The year 2021 was marked by changes in foreign direct investments caused by the coronavirus pandemic. At the same time, during the last 12 months, we could also notice a clearly greater activity of investors than in 2020. As a result, only in the first half of 2021, global FDI reaches a value of approximately USD 852 billion. The October Monitor Trends Investów UNCTAD indicates that during the six months of this year, FDI recovered over 70 percent. Losses resulting from the 2020 coronavirus pandemic crisis.
Despite a clear improvement in sentiment, experts stress that uncertainty remains high and that important factors causing it are the duration of the health crisis, the pace of vaccination, especially in developing countries, and the pace of implementing infrastructure incentives. Other important risk factors include labor and supply chain bottlenecks, rising energy prices, and inflationary pressures. So the following questions arise: what will 2022 look like in a foreign direct investment? What trends will shape international business? Which industries can be a source of investment opportunities?
Analysts expect FDI should continue to recover from losses in the coming year. According to the Global Data forecasting models, FDI will increase by about 6% in the global dimension, although the growth rate will vary depending on sectors and countries. Experts are convinced that companies are determined to look for new business opportunities after almost two years of operating in a pandemic reality. Many of them supplemented or updated their strategies, taking into account the need to adapt to current trends related to, among other things, with new work models, accelerated digitization, and the need to build more resilient supply chains. Foreign direct investment may be one of the key elements in the implementation of these strategies.
First, IT
Very good prospects for new investments are visible, among others in the IT industry. According to analysts’ forecasts, this sector will occupy the first place in terms of the number of completed investments in the coming year. The factors driving the good economic situation will be the phenomena related to the increase in the level of digitization in the world, fintech, and artificial intelligence, and smart cities. Polish companies also take advantage of the favorable situation in the industry. The data of the Polish Development Fund indicate that in 2020 the value of sales of Polish telecommunications and IT services abroad reached over PLN 37 billion. Three years earlier, this amount was twice as low and amounted to approximately PLN 18.3 billion. The Polish IT sector has developed a strong brand on the international market,
The R22 Group, which provides solutions in the hosting and domains industry, noticed the good economic situation a few years ago. In 2018 and 2019, together with the Foreign Expansion Fund, it implemented two investments – first in Romania and then in Croatia. Thanks to the takeover of local companies, the Polish group gained about 30% share in Croatia’s hosting and domains market and about 25% share in the Romanian market.
More Electronics
The pandemic fueled the sale of electronics, and remote work and education forced more consumer electronics purchases. The main categories of products purchased in 2020 and 2021 were computers, laptops, cameras, monitors, speakers, and other devices supporting online work and life. We also observe an increased demand for batteries, especially those intended for electric vehicles and semiconductors.
According to the “Consumer Electronics E-Commerce Global Market Report 2021″, the value of the global online electronics market in March 2021 was estimated at over $ 343 billion and will continue to grow. Data from the report indicates that in 2025 it may reach as much as $ 511 billion.
At the same time, electronics manufacturers were not spared problems in production, access to components, and logistics during the pandemic. Despite the record-breaking demand for electronics, many factories had to stop production. Very long supply chains failed, and this generated enormous losses.
During the pandemic, both the largest and slightly smaller manufacturers had huge production, component availability, and logistics problems. Although the demand for electronics was greater than in previous years, many factories were shut down. While the supply chain has suffered in all industries, delays in this industry have generated enormous losses. This prompted many companies to take steps to secure their supply chains and resist shocks; for example, Intel decided to build new factories in Europe. Such a decision was made, among others, by Intel.
The demand for electronics is also used by Elemental Holding, which, together with the Foreign Expansion Fund, invests in the recycling of strategic metals. The platinum metals, gold, silver, copper, aluminum, nickel, cobalt, and lithium obtained in this way are used in electronics and the e-mobility segment. In addition, the company’s strategy is in line with a large trend related to the transition to a circular economy, as it allows the extraction of high-value raw materials to be replaced with recycling. The Foreign Expansion Fund is involved in five of the company’s projects. The financing obtained from the fund allowed the company to appear in Lithuania, Germany, and the United States.
Building Resilience
Experts and analysts agree: the pandemic has shown us that an unexpected, violent event can shake up almost every aspect of our lives. What’s more, we can often come across opinions that pandemics will repeat in certain cycles, so proper preparation and resistance to shocks becomes crucial.
One area that has been particularly hard hit is the transport and logistics industry. Withheld deliveries from Asia to Europe and America, port blockades meant complications for virtually every industry. Entire factories had to stop their production lines. The above difficulties made us realize how fragile very long supply chains turn out to be in the face of unpredictable situations. Most of the respondents who participated in the Capgemini Building Supply Chain Resilience study believe they will have to significantly overhaul their supply chain management strategies in the next 2-3 years. The changes aim primarily to build more regional and local production bases: diversification, contingency planning, agility, and a balanced approach to entire supply chains for the respondents. In addition, organizations plan to invest in technologies that make supply chains more autonomous and intelligent.
Poznańska Korporacja Budowlana Pekabex took care of strengthening the logistics processes. The Poznań-based producer of prefabricated elements, in cooperation with the Foreign Expansion Fund, purchased the Fertigteilwerk Obermain GmbH factory in Bavaria, which has a similar production profile but relies on different supplier channels. Germany is one of the key markets for this company, therefore having a factory there will secure the supply chain.
Forecasts and market research suggest that 2022 will positively affect the foreign investment market. Despite many negative effects, the pandemic also created many opportunities and business opportunities. From the perspective of the Foreign Expansion Fund, we can see that Polish companies are ready to use them and are actively looking for their place in foreign markets. After a period of increased uncertainty, we see a clear interest in expansion and expect that soon we will be able to talk about further projects by Polish entrepreneurs with our participation.
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