Table of Contents

ASSIGNMENT COVER SHEET .................................................................................... 0

Abstract .............................................................................................................................. 3

I. GLOBAL FDI OVERVIEW....................................................................................... 4

1. FDI FLOWS IN DEVELOPED AND DEVELOPING COUNTRIES ............... 4

1.1. CHANGES IN FDI TRENDS: M&A AND GREENFIELD ACTIVITIES . 5

1.2. CHANGES IN FDI TRENDS: ONSHORING AND FRIENDSHORING 6

2. EXPLORING FDI ATTRACTING: ANALYZING FACTORS OF BRAZIL,

AUSTRALIA AND CANADA ................................................................................................... 8

II. A CASE OF VIETNAMESE FDI ........................................................................... 10

1. FDI INFLOW OVERVIEW............................................................................. 10

2. VIETNAMESE FOOD PROCESSING INDUSTRY SCAN .......................11

3. PORTER’S FIVE FORCES ANALYSIS ...................................................... 13

Appendix Appendix 1: PESTLE Analysis of 3 countries .......................................... 18

Appendix 1.1.: Political factors ................................................................................. 18

Appendix 1.2.: Economic factors ............................................................................ 19

Appendix 1.3.: Social factors .................................................................................... 20

Appendix 1.4.: Legal factors ..................................................................................... 22

Appendix 1.5.: Environmental factors ..................................................................... 24

1
References ...................................................................................................................... 27

2
 Abstract

The report provides a comprehensive analysis of the current global trend affecting

foreign direct investment (FDI) inflow. It also highlights the critical factors that contribute

to the success of three leading countries in attracting significant FDI inflow, namely Brazil,

Australia, and Canada. Furthermore, it compares and contrasts the food processing

industry in Vietnam to the successful FDI strategies employed by these three leading

nations.

Keywords: FDI inflow, Brazil, Australia, Canada, Vietnam, food processing

industry

3
 I. GLOBAL FDI OVERVIEW

2022 saw a 5% decrease in worldwide FDI inflow over the previous year. Global

FDI flows increased by 24% at half-year values in the first half of 2022, exceeding any

half-year level seen since 2018. Following the COVID-19 epidemic, the world economy

began to show signs of recovery as some nations loosened restrictions and resumed

business as usual. Investor confidence rose as a result, and FDI inflows surged.

Due to the effects of the Ukraine War, it then fell by 58% in the second half of the

year, followed by political turmoil, economic sanctions, the risk of violence, and civil unrest

(Figure 1).

Figure 1: Global FDI flows, 1999-2022 (Source: OECD)

1. FDI FLOWS IN DEVELOPED AND DEVELOPING COUNTRIES

Due to withdrawals from Luxembourg, FDI inflows to OECD countries decreased

by 26%; however, substantial gains in Switzerland and the United Kingdom somewhat

compensated for this decline. A 38% decline in FDI inflows to non-OECD G20 economies

was primarily attributable to China (Figure 2).

4
 Figure 2: FDI inflow to selected areas, 2021-2022 (USD Billion)

Major FDI recipients recorded lower FDI flows in 2022, particularly China and the

United States partly as a result of reduced new investment activity.

Nevertheless, the United States and China were the top two FDI destinations

worldwide in 2022, followed by Brazil, receiving peak levels of inflows partly due to

increased reinvestment of earnings (Figure 3).

Figure 3: FDI inflow to selected countries, 2021-2022 (USD Billion)

1.1. CHANGES IN FDI TRENDS: M&A AND GREENFIELD ACTIVITIES

The first quarter of 2023 saw a further fall in cross-border M&A activity, potentially

as a result of a tighter financial environment, ongoing geopolitical issues, and worries

about an impending recession. In 2022, fewer agreements were completed than in 2021.

5
The outlook for greenfield investment activity was still favorable in 2022, though. Despite

an increase in announced capital spending in advanced, emerging, and developing

economies, there were still fewer projects than before the epidemic (Figure 4).

