May 1999 Edition
MEXICO
Mexico is aggressively positioning itself as the leading free-trade trader of the Americas and is turning into a hub for bilateral trade agreements. Besides the NAFTA, Mexico already has free-trade pacts with Chile, Bolivia, Colombia, Venezuela, Cost Rica and Nicaragua. Talks with Panama are advanced, and Mexico is also negotiating with Peru, Belize, Ecuador, Israel and Trinidad. Top of Mexico's agenda is finishing an agreement with the European Union before the end of the year. This will give Mexico access to the lucrative European market and allow Mexico to diversify its export market instead of depending so heavily on the U.S.
ASSIGNMENTS
An annual survey of the top destinations for international assignments, shows that the U.S. was again the top location for expatriates and short-term assignees. The study utilized data on worldwide transfer activity of more than 18,000 international assignments in 1998. Companies bring employees into the U.S. on shorter-term assignments, typically up to one year, for training, technology and management development. The 1998 top five locations for international employee assignments were: the U.S., the United Kingdom, Mexico, Canada and Singapore. Hong Kong, ranked in 5th place last year, is no longer a top ten destination.
SHANGHAI
Headquartered in Shanghai, the Lianhua Supermarket Co is China's largest chain-store operation with 400 outlets and sales of $400 (U.S.) million a year. Despite its size, Lianhua remains little known outside Shanghai but this may change. Once it was a pet project of municipal officials, now it is the favourite of the national government. Developing domestic chains has become a political priority as China seeks to modernize retailing and boost consumer spending, a vital step to preventing economic growth from sliding below this year's target of 7 per cent. Chains get consumers to spend by offering a greater range of products and placing their stores in convenient locations.
Chain stores now account for less than 2 per cent of China's retail sales.
HUNGARY
Hungary is close to the geographical heart of Europe. Budapest, the capital, has over two million inhabitants and is the commercial hub of the country. Since the collapse of communism, the country has established a parliamentary democracy and developed a strong market economy. The Government has privatized most state-owned companies, banks and utilities. Nearly 80% of the country's gross domestic product is now produced by the private sector, compared with only 10% in 1990. Over 80% of Hungary's trade is now with OECD countries, including some 71% with the European Union (EU). Until 1990, 65% of Hungary's trade was with Communist bloc countries.
PIRACY
The market for pirated music exploded in 1998 as new digital technologies and the Internet gave audio pirates more ways to break the rules. The recording industry reports that 338,458 pirated CDs were confiscated in the U.S. in 1998, up 163 per cent from 129,000 in 1997. The figure reflects products that were confiscated on street corners, in flea markets, retail outlets and via Internet sales. The rising number of illegal copies is said to be due to the recent availability of inexpensive CD recorders.
IT'S IN THE MAIL
Mail deliveries in Trinidad only reach half the island's households; airmail from Britain can take eight weeks and mail sometimes sits on the docks for months. The turnover is only $7 million a year with losses of around $3 million. Now, Trinidad & Tobago has given the New Zealand Post Office a five-year contract to run its postal service. South Africa is about to out-source its mail service with New Zealand Post on the short list and Britain's Royal Mail already has a 30-year franchise to deliver letters in Argentina.
PORK
A U.S.-China trade agreement has given U.S. pork producers access to the largest pork-consuming market in the world. Per-capita consumption of pork in China already is higher than in the US. Analysts expect pork demand in China to increase by 6 to 7 percent per year, meaning that each year, China will consume an additional amount of pork five times greater than the 529,000 metric tons of pork exported by the U.S. in 1998. Previously, China blocked U.S. pork imports through a system of high tariffs, restrictive import licensing and distribution practices, and complicated and arbitrary sanitary requirements.
ASIA
It seems Canadian entrepreneurs doing business abroad have coped with the so-called "Asian flu." According to a 1998 survey of 1,007 small and medium-sized enterprises (SMEs), 43 per cent of respondents said they were either "successful" or "very successful" in doing business in Asian countries. The overwhelming majority of respondents said cross-cultural awareness is important to doing business in Asia, but only 15 per cent had formal training in place.
PRIVATIZATION
The global privatization boom slowed last year. In 1998, sales of state-owned companies fell by 26 per cent worldwide to $115 billion according to the OECD. Sales in non-OECD countries fell by half to $28.5 billion; excluding Brazil, they were only $3 billion. Italy was the biggest privatiser last year, with sales of $14 billion and France was second. Britain which pioneered privatization in the 1980s, sold nothing last year.
FAMILY INCOME
Average family income in Canada before taxes was an estimated $57,146 in 1997, essentially unchanged from 1996 after adjusting for inflation. This left family income at virtually the same level it was in 1994, the last year there was a significant improvement, and some $2,700, or 4.5%, below the pre-recession peak of $59,862 in 1989. In terms of specific family types, two-parent families had an average income of $64,814 in 1997, virtually unchanged from 1996. However, average income for lone-parent families headed by women increased 4.1% to $25,445, as higher employment earnings were accompanied by increased Child Tax Benefits.
