The following article was originally published in the March 2000 edition of International Relations, a monthly magazine published by the Korea Local Government Authorities Foundation for International Relations. While it is directed toward local Korean government officials, the points raised are equally applicable to any government agency or private sector firm or institution that is seeking to attract the attention and capital of global investors or to otherwise communicate its interests and objectives to targeted constituencies in the U.S. and other international markets.

By Keith W. Rabin, President, KWR International, Inc.

Over the past five years Korea's national government has moved to decentralize and empower its provinces and municipalities – providing unprecedented opportunities for control on the local level -- yet creating new and demanding responsibilities. The post "IMF" era has accelerated this trend and government organizations now find themselves challenged by the need to access the foreign investment and technical knowledge required to maintain and enhance their long-term competitiveness and economic viability.

Reacting to this imperative, many national, provincial and municipal agencies have organized "road show" expeditions to foreign cities. Political leaders, bureaucrats, corporate executives and project representatives travel long distances to meet briefly with potential investors and corporate partners. To date, these often costly exercises have produced mixed results, leading many to question whether these efforts can achieve the results needed to justify the investment.

The inability of these events to generate meaningful progress by themselves should not be surprising. If a U.S. firm or municipality were seeking to develop a presence in Korea, one would not imagine they would gain much from a single effort that consisted of a one-day seminar in Seoul, followed by a number of one-on-one meetings – regardless of the quality of the program or participants in attendance.

Koreans -- who place so much emphasis on relationships within their own society --need to understand that in foreign countries as well there is a critical need to develop and nurture business and investments over time.

When organized effectively, road shows provide a wonderful opportunity to build interest and awareness in a particular region or project. However, the tendency to view a road show as an end, in and of itself, rather than as a key component within a complex, on-going process, has prevented Korean government agencies from achieving the full value that can be realized through these initiatives.

Having developed numerous investment promotion programs for government and corporate entities in Korea and all over the world, KWR International has developed several key reference points that should be considered by every Korean government agency seeking to attract investment into their province or municipality:

1) Research the Competition: Korean local governments face stiff competition from localities all over the world. Local governments must analyze all potential competitors in order to develop a credible strategy. For example, Korea lacks the English-language capabilities of Asian economies such as the Philippines, Hong Kong, Malaysia and India, not to mention British Caribbean countries or Ireland. Therefore, a strategy that seeks to directly compete against these economies to create back-office operations for U.S. and European multinationals is not likely to be successful. On the other hand, high education levels, established production expertise and strong corporate capabilities allow Korean localities to provide strengths over these other destinations, who are generally limited to their ability to provide real estate and low-cost labor.

2) Define Competitive Advantage: Successful investment promotion programs clearly illustrate the attractiveness of a destination. One cannot adopt meaningless slogans such as "Province ëA‰ is Right for You", which can be applied almost equally well to every locality in the world. Local governments must differentiate themselves. Positive examples include Inchon‰s emphasis on its infrastructural strength, Kangwon‰s attractiveness as a tourism destination or Taegu‰s Milan Project. Each draws on the respective strengths of the locality and provides investors and corporate site selectors with a rational reason to pay further consideration.

3) Target Audience: U.S. firms and investors tend to be specialized in their requirements. Different projects appeal to different constituencies and must be marketed in a different manner. For example, a government planning a bond issue will likely seek to meet with investment banks, credit agencies and perhaps institutional investors. Those emphasizing FDI need to appeal directly to site locators and corporations. Companies seeking venture capital or to partner with U.S. firms will require a third approach.

4) Emphasize Value over Cost: Korea's rapid industrialization has given rise to higher costs and wages, eroding the cost advantage it enjoyed during earlier stages of its development. To sustain a higher cost structure, Korean localities must offer tangible value beyond simple cost savings. Otherwise they will need to compete solely on price against lower-cost destinations such as China, Malaysia, Thailand or India.

5) Develop an Cohesive Program: Companies that seek to introduce new products into the market cannot achieve success through a one-day promotion. They must develop a sales, distribution and customer service network to nurture and maintain the interest of their target customers. Successful investment promotion programs adopt a similar approach. They incorporate a well-defined strategy within a well-orchestrated ongoing program. This is essential, as an unfocused approach consisting of a series of discrete, disconnected events lacks continuity and is unlikely to generate meaningful results. Investors, corporations, intermediaries and other entities need to be supported throughout all phases of a transaction. Additionally, as one of the best ways to attract investment is to point to success stories, it is critical to continue to maintain support to past investors as well.

