DECEMBER 1995 Edition
EXPORT DATA
The Department of Foreign Affairs and International Trade
(DFAIT) has created a directory of electronically available international
business data sources to help Canadian firms seeking to obtain business data on
foreign markets. Persons can now obtain a wealth of information that is useful
in developing an export plan or implementing an export strategy. The directory
can be accessed through menu M22 of the InfoCentre BBS from which it can be
downloaded. To access the InfoCentre BBS, dial (613) 994-1581 from your
computer modem, or 1-800-628-1581 (line parameters set at 8-N-1, baud speed up
to 14,400, terminal emulation set for ANSI/ASCII standards). The directory is
organized by geographic region--Canada, United States, Europe and Asia-Pacific.
CHINA
China has suddenly exploded into a global export power.
It now produces half the world's toys and two-thirds of its shoes. Most of the
world's bicycles, lamps, power tools and sweaters also come from China. More
worrisome to export giants like Japan and the United States, China's export
surge is now being powered by coveted, high-tech products. Exports of machinery
and electronics--from alarm clocks to video camcorders--have jumped 60 per cent
so far this year Chinese statistics show, becoming its top export category for
the first time. If China's current trade trajectory holds, it will export $38
billion more than it imports from the U.S. Next year, U.S. officials estimate
the surplus could reach $50 billion putting it close to Japan whose bilateral
trade advantage with the U.S. is $66 billion.
LICENSING
The Vatican Library has given its blessing to a lucrative
licensing project that could put its official seal on everything from luggage
to bed linens. You can already buy Vatican costume jewellery and will probably
soon find Vatican watches, greeting cards and T-shirts at the mall. Over the
first five years, licensing revenue is projected to average about $5 million
(U.S.) annually jumping to $10 to $20 million annually after that. When Pope
John Paul II visited Denver in 1993, roughly $400 million of Pope-related
material was sold in a 30-day period. The Vatican joins Queen Elizabeth II who
approved the sale of goods under the House of Windsor name including furniture
and Scottish throw rugs. The Mormon church has also begun expanding its
licensing activities.
RESTAURANTS
An analysis of the financial results of 1,151 restaurants
by Dun & Bradstreet Canada has pinpointed the restaurant industry as the
most unstable field of all the businesses it studies, with low profit margins
and high failure rates. The average restaurant had an after-tax return on sales
of just 2.1 per cent last year, while return on assets was a dismal 4.77 per cent.
Costs of food and beverages increased to 34.9 per cent of total sales in 1994,
up from 32.7 per cent in 1992 while other operating expenses, such as salaries
and rents, accounted for 55.2 per cent of sales in 1994, up from 53.4 per cent.
Introducing the GST in 1991 caused sales to drop 10 per cent that year alone
and they have never recovered to prior levels. Restaurants are most stable in
Quebec and the Maritimes and least stable in Ontario. The average restaurant
faces a 3.66 per cent risk it will close in the next six months and business
failures are surprisingly high in the eighth and ninth years of operations.
GLOBAL ECONOMY
According to the World Trade Organization, world trade in
goods, spurred by the integration of the global economy, is expected to grow 8
per cent in volume in 1995. The WTO says that the strong global trade figures
indicate protectionism is losing out to liberalization. Though the 8 per cent
figure is down from the 9.5 per cent increase in 1994, it will still keep trade
expansion at nearly three times that of overall world economic growth which is
projected to be 3 per cent. In 1994, the value of world merchandise trade rose
to $4.09 trillion.
EUROCOWS
As far as European Community cows are concerned, 1996
will not be a leap year. Rather than recalculate production formulas based on
365 days, Brussels bureaucrats have decided that any milk the animals produce
on February 29th will be credited to the two months before or after that date.
RETAIL
Zellers Inc., with more than 300 stores, used to be the
undisputed king of discount retailing in Canada. For more than a year now,
Zellers and Wal-Mart Canada, with its 129 Canadian stores, have been trading
punches with one retailer dropping its prices only to be matched or outdone by the
other. While the consumer has benefitted, the impact on both companies'
earnings is noticeable. Wal-Mart absorbed a loss last year and in the first
quarter of 1995 while Zellers operating profits have been sliding. Zellers is
about to open its biggest store yet, about 147,000 square feet, close to a
Wal-Mart store in Montreal. The store will serve as a laboratory of sorts as it
tests various strategies for boosting sales across its entire chain. Wal-Mart
claims to have boosted its share of the discount market to 40 per cent from the
22 per cent when it bought the Woolco chain.
NAFTA
The Canadian government has acknowledged for the first
time that it won't achieve a comprehensive deal with the U.S. and Mexico by
year-end on getting rid of arbitrary trade laws within the North American
free-trade agreement. Instead, the partners are expected to issue an interim
report that will include recommendations for some technical and administrative
changes to anti-dumping and countervailing duty rules. The Canadian government
has long argued that absence of clear rules and arbitrary U.S. trade remedy
measures are to blame for a deluge of cross-border disputes in recent years,
including those involving steel and softwood lumber.