ARCHITECTS
Their services range from designing furniture to planning residential, institutional and commercial buildings. Last year, 3,800 companies, mainly small, private ones employing two or three people, conducted business in Canada. The federal government estimates total employment at about 11,500 and revenue at $899 million for 1995. A number of firms are doing work abroad, however, just $17 million of revenue came from exports in 1995. Falling trade barriers have improved export prospects but this also means more competition within the domestic market
SHOPPING
A.C. Nielsen Corporation has announced that participation in grocery store frequent shopper programs has grown to 66 percent of U.S. households - up from 55 percent in 1997 and 35 percent in 1996.
CITIES
In 1931, Montreal and Toronto were only two Canadian cities with populations of half a million or more, now there are nine. The two big cities in 1931 held 18 per cent of the country's population. In 1996, the nine big cities held 48 per cent of the Canadian total. What draws population it seems is sheer size. The large cites are not just home to a lot of people, but a magnet that draws theatres, orchestras, art galleries, restaurants and visitors. However, the biggest metropolises are plagued by high real estate prices, pollution and a perception of high crime rates.
HOGS!
A recent U.S study by J.D. Power and Associates which polled 9,000 people who bought motorcycles in 1998, found that women represented a surprising 22 per cent of first-time buyers. While the world of motorcycling is still overwhelmingly male--only eight per cent of all buyers were women--the female first-time buyer is a significant trend. This is a trend that is also reflected in Canada.
DRUGS
For the first time this decade, sales of brand-name pharmaceuticals in 1998 grew at a faster rate than lower priced generics. Prior to 1998, the prescription trend for generics had been growing faster than for brand therapies, with most provincial health insurance plans opting to increase usage of generic drugs. Pharmaceutical sales in Canada soared 12.7 per cent to $7.5 billion last year, the world's ninth-largest market. Reflecting a global trend, consolidation in the Canadian drug industry is increasing. In 1998, the top ten pharmaceutical companies in the country accounted for 51 per cent of industry sales.
LIFE
An American millennium baby can expect to live nearly twice as long as one born in 1900, and to grow a full three inches taller. A Canadian or Swiss baby now has twice the life expectancy of a Zambian or Ukrainian one.
GIFTWARE
The giftware and crafts industry includes products ranging from jewellery to stationery, toys and home and garden supplies. About 45,000 work in this sector, including 25,000 artists and artisans, estimates Industry Canada. The value of exports has been growing since the mid-nineties. Items for export include glassware, ceramics, porcelain, china, artwork and miscellaneous giftware. In 1997, Canadian companies exported more than $121 million of these items, up from $70 million in 1994. In addition to the large companies, there are about 400 export-ready craft and giftware producers in Canada. Their annual sales range from $80,000 to $100,000.
DEBT
Canada's net debt owed to foreigners edged down to $324 billion last year, the third drop in four years. Statscan reports that net foreign liability dropped to 36 per cent of gross domestic product from 44 per cent in 1994. There were external liabilities of $971 billion and external assets of $647 billion. Americans were Canada's largest net creditors at the end of 1998 with holdings of $218 billion. Japan was the next largest creditor followed closely by Britain.
HOMES
More Canadians are moving up from starter homes to something more pricey, according to federal housing analysts. While first-time buyers dominated the market in 1997, the trend shifted last year as consumers looked for more expensive homes. The trend was particulary noticeable in Halifax, Montreal and Calgary. In Montreal, demand for new homes over $300,000 jumped 75 per cent in 1998. In Calgary, demand for homes for less than $150,000 declined 16 per cent.
PREDICTIONS
In 1943, IBM Chairman Thomas Watson stated that in his opinion there was a world market for maybe five computers. By 1997, this computer giant was predicting that hard-disk drives in personal computers would be outselling television sets within three years.
TRASH
In Oxfordshire, England, local authorities are putting video cameras in empty drink cans and leaving them lying about the countryside. These hidden cameras are used to catch people who dump garbage illegally in fields and along the sides of roads.
RESEARCH
Ten of the world's leading drug companies are jointly creating a new research consortium to study how variations in human DNA affect disease development. This will help drugmakers to tailor their products to individual patients.
HELP!
When a man in England phoned 911 recently to complain of a broken heart, phone operators first established that he did not require an ambulance and then told him to hunt for an advice columnist.
Thank you for reading the A & A Economic News Digest. For more information visit our website www.aacb.com or contact A & A Contract Customs Brokers Ltd. at strehler@aacb.com.
