Transcript Chapter 14: Doing Business in Industrialised countries E.U USA THE TRIAD Japan Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a International Trade and Investment by John Gionea Slides.

Chapter 14:
Doing Business in Industrialised countries
E.U
USA
THE TRIAD
Japan
Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a
International Trade and Investment by John Gionea
Slides prepared by John Gionea
TOPIC PLAN
Definition of Industrial Countries
(IC’s)
– Import markets in IC'S
– Trade issues in IC'S
– Export marketing aspects
– Considerations for Investing in IC'S
–
Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a
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Slides prepared by John Gionea
Features of Industrialised Countries
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•
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High per capita income and standard of living
Market based economic systems.Limited
government intervention
Mature secondary sector; Dynamic tertiary sector
Rational macroeconomic policies
Sophisticated financial systems
Well-develop infrastructures
Advanced communication networks
High-level education and training
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Industrial Countries As Mixed
Economies
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Predominance of the private sector
–
–
Domestic firms (small,medium,large)
MNE's
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Various degrees of government intervention.
•
Substantial freedom for markets and
MNE's
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Government Involvement in the
Production of Goods & Services
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Government sector:about 1/3 of GDP of IC's
+ 10% of GDP for government companies
Government ownership :
Electric and telephone utilities,
Banking,Petroleum etc.
Australia
–
About 1/4 of GDP( >US and UK ; < West Europe)
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Government Involvement
in International Business
• OECD: Principle of national treatment
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for non-nationals (no discrimination for
foreign firms).
Government control of international trade and
investment
– Tariffs; Non-tariff measures; Taxes etc.
–
Export support measures
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Shares of W.Europe, North America, Japan and
Australia-New Zealand in world merchandise imports
50
45
% of World Imports
40
North America
35
Western Europe
30
25
Japan
20
Australia and New
Zealand
15
10
5
0
1948
1953
1963
1973
1983
1993
2000
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Imports of Industrial Countries
Group/country US$B. Main sources(%)
2000
Western
2,566 W.Europe(64.6),Nth
Europe
America(8.9), E.Europe(5.6),
Asia(12.9), Aus/N.Z(0.4)
North
1,504 Asia (33.7),Nth America (26.2),
America
W.Europe(18.5), America(15.4),
Japan
380
Asia(46.4), Australia-New
Zealand(4.5), Nth America(21.4)
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Import Markets in Industrial Countries:
Product markets, 2000
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Merchandise Imports of the TRIAD(US$ 4,236)
– Primary products (18-42.3%)
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Food;Raw materials;Ores and minerals
Manufactures (56-78.1%)
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Iron and steel
Chemicals
Other semi-manufactures.
Machinery and Transport Equipment(28-46.5%)
Textiles
Clothing
Other consumer goods
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Australia and New Zealand’s
merchandise imports by source(%)
Supplier
North America
Latin America
W.Europe
Africa
C.E.Europe
Middle East
World
1990
23.4
1.0
27.2
0.4
0.4
3.4
100.0
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2000
20.1
0.9
22.8
0.9
0.2
3.1
100.0
Export Marketing Aspects
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Very competitive markets
(local/regional and foreign
competition)
Intra- MNE trade
Sophisticated marketing techniques
–
Market segmentation
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Export Marketing Aspects
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Price-setting strategies
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High media spending (e.g US,Switzerland)
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Standard;Dual;Market-differentiated pricing.
"Gray markets" (Parallel importation)
Legal differences in advertising
Distribution channels tend to be
shorter than in Developing countries.
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Advertising expenditure per head (US$)
and by medium (%) , 1999
Country
US$ /
Head
% TV
%
Print
%Radio %
%
Cinema Outdoor
USA
432
37.4
47.2
13.5
Canada
160
37.7
46.4
12.9
Japan
262
52.5
41.7
5.7
Switzer 363
land
Australia 242
13.8
71.2
33.7
New
Zealand
36.6
178
1.9
0.1
2.8
3.1
0.9
11.0
53.8
7.4
0.8
4.3
49.5
12.9
1.0
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Trade Issues in
Industrial Countries
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Tariffs:Generally low
and mostly bound
US-Japan trade dispute;US-European Union
Regional Trading Blocs
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•
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The European Union(EU-15)
NAFTA(US/Canada/Mexico)
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Foreign Direct Investment in the Triad
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Increasing concentration("The TRIAD"),
1999-2000
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US and EU > inward FDI than Japan
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80 % of global FDI inflows
78 % of global FDI outflows
Foreign affiliates:1.5% of total sales in Japan
Sectoral shifts since the mid.1970's
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Services up;Primary/Secondary sectors down
Banking-the leading service sector
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Investment Considerations
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Political stability
Nationalisation ,government
controls
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Prices,pollution
Economic outlook
(e.g. synchronised cycles)
Attitude to foreign investment
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Investment Considerations
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Taxes
Incentives
Personnel, labour and social
considerations
Exchange rates
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FDI Inflows into Oceania, 1989-2000, US$ B.
FDI inflows
20
15
US$ Billion 10
5
0
FDI inflows
19891995 1996 1997 1998 1999 2000
94
7.7
15.6
8.3
10.3
7.1
7.8
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Slides prepared by John Gionea
13.1