Within five years China will have overtaken the US as the world's leading recipient of direct investment. The Land of the Dragon is set to become a top investment destination, particularly in the IT/telecommunications, industrial products and mining sectors. These were the results of a global KPMG study about future investment trends in multinational companies. A number of investment specialists were questioned in the survey, including managing directors, CFOs and strategists from 311 international companies in 15 countries.
The results show a clear decline in the number of direct investments not only in the US (-4 percentage points), but also in Japan, Singapore and the United Arab Emirates (all -2 percentage points). It is expected that the BRIC countries, Brazil, Russia, India and China, will experience more significant growth. 17 percent of the companies surveyed replied that they want to invest in China in 2008/9, in comparison to 24 percent in 2013/14. In addition, an increasing number of companies would like to invest in Russia (2008/9: 12 percent; 2013/14: 19 percent) and Brazil (2008/9: 10 percent; 2013/14: 14 percent). India's share of corporate investment could even grow from 10 to 18 percent during the same period. This is the sharpest rise in direct investment of any country and is largely based on the expected expansion of the country's manufacturing capacity.
The survey also highlighted that one in four of the production companies that took part in the survey will invest in India in 2013/14. For two-thirds of companies asked, this will actually be their first investment in India. In comparison, the number of direct investments in the US will fall from 27 to 23 percent. This will see the US drop to second place in the global direct investment ranking list by 2013/14, one place behind China (24 percent). The study also shows that the US will lose its top spot to China in the consumer, IT/telecommunications, manufacturing and mining sectors in the next five years.
Jörg Walker, Head of tax advisory and responsible for emerging markets at KPMG Switzerland, commented on the study saying that "even though most Swiss companies responded that in the current year they would like to invest in China (60 percent of companies) and the US (45 percent), they also believe that in five years' time they will be investing in China (65 percent), Germany (50 percent) and India (40 percent). While Germany's expected share rose sharply (+15 percentage points), the US showed the opposite trend (-10 percentage points), making Asia and Europe interesting alternatives to the US in future".
The study also revealed that in comparison to other countries, Swiss companies are far more globally oriented. Only 15 percent of companies are investing for the first time abroad, compared with 29 percent in other countries. However, Swiss companies are significantly more cautious when investing abroad, with only 35 percent of investments abroad being financed domestically. Elsewhere this figure is 58 percent.
Date: 06/16/2008
KPMG Ltd
Stefan Mathys
Brand & Communications
T +41 44 249 27 74
Mobile: +41 79 227 98 31
E-Mail: kpmgmedia@kpmg.ch
KPMG International is a worldwide leading network of audit and advisory services firms with approx. 123,000 employees in 145 countries. The activities of KPMG Switzerland are combined under KPMG Holding Ltd (the Swiss member firm of KPMG International). Under this umbrella, KPMG Ltd has approx. 1,628 employees in 13 locations in Switzerland. In fiscal year 2007, KPMG Switzerland generated sales of CHF 422 million which corresponds to a growth rate of 6 percent compared with the previous year.
