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Strategic Investment Approaches in Peru: A Case Study

Learn how to target sub-sectors for investment and approach potential investors effectively in Peru, focusing on agricultural exports and strategic market selection. Case study includes investor targeting phases, sector screening, and successful investor engagement. Explore the importance of international networking, competitive assessments, and strategic planning to attract foreign direct investment. Success stories and key points provide valuable insights for investment promotion agencies and businesses seeking foreign investors.

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Strategic Investment Approaches in Peru: A Case Study

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  1. Identifying target sub-sectors, and how to select and approach potential investors: the case of Peru ‘Investment Promotion’ Short courses for permanent missions in Geneva Palais des Nations, 9 June 2009

  2. Phase 1: Broad Sector Screen • Peru’s Investment Policy Review • Study on FDI promotion at the regional level in Peru • Training workshops with outputs such as work plans, including national and international networking • Export and competitiveness studies carried out by different public and private organizations

  3. Phase 2: Narrow Sector Screen • Identified non-traditional agricultural exports. Given the success of the Asparagus, other similar products were identified: Paprika, Artichoke, Piquillo Pepper, Mango, Citrus fruits, Avocado • Selected 3 products to start with: Paprika, Artichoke and Piquillo Pepper (food processing- more value added)

  4. Phase 2: Narrow Sector Screen, cont. • Evaluated the national strengths & competitors • Competitive production costs • Identify main export market: USA and Europe • Identify main competing exporters: Spain, Brazil, Iran and China • Detailed market & corporate (TNCs) based assessment • Aim is to find un-served market opportunities and TNCs looking for markets to serve Do a few sectors well…… then do some more!

  5. Phase 3: Broad Company/Nation Screen • Screened the 3 products against other probable country competitors • Reviewed TNCs in priority products in those host nations • Determined that Spain was a major target country • Identified an international food fair in which to participate: Alimentaria Barcelona 2006 • Hire a Spanish expert to select 30-40 companies and to prepare their visit during the fair

  6. Phase 4: Confirmation of Targeting Priorities • IPA and Government committed to: • 3 products • Spain as FDI source • 20-30 prime candidate TNCs/investors • Prepare the promotional material: brochures, video, ppts, investment guide, etc • Inter-institutional cooperation: Ministry of Economy, Proinversión, PromPerú, Andean Community Secretariat, local consulting firms, local private sector

  7. Phase 5: Developing the Project Position • Prepare specific information on each product • Product X to serve market Y: i.e. Peruvian products competitiveness to serve USA and European markets • Researched and produced project concepts for target companies: Paprika, Brine Artichoke and Piquillo Pepper

  8. Phase 6: Reconfirmation of Target TNCs • Government, IPA and UNCTAD reviewed projects and targets • Continuous review of target TNCs with the help of an international expert – e.g. visit their Websites • Confirmed primary TNC targeting list (20-30 provided by international expert previous to the int’l fair)

  9. Summary of Key Points • Broad Sector Screen……………………. 6 priority products • Narrow Sector Screen…………………… 3 target products • Broad Company/Nation Screen…….…. 20-30 target TNCs • Confirmation of targeting priorities • Develop the project proposition & prospectus • Reconfirmation of targets TNCs………

  10. Phase 7: Corporate Appraisal & Screening Phase 8: Identification of Key Executives

  11. Phase 9: Corporate Contact/Negotiations • Organized presence in the Feria Alimentaria Barcelona, 2006 • Prepared staff and material: first impressions count! Shared stand with PromPeru, exhibit together with Peruvian companies, show the video, etc. • Focused on learning more about the TNC, its plans & perceptions of Peru • Diplomatically introduced possible project opportunity: no hard sell • Listened carefully to the TNC’s reaction & adjust project accordingly • Followed-up meetings very closely

  12. Peru in Feria Alimentaria Barcelona

  13. PRELIMINARY RESULTS • 5 Companies announced investments interest equivalent to $10 million • 14 June 2007, one company started a $1.5 million operation to produce brine artichoke for the USA and Spanish markets • Local partner • 180 jobs per 8 hour shift • 200 day labourers per season (indirect jobs) • Approx. 300 rural farmer families directly benefited (crops) • The investment promotion agency ProInversión continues close follow up and assistance to potential investors

  14. PRELIMINARY RESULTS • Investor Targeting works but it is not magic • Inter-institutional cooperation is fundamental • Time and good research skills, too • Experts from the target country are instrumental • Diplomats can also be instrumental, in particular if posted in target countries

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