Trade

With a vast landmass, extensive natural resources, more than 140 million consumers, a growing middle class, and almost unlimited infrastructure needs, Russia remains one of the most promising and eexciting markets for U. S. exporters. Russia is the world’s 11th largest economy by nominal gross domestic product (GDP) and 7th largest by purchasing power parity (PPP). It has the highest per capita GDP ($13,400) of the BRICS countries (Brazil, Russia, India, China, and South Africa). Russia is an upper middle income country, with a highly educated and trained workforce and sophisticated, discerning consumers.

Russia’s economy is still recovering from the economic crisis that began in 2008, with GDP growth estimated at 2. 8% for 2013. In terms of trade in goods, Russia was the United States’ 27th largest export market and the 16th largest exporter to the United States in 2012. Russia was America’s 21st largest trading partner overall. U. S. exports to Russia in 2012 were $10. 7 billion, a new record and an increase of almost 30% from 2011. This is six times more than the growth rate for overall U. S. exports worldwide, which rose by 5%. Russian exports to the United States in 2012 were $29 billion, a decrease of 15% from 2011.

Russia’s leading trade partners were recently Netherlands, China, Germany, Italy, Ukraine, and Turkey. U. S. accumulated investment in Russia is approximately $10 billion. According to Russian data, the United States is Russia’s 10th largest foreign investor. Russia joined the World Trade Organization (WTO) in August 2012. This brought the world’s largest economy outside the WTO into the organization and bound it to a set of rules governing trade. Congress also enacted legislation to extend permanent normal trade relations to Russia in the same year.

Russia’s membership in the WTO will liberalize trade with the rest of the world and create opportunities for U. S. exports and investments. For industrial and consumer goods, Russia’s average bound tariff rate declined from almost 10% to under 8%. U. S. manufacturers and exporters will have more certain and predictable access to the Russian market as a result of Russia’s commitment not to raise tariffs on any products above the negotiated rates. For American businesses, Russia’s accession to the WTO will also bring the following:  More liberal treatment for service exports and service providers.

Sthronger commitments for protection and enforcement of IPR. Rules-based treatment of agricultural exports. Market access under country-specific tariff-rate quotas. Improved transparency in trade-related rule-making. More effective WTO dispute resolution mechanisms. The United States is working vigorously to expand bilateral trade and investment cooperation to benefit both Russia and the United States. In the last several years, the positive atmosphere resulting from the “reset” of bilateral relations has led to an unprecedented advance in economic cooperation between our countries.

From 2009 to 2011, U. S. exports to Russia rose markedly by about 57%, and total United States-Russia trade increased by more than 80%. There is much more room for growth in this important relationship. Return to top

Market Challenges

Russia is the largest country in the world, pning nine time zones and encompassing over 17 million square miles. Seriously underdeveloped infrastructure poses logistical challenges, especially in accessing markets outside of major cities.

An incomplete transition from central planning has led to an insufficiently iintegrated economy and disparities in wealth distribution, both geographically and demographically. Conducting business might be impeded by: burdensome regulatory regimes; inadequate intellectual property rights (IPR) protection and enforcement; widespread corruption and inadequate rule of law; inconsistent application of laws and regulations; lack of transparency; and the continued presence of large state-owned, or state-controlled, enterprises in strategic sectors of the economy.

Investments in “strategic sectors” of the Russian economy are subject to Russian Government control. Recent reforms make it easier for companies to hire expatriate employees, but the Russian immigration and visa system requires time and patience for business travelers to obtain necessary permissions to do business in Russia. English is not widely spoken although knowledge of the language is expanding especially in the major cities. Return to top Market Opportunities In alphabetical order:

• Agricultural Equipment

• Apparel

• Automotive Parts and Service Equipment/Accessories

• Aviation 4

Chemicals/Plastics Construction Consumer Electronics Electric Power Generation and Transmission Equipment Energy Efficiency/Green Build Medical Equipment Refinery Equipment Safety and Security Equipment Travel and Tourism to the United States Return to top Market Entry Strategy • Commit time, personnel, and capital seriously, as developing business in Russia is resource-intensive. Conduct market research, such as with the U. S. Commercial Service’s Gold Key or International Partner Search services, to identify opportunities and potential Russian business partners.

Conduct due diligence, such as with the U. S. Commercial Service’s International Company Profile service, to ascertain the reliability of business partners. Consult with U. S. companies already in the market, as well as with the U. S. Commercial Service and business organizations such as the American Chamber of Commerce in Russia and the U. S. -Russia Business Council. Communicate regularly with Russian business partners to ensure common understanding of expectations. Frequent travel to Russia is sthrongly recommended in order to establish and maintain relationships with partners and to understand hanging market conditions. Maintain a long-term timeframe to implement plans and achieve positive results.

