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MERGER DEALS IN US HIT RECORD LEVELS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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USA -- Are NYNEX, Bell Atlantic, SBC and Pacific Telesis, Cisco Systems, Stratacom, CUC
International, Ideon Group and many others an indication of what's to come? Is the US headed for
another merger mania? All eight companies were involved in merger/acquisition deals on April
22nd, the second biggest day of merger deals in US history. All totaled, there were over
US$27 billion worth of mergers that day. The biggest merger day in history was October 24, 1988,
valued at US$32.05 billion. (Source: YOUR LINK HERE)
USA -- Just when the Baby Bells (formerly AT&T consolidated) were establishing their own
reputations, balance sheets and business models, NYNEX and Bell Atlantic announced, last month,
their consolidation in a merger worth US$22.1 billion. This merger follows recent government
regulatory changes in communications laws that permit local telephone companies to compete in the
long-distance market and long-distance carriers (such as AT&T, MCI and Sprint) to expand into local
service. Earlier this month, two other Baby Bells announced a merger -- SBC Communications and
Pacific Telesis.
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COMPETITION HEATS UP IN MEXICO'S TELECOMMUNICATIONS INDUSTRY | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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MEXICO CITY, Mexico -- Telefonos de Mexico, Mexico's monopoly telecommunications provider, is
facing recent competition from companies with licenses to operate in Mexico. Mexico has passed new
long-distance laws that will go into effect early 1997 that have opened the market to foreign
competition. By the end of this year, Mexican consumers must choose their long distance
carrier -- among their choices are joint partnerships including: Alestra (AT&T, GTE, Bancomer,
Telefonica Internacional/Spain), Avantel (MCI and Banamex), Bell Atlantic/Iusacell and others.
These new market entries have invested hundreds of millions of dollars on fiber optic networks
(infrastructure projects) and publicity campaigns targeted at the consumer market, with over US$1
billion planned for investment over the next five years. (Source: YOUR LINK HERE) |
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| CANADA TO BAN TOBACCO ADS | VIETNAM FORECASTS GROWTH IN 1996 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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OTTAWA, Canada -- Canadian government is working towards getting a total ban on tobacco media
advertising and imposing restrictions on promotional activities including in-store displays, event
and cultural sponsorships, celebrity endorsements, etc. The health ministry is working to implement
this ban, while the Supreme Court ruled last September 1995 that tobacco ad restrictions are a
violation of the right to free speech. Nevertheless, supporters insist that regulation is necessary
because tobacco is a leading cause of death among Canadians. (Source: YOUR LINK HERE) |
HANOI, Vietnam -- According to Vice Minister and Deputy Governor of the State Bank of Vietnam,
Le Van Chau, Vietnam will post higher economic growth this year while keeping inflation in
check. GDP is expected to be around 10% in 1996, up a half percent from 1995 (9.5%), while
inflation is expected to drop to about 9.5 - 11%, compared with 12.7% in 1995. The government was
reportedly happy with foreign direct investment flows into the country and continues programs to
evaluate and readjust the investment structure and policy to create further incentives for foreign
investments as more state assets are privatised. Additional information on Vietnam -- see
Doing Business in Vietnam - an insider's perspective. (Source: YOUR LINK HERE) |
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| OPEN SKIES FOR SHIPPING TO ASIA FOR US COMPANIES | POST CEREAL PRICES CUT 20% IN USA TO SPUR PURCHASE | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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TOKYO, Japan -- The Asian market will become more accessible for US direct marketing,
catalog, fulfillment and other US companies doing business there as a result of the new air cargo
agreement signed by President Clinton and Japan's Prime Minister, Ryutaro Hashimoto. This
agreement will increase the number and frequency of cargo flights between the USA and Japan and
flights from Japan to other Asian markets by US carriers. Businesses will be able to ship packages,
catalogs, documents and orders faster than is currently possible. A direct effect will be felt by
UPS, which has been given permission to double its current six flights/week to Osaka, Japan; Federal
Express will double its current one flight/ day into and out of Japan and DHL will be able to have
one flight into and out of Japan under this agreement. These shipping companies will be spending
over US$1 billion upgrading their Asia-Pacific facilities over the next few years (UPS's hub in
