A United and Divided Kingdom – for overseas investors, trust trumps all
Amid Brexit and the COVID 19 pandemic – which has seen the UK economy experience the worst economic contraction in 300 years – the UK public are more open toward foreign direct investment (FDI) than ever before, according to new research by FTI Consulting.
That’s good news for potential investors, as well as UK plc. With a Brexit deal providing clarity about the UK’s new relationship with the EU, some expect renewed global interest in British businesses over the next 12 months – and landing new foreign direct investment is clearly a priority for the UK government.
In December 2020, FTI repeated a survey on public perceptions of FDI that was originally carried out in December 2012. The most recent results show that 74% of the UK general public support FDI into the country – and fewer people are concerned about which sectors are invested in and where investment comes from than in 2012.
Residents across the devolved nations are most supportive, followed by Londoners and those living in Yorkshire and the Humber.
However, support is not unconditional. There are fears about the impact of overseas investment, with 46% worried about ‘the potential for overseas companies to gain political influence’ and 32% concerned about foreign investors ‘acquiring technology’ and ‘obtaining knowledge in order to make [products] cheaper elsewhere’.
Regardless of provenance or sector, the top three qualities of prospective investors into the UK were honesty (58%) transparency (49%) and reliability (41%). The UK public also said that the view of a target company’s employees were more important to them in shaping their view of a deal (43%) than either the target company’s senior leadership (35%) or the senior leaders of the investor company (33%).
The UK public found commitments to UK job preservation and security (82%) as well as to increased R&D spending (80%) to be the most reassuring messages during an overseas acquisition of a British business, as well as commitments to retraining UK workers and developing infrastructure (79%).
Trust in a business or brand can take years to cultivate, and days to destroy. An effective communications strategy for acquisitions and investments is essential. Investors must explain their plans clearly and honestly; treat employees and communities with respect; demonstrate progress against an agreed roadmap; and behave consistently. Even bad news – such as job losses or closures – can enhance trust in a business, if communicated honestly and with empathy and implemented responsibly. Deals and investments that fail to meet with this standard remain in the public consciousness for years – with a permanent blot on a company’s reputation often the result.
Integrity and trustworthiness are key to securing public support. Without these, investors will face difficulties – with 10% of the public motivated to actively oppose investments they do not agree with either by taking to social media, by forming a protest group or lobbying local elected representatives.
International investors that commit to operating responsibly will, however, find a warm welcome from the UK public in 2021.