Investing Abroad lesson from a global investor

Investing abroad in this business environment

What does “investing abroad” means in this time of globalization? Well I have got my answer at the Conference Hosted by Romanian Prime Minister Emil Boc in East Lansing, sponsored by Michigan State University recently. The entrepreneurs around the table had already experienced trade and business in Canada, Mexico, China and South Asia and were interested to prospect Eastern Europe in this case Romania.

Why Romania? The US Department of Commerce handout highlights that the country’s entry into the European Union in January 2007 and the membership in NATO since 2004 made numerous companies from developed countries invest and operate successful subsidiaries in Romania.

Every investor is aware and expects challenges in any foreign market. Like everywhere the problem is not entirely one of money. The EU has allocated billions of euros to Romania for infrastructure and development. The challenge has been a lack of adequate administrative capacity and skills to plan, budget, obligate and spend funds in an efficient, transparent and effective manner.

New facts about Romania

A fresh generation of politicians educated in the USA wants to heal relationship between government and business marred by bureaucratic inefficiency, a lack of transparency, and instances of corruption.

A new government was elected late in 2009, and the new Prime Minister inherited these problems. The effects of the slowing world economy arrived late in Romania as a result the consumer and corporate investing plans are being reconsidered.

At the conference I talked with new young – less than 35 years old - Government members and counselors in fluent English acquired or improved studying in the USA universities on Fulbright scholarships.

Mr. Prime Minister Emil Boc mentioned about the new "Private Public Partnership Law" that is coming with bank loans without collateral for private investors and the Romanian Government guaranties for public facilities. This law is design to boost the foreign investment in: highways, hospitals, infrastructure, energy, educations, defense, etc.

Investing abroad successfully from an expert

From John Rakolta Jr. the "Walbridge Co." CEO presentation I selected for you the main steps in acquiring a Romanian manufacturing company and developing it into a global company Mefin.Ro exporting pumps in more than 60 countries. These are his Rules of Investing Abroad:

Go there first, get a good guide and enjoy the food and new connections, feel the local culture;
Get help from Government with market studies for whatever you are looking for: distributor agreement, subsidiary, joint venture or acquisition. Government can help with reference checks. Perform due diligence;
Be ready to adjust your Business Plan and have the finances available;
Identify, qualify and select a local partner with expertise and resources to help accomplish your objectives;
Enjoy what you do.

What was the source of money for Mr. John Rakolta Jr. investments around the world? His philosophy of investing was and still is to use his profits but loans.

"Neither a borrower nor a lender be;For loan oft loses both itself and friend,And borrowing dulls the edge of husbandry."Hamlet, 1. 3

The Mr. Rakolta' grand-grand-father emigrated in the USA from Romania in 1906 when he was a teenager, his father was an American pilot in WWII and became a partner in Walbridge Co. in 70's. At his turn Mr. John Rakolta Jr. is expanding the heritage globally.

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