March 25, 2015
Now we are facing two challenges, one of maintaining the companies we already have, and collaborate with them to boost economic growth, and another of attracting foreign investment.
For the second plan, the one of attracting foreign investment, to succeed there is necessary an aggressive economic diplomacy, beside all the over-mentioned ideas (political and fiscal stability and predictability, measures against corruption and tax evasion, leaner bureaucracy, improving infrastructure).
Without insisting on a chart of FDI developments, that would only say there is a dynamic in this area depending on interests, circumstances, public policy and economic profiles, I have to point out some aspects for an important base. This foundation would be preferable to turn into a national tradition, like a stamp posted on a nation’s image. These issues will be the epicentre of a healthy business environment, a strong country brand and the establishment of a level of ambition at the height of the national potential and international position of Romania, which is currently at its peak.
How are we promoting ourselves?
First let us consider the promotion of Romania’s competitive advantages! We note that we are still having a gap in terms of a clear and structured way in this regard.
Some of the advantages of the Romanian economy are often mentioned in specialized editorial or political speeches and refer to skilled and cheap labour, significant natural resources, opportunities opened by a developing economy that leaves you very little room for manoeuvre, favourable geopolitical position in the context of the current international system dynamics etc.
But the fact that these advantages are discussed in the public sphere does not refill or replace the importance of a government marketing strategy in this respect. On the contrary, it makes it increasingly more necessary. In other words, this action relates to creating a country brand, strategic designed for supporting the attractiveness for foreign investors. We are talking about a country brand consolidation towards a well defined objective, in order to become operational.
Without a solid country brand we have a nameless ‘product’. There are such products but they are generally very cheap and quickly out-of-date.
And when we talk about country brand in terms of the national economy, we talk about excellence, about success and about the values that attract and do business to be more attractive. So we must go further away with discussing the material advantages, but also those related to values, abstract. It should be created a coherent value system and integrated into a government communication strategy. Then externally, economic diplomacy and public diplomacy are two vital tools in the process of promotion.
Highlighting a tradition, and ultimately its existence are coming primarily from the identification of a country’s economic profile, strategic thinking and commitment. So currently we cannot speak of a tradition, but rather an amorphous mass of values, interests, industries, systems, people and missed opportunities.
So, like any other brand, the core element of the national brand is the value it has (“equity”). This value must be perceived by external audiences. How Romania’s image is reflected abroad is easily learned from international press reports or opinions. As long as there isn’t provided information, success stories, best results, these environments will crystallize a picture from their experiences, information sources that might be corrupted. Let us think this is a war and the desire for manipulation and misinformation is huge. And it must be fought by all means.
This idea actually explains what happens with Romania’s image in the UK, France, Netherlands, Nordic countries, etc.
In a study about national brands, published at the end of 2014 with the title “Nation Branding is essential, but not an easy ride” – Brand Finance Nation Brands warned that branding does not refer to the creation of logos, mottos, advertising and public relations – it is about developing competitive strategies that should target not only communication and message delivery. At the country level, it involves political and public diplomacy and behavioural changes both in the public and private sectors. Inclusion is critical to success, failure of non-including all stakeholders in the national branding will almost certainly lead to suboptimal results.
In the current international context we cannot debate the impact of Romania’s geography at the border of a conflict involving major power centres of the world. A study published by Ernst and Young Romania emphasize that there is a reluctance of investors to political instability and proximity to Ukraine, but that overall confidence remains at a high level of over 60%. Also, the orientation towards stable and mature markets is crystal clear, although there are more fragile competitive advantages.
There are specialists who develop theories on account of regional developments and beliefs that created an area of opportunity as long as most of the funds were withdrawn from Russia or Ukraine seeking another market. It should be noted they are most popular with emerging markets in Poland, Asia and Turkey, but the opportunity for Romania remains and must be seized.
A practical example in promoting Romania, in addition to charting the general framework and the creation of specialized bodies in the field of economic diplomacy and public diplomacy, is the special attention given to increasing the number of business representatives participating in diplomatic visits.
Let’s be honest. The Romanian Cultural Institute is more for image, and the lack of solid research institute, both on foreign trade and public diplomacy, and the lack of a Ministry of Foreign Trade does not give us too many success sources.
Facilitating exports through economic diplomacy is another goal that deserves fulfilled in the efforts to attract foreign investment, but also in those for national economic recovery. The two are in a relationship of mutual determination.
A sound economic policy in supporting this goal hints to stimulating the production of exportable goods and services.
The internationalization of domestic capital. A powerful tool
The internationalization of a company’s capital is its act of will to engage in battle on foreign markets, assuming the benefits and risks of taking this decision. For the state, this individual and private act is a major vehicle image.
This phenomenon should be taken by the economy as a whole, in order to talk about the internationalization of domestic capital or Romanian economy – the holistic approach.
But before internationalizing the capital, we must create real domestic capital. To grow it, stimulate it, give him value. And is a long step to go.
Of the six forms of internationalization known, export, turnkey projects, licensing, franchising, joint ventures and wholly owned subsidiaries, the favourite one for the Romanian economy, especially at this stage of development, is export.
So, in the pursuit of foreign investment, we should not overlook the appetite for exports, a first step for companies to expand globally. Indeed, it is not easy to implement, but the benefits of developing the Romanian economy creates long-term benefits.
Clearly this is not the state of various Romanian companies, who in these years are struggling to survive, not thrive. It is therefore necessary to bring them in the stage where they wish internationalization.
It is almost impossible for a company to accept a risky investment environment both internally and externally simultaneously.
A domestic capital, as the Romanian frail one, has no chance to get out on the international stage if does not receive institutional support and quality, relevant and timely information.
The strategic partnership between the real economy and the state
The efforts to attract foreign investment must be complemented by internally actions to create a favourable business climate and especially to open a dialogue and develop collaboration with present companies, be they foreign or national.
Romania’s growth model needs to have a direction drawn from the inside out, so that priorities should focus on internal measures, on the famous structural reforms, but also on domestic resource mobilization and saving very well thought out and put into practice.
The euro area dependence and the effects of negative developments on Romania are shaping the main objective of good governance, dealing with serious internal failures and using all the tools at its disposal to mitigate any dependency ratio.
Creating a dialogue between government and companies present in Romania is an important step, currently experiencing a nascent form. They refer to the signing of cooperation agreements, strategic partnerships that seek to establish a comfortable climate for foreign investors.
The goals of such initiatives are diverse and can multiply in securing foreign investment to increase employment, boost exports and reinvesting profits locally.
The impact of these partnerships is not negligible. Companies receive an additional sense of security, and the fact that their presence, their proper functioning and best practices they implement are important for national economic growth, they receive a warranty to identify common goals and, especially, to guarantee the implementation of joint actions goals.
The country brand cannot be a punctual and superficial action. Our image as a country is perfectly identical to what we think about ourselves and what we want to show.
A “premium” image of the country is created in generations. It is a puzzle with a “billion little pieces.” It is not a matter of form, is a destination background.
It is based on respect, the principles of trust, honesty and, why not, is based on ambition. The ambition of each of us and all together.
Cultural, sportive and historical aspects, intertwined with economic and societal performance for not creating a false image in the international scene mirror, but a tangible reality. A desirable, tasty and full of content reality.
Are we going to be able to start Romania’s vital building? I must honestly admit, at least at this moment, I have great reservations.
Adrian Marius Dobre