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

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 International Trade and Investment by John Gionea Slides prepared by John Gionea Features of Industrialised Countries 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

Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a International Trade and Investment by John Gionea Slides prepared by John Gionea Industrial Countries As Mixed Economies Predominance of the private sector – Domestic firms (small,medium,large) – MNE's Various degrees of government intervention. Substantial freedom for markets and MNE's

Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a International Trade and Investment by John Gionea Slides prepared by John Gionea Government Involvement in the Production of Goods & Services 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)

Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a International Trade and Investment by John Gionea Slides prepared by John Gionea Government Involvement in International Business OECD: Principle of national treatment for non-nationals (no discrimination for foreign firms). Government control of international trade and investment – Tariffs; Non-tariff measures; Taxes etc. – Export support measures

Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a International Trade and Investment by John Gionea Slides prepared by John Gionea Shares of W.Europe, North America, Japan and Australia-New Zealand in world merchandise imports

Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a International Trade and Investment by John Gionea Slides prepared by John Gionea Imports of Industrial Countries Group/countryUS$B Main sources(%) Western Europe 2,566W.Europe(64.6),Nth America(8.9), E.Europe(5.6), Asia(12.9), Aus/N.Z(0.4) North America 1,504Asia (33.7),Nth America (26.2), W.Europe(18.5), America(15.4), Japan380Asia(46.4), Australia-New Zealand(4.5), Nth America(21.4)

Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a International Trade and Investment by John Gionea Slides prepared by John Gionea Import Markets in Industrial Countries: Product markets, 2000 Merchandise Imports of the TRIAD(US$ 4,236) – Primary products ( %) Food;Raw materials;Ores and minerals – Manufactures ( %) Iron and steel Chemicals Other semi-manufactures. Machinery and Transport Equipment( %) Textiles Clothing Other consumer goods

Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a International Trade and Investment by John Gionea Slides prepared by John Gionea Australia and New Zealand’s merchandise imports by source(%) Supplier North America Latin America W.Europe Africa C.E.Europe Middle East World100.0

Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a International Trade and Investment by John Gionea Slides prepared by John Gionea Export Marketing Aspects Very competitive markets (local/regional and foreign competition) Intra- MNE trade Sophisticated marketing techniques – Market segmentation

Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a International Trade and Investment by John Gionea Slides prepared by John Gionea Export Marketing Aspects Price-setting strategies – Standard;Dual;Market-differentiated pricing. – "Gray markets" (Parallel importation) High media spending (e.g US,Switzerland) – Legal differences in advertising Distribution channels tend to be shorter than in Developing countries.

Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a International Trade and Investment by John Gionea Slides prepared by John Gionea Advertising expenditure per head (US$) and by medium (%), 1999 CountryUS$ / Head % TV% Print %Radio% Cinema % Outdoor USA Canada Japan Switzer land Australia New Zealand

Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a International Trade and Investment by John Gionea Slides prepared by John Gionea Trade Issues in Industrial Countries Tariffs:Generally low and mostly bound – US-Japan trade dispute;US-European Union Regional Trading Blocs – The European Union(EU-15) – NAFTA(US/Canada/Mexico)

Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a International Trade and Investment by John Gionea Slides prepared by John Gionea Foreign Direct Investment in the Triad Increasing concentration("The TRIAD"), – 80 % of global FDI inflows – 78 % of global FDI outflows US and EU > inward FDI than Japan – Foreign affiliates:1.5% of total sales in Japan Sectoral shifts since the mid.1970's – Services up;Primary/Secondary sectors down – Banking-the leading service sector

Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a International Trade and Investment by John Gionea Slides prepared by John Gionea Investment Considerations Political stability Nationalisation,government controls – Prices,pollution Economic outlook (e.g. synchronised cycles) Attitude to foreign investment

Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a International Trade and Investment by John Gionea Slides prepared by John Gionea Investment Considerations Taxes Incentives Personnel, labour and social considerations Exchange rates

Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/a International Trade and Investment by John Gionea Slides prepared by John Gionea FDI Inflows into Oceania, , US$ B.