Past issues of the A&A Economic News Digest can be found at http://www.aacb.com/publications/ed/index.asp
Mexico is aggressively positioning itself as the leading free-trade trader of the Americas and is turning into a hub for bilateral trade agreements. Besides the NAFTA, Mexico already has free-trade pacts with Chile, Bolivia, Colombia, Venezuela, Cost Rica and Nicaragua. Talks with Panama are advanced, and Mexico is also negotiating with Peru, Belize, Ecuador, Israel and Trinidad. Top of Mexico's agenda is finishing an agreement with the European Union before the end of the year. This will give Mexico access to the lucrative European market and allow Mexico to diversify its export market instead of depending so heavily on the U.S.
ASSIGNMENTS
An annual survey of the top destinations for international assignments, shows that the U.S. was again the top location for expatriates and short-term assignees. The study utilized data on worldwide transfer activity of more than 18,000 international assignments in 1998. Companies bring employees into the U.S. on shorter-term assignments, typically up to one year, for training, technology and management development. The 1998 top five locations for international employee assignments were: the U.S., the United Kingdom, Mexico, Canada and Singapore. Hong Kong, ranked in 5th place last year, is no longer a top ten destination.
SHANGHAI
Headquartered in Shanghai, the Lianhua Supermarket Co is China's largest chain-store operation with 400 outlets and sales of $400 (U.S.) million a year. Despite its size, Lianhua remains little known outside Shanghai but this may change. Once it was a pet project of municipal officials, now it is the favourite of the national government. Developing domestic chains has become a political priority as China seeks to modernize retailing and boost consumer spending, a vital step to preventing economic growth from sliding below this year's target of 7 per cent. Chains get consumers to spend by offering a greater range of products and placing their stores in convenient locations.
Chain stores now account for less than 2 per cent of China's retail sales.
HUNGARY
Hungary is close to the geographical heart of Europe. Budapest, the capital, has over two million inhabitants and is the commercial hub of the country. Since the collapse of communism, the country has established a parliamentary democracy and developed a strong market economy. The Government has privatized most state-owned companies, banks and utilities. Nearly 80% of the country's gross domestic product is now produced by the private sector, compared with only 10% in 1990. Over 80% of Hungary's trade is now with OECD countries, including some 71% with the European Union (EU). Until 1990, 65% of Hungary's trade was with Communist bloc countries.
PIRACY
The market for pirated music exploded in 1998 as new digital technologies and the Internet gave audio pirates more ways to break the rules. The recording industry reports that 338,458 pirated CDs were confiscated in the U.S. in 1998, up 163 per cent from 129,000 in 1997. The figure reflects products that were confiscated on street corners, in flea markets, retail outlets and via Internet sales. The rising number of illegal copies is said to be due to the recent availability of inexpensive CD recorders.
IT'S IN THE MAIL
Mail deliveries in Trinidad only reach half the island's households; airmail from Britain can take eight weeks and mail sometimes sits on the docks for months. The turnover is only $7 million a year with losses of around $3 million. Now, Trinidad & Tobago has given the New Zealand Post Office a five-year contract to run its postal service. South Africa is about to out-source its mail service with New Zealand Post on the short list and Britain's Royal Mail already has a 30-year franchise to deliver letters in Argentina.
PORK
A U.S.-China trade agreement has given U.S. pork producers access to the largest pork-consuming market in the world. Per-capita consumption of pork in China already is higher than in the US. Analysts expect pork demand in China to increase by 6 to 7 percent per year, meaning that each year, China will consume an additional amount of pork five times greater than the 529,000 metric tons of pork exported by the U.S. in 1998. Previously, China blocked U.S. pork imports through a system of high tariffs, restrictive import licensing and distribution practices, and complicated and arbitrary sanitary requirements.
ASIA
It seems Canadian entrepreneurs doing business abroad have coped with the so-called "Asian flu." According to a 1998 survey of 1,007 small and medium-sized enterprises (SMEs), 43 per cent of respondents said they were either "successful" or "very successful" in doing business in Asian countries. The overwhelming majority of respondents said cross-cultural awareness is important to doing business in Asia, but only 15 per cent had formal training in place.
PRIVATIZATION
The global privatization boom slowed last year. In 1998, sales of state-owned companies fell by 26 per cent worldwide to $115 billion according to the OECD. Sales in non-OECD countries fell by half to $28.5 billion; excluding Brazil, they were only $3 billion. Italy was the biggest privatiser last year, with sales of $14 billion and France was second. Britain which pioneered privatization in the 1980s, sold nothing last year.
FAMILY INCOME
Average family income in Canada before taxes was an estimated $57,146 in 1997, essentially unchanged from 1996 after adjusting for inflation. This left family income at virtually the same level it was in 1994, the last year there was a significant improvement, and some $2,700, or 4.5%, below the pre-recession peak of $59,862 in 1989. In terms of specific family types, two-parent families had an average income of $64,814 in 1997, virtually unchanged from 1996. However, average income for lone-parent families headed by women increased 4.1% to $25,445, as higher employment earnings were accompanied by increased Child Tax Benefits.
