Territorial marketing to attract investment for development in Thai Nguyen province

Foreign investors use foreign direct investment (FDI) and foreign investors use indirect foreign investment or ODA (Official Development Assistance).

- Domestic investors: This group of investors originates within the scope of a country, called domestic investors. They are organizations or individuals with financial, technological and intellectual potential, ready to invest in the development of their country.

This group can be divided into 2 types of investors as follows:

Firstly, domestic investors invest in central projects. Investors of this type often seek investment opportunities from large central projects, especially central projects implemented locally such as national key infrastructure, transportation, hydropower, and irrigation projects.

Investors of this type often have strong financial, technological, human resources and management capabilities. In addition, they are also reputable, experienced and have strong brands in the investment sector. In particular, investors of this type often have very good relationships with central management agencies and authorities.

The number of investors of this type in each locality is not much, due to the limited capacity and high requirements in the nature of the work of investment projects from the Central Government. Normally, they only participate in one or some certain stages of the investment project implemented by the Central Government near or in their locality. There are very few domestic investors who are capable of participating in Central projects far from their locality.

Second, the type of domestic investors who invest locally and invest in other localities. These types of investors often seek investment opportunities themselves or set up investment projects according to their strengths and capabilities locally or in other neighboring localities. The main areas of investment focus are:

The main businesses of this type of investors are mainly commercial business projects, import-export or goods manufacturing factories.

Domestic investors often have a relatively clear understanding of the investment environment in their own territory. They have many opportunities to search for and grasp market information related to their business activities.

Divided by production and business sector, investors in general can be divided into the following groups:

- Investors in the industrial and basic construction sectors

This is a group of investors with production activities in the industrial and basic construction sectors. They include both domestic and foreign investors.

Investors in this sector often target areas with high industrial development rates. Investments focus on export processing zones and manufacturing plants with accompanying requirements for technology and science.

To attract this group of investors, localities need to plan into regions, industrial parks or concentrated industrial clusters with adequate infrastructure conditions, convenient for organizing production for enterprises. In addition, the arrangement of the above planning locations should be near areas with resources, or convenient for finding and purchasing raw materials for production for enterprises.

Localities that are unable to meet the above requirements should not focus on attracting this group of investors.

- Investors in agriculture, forestry and fisheries

This is a group of investors operating in the fields of agriculture, forestry and fisheries. They seek opportunities to make profits from activities of building factories, manufacturing, exploiting, processing and consuming domestically and exporting goods related to the above fields.

The products they bring are: animal feed, fertilizer, wood processing, paper production, aquaculture and food processing of agricultural - forestry - fishery origin.

- Investors in the field of trade and services

This is a group of investors with production and business activities in the fields of trade and services. When investing, investors in this group do not have to bring with them technologies, tools or large-sized and massive means of labor to the investment locations, but instead bring their own knowledge and business secrets. Thanks to that, their flexibility is very high, and they can quickly and easily change from one profession to another.

Investors in this group are not necessarily from any particular region. It depends on their strategic business goals and willingness to invest outside their own borders. Furthermore, it also depends on the market potential and favorable business conditions such as mechanisms and policies in the place where they will invest.

- Investors in infrastructure sector

This is a group of investors in the infrastructure sector, such as: traffic works, bridges, culverts, commercial centers and national-scale office buildings.

Due to the requirements for large amounts of capital, in Vietnam, in addition to government investment through bond issuance to raise capital, investors in this field often come from outside. They are individuals or organizations from countries with developed economies and industries. They have the capacity, experience and ability to raise large amounts of capital. They often participate in investment in the form of infrastructure projects under BOT contracts (partially exploiting after construction is completed and then transferring to the recipient country), BTO (complete construction and then transferring to the recipient country for exploitation) or similar types of contracts as stipulated in the provisions of the Vietnam Investment Law.

- Investors in social sector

Social investors are often organized as foundations, associations, philanthropic programs, foundations or grants.

This group of investors helps create stability and balance in society. Many times, they become organizations that guarantee the rights of people living in the areas where they are present.

- Investors in the field of security and defense

This is a special group of investors operating in the security and defense sector. Normally, this investment sector only focuses on investors acting on behalf of the Government of that territory. In addition, there may also exist investors from outside the national borders, but they have close political and military ties with the invested country.