6) Vision Before Details: To justify the allocation of the considerable resources required to successfully evaluate the feasibility of an investment, an investor must first be convinced of the general attractiveness of a project. At that point they will likely have their own unique criteria and objectives and are unlikely to simply accept the parameters defined by a project sponsor. Therefore, while local governments need to fully understand all aspects of projects in their portfolio, they should not overload their presentations with technical details. These can be addressed in follow-up meetings and will distract from conveying the essential attractiveness of an investment opportunity.

7) Substance before Style: Simplification and an emphasis on vision does not, however, mean that a presentation be devoid of substance. While one must make a good impression, investors are far more likely to be impressed with intelligent, credible information than elaborately designed, costly brochures and materials that offer little tangible value. Should there be sufficient resources to allow both the development of well-defined messages and information and as well as well-designed materials, local governments need to make sure they obtain the input of trained professionals who are familiar with both the subject matter as well as the local language. Even if they contain appropriate information, fancy materials filled with grammatical and spelling errors and poorly-written English are more apt to leave a negative than a positive impression. We have seen more than one example of this in our travels within Korea and other non-English speaking countries.

8) Utilize Spokespeople: Statements by local governments will be viewed with caution as investors understand the primary responsibility of a local government is to its province or municipality. While it is essential to involve government spokespeople in presentations, it is equally important to supplement their participation with third-party individuals who will be viewed as more objective and legitimate. Therefore, if a local government has had past successes attracting foreign investors, it should involve these entities in their promotional outreach. If they are promoting high-tech industries or tourism, they should utilize industry professionals or journalists who can leverage the messages of government spokespeople through comments that communicate the competitive reasons why a particular locality offers superior value.

9) Leverage through Media Relations: Road shows visits often cost hundreds of thousands of dollars if one accounts for all the travel, planning and associated expenses. Yet local governments are often reluctant to allocate the resources needed for effective media outreach, even though the incremental costs are generally quite low. However, a highly-successful road show visit will at best attract several hundred targeted people to a particular location. A well-placed interview can be seen by hundreds of thousands, if not millions of individuals, and provide articles that can be circulated for many months or even years to come. Road shows should be viewed as a forum from which clearly-defined messages can be delivered to large numbers of individuals who live and work over vast geographic regions and whose schedules may, or may not, allow them to attend a particular event. Individuals outside the room are therefore as important as those that attend.

10) Provide Local, Ongoing Support: If a road show is successful, participants will have many questions and needs over subsequent weeks. Inquiries will also be generated from people who were not able to attend and still others who seek to follow-up with proposals, site visits and other requests. Local governments are rarely able to sustain the personalized, ongoing contact required to maintain continuity by themselves. The distance is too great and they do not possess the necessary expertise, localized networks and experience. Even local governments that are able to station a representative in the U.S. are able to benefit from the specialized support of an informed consulting firm. An amicable and long-term working relationship is critical in order to allow effective representation.

11) Keep the Fire Burning: Constant communication and interaction with targeted prospects, long-term contacts and existing investors is essential – 365 days a year. Decisions to make large-scale fixed investments can require millions or even billions of dollars. They involve many people and are made over long periods of time. While road shows and seminars offer an excellent vehicle to open doors and entice potential investors, they are unlikely to generate tangible results in and of themselves. The best one can hope for are intent letters or memorandums of understanding, which do not generally create any legal obligation and are therefore essentially meaningless documents. Follow-up must be sustained to maintain continuity and the growing interest and participation needed to transform an initial interest into a real transaction.

12) Maintain Flexibility: Government agencies budget far in advance. They are therefore often unable to respond to attractive opportunities that may arise unpredictably over the course of a year. Local governments must, however, try to leave themselves open to change and are advised to retain a portion of their allocated funding so that they can respond quickly and proactively, so that they will not have to wait for an entire year before initiating needed changes.

Every province and municipality is unique and the points noted above address just a few of the many issues KWR International utilizes when it works with a client to develop an investment promotion program. For additional information, please contact Keith W. Rabin, President of KWR International, Inc. at tel. 212-532-3005, fax: 212-799-0517, e-mail: krabin@kwrintl.com.