Opening business branches in other countries.
Companies reaches a time when they feel that the local demand is fully saturated therefore opt for foreign investment. Foreign investment is a move considered by all companies irrespective of the industry for example universities are moving to other countries as well as banks. In the past this move was welcomed with a lot of hostility by the destination country making set up business or institution very difficult. However currently many countries are passing laws and decrees to encourage more and more companies to settle in their country. What have softened governments is discovering that their country gains to gain from foreign investors through.
Creating of employment to the local residents of the country. Companies when they expand will require personnel with local expertise. Hence the citizens will enjoy getting revenue from the foreign company.
Innovation on the infrastructure. Foreign companies are known to partner with the country’s authorities to improve on the transportation and communication channels. The foreign company also pays fees and taxes to the government which will be invested in the economic growth and development of the country.
Provision of high quality goods and services. This is especially the case with education where foreign institutions helps to diversify the education sector of the country. Therefore residents are able to acquire skills which there had to travel abroad to learn locally.
Some of the laws being passed to encourage foreign investment involves.
The law relating to ownership of land. Some countries had very strict conditions that a business had to own a piece of land in order to operate in the Country. The problem was that the land owners in the country were afraid of their land being acquired by foreigners. Also in addition land acquisition is a huge investment that many business will not want to incur especially with the risk it’s a foreign country. This laws was replaced by allowing businesses to have short term occupancy agreement of real estate with the residents.
Reduction of the foreign company business registration requirements. Foreign governments usually ensured that a non-resident company had to go to very many government offices before getting approval to do business in the country. Non-resident companies would abandon the prospects of investing in the country after discovering it would take them a long time to settle in. This strategy aim to entice more foreign companies into the country.
However although countries are doing all the above they have added the financial cost required to trade in the country. Foreign governments have raised the minimum capital requirement for the non-resident companies. Foreign governments justify the high fees and taxes to creating a more conducive business environment.
With time it will become necessary to revise the capital requirements of a non-resident company.