What is the process of entering a foreign market by developing foreign-based assembly or manufacturing facilities called?

The process of entering a foreign market by developing foreign-based assembly or manufacturing facilities is referred to as direct investment. This approach involves substantial commitment of capital and resources into establishing operations in another country, allowing businesses to manufacture products locally while reducing transportation costs, complying with local regulations, and potentially gaining favorable positions in the local market.

Direct investment can take various forms, such as building new facilities (greenfield investments) or acquiring existing ones (brownfield investments). This strategy not only strengthens the company’s presence in the foreign market but also provides better control over production and distribution, which can lead to enhanced competitive advantages.

Market penetration typically refers to strategies aimed at increasing market share within an existing market, rather than entering a new one. Exporting involves producing goods in one country and selling them in another without the establishment of local production facilities. Joint ventures usually involve collaboration with local firms or investors to share resources and risks, but they do not primarily focus on establishing wholly owned manufacturing or assembly facilities as direct investment does.