The Covid-19 pandemic caused overall greenfield foreign direct investment (FDI) project numbers to decline by 17.5% in 2020. However, as the world reopened in 2021, investors reacted quickly and FDI levels rose by 18.1%, according to our Global FDI Annual Report 2022. Most sectors witnessed a rise in their number of projects, with companies keen to make up for lost time, yet the rise is not expected to be sustained. Investment levels will likely fall again in 2022. Russia’s invasion of Ukraine has led to heightened geopolitical tensions, a global cost of living crisis, slow economic growth and continued supply chain disruptions. All of which will claw back the resurgence FDI seen in 2021.
Amazon is the leading global investor
Amazon increased the number of its outbound investments by 55% from 155 in 2020 to 241 in 2021, representing the highest percent increase of any company in the top ten. India was the leading destination country for Amazon’s FDI, attracting 36 projects, the majority of which were destined for the states of Tamil Nadu and Gujarat.
Spain and the UK ranked joint second for Amazon investment, each attracting 28 projects, followed by Germany with 23. Of the top ten countries in which Amazon invested in 2021, five were European: Spain, the UK, Germany, France and Italy. Aside from India, Japan was the only other country in Asia-Pacific to place in the top ten, ranking eighth with eight projects. Canada ranked sixth attracting 17 projects while Saudi Arabia and Brazil placed joint ninth with seven projects.
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Of the 241 FDI investments made by Amazon, 75% were in the consumer goods sector. Communications and media represented 14% of its investments and renewable energy 6%.
As would be expected, logistics and warehousing was the primary business function for Amazon’s investments representing 61% of its total FDI. Sales operations ranked second with a 17% market share and technology and related infrastructure ranked third with 10%.
Amazon Web Services, a provider of on-demand cloud computing platforms and a subsidiary of Amazon, made the company’s largest investment in 2021 in terms of capex expenditure. The subsidiary announced plans to build a data centre cluster in Auckland, New Zealand in 2024 for a capital investment of $5.3bn over 15 years. The investment is expected to create 1,000 new jobs.
Tesla ranks top for automotive investment
US-based electric vehicle (EV) specialist Tesla was the top automotive investor in 2021 and ranked 14th across all sectors. The company announced 53 projects in 2021, a stark rise from the 12 projects previously recorded in 2020.
The majority of Tesla’s FDI was concentrated in Europe with 25 projects spread across Scandinavia and central and western Europe. Asia-Pacific won 16 FDI projects with the majority destined for Japan and China, attracting seven and six investments respectively. Canada was the leading destination country for Tesla’s outbound investment and recorded 11 FDI projects, of which 72% were located in either Ontario or British Colombia.
Almost three-quarters of Tesla’s FDI was dedicated to maintenance, repair and operations as the company expedited service centre openings in 2021. During 2021 Tesla made several high-profile investment announcements, including a $188m expansion of its Shanghai EV manufacturing facility, creating 4,000 new jobs. Other significant investment announcements included plans to open an EV manufacturing unit in Karnataka, India, a new logistics centre in Saint-Jacques-de-la-Lande, France and a warehouse in Brandenburg, Germany which will be built next to its GigaBerlin factory in Grünheide.
Marriott Hotels is the top tourism investor
Tourism projects were dominated by US-based hotel operator Marriott International, which ranked as the third most active investor in 2021. The company recorded a total of 98 FDI projects in 2021, a marginal increase of 4% when compared to data from 2020.
Asia-Pacific was the main destination market for Marriott (40 projects), followed by Central America and the Caribbean (17), and central and eastern Europe and the Commonwealth of Independent States (14). China was the leading country destination for the company winning 20 FDI projects, followed by Japan and Turkey with nine projects each.
When compared to Marriott’s investments in 2020, Japan, which was the leading destination country, experienced a decline of 47%, from 17 to just nine projects in 2021. Spain which ranked third for Marriott in 2020 has seen its number of investments drop from seven to two, while Mexico's rank (fourth) and number of projects (six) has remained the same for both years. Of the 98 projects recorded for Marriott International only four were expansion investments, the remaining 94 were greenfield FDI projects.
FDI newcomer Cloudflare top for communications FDI
US-based Cloudflare, a content delivery network and DDoS mitigation company, placed second for outbound FDI, investing in 98 projects in 2021. The company, a newcomer to the top ten, primarily invested in internet points of presence, with 95% of its FDI in this field. Cloudflare also made several investments in wired and wireless telecommunications activities and one software-based investment.
China was the leading recipient for Cloudflare’s investments attracting a 36% market share of its outbound FDI, followed by Brazil with 33%. Bangladesh, India, and Australia ranked third to fifth with a combined market share of 8%. In April 2021, Cloudflare also announced it had opened a new regional headquarters in Paris, France creating 30 new jobs.
Communications and media was the third largest FDI sector in 2021. Data centre investments increased by a quarter, with the bulk of projects destined for Germany, India and China.
A global surge in 5G projects saw wired and wireless communications become the leading subsector, with the majority of investment going into northern and western Europe. Hutchison 3G UK Holdings, Telia Norge and Hrvatski Telekom were the largest investing companies in this subsector by project numbers, with a combined market share of almost 40%. Sweden, Hong Kong and the UK were the largest source markets for wired and wireless investment, while the US accounted for 28% of all communications and media sector FDI projects.
Teleperformance tops list for job creation
France-based Teleperformance, a provider of customer acquisition management and technical support was the leading investor in terms of the number of jobs created by a company. In 2021 it launched its biggest-ever recruitment drive and announced plans to hire 50,000 employees in India by the end of 2022. The company will hire for customer management and non-voice interaction roles as it continues to invest in process automation, AI and robotic process automation to cater to an increase in demand across different verticals, particularly life sciences and new age companies.
In an interview with The Hindu newspaper in August 2022, Anish Mukker, CEO of Teleperformance India, said: “With our cloud campus model, which enables individuals to work from anywhere with cutting edge security, access to our wide reach across Fortune 1,000 companies, India will play a strategic role in the growth of Teleperformance globally. To support this expansion Teleperformance in India expects to be 100,000 people-strong in the next year and a half."
The company also announced hiring plans in other regions in 2021, including an expansion of its facility in Barranquilla, Colombia. Teleperformance announced it would hire a further 9,000 staff in 2021 to complement the existing 15,000 roles the company created when it established operations in the Colombian city in 2020. The company further announced plans to open a delivery centre and subsequently hire 600–800 employees in Guyana.
While FDI is expected to face further challenges in 2022, these large hiring campaigns and the continued aggressive expansion of companies such as Amazon and Tesla show that foreign investment will continue to grow in certain sectors.