Return to table of contents 5 Return to table of contents Chapter 2: Political and Economic Environment For background information on the political and economic environment of the country, please click on the link below to the U. S. Department of State Background Notes. http://www. state. gov/r/pa/ei/bgn/index. htm Information on Russia can be found at the following link: http://www. state. gov/r/pa/ei/bgn/3183. tm Return to table of contents 6 Return to table of contents Chapter 3: Selling U. S. Products and Services  Using an Agent or Distributor Establishing an Office Franchising Direct Marketing Joint Ventures/Licensing Selling to the Government Distribution and Sales Channels Selling Factors/Techniques Electronic Commerce Trade Promotion and Advertising Pricing Sales Service/Customer Support Protecting Your Intellectual Property Due Diligence Local Professional Services Web Resources Return to top Using an Agent or Distributor

Encompassing nine time zones, Russia is the largest country in the world by landmass. Therefore, many businesses tend to approach the Russian market on a regional basis. Most new entrants start in Moscow and then move into the regions either through an existing distributor or by seeking new distributors in those locales. As both Moscow and St. Petersburg are major population and business centers, many Western firms have representatives there. The Northwest Federal District consists of the northern part of European Russia and includes eight federal subjects (equivalent to U.

S. states), including Russia’s second largest city, St. Petersburg. St. Petersburg and the surrounding Leningrad Region are home to Russia’s largest port facilities, and the area has significant natural resources, especially in forest products and oil and gas. The region’s population of over 13 million provides a stable and highly educated workforce. In addition, the region shares a long border with Finland, and nearly 40% of European Union-Russia trade takes place along this border.

American companies have made significant investments in northwest Russia: Caterpillar, Ford, GM, International Paper, Kraft Foods, Wrigley and ConocoPhillips are some of the U. S. brand names with investments there. Some companies have successfully entered the Russian market by starting distribution in other key regions first because of market features and industry sector concentrations (e. g. , woodworking in northwest Russia and energy projects in Sakhalin and western Siberia) and then expanding elsewhere. Well-organized distribution channels are established in western Russia, especially in Moscow and St.

Petersburg, and continue to 7 develop rapidly in southern Russia, the Volga region, Urals, Siberia, and Russian Far East. With a high concentration of mineral resources (diamonds, gold, silver, tin, tungsten, lead and zinc), fishing, and timber resources, the Russian Far East also represents business opportunities for U. S. exporters. The Russian Government is promoting a shift in the region to deep processing of natural resources and fostering local production of high value-added products, while preserving a reasonable focus on resource extraction.

Deep processing is focused on the timber, fishing, and agricultural (meat and milk production) industries and will create a need for equipment in these areas. Local and international environmental groups are supporting this strategy, aimed at more sustainable economic development in the region. The Russian Government has mega-projects in the fuel and energy sectors, including continued development of the major Sakhalin oil and gas project at a cost of over 1. 8 trillion rubles. Chemical production facilities using natural gas will likely be built along the pipeline routes.

A large-scale petro- and natural gas chemical industry is expected to develop in the Russian Far East along the main pipeline routes to include methanol, ammonia, and fertilizer products, as well as manufacturing of polymeric plastics. These new projects will require procurement of equipment and machinery to support their production. The mining sector is also expected to be developed, including continued development of gold deposits in the Amur and Magadan regions and the Chukotka Autonomous Region.

New projects in the mining sector will drive up the demand for expanded fleets of road construction machinery, and other equipment by local companies. The development of regional aviation as a mearns to connect population centers in the Russian Far East is another Government priority. A new Federal program (adopted in April 2013) plans to allocate 101 billion rubles to support regional aviation, including the upgrade of local airports’ infrastructure. This will create business opportunities for suppliers of regional aircraft and equipment, as well as for service providers specializing in airport modernization.

The contract between parties is a CIF (cost, insurance and freight) contract and as such, the Seller is required to arrange the carriage of the goods, their insurance in transit and all costs of such arrangements are usually included in the contract price (Bridge, 2007). Furthermore, an essential element of a CIF seller’s duty is to obtain a bill of lading, an insurance policy, any other document required by the contract (Bridge, 2007) and to forward these to the buyer. The buyer then pays on the invoice only when they have received the correct shipping documents (Bridge, 2007).

