Transcript Emergence of FDI in CEE and its effects on Food supply Dimuth

Dimuth Nambuge
Assistant Professor
Department of Economics
Slovak University of Agriculture Nitra
[email protected]
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What Foreign direct Investment?
Key terminology is – the “controlling interest” in
a foreign company.
 Does not need to be 100% ownership.
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Importance of FDI
Host country
 Ownership country
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P - Political
E - Economical
S - Social
T - Technological
L - Legal
E - Environmental
C - Cultural
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Spontaneous privatization 1989 - 1991
Privatization 1992 - 1995
Concentration begins 1996 - 2000
Accelerated concentration 2001 -
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The period of spontaneous privatisation happened
in 1989-1990, when the smaller shops were
privatised, but when a significant number of
private shops were established as well. Therefore
the number of food retail shops started to grow.
Prior to the period food chains were vertically
Integrated
Acquisitions and joint ventures in core products
groups
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During the period of privatization (from 1991 to
about 1995-96) the owners of the larger food
retail chains have been changed. Most of the shops
in the favourable areas have become the
properties of multinational chains.
Some SME’s developed
Some were bankrupt
Large western companies concentrated on post
acquisition issues;
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Distribution, brand positioning, pricing strategy
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During this period number of self employed
shops grew up.
Rationalization of manufacturing/ market
strategy for “NEW EUROPE”
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Transition period (1989- 1995) negative
GDP growth.
Higher level of poverty and unemployment.
Entry costs were minimum
Entered mainly through acquisitions.
Anti dumping policies
• Major brands
well
established
• Maximum
economy of
scale
• Costly
advertising
campaigns
• Mature
markets
• Expensive
listing costs
Eastern Europe (400 million
people)
Western Europe (350 million
population
North America (300million
population
• Major brands
well
established
• Maximum
economy of
scale
• Costly
advertising
campaigns
• Mature
markets
• Expensive
listing costs
• Most deals for
25 – 70
percent
market share
in major
product
groups have
been attained
to 3 to 40
billion dollars
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Knowledge spill over
High quality standards (ISO 22000 series)
High safety standards (HACCP)
Technological Transfers
Production line efficiencies
Increased yields through reserach
Environmental concerns
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Tax holiday incentives
Government and EU grants
Buyouts of small farms
Source: FDI markets, Financial Times, 2009, January
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Wholesale markets
Market Information Systems (MIS)
Measuring International Competitiveness
Improving market access to the supply
chains of multiple retailers
Human Capital
Improving access for small farms
Stimulating intermediary organizations and
marketing cooperatives
Discuss