Figure 4: Recent cross-border investment activity, Q1 2019 – Q1 2023

1.2. CHANGES IN FDI TRENDS: ONSHORING AND FRIENDSHORING

Companies and authorities are increasingly considering ways to strengthen supply

chains by relocating production domestically or to reliable nations as geopolitical tensions

mount. Thus, during the past ten years, more FDI flows have gone to economies with

comparable geopolitical alignments than to more proximate countries, indicating that

geopolitical preferences are increasingly influencing the geographic footprint of FDI.

This occurs as a result of FDI's global footprint shifting due to rising geopolitical

tensions between major economies like the United States and China. Countries may

prioritize investments in economies with similar geopolitical alignments as they work to

lessen their reliance on opposing superpowers and fortify their economic and strategic

partnerships.

6
 To advance their strategic interest such as getting access to natural resources,

expanding their market share, or supporting their regional allies—countries invest in

economies that are compatible from a geopolitical perspective. This may be especially

important in areas like Asia, where economic and strategic competition is growing.

Geopolitically connected economies may coordinate their regulations and

standards to promote trade and investment, making it simpler for investors to transact

business internationally. This is especially important in areas like the European Union,

where the harmonization of laws and standards has made cross-border investment easier

(Figure 5).

Figure 5: Trend in flow of FDI, 2002-2021 (Source: IMF)

7
 2. EXPLORING FDI ATTRACTING: ANALYZING FACTORS OF BRAZIL,

AUSTRALIA AND CANADA

Brazil, Australia, and Canada are among the top 20 countries in the world that have

attracted significant foreign direct investment (FDI) inflows. They have things in common

including stable political environments, an abundance of resources, qualified labor, well-

developed infrastructure and proximities to wider markets that have drawn foreign

investors in many industries (Figure 6).

Further analysis of PESTLE FACTORS of 3 leading countries is included in

Appendix 1.

8
 Figure 6: Matrix Table of summarizing and ranking common factors among 3 countries.

Factors Political stability / Proximity to other Skilled workforce Abundant natural Well-developed

Government markets resources Infrastructure

Countries incentives

Brazil (Total rank: 3) 3 2 3 2 3

Australia (Total rank: 1) 1 1 1 3 2

Canada (Total rank: 2) 2 3 2 1 1

Benefits from these - Reduce risk, - Provide access to a - Make them attractive - Provide a reliable - Reduce the risk of

factors in attracting FDI increase investor wider customer base locations for businesses supply of raw materials investing

confidence - Reduce reliance on a wishing to engage in for manufacturing and - Make it easier for
inflow
- Long-term planning single market research and production businesses to operate

- Lower the operating - Allow companies to development - Make operations more - Lower the costs of

cost compete successfully - Reduce the possibility cost-effective and doing business.

- Competitive on international of a human capital profitable through local - Ensure that

advantage markets. deficit resources accessing investments are

- Partnership - Enable businesses to without export/import profitable and

opportunities: provide access a talent pool of fees sustainable over the

valuable market individuals who can - Diversification long term.

knowledge, expertise, foster growth and opportunities.

and connections for innovation.

local companies.
 II. A CASE OF VIETNAMESE FDI

1. FDI INFLOW OVERVIEW

With a significant 10.3 billion USD in intraregional Greenfield investments in 2022,

nearly 43% of all investments in the Asia-Pacific area, ASEAN member states took the

lead (ESCAP, 2023).

In the region, the green industry has had the highest FDI inflows from Vietnam and

Indonesia ($232-242 billion), followed by Malaysia and Singapore ($153-164 billion) over

the past ten years (Southeast Asia is one of the largest recipients of FDI among Emerging

regions, 2022), (Figure 7).