The fundamental feature of a CIF contract is that once a seller has shipped the goods, they have “performed” the contract by tendering conforming documents to the buyer (Treitel, 2007). Indeed, it was described in the case of Hindley v E India Produce Co. Limited (1972] 2 Lloyd’s Rep 515) as “a contract for sale of the goods performed by delivery of documents” (Sealey & Hooley, 2003). As such, the CIF contract imposes duality of obligations on the seller to deliver the goods and deliver the documents.

The documentary obligations require the seller to procure and submit to the buyer the exact documents stipulated in the contract (Sealey & Hooley, 2003). Furthermore, in the case of The Julia ([1949] AC 293), Lord Porter asserted that in the absence of a provision in the contract to the contrary, the documents provided should include a bill of lading, an insurance policy and an invoice. Under English law, a CIF contract entitles buyers to reject a tender of shipping documents on grounds of the document being “defective” or alternatively, where they are tendered late (Kwei Tek Chao v British Traders and Shippers Limited [1954] 2 QB 459).

With regard to the definition of “defective”, various scenarios have addressed this, including a non-genuine bill of lading and a bill of lading failing to provide the buyer with “continuous documentary cover”. Moreover, in the case of Gill & Duffus SA v Berger & Co Inc ([1984] AC 382) it was asserted that if the documents conform to the contract stipulations, then the buyer is obliged to accept them otherwise they will be in breach of contract even if the goods themselves do not comply with the contract on arrival (which is subject to the separate right of rejection).

Furthermore, in the Hansa Nord case, Roskill L. J asserted that “the seller’s obligation regarding documentation has long been made sacrosanct by the highest authority and….. The express or implied provisions in a c. i. f. contract in those respects [are] of the class ….. Any breach of which justified rejection” (at p. 70). It was further held that a c. i. f. buyer could reject documents disclosing a defect even where the defects in the goods would not itself justify rejection of the goods.

The common law demonstrates that there is an exception to the requirement that the documents must be perfect in all respects, however the parameters of this exception are uncertain and ultimately appear to be a question of fact. For example, in the case of Tradax Internacional S. A. v Goldschmidt S. A. ([1977] 2 Lloyd’s Rep 604) , the contract provided that the goods should contain no more than 4% foreign matters and a certificate of quality was required to be submitted with the other standard shipping documents.

The buyers subsequently rejected the documents on the grounds that the certificate of quality showed 4. 1% of foreign matters. However Slynn L. J. presiding stated that the buyer could not validly reject the documents on this ground and that the certificate was what it was stated to be, in other words a “certificate of quality”. Slynn L. J further asserted that “here the certificate is a good certificate in that it does state what is the quality, what is the percentage of impurities. It shows that there was not a full compliance with the contractual term as to quality and it does what it was intended to. It is a valid document…. Capable of being transferred as part of a subsequent sale”.

China to put duties on US chicken imports The article centers around anti-dumping tariffs on United States chicken imports. The duties were introduced by China, which claims that American poultry firms are exporting the meat at unfairly low prices. The effects are growing trade disputes and accuses between the two countries. Tariffs can be explained as a tax levied on imported goods. Tariffs are a form of protectionism. Tariffs can be ad valor (percentage of the value of the good that is being imported) or specific (tax based on a measurable unit as tones ).

Protectionism is any form of action taken by a country to decrease the ratio of domestic goods to imported goods. The aim of protectionism is to make domestic goods more competitive. The article mentions that the demand for chicken wings and feet is higher in China than in United States. American poultry companies, knowing that chickens are considered to be delicacies in China, prefer to sell them on the Chinese market. The graph above explains the situation. Since the poultry is not so popular in America as in China, the demand for chickens in America is labeled as D US and the demand in

China for chickens as D China. When American poultry companies are operating at point A, they can only sell QUO for the price POP. When they decided to export their goods to China and started operating at point B, they automatically increased the production from QUO to IQ . Also the price has moved upwards as the Chinese demand is higher. Hence, there is no wonder why US companies prefer to sell their goods abroad. China in order to protect the domestic market sets tariffs on imported American poultry. The graphs above and on the next page present how the situation looks like fore and after setting tariffs.

Earlier US could supplied goods from IQ to SQ at a price Pl, while the domestic producers were able to sell IQ tones per year. After the tariff from Pl to UP was levied on imported poultry, the imports decreased from IQ SQ to SQ. Since the prices are higher the demand for imported goods has fallen. The effect is that domestic producers can now supply SQ goods at the price UP. The combination of higher price level and lower demand lead finally to lowering imports and thus, increasing domestic production. China has blamed US of exporting chickens at unfairly low prices.