ARCHITECTS
Their services range from designing furniture to planning residential, institutional and commercial buildings. Last year, 3,800 companies, mainly small, private ones employing two or three people, conducted business in Canada. The federal government estimates total employment at about 11,500 and revenue at $899 million for 1995. A number of firms are doing work abroad, however, just $17 million of revenue came from exports in 1995. Falling trade barriers have improved export prospects but this also means more competition within the domestic market
SHOPPING
A.C. Nielsen Corporation has announced that participation in grocery store frequent shopper programs has grown to 66 percent of U.S. households - up from 55 percent in 1997 and 35 percent in 1996.
CITIES
In 1931, Montreal and Toronto were only two Canadian cities with populations of half a million or more, now there are nine. The two big cities in 1931 held 18 per cent of the country's population. In 1996, the nine big cities held 48 per cent of the Canadian total. What draws population it seems is sheer size. The large cites are not just home to a lot of people, but a magnet that draws theatres, orchestras, art galleries, restaurants and visitors. However, the biggest metropolises are plagued by high real estate prices, pollution and a perception of high crime rates.
HOGS!
A recent U.S study by J.D. Power and Associates which polled 9,000 people who bought motorcycles in 1998, found that women represented a surprising 22 per cent of first-time buyers. While the world of motorcycling is still overwhelmingly male--only eight per cent of all buyers were women--the female first-time buyer is a significant trend. This is a trend that is also reflected in Canada.
DRUGS
For the first time this decade, sales of brand-name pharmaceuticals in 1998 grew at a faster rate than lower priced generics. Prior to 1998, the prescription trend for generics had been growing faster than for brand therapies, with most provincial health insurance plans opting to increase usage of generic drugs. Pharmaceutical sales in Canada soared 12.7 per cent to $7.5 billion last year, the world's ninth-largest market. Reflecting a global trend, consolidation in the Canadian drug industry is increasing. In 1998, the top ten pharmaceutical companies in the country accounted for 51 per cent of industry sales.
LIFE
An American millennium baby can expect to live nearly twice as long as one born in 1900, and to grow a full three inches taller. A Canadian or Swiss baby now has twice the life expectancy of a Zambian or Ukrainian one.
GIFTWARE
The giftware and crafts industry includes products ranging from jewellery to stationery, toys and home and garden supplies. About 45,000 work in this sector, including 25,000 artists and artisans, estimates Industry Canada. The value of exports has been growing since the mid-nineties. Items for export include glassware, ceramics, porcelain, china, artwork and miscellaneous giftware. In 1997, Canadian companies exported more than $121 million of these items, up from $70 million in 1994. In addition to the large companies, there are about 400 export-ready craft and giftware producers in Canada. Their annual sales range from $80,000 to $100,000.
DEBT
Canada's net debt owed to foreigners edged down to $324 billion last year, the third drop in four years. Statscan reports that net foreign liability dropped to 36 per cent of gross domestic product from 44 per cent in 1994. There were external liabilities of $971 billion and external assets of $647 billion. Americans were Canada's largest net creditors at the end of 1998 with holdings of $218 billion. Japan was the next largest creditor followed closely by Britain.
HOMES
More Canadians are moving up from starter homes to something more pricey, according to federal housing analysts. While first-time buyers dominated the market in 1997, the trend shifted last year as consumers looked for more expensive homes. The trend was particulary noticeable in Halifax, Montreal and Calgary. In Montreal, demand for new homes over $300,000 jumped 75 per cent in 1998. In Calgary, demand for homes for less than $150,000 declined 16 per cent.
PREDICTIONS
In 1943, IBM Chairman Thomas Watson stated that in his opinion there was a world market for maybe five computers. By 1997, this computer giant was predicting that hard-disk drives in personal computers would be outselling television sets within three years.
TRASH
In Oxfordshire, England, local authorities are putting video cameras in empty drink cans and leaving them lying about the countryside. These hidden cameras are used to catch people who dump garbage illegally in fields and along the sides of roads.
RESEARCH
Ten of the world's leading drug companies are jointly creating a new research consortium to study how variations in human DNA affect disease development. This will help drugmakers to tailor their products to individual patients.
HELP!
When a man in England phoned 911 recently to complain of a broken heart, phone operators first established that he did not require an ambulance and then told him to hunt for an advice columnist.
Thank you for reading the A & A Economic News Digest. For more information visit our website www.aacb.com or contact A & A Contract Customs Brokers Ltd. at strehler@aacb.com.
Past issues of the A&A Economic News Digest can be found at http://www.aacb.com/publications/ed/index.asp
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