Figure 7: Destinations of intraregional Greenfield FDI inflows and share of total

Greenfield FDI inflows to the Asia and the Pacific region, 2011 – 2022 (US$ million)

10
 2. VIETNAMESE FOOD PROCESSING INDUSTRY SCAN

The main industry in Vietnam is food processing, and it has a lot of potential to

improve the country's economic situation. The food processing sector in Vietnam has

risen consistently at a rate of roughly 7% during the past five years and accounted for

19,1% of the Manufacturing industry (Figure 8).

Figure 7: Breakdown of foreign direct investment (FDI) inflows in Vietnam

in 2022, by industry

Seafood and agricultural food items are the mainstays of this industry, which is

mostly export-oriented.

In recent years, there have been many M&A deals in the food industry (mergers

and acquisitions of food processing companies) and this trend is expected to continue in

the coming years. Examples include CJ Group (South Korea) acquiring 65% of Minh Dat

Food Company and 47.33% of Cau Tre Export Goods Processing Joint Stock Company;

Daesang Corp (South Korea) acquiring 100% of Duc Viet Food Joint Stock Company; …

11
The number and value of completed M&A deals in Vietnam have been steadily increasing

in recent years. It is expected that M&A will continue to grow, especially with the

implementation of EVFTA (Chi Mai, 2023).

Figure 8: Factors that affect Vietnamese manufacturing businesses Q2/2023 (%),

according to Vietnam General Statistics Office (GSO)

As a sector of manufacturing industry, food processing industry also faces the

difficulty from those factors above (Figure 8). However, being a domain contributor to the

Vietnamese economic situation, food processing operation possess some PESTLE

advantages:

- Social factor – Large market: a population of nearly 100 million people, about 50

per cent of whom are below 35, has a huge demand for food products (Vu, 2023)

- Environmental factor – Strategic Location: Vietnam is located in a region with

abundant marine resources, making it a major producer and exporter of seafood

products. Vietnam is located in the heart of Southeast Asia, this provides easy

12
 access to other major markets in the region, including China, Japan, South Korea,

and ASEAN countries.

- The government is investing in infrastructure.

- The government has also established trade agreements with other countries to

promote exports.

- Vietnam's laws and regulations related to food safety and quality have been

strengthened in recent years, which can help to improve consumer confidence in

domestically produced food products. The country has also signed trade

agreements with other countries that help to ensure compliance with international

standards.

3. PORTER’S FIVE FORCES ANALYSIS

Note: Red (High), Yellow (Moderate), Green (Low)

5 Forces Domestic Market Export Market

Threat of • The presence of established • The growing demand for food

New players products

Entrants • High barriers to entry such as • The government's support for

regulations, capital requirements, the export industry.

and distribution networks.

13
Bargaining Suppliers have some bargaining power Suppliers have more bargaining

Power of due to the concentration of raw material power due to the quality requirements

Suppliers suppliers and the limited availability of and certifications needed to meet

certain ingredients. international standards.

- The concentration of suppliers:

Vietnam's food processing sector does

not have a high degree of concentration.

Additionally, this lack of focus lowers

costs and offers food processors some

negotiating power.

- The significance of suppliers:

Suppliers not only provide the raw

materials and inputs needed for food

processing, but they can also obtain such

commodities from abroad.

Bargaining Buyers have a wide range of choices and Buyers have more bargaining power

Power of can easily switch to other manufacturers. due to the high competition and the

Buyers need for suppliers to meet quality

standards.

14
 Change in preference:

• Organic and plant-based products

• Less-processed and environmental-friendly food

• High food safety standards and free of contaminants

Threat of There are many substitutes available, but - There are many other

Substitutes consumers may prefer established countries that produce similar

brands or other options, including home- food products, such as

cooked meals, street food, and other Thailand, China, and

processed food products. Indonesia.

- Vietnamese customers are noted - Different tastes and

for having a strong preference for preferences among consumers

natural ingredients, which may in export regions could lower

reduce the need for processed the demand for Vietnamese

food goods. (Phân Tích Báo Cáo processed food items.There

Ngành Thực Phẩm Việt Nam are only 7 products/ groups of

2022). products of Vietnam that

achieve export value of over 2

billion USD including seafood,

coffee, rice, rubber, fruits and

vegetables, cashews, and

wood and wood products.