They suspect that the meat was dumped on their market and had to set anti-dumping tariffs. Dumping can be explained as selling goods below production cost and below the domestic price level. Dumping is an action that intends to drive competitors out of the market. Anti-dumping is an action taken by the country on which the goods are dumped. This country sets anti-dumping tariff on imported goods in order to reflect the true cost of production. The graphs on the next page explain how dumping works. The first graph presents the situation on the US market.

On the graph it can be seen that there is a lb Economics Commentary By cockier production Pl what can be seen on the second graph. SQ and QUO’4 represent the chicken dumped on the Chinese market. This will result in the decrease of domestic consumption from Q’4 at POP to G’S at the price Pl . China has already set tariffs on leading American poultry firms, which vary from 43. 1% to even 64. 5%. The tariffs are said to start from 14 February. This has led to the rosining of trade relations between the two countries.

US has already accused Beijing of keeping the Chinese currency Yuan undervalued to help Chinese exporters. The graph below shows how low exchange rates of Yuan can support Chinese exporters. The exchange rate is the price of currency expressed in terms of another currency. When China decreases the exchange rate from 1. 05 to 1. 01 by increasing the supply of Yuan, the quantity demanded for exports will increase. The two nations have clearly an argument. They are not only about chickens but also bout clothing exports.

In my opinion the article was informative and focused on the most relevant matters. The author explained briefly and in an interesting way the complication between the two countries. However, what I think is that the article would be far more absorbing if he focused more on the tariffs on Chinese tires and clothing exports, about which he only mentions. My belief is that the sum of poultry and tires tariffs, rows about clothing exports and film piracy has led to the quarrel between the two nations and that one were the effect of another.

Ironically, as society drifts towards globalization, regionalism also seems to take place in almost every corner of the globe. In fact, most countries in the world, on all continents, are members of regional trade agreements through either customs unions, free trade areas, or other preferential arrangements. Over 200 regional trade agreements (RTAs) exists and have been notified to the World Trade Organization (WTO) and over 150 of those agreements are in force.

Most of these agreements have been concluded in the past ten years and cover mainly trades in goods or services, or a combination of both. To further complicate the issue of RTAs, many countries are members of several agreements; oftentimes these multiple agreements have differing rules. Europe seems to be taking the lead in regards to RTAs with sixty percent of the notified RTAs in force at the end of 2000 whereas developing countries only account for about fifteen percent of the total RTAs in 2000.

The question that arises is whether the growth of regional groups helps or hinders the development of multilateral trading systems. Many countries are trying to balance between global and regional trade organizations. To understand the relative advantages of regional versus global organizations you must consider why international organizations are created. According to Yale University”s Bruce Russett, some organizations have single or multiple purposes, however, according to Russett, all international trade organizations have these purposes or functions.

First, to secure peace among their members; second, to provide for external security vis-a-vis other states; third, to carry out a variety of economic-related tasks, such as development, managing or promoting interdependence; fourth, to address problems of environmental protection, and lastly, to secure human rights. These purposes or functions are normally carried out by a wide range of international organizations, including international non-governmental organizations (INGOs) and intergovernmental organizations (IGOs).

Many scholars feel that the United Nations serves three distinct purposes, security against violence, economic security, and to promote human rights. It is the second purpose of the UN, economic security, which ties into regional and global economic organizations. The UNs economic security is, no doubt, a global and not a regional solution. It is the Bretton Woods institutions of the World Bank, International Monetary Fund (IMF), and the WTO along with the UN Development Program that the UN uses to rebuild economies and develop poor and underdeveloped countries.

These institutions have been concerned with promoting economic interdependence, reducing poverty, and stimulating economic development. Because of these functions, these global institutions have underpinned economic interdependence and have become major advocates for the spread of free markets. The problem is that as the UN and these aforementioned organizations propagate free trade and globalization, many regions feel they are losing there autonomy and are looking towards more regional agreements, hence the move towards regionalism in the 1990s.

There are two basic schools of thought in regards to the relationship between multilateral (globalization) and regional trading arrangements. According to Bhagwati and Panagariya, those who advocate the total reliance on the multilateral economic process express three main concerns against regional economics. These reasons are: First, regional agreements divert trade by creating preferential treatment for member countries vis-a-vis nonmembers, the term for this used by anti regionalism critics is preferential trade agreements (PTAs).

Second, critics argue that countries may lose interest in the multilateral system when they engage actively in regional initiatives; they feel that regionalism will stall and even threaten global trading. Third, regional trading agreements may contribute to political and even military clashes among nations, this though is the extreme. Still and all, contemporary critics of regionalism do worry that extensive and regional ties may lead to conflicts that range beyond economics to broader areas of international relations.