COMMUNICATIONS
Telephone users in Regina, Saskatchewan, can now call a
business by dialling a three-digit code and speaking the company's name into a
computer. Sask'Tel, is the first phone company in North America to begin
testing the new application of voice-recognition developed by Bell-Northern, a
division of Northern Telecom. After the first month of the trial, the 325
businesses that have agreed to participate will pay a monthly fee to have their
name stored on the computerized system which has an almost limitless vocabulary
and does not have to be trained to recognize speakers. If successful, the
system will go into service across the country.
COMPETITION
The inefficiency of Japan's offices contrasts sharply
with the legendary productivity of its factories. Last year, only 25 per cent of
white-collar workers had personal computers. When Compaq and Dell Computers
invaded Japan's market three years ago with personal computers selling at half
the price of Japanese products, Japan's computer makers braced for declining
market share and falling profits. But instead of killing Japan's PC market, the
U.S. invasion has liberated it. Japanese manufacturers have become fierce
competitors, cutting prices dramatically, and the results have been a boom in
sales for both Japanese and U.S. manufacturers with sales climbing by a third
in 1994. Sales in 1995 are expected to jump by 50 per cent. Leading the U.S.
companies was Apple Computer Inc. which has now become the No 2 personal
computer vendor behind NEC Corp. with a 15 per cent market share.
EDUCATION
Officials at some of Canada's major banks are discussing
a loyalty credit card that would allow users to put a percentage of their
purchases into a fund for their children's post secondary education. The
Student Co-operative Canada Project--Scoop for short--would award card users
points for up to five per cent of purchases from designated companies.. The
points would be transferable to a post-secondary education savings plan that
would be managed by mutual funds for individual students. The card proposal is
being designed to include accumulating points for debit card purchases and even
cash purchases. It would also allow card users to convert points from Air Miles
and other existing loyalty programs.
BIOTECHNOLOGY
According to Ernst & Young, Canadian biotechnology
companies are continuing to use strategic alliances with bigger, better
capitalized partners to replace other sources of capital. Biotechnology product
sales rose to $9.3 billion (U.S.) as of June 1995, an 18 per cent rise over the
previous year. Market capitalization of companies in this business rose 27 per
cent to $52 billion. The Canadian industry now has about 200 biotech companies
and about 30 publicly listed biotech companies. They are also capitalizing on
the need of large pharmaceutical companies to buy research from outside sources
to attract funds.
WORK
By overwhelming majorities, Canadian and U.S. employees
say they are fulfilled by their work, but many express dissatisfaction with
their pay, opportunities to advance and employers' concern for their needs.
Canadian employees (77 per cent), more so than Americans (72 per cent) say
their job "provides a sense of personal accomplishment" even though
fewer Canadians (41 per cent) than Americans (45 per cent) believe they have a
chance to advance. Employees of both countries say they can "have a direct
impact" in helping their firms succeed through their day-to-day-efforts,
including "high-quality" customer service.
MEXICO
Mexican exports to Canada increased 24 per cent in the
first eight months of the year, while imports from Canada fell 8.5 per cent.
Their exports have been helped by a weaker peso which was devalued last
December and has fallen 54 per cent against the U.S. dollar in the past 11
months. This has also put a brake on Mexican imports but those from Canada have
fallen at a lower rate than those from Japan and Europe. 51.8 per cent of
Mexican exports to Canada were consumer goods, 31 per cent were raw materials
and 10.7 per cent capital goods.
GENERIC DRUGS
According to a study by IMS Canada, growth in sales of
generic drugs outpaced that of brand-name pharmaceuticals by more than five
times in the 12 months ended September 1995. Generic drug producers saw their
sales rise 13.8 per cent compared to a 2.7 increase reported by brand-name
manufacturers. Generic drugs now represent 14 per cent of retail drug store
sales, up from 11 per cent in 1991 and it is projected that this figure will
reach 16 per cent of retail sales by the year 2000.
LOANS
Loans of up to $250,000 are to be made available to
asset-poor, idea-rich, knowledge-based businesses in Western Canada under a $25
million program announced by the federal government and its Business
Development Bank of Canada. One appealing feature is that repayments of both
principal and interest can be deferred for up to three years. The bank will charge
a base interest rate plus a royalty on a borrower's sales. Major banks have
traditionally turned down knowledge-based businesses, even when they have
signed contracts in hand, because they don't have buildings, machinery or
inventory to assign as security on loans.
INCENTIVES
"Stop smoking for three years and save enough money
to buy an ox."--The slogan of China's new anti-smoking campaign.
DUST TO DUST
A devotee of the Real Betis soccer team in Spain who died
last year asked his son to take his ashes to every game. The son went one
better by renewing his father's club membership entitling the ashes to a seat.
Security officials balked when he carried the ashes in a glass jar which they
considered to be a dangerous object. So now he takes his father in a one-litre
milk carton.
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