Taiwan and DHL's hub in Manila). (Source: YOUR LINK HERE) |
USA -- Philip Morris Company's Kraft foods division of Post cereal announced an average 20%
price cut intended to increase consumer purchase of cold cereal. Post brand cereal sales have
been declining. The overall cereal market in the US declined slightly in 1995 and sales in first
Quarter 1996 have been flat. This follows some other cereal manufacturers in the US who have already
lowered prices, such as General Mills which claims to have reduced overhead and then shelf/retail
prices by 11%. Post's price cut will bring prices for their cereal brands under or around
US$3.00/17.2 oz. box; current prices are about US$4.00. In addition to this price cut, Post is also
revamping its couponing strategy. Instead of offering individual coupons for each of its different
brands and box sizes, it will offer one coupon good for all Post brands/sizes -- in an effort to
simplify a now confusing process in an overcrowded aisle where consumers are bombarded with dozens of
brands, flavors and sizes. (Source: YOUR LINK HERE) |
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| WILL AMERICAN COMPANIES TRANSFORM RETAILING IN EUROPE? | YAHOO! MOUNTAIN DEW! SOFT DRINK LAUNCHES IN THE UK | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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USA -- The US clothing company, The Gap, entered the UK market in 1987 and now has 71 stores
in three European countries. Esprit entered Germany in 1986 and now has 121 stores in Europe. Toys
'R' Us launched in the UK in 1985, now has 201 stores in 12 European countries. Blockbuster Video
launched in Spain and the UK in 1989 and already has 764 outlets (including 107 superstores) in five
European markets.
European youth and adults are responding in kind to American goods and these stores are proving
successful -- but not only are these American companies exporting American goods, they are also
exporting American-style merchandising. US retail shops have quicker merchandise turnaround, are
quick to put items on sale and bring in newer, trendy goods. (For example, the Gap displays new
designs and colors every 4 - 6 weeks, compared with 4 - 5 times per year for many European retailers.)
With high unemployment and slow economic growth, Europeans are more price-conscious now than before,
which makes American efficiency and lower-priced goods ever more appealing. The American formula
seems to be working for American retailers abroad, and local retailers are losing sales. Will local
retailers be forced to change their merchandising style? Have American newcomers transformed
retailing in Europe? Of course, local experts and supporters hope that the American influence will
result in higher production and lower prices, increased sales and new jobs for Europe. Please
share your thoughts and we'll add them as an addendum.
BEIJING, China -- PC sales in PR China increased by 54% from 1994 to 1995 to 1.1 million units sold last year. There are now an estimated 3.4 million PCs in use in China; 1996 estimates predict the number will increase to 4.5 million PCs in use next year, based on a projected (1.4 million) units to be sold. Sales in 1995 were equal to the combined sales from 1993 and 1994, according to the Ministry of Electronics Industry (MEI). 1995 sales volume puts China within the top 8 PC markets in the world.
Until last year, the market for PCs in China were nearly exclusively tax offices, banks, educational institutions, distribution businesses, and customs centers. But last year, 20% of units sold (about 220,000 PCs), were to individual households (compared with just 10% in 1994).
Experts maintain that last year's home PC sales were mainly boosted by the introduction of multimedia technology. As such, nearly 3/4 (70%) of PCs sold were 486-based . While foreign manufacturers dominated the market (more than 50% of units sold), about 0.5 million were Chinese-made PCs.
MEI predicts that sales of PCs will reach eight million in the year 2000; about five million will be home PCs. |
LONDON, UK -- Pepsi-Cola International has been focusing
attention on the UK this year, and now introduces Mountain Dew, a high caffeine, vibrant green,
citrus-flavored carbonated beverage into the British market. In the US, Mountain Dew has lost
considerable appeal, and carries with it baggage from the '60s when it was originally positioned as a
Southern, hillbilly, rugged drink; Pepsi has made recent attempts to reposition the brand in its home
market, to appeal to an outdoors, active, youthful consumer. In the UK, this soft drink will launch
with a US$9.3 million descriptive campaign extolling its "wild color, smooth taste." Pepsi's local
bottler in the UK, Britvic, says that Mountain Dew will appeal to a thirsty, "gulpable" group. And
preparatory research indicates that they will like it. (Source: YOUR LINK HERE)
GERMANY -- A recent/1995 study in Germany revealed that Germans still feel there is ample room for improvement
to bridge the gap between genders, and the disparity