The champions of regionalism address and counter each one of the aforementioned issues. C. Fred Bergsten nicely sums up the points that counter the critics of regionalism. Bergsten lists these three opposite views on the issues presented by the critics of regionalism: First, regional arrangements promote freer trade and multilateralism in at least two areas, trade creation has generally exceeded trade diversion and regionalism contribute to both internal and international dynamics that enhance rather than reduce the prospects for global liberalization.

Second, regionalism oftentimes has important demonstration effects; that is to say, that regional initiatives can accustom officials, governments, and nations to the liberalization process and increase the probability that they will subsequently move on to similar multilateral actions. Lastly, regionalism has had positive rather then negative political effects; the European Union (EU), because of economic interdependence, is unlikely to see any serious conflicts between the member states. As the last two paragraphs show, it is impossible to decisively resolve the regionalism versus multilateralism issue.

Most analysis of free trade agreements (FTAs) conclude that trade creation has dominated trade diversion but that conclusion is not without foolproof results and the future cannot guarantee that regional arrangements will have similarly benign results. However, most economic scholars agree that regional and global liberalization have proceeded together and have tended to reinforce each other; the US would be a good example of this, the US has continued to provide global leadership for multilateral liberalization while simultaneously pursuing it”s regional initiatives.

In the end, the evidence suggests that the interactions have been largely positive but this conclusion is based on judgmental rather then definitive results. The only irrefutable conclusion is that the interrelationship between regionalism and globalism depends on the management of the process by the key countries involved. If those countries seek constructive synergism between regionalism and globalism, then the historical record shows that that synergism can be achieved.

If those countries wish to pursue either regionalism or globalism at the expense of the other, then the outcome could be different. What has evolved is a term called “open regionalism,” open regionalism represents an effort to resolve one of the central problems of global trade policies; how to achieve compatibility between the explosion of regional trading agreements erupting around the world and the global trading system as embodied in the WTO.

The “open regionalism” concept seeks to assure that regional agreements will in practice be building blocks for further global liberalization rather then stumbling blocks that deter progress. “Open regionalism” has been adopted by the three largest economies in the world, the United States (US), Japan, and China, when those economies established an international trade organization, the Asia Pacific Economic Cooperation (APEC).

According to Bergsten, APEC is the largest regional trade organization in the world and is potentially the most far-reaching trade agreement in history, therefore, APEC is a major factor in the world trading system and its embrace of “open regionalism” has propelled this concept into the global marketplace. The concept of “open regionalism” represents an effort to achieve the best of regionalism and globalism, the benefits of regional liberalization, of which even the critics acknowledge, without jeopardizing the continued vitality of the multilateral system.

Proponents of open regionalism view it as a device through which regionalism can be employed to accelerate the progress towards global liberalization and rule making. Ross Garnaut gives five possible definitions of “open regionalism” and these can be implemented simultaneously as well as independently, the five definitions that Garnaut gives are: One, “open regionalism” has open membership in the regional arrangement. Any country that indicates a credible willingness to accept the rules of the institution would be invited to join.

Second, the most favored nation (MFN) treatment concept would be utilized; trade liberalization would be extended unconditionally to all of the members” trading partners. Third, conditional MFNs would be instituted to counter the unconditional MFNs mentioned in the second definition. Outsiders would accept offers from regional trade organizations in order to avoid being discriminated against by countries that account for half the world”s economy. Fourth, regional organizations will continue reducing their barriers on a global basis while pursuing their regional goals.

Continuing the practice of unilateral liberalization and multilateral negotiations in the WTO would do this; both approaches avoid creating a new discrimination and could be viewed as faithful renditions of “open regionalism. ” Finally, trade facilitation through non-tariff and non-border reforms. Such initiatives would be narrowly focused, though still valuable in enhancing trade, such as customs harmonization and mutual recognition of product standards.

Economic regionalism and globalism can co-exist, in fact, as can be seen with the US, a state can practice both and flourish. Most countries will accept the idea of “open regionalism” and will want to promote liberalization in both their region and globally, “open regionalism” allows those states to do this. These countries must indicate publicly both their regional liberalization program and their willingness to extend that liberalization to all members of global organizations, such as the WTO, on a reciprocal basis.

Such a strategy is feasible, as noted earlier, over sixty percent of world trade already takes place within regional arrangements that have either achieved free trade, are getting close to that position, or have committed to do so. The advantage of overcoming current preferential discrimination offered to MFNs would be enticing enough to convince most countries to take the additional step of freeing trade with all partners rather then a selected few while still maintaining regional ties, this is exactly what “open regionalism” does.