Substitute for Vietnamese products:

15
 • Seafood: Thailand, Indonesia,

and India

• Frozen, canned meat and

sausages: Brazil, Australia,

Indonesia, Philippines

• Rice: Thailand, India

• Fruits and vegetables: China,

Thailand, and India

Competitive Companies compete on elements like The processed and preserved

Rivalry pricing, quality, taste, and innovation, seafood products in Vietnam face

which can lead to heated rivalry. intense competition in the export

Imported goods, which can provide more market from other global competitors.

variety and better quality, are another • Due to the presence of

pressure on the sector. established market players, as

well as the availability of

alternative products from other

countries.

• Due to their efficient supply

chains, large retailers and

foodservice businesses may

have a greater competitive

advantage depending on the

16
 distribution channels and end

users.

4. STRATEGIC ISSUES AND SOLUTIONS

Vietnam Food Processing Industry is facing 3 main issues:

- Lack of policies to create favorable conditions for capital support.

- Lack of policies to attract, retain, and utilize human resources.

- Inadequate investment and allocation of raw materials and fuels

- Vietnamese multinational food processing groups and the global food supply chain

do not have enough intimate connections to each other to participate.

Solutions and potential recommendations:

- For efficient operation in business and manufacturing:

• Provide policy and support for capital loans, production raw materials, and

reduction of administrative procedures; especially for small and medium-

sized enterprises.

• Increase investment in technology to improve the efficiency and quality of

food processing, reducing costs and increasing competitiveness.

• Develop a skilled workforce by partnerships with educational institutions

and vocational training programs.

- For long-term development and sustainability:

17
 • Encourage R&D

• Promote sustainable aquaculture and agriculture practices through

management practices, the use of natural feeds, and the development of

closed-loop systems.

• Invest in climate-resilient infrastructure.

Appendix

Appendix 1: PESTLE Analysis of 3 countries

Appendix 1.1.: Political factors

18
Appendix 1.2.: Economic factors

19
Appendix 1.3.: Social factors

20
21
Appendix 1.4.: Legal factors

22
23
Appendix 1.5.: Environmental factors

24
25
26
 References

2023 | Logistics Performance Index (LPI). (n.d.). https://lpi.worldbank.org/international/global

Asia-Pacific trade and investment trends brief 2022/2023: South-East Asia. (n.d.). ESCAP.

https://www.unescap.org/kp/2023/asia-pacific-trade-and-investment-trends-brief-

20222023-south-east-asia

Australia - The World Factbook. (n.d.). https://www.cia.gov/the-world-

factbook/countries/australia/

Bada, F. (2018). What Are the Major Natural Resources Of Brazil? WorldAtlas.

https://www.worldatlas.com/articles/what-are-the-major-natural-resources-of-brazil.html

Brazil - The World Factbook. (n.d.). https://www.cia.gov/the-world-factbook/countries/brazil/

Cerna, L., & Czaika, M. (2020). Rising stars in the global race for skill? A comparative analysis

of Brazil, India, and Malaysia. Migration Studies.

https://doi.org/10.1093/migration/mnaa009

Chi Mai, P. (2023, June 1). Ngành thực phẩm chế biến của Việt Nam có nhiều tiềm năng phát

triển. https://dangcongsan.vn. Retrieved June 30, 2023, from

https://dangcongsan.vn/kinh-te/nganh-thuc-pham-che-bien-cua-viet-nam-co-nhieu-tiem-

nang-phat-trien-639003.html

Fragmenting Foreign Direct Investment Hits Emerging Economies Hardest. (2023, April 5).

