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Six Trends Impacting Global Businesses in the Carolinas

    Client Alerts
  • September 07, 2022

Global businesses are increasingly focused on environmental, social, and governance concerns. Working from home is impacting corporate relocations and economic development strategy more broadly. And the electric vehicle industry continues growing in the Carolinas, although mega sites are becoming harder to find.

Those are a few takeaways from the Global Carolina Connections conference on International Investment in the Carolinas which took place in late August. One of us (Sam Moses) co-founded the conference nine years ago to bring together key players in the Carolinas representing foreign-owned subsidiaries as well as economic development and professional services organizations who support such companies. The conference was focused on providing updates on the state of foreign direct investment (FDI) in the region, as well as to highlight the current challenges and opportunities facing foreign investors as they do business here in the United States. The conference is hosted annually and has been held in several major cities around the Carolinas.

Below are a few key takeaways from the conference.

Continued Growth in Electric Vehicle Industry

The Carolinas have experienced many recent successes in the electric vehicle industry, including with Toyota, Arrival, VinFast, and, most recently, Forza X1, an EV boat manufacturer. Christopher Chung, chief executive officer of the Economic Development Partnership of North Carolina (EDPNC), provided insights on the continued growth in this emerging sector and several automotive companies in the EV market, including Star EV Corporation, VinFast, Bharat Forge, and Morgan Crapps of Parker Poe Consulting participated in a panel discussion about how electrification in the transportation sector is creating new opportunities in the region.

Industrial Inventory Availability

While the Carolinas are experiencing an economic development boom, there is a rising concern over the availability of land and buildings. Both North and South Carolina have created incentives to develop new industrial inventory alongside growing private investment to ensure the region has enough sites and buildings in the future for those industrial expansions. Megasites, which are tracts of land, typically larger than 1,000 acres, and which usually boast sufficient infrastructure for access to utilities, transportation networks, and a skilled workforce, are in short supply.

Work From Home and Corporate Relocations

COVID-19 created a massive shift in how and where we work. While working from home has meant a more flexible environment for employees, it has complicated large corporations’ relocation plans. The most high-profile example discussed at the conference was Centene recently abandoning its plans for a $1 billion East Coast headquarters in Charlotte. The vast majority of its workforce has gone remote or hybrid since the project was announced in the summer of 2020.

Because of this trend, economic development organizations around the country may shift their prospecting strategies, including a more concentrated focus on attracting industries that do not offer a hybrid or remote work option, such as manufacturing, while the focus on corporate offices may decline.

ESG Concerns for Foreign Investors

Environmental, social, and governance (ESG) concerns are at the forefront for foreign investors, particularly European investors. In addition to concerns like access to clean or renewable energy, foreign companies will take a harder look at the social climate for their employees.

Volvo USA’s Head of Sustainability Americas, Katarina Fjording, outlined how the global car manufacturer is embracing a forward-thinking ESG strategy and is actively engaging with community stakeholders to work in collaboration with the company to push sustainability initiatives that will be good for the communities where the company is operating.

There was also discussion around whether U.S. states will begin to see a shift as to how companies decide where to locate and invest due to a state’s posture toward reproductive rights in the wake of the U.S. Supreme Court’s Dobbs v. Jackson Women’s Health Organization decision.

Finally, there is also increasing collaboration between global manufacturers and the renewable energy sector in the Carolinas. Parker Poe partner Katherine Ross had a fireside chat with Duke Energy’s Director of Economic Development for North Carolina to discuss this topic.

Trends in Cybersecurity & Data Privacy Risks

The conference highlighted that manufacturing was the top cybercrime target in 2021, outpacing the insurance and financial sectors for the first time in five years. Outdated systems, new network expansions, and the immediate financial impact of disruption have made the manufacturing industry a prime target.

Due to globalization, foreign headquartered firms are much more vulnerable, as there are multiple layers of data governance and compliance. There have also been data privacy consequences all over the world tied to the Russia-Ukraine war and targeted cybersecurity attacks linked to it.

Those were among the takeaways from a cybersecurity panel that included Colin Kiser with SpotIt, a Belgium-owned cybersecurity solutions provider, several guests from Belgium who participated via live stream, and Parker Poe partner Sarah Hutchins. The panel outlined the issues faced by many companies and discussed solutions for global businesses.

Geopolitical Concerns

Worsening trade relations with China, Russia’s invasion of Ukraine, and strained supply chains owing to differing COVID-19 response strategies have all shown that international trade and investment are much more susceptible to geopolitical developments than many may have assumed just several years ago. While the Carolinas have the largest concentration of FDI originating in Europe, the share of FDI from other regions, in particular Asia, has increased over the last two decades. As the largest economy in Asia, FDI from Chinese companies has grown rapidly, but so too has the U.S. government’s scrutiny over the national security implications of such investments.

As Chris Chung noted, given this increased scrutiny, economic developers will need to take a more critical look at investments from not only China but any country whose geopolitical goals may be in conflict with U.S. interests. Many of the other conversations and speakers noted the continued impact of tariffs, supply chain bottlenecks, and inflation as factors that must be analyzed by those who are considering making an investment in the U.S.

For more information, please contact us or your regular Parker Poe contact.