Reefer sloping refers to the transportation of perishable goods over sea through temperature-controlled reefer containers or specialized reefer ships. These reefer containers and ships are equipped with in-built cooling and refrigeration units that provide optimal temperatures for different products. Reefer containers come in various sizes and specifications to meet the trade requirements. Covered In this Report This report covers the present scenario and the growth prospects of the Global

Reefer Shipping market for the period 2015-2019. To calculate the market size, the report considers the volume of trade conducted through different modes of reefer transportation. It presents an in-depth analysis of the different types of transportation used in the Reefer Shipping business. The report also presents the vendor landscape and a corresponding detailed analysis of the top four vendors In the Global Reefer Shipping market. View our full TCO here Key Regions MEME OPAC South America North America Key Vendors FCC Furloughs Chartering Gumbo Markers Line NYC Line

Starred Reefer Chartering Other Prominent Vendors Africa Express Line PAL China Shipping Container Lines CAM COM Companion Academicians De Vapors Guest Line Green Reefers Group Hanging Shipping Happy-Lloyd K Line Logistics Killing Group Kiowa Shipping Maestro Reefers Mediterranean Shipping Mitosis O. S. K. Lines Orient Overseas Container Line Succubae Container Leasing STAR Reefers United Arab Shipping Yang Mining Marine Transport JIM Integrated Shipping Services Key Market Driver Increased Capacity of Reefer Containers For a full, detailed list, view our report.

Key Market Challenge Aging Fleet Key Market Trend Introduction of Vessel Sharing Agreement Key Questions Answered in this Report What will the market size be in 2018 and what will the growth rate be? What are the key market trends? What is driving this market? What are the challenges to market growth? Who are the key vendors in this market space? What are the market opportunities and threats faced by the key vendors? What are the strengths and weaknesses of the key vendors? For more insights, view our Global Reefer Shipping Market 2015-2019 report.

Throughout history books examples of early globalization can be found. One example dates back to the Middle Ages when the Silk Road was used as a trade route from China to Europe. Another example of early globalization was the Triangle Trade Route which was used to exchange goods to and from Europe, Africa, and the Americas. These early examples paved the road for globalization as we understand it today. Over the years trade has continued to grow to every part of the world.

In recent years the growth of globalization has been phenomenal. Technological advancements have played a key role in the expansion of globalization. The internet allows for trade to occur across the world in a matter of seconds. Technology has connected people in recent years like never before. Another improvement that has had a positive impact on globalization is better and faster methods of transportation. The planes and ships built today are quicker and larger than the ones used in the past and make trade even easier. One final reason globalization has grown so much recently is the policies countries have put in place to promote cross-border trade, and investments.

Even though globalization continues to expand not all effects of recent globalization have been positive in the United States. Because of increased competition some corporations that began in the United States have moved to other countries. One example is Burger King. In 2014 they moved their headquarters to Canada. The dog food company Purina, which was established in 1894 in Saint Louis, merged with Nestle which then moved its headquarters to Switzerland in 2001. Another example is Fruit of the Loom which moved to the Cayman Islands. These are just of the few of the many companies that have moved out of the United States for many reasons. Some of those reasons include cheap labor and avoiding high taxes.

Some companies have chosen to move factory jobs that were based in the United States to Mexico in recent years. The global economy is making it harder for some companies to keep jobs based in the United States. There are many reasons businesses say they leave to set up factories in Mexico. One reason was in order to remain competitive they needed to lower production costs. Factories based in Mexico can pay lower wages and still be close to the United States.

A branch of Nabisco which had been making oreo cookies in Chicago, Illinois since 1953 closed in 2016 and relocated to Mexico. Chowchilla brake parts also chose to relocate to Mexico. When questioned about why the move was necessary company representative were quoted as saying, ” There’s no way that U.S. workers are going to work for $3.50 or $4.00 an hour, and that’s the reality of the situation.”
So what happens to the towns that are left behind? The loss of a corporation can also have a huge impact on the place that suddenly loses a business that has been based in an area for many years. Unemployment rises due to the amount of people suddenly left without a way to earn a living for themselves and their families.

The loss of a corporation can also have a huge impact on the place that suddenly loses a business that has been based in an area for many years. One example of the devastating effect the loss of industry can have on a town is Bruceton, Tennessee. In the 1990’s jobs began leaving as layoffs rose and factories closed to go elsewhere. The Henry Siegal company had three large factories based here that produced jeans and suits.