IMF. https://www.imf.org/en/Blogs/Articles/2023/04/05/fragmenting-foreign-direct-

investment-hits-emerging-economies-hardest?fbclid=IwAR3s9oUrFCi9R-

8sk7Jbu96Q4Q39_FGa4t9PcWIwM7zFOcOJJmjVdksLWy0

Global Talent Competitiveness Index | INSEAD. (2022, October 11). INSEAD.

https://www.insead.edu/faculty-research/research/gtci

27
https://vietnamnews.vn/economy/1521122/food-industry-has-large-potential-to-expand-

markets.html. (2023, April 18). Việt Nam News. Retrieved June 30, 2023, from

https://vietnamnews.vn/economy/1521122/food-industry-has-large-potential-to-expand-

markets.html

International - U.S. Energy Information Administration (EIA). (n.d.-a).

https://www.eia.gov/international/overview/country/BRA

International - U.S. Energy Information Administration (EIA). (n.d.-b).

https://www.eia.gov/international/analysis/country/AUS

International - U.S. Energy Information Administration (EIA). (n.d.-c).

https://www.eia.gov/international/analysis/country/CAN

Natural resource value: ranking by country 2021 | Statista. (2022, August 2). Statista.

https://www.statista.com/statistics/748223/leading-countries-based-on-natural-resource-

value/

OECD. (2022). FDI in Figures April 2023. In OECD. Retrieved June 30, 2023, from

https://www.oecd.org/investment/statistics.htm

Phân Tích Báo Cáo Ngành Thực Phẩm Việt Nam 2022. (2022, December 21). MISA AMIS.

Retrieved June 30, 2023, from https://amis.misa.vn/77256/bao-cao-nganh-thuc-pham-

viet-nam-2022/

Reyes, J. D., Gomez-Altamirano, D., & De Bonneval, P. (2023, June 29). Brazil makes a smart

move to attract and retain foreign investment. World Bank Blogs.

https://blogs.worldbank.org/psd/brazil-makes-smart-move-attract-and-retain-foreign-

investment

28
Sharma, B. (2021). Covid-19 and recalibration of FDI regimes: convergence or divergence?

Transnational Corporations Review, 13(1), 62–73.

https://doi.org/10.1080/19186444.2021.1890433

SOUTHEAST ASIA IS ONE OF THE LARGEST RECIPIENTS OF FDI AMONG EMERGING

REGIONS. (2022, November 7). Vietnam National Trade Repository. Retrieved June 30,

2023, from https://vntr.moit.gov.vn/vi/news/southeast-asia-is-one-of-the-largest-

recipients-of-fdi-among-emerging-regions

VN GSO, & Nguyen, T. T. H. (2023). BÁO CÁO XU HƯỚNG SẢN XUẤT KINH DOANH

NGÀNH CÔNG NGHIỆP CHẾ BIẾN, CHẾ TẠO VÀ XÂY DỰNG QUÝ II NĂM 2023,

DỰ BÁO QUÝ III NĂM 2023. In Vietnam General Statistics Office. Vietnam General

Statistics Office. Retrieved June 30, 2023, from https://www.gso.gov.vn/tin-tuc-thong-

ke/2023/06/bao-cao-xu-huong-san-xuat-kinh-doanh-nganh-cong-nghiep-che-bien-che-

tao-va-xay-dung-quy-ii-nam-2023-du-bao-quy-iii-nam-2023/

XUẤT KHẨU NÔNG, LÂM NGHIỆP VÀ THỦY SẢN NỖ LỰC VƯỢT QUA KHÓ KHĂN. (2022).

VN GSO. Retrieved June 30, 2023, from https://www.gso.gov.vn/du-lieu-va-so-lieu-

thong-ke/2022/10/xuat-khau-nong-lam-nghiep-va-thuy-san-no-luc-vuot-qua-kho-

khan/#:~:text=Trong%209%20th%C3%A1ng%20n%C4%83m%202022,v%C3%A0%20

gi%C3%A1%20tr%E1%BB%8B%20xu%E1%BA%A5t%20kh%E1%BA%A9u.

29
30