There are investments in this field in the world, such as the Russian Federation investing in military equipment and national defense in Venezuela, the United States investing in the Philippines and Israel. The rest, in general, come from the State budget. In Vietnam, this field is strictly controlled by the Ministry of Defense.

1.2.2.3 Investor behavior

a. Concept of investor behavior

Based on the general concept of customer behavior in marketing of common goods and based on the results of practical research, the concept of investor behavior should be understood as follows:

Investor behavior is all the actions that investors show in relation to investing in a certain locality, including: searching, evaluating, deciding to implement investment activities and subsequent reactions.

Understanding investor behavior is always considered a necessary task for local authorities. In fact, in the fierce competition to attract investment between different localities, the locality that can better meet the demands of investors will have an advantage in attracting their investment.

b. Investment decision making motives

Research on decision-making motives is one of the important contents when studying investor behavior. Research on decision-making motives

Investment will help localities easily grasp the purpose and find solutions to meet the needs of investors.

Synthesis from practice shows that investors' decision-making motives are classified into groups and differentiated by levels. Model 1.1 will describe those levels of investors' decision-making motives.

Search for strategic assets

Search effectively

Market research

Find resources

Figure 1.1 Levels of investor decision-making motivation

Source: Author's synthesis and construction

The levels of investor decision-making motivation are built on the pyramid model above. Those levels increase gradually according to their investment motivation, from the most basic level where investors only want to find resources (resources and labor) to serve production and business activities to the highest level to find strategic alliances. At each level, the number of participating enterprises also decreases according to the level of specialization and the formation of strategic investment motivation.

Specifically, the content of the levels of investor decision-making motivation is shown as follows:

(1) First, find resources

- Investment in natural resources, including: minerals, raw materials and agricultural products;

- Invest in finding labor resources, including low-cost labor or highly skilled labor.

(2) Second, market research

- Investing in markets previously served by exports, or in closed markets protected by high import tariffs or other import barriers;

- Invest in companies that supply or serve their customers abroad;

- Invest in adapting products to local tastes and needs, using local raw materials.

(3) Third, search effectively

Rationalization or connectivity (regional/global) activities lead to cross-border product or production process specialization.

(4) Fourth, search for strategic assets

Acquisitions and alliances in the form of mergers and acquisitions (M&A) to advance long-term business goals.

c. Investment decision making process

According to the perspective of local marketing, the investment decision-making process of investors includes their actions taking place in chronological order in searching for a location to implement their investment activities.

This is a complex process with many participants, creating certain impacts on investors' decision making. Researching investors' investment decision making process will help localities gain a more accurate understanding of them, thereby making effective marketing decisions.

(1) Characteristics of the decision-making process for choosing an investment location:

Unlike the decision-making process in the normal commodity market, the decision-making process in choosing an investment location has the following basic characteristics:

Firstly, the decision-making process for choosing an investment location is a long and complex process, and therefore, the level of risk is high. Usually, this process takes place in an uncertain environment. This is mainly explained by the lack of information for research and decision-making;

Second, the decision to choose an investment location involves many different decisions and is less formal; however, this process still has to comply with some basic requirements, first of all in terms of finance and market;

Third, the decision process of choosing an investment location can be viewed as a social, dynamic process that is continuously influenced by different members of the organization;

Fourth, this process is influenced by many factors such as strategy, resources, goals and needs of members;

Fifth, this is a non-traditional process and the impact of experience is not large. Each investment project is always considered on a new basis and according to constantly changing selection criteria. There will even be a new Management Board for each project.

(2) Stages in the investment decision-making process:

The investment decision-making process of a production and business investor is simulated in Figure 1.2 (See next page).

Phase 1: Identify investment needs

The decision to select an investment location is part of the company's strategic decision. This decision reflects the investor's motivations regarding the choice of a new location. The investor's reasons or motivations will be relevant to the identification and application of criteria for selecting a new investment location (see Table 1.1 on the next page).

1. Identify investment needs

2. Establishment of Investment Project Management Board

3. Identify and clarify the role of consultants

4. Identify and analyze basic factors affecting investment projects

5. Make a list of some potential locations

6. Site survey and negotiation

7. Final choice

Figure 1.2 Investor decision-making process

Source: [11:pp.40-43]

Table 1.1: Factors related to motivation for choosing new investment locations

Factors

Individual