trade balance.