In 2000 the last of the factories closed its doors for good. Since then the entire town has struggled for survival. The factories remain empty and abandoned as they fall apart. Businesses located downtown began to close. The bank, supermarket and clothing store that once were located downtown are no gone and a parking lot has taken their place. It looks like a ghost-town now just like so many other small rural towns across the country today.

However some towns have made it through these tough times by reinventing themselves. Cleveland and Pittsburgh who once led the way in manufacturing have now begun to fill the gaps in their economy that the loss of industry has left behind with successful robotics and biotechnology facilities that have provided much needed jobs to these areas. Towns are now faced with finding alternatives to working in factories to earn a living. Finding alternatives help to lower the high rates of unemployment that occurs when these industries leave.
When companies move overseas from the United States the country that the corporations move to also experience some changes.

The culture of a place can be impacted by the company moving in. Many times corporations that move overseas bring with them many new jobs. This can lay a huge role in the culture of an area. More jobs lead to more income which can impact life for people living here. Usually when corporations move some employs move with the company as well. These people will bring with them aspects of their own culture such as food and clothing that can spread to others living here. The spread and integration of cultures often occurs when companies move to different parts of the world.

Many people believe the world has entered a new phase in its economic development. For example from just 1997 to 1999 flows of foreign investment has nearly doubled from, $468 billion to $827 billion. Many observers have seen this and say that globalization in now “faster, cheaper, farther, and deeper”.

Globalization today has been driven by policies that have opened economies domestically and internationally. During the past two decades many governments have adopted free-market economic systems, increasing their own productive potential and creating new opportunities for international trade and investment. Governments have also negotiated dramatic reductions in barriers to commerce and have established international agreements to promote trade in goods, services, and investments.

Globalization is puzzling at times but it is also fascinating to see how it has changed and expanded over time. There was a time when people believed the world was flat and a lot smaller than it actually is. Today we can communicate with people all over the world with the click of a button and we can travel anywhere in the world. It is hard to imagine how globalization will continue to expand in the future, but with advancements in technology there are so many possibilities for the future. The world is more connected than ever before. There are opportunities for globalization continue to improve the world market.

International trade refers to the exchange of raw materials and manufactured goods (and services) across national borders. This situation could happen since every country has specific products or services that are better in terms of quality, price, or any other measurable factors than one form other countries. This condition means that the country has comparative advantage in producing specific product/service (Krugman and Obstfeld 1997). This situation drives countries to export their products and services that have competitive advantages to other countries worldwide.

Within the past few decades, the increase of international trade has driven the integration of the world economy. Figure 1 International Trade Source: Map of World 2009 Figure 1 shows those countries that experience significant GDP growth will also experience the rising international trade as well. This situation highlight that those countries become potential markets for export. Out of top ten countries in terms of GDP growth, five countries are from European continents and also members of European Union (EU).

This suggests that conduct international trade (export and import) with other countries in other continents. One region that becomes the target of European countries’ exports is Asia since many of countries in this region perform well in GDP growth. However, since Asian countries have different cultural background and business practices, European counterparts require customized strategy in entering Asian markets. Concerning this issue, this paper will discuss about global strategic marketing and planning focused on European products, to be specific legendary pottery from Portmeirion , which are exported to Asian market. In this paper, we will also elaborate regarding the factors that European countries should take into account in order to succeed in Asian market through customized marketing.  As a continent that shows the quality of manufacturing, European countries have quality products that are saleable to other markets. Table 1 show the composition of EU exports where it reveals that most of export from European countries is machinery, transport equipment, and chemicals.

This suggests that European countries have capabilities to produce machineries better. However, European countries, especially those in European Union, are also significant players in the agriculture product. Table 1 EU’s Global Trade by Product Grouping Source: Delegation of the European Union to Japan 2008 In general, the total export from European Union accounts for $1. 952 trillion in 2007 and $1. 33 trillion (2005) excluding intra-EU trading. The main export commodities including machineries, and industrial products like plastics, motor vehicles, iron and steel, pharmaceuticals, wood pulp and paper products; food processed products like dairy, fish, meat, and also alcoholic products (Central Intelligence Agency 2010). Figure 2 European Union top 25 Agricultural Exports Source: European Commission 2010 In addition, according to European commission, European Union becomes the largest importers and second largest exporters in the agricultural products/foodstuffs.

This performance can be reached as the EU has successfully obtained a contract and trading agreements with third countries. In addition, the quality and diversity of foodstuff products also put EU to be major exporters (Figure 2). In 2006, the total export of agricultural products reaches €72. 553 billion (European Commission 2010).

