U.S. Manufacturers Up Their Stakes In Emerging MarketsGene Koretz
American companies are widening their investment sites overseas. Ernst & Young reports that 709 foreign manufacturing projects were announced by U.S. corporations last year, an 8% increase over 1991. While Europe dominated the list, with 53% of the projects, and Britain nudged Canada out for first place, the most noteworthy change was accelerated activity in markets newly opened to Western business.
China posted the biggest increases--39 projects, compared with 15 in 1991. Czechoslovakia's tally also rose, from 5 to 15. (The Czech Republic and Slovakia did not split apart until 1993.) Other countries attracting increased investment included Chile, India, Israel, Romania, Malaysia, Singapore, South Africa, and Venezuela. By contrast, announced investment projects in Mexico dropped from 56 to 32, perhaps because of apprehension over the pending vote on the North American Free Trade Agreement.
In sum, according to Ernst & Young's tally, some 355 U.S. companies initiated or expanded manufacturing operations in 58 foreign countries in 1992. Although acquisitions were the most popular growth option, particularly in Western Europe and Canada, joint ventures predominated in Asia and Eastern Europe, where local partners help bridge economic and cultural differences.
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