 Success Factors of Entering Asian Market

The large number of foreign direct investment and export to Asian market is because Asian countries provide potential markets. In terms of economy growth, many Asian countries also score high such as China and India (Figure 3a). This fact also underlines that European countries target countries in Asia as major trading partners especially China and Japan.

In the case of legendary pottery, the potential markets into Asia is also wide opened as Asian people value the art and legendary pottery as one creation that word to be purchased especially by the Have in the Asia. However, selling pottery products need detail plan as Asian countries also well-known for their pottery products, especially those from China and Japan that inherit quality of pottery from the past. Asian countries provides interesting fact as Asian countries typically have distinctive cultural background and business practices.

This condition, for example, encourages many multinational companies like Starbucks that enter Asian markets like China to appoint native Chinese as managers that deals with customers and partners (Darguste et. al 2003; Robert Fleming Inc. 2003). As Asian countries are varied in terms of GDP and many of population are underdeveloped, therefore the creation of marketing mix must be tailored particularly for every single country. This is because the market characteristics in Japan are different with those in Indonesia or Malaysia.

Some marketing approaches that can be taken in order to enter Asian market include corporate social responsibilities (CSR), promotion that endorsed by well-recognized celebrities as many Asian people also become fans of western celebrities and sport athletes especially soccer and basketball. However, the degree of conducting this marketing approach may be different from one country to another. Asian countries are known for having natural resources from oil, land forest, plantation like palm oil etc.

However, the beneficial condition is not accompanied with the improved wealth of farmers or in the case pottery products, the artists. Considering the issue, exporting pottery products from European countries like Portmeirion and Wedgwood  to Asian market should be accompanied by the program to improve the wealth of artists and the needy in the target Asian countries. Another program that can be developed within the corporate social responsibility aspect is to give scholarship for smart Asian students to study in some universities in European Union’s member countries.

 Establishing a pottery store in Asian countries is one interesting strategy. Considering the market for luxury pottery is vast, the company can develop licensing and joint-venture partnership with local dealers that help Portmeirion to deal within the local regulations and local specific issues. o Since most Asian countries have tendency to be westernized, Portmeirion does not change too much their design since local consumers in Asian countries feel praised to use imported pottery products.

In marketing pottery products into Asian market, the company like Portmeirion should provide a local design to differentiate them from other pottery products. This will help the pottery products to be perceived as local but with global brands. In addition, the pottery products that marketed into Asian countries should also pay attention to the product mix, especially when targeting specific ethnicity (Moran 2005). The idea of international advertising is basically targeting prospective customers located at more than one country.

As depicted in the idea of mass customization, the international advertising also pay attention to cultural diversity, which in turn influences how advertisers employ symbols or stimuli, languages, and many other factors that are relevant to cultures of targeted customers. Douglas and Samuel says that International advertising can be regarded a s communication process that takes into account multiple cultures that each differs in terms of values, communication styles, and consumption patterns.

Benefits of Local over Worldwide Campaigns

Concerning the comparison whether to choose global advertising or local one, we can take into account several considerations such as the purpose of advertising. For example, if a company intends to develop a strong global corporate image, we can suggest that the company had better to use global campaign where the promotional material could be the same from one country to another. However, if the objective of the advertising is to launch a new product or brand in a designated market, we can suggest that the advertisers or product owners to develop local campaigns matched the characteristics of local markets and culture (Douglas and Samuel).

For example, an automaker that wand to advertise their new high end product could use difference model in their commercial. In Europe, they could use a famous entrepreneur since it will have great impact on European customers but in Asia, the use of local or well-known worldwide celebrities has greater impact in promotional message. Or else, the automaker will loose sales. Concerning the promotion, we witness lots of advertisements fill the space of advertorial spots in all media from newspapers to television and a simple brochure to complicated pop ups advertising over the Internet. They are all bringing the same intention that is to attract customers and fledgling ones to repeatedly use the advertised products or services.

Adoption of Technology and Marketing Campaign

As it was mentioned before, the innovation element has been crucial for the growth of coffee market. It concerns primarily the technologies, which are able to improve the product quality and taste substantially. For pottery products, in the absence of factory shops in any Asian countries, Portmeirion should enable the delivery into Asian countries with care.

One technology that enables these sales is internet where customers can browse specific products or even design and have the products delivered into their house. In online stores of Portmeirion, it seems that Portmeirion already enable the delivery into international market. However, in order to differentiate from competitors like Wedgwood that can also deliver products to any countries including Asia, Portmeirion needs additional service like customized design with expert’s advice that would increase the customer relationship and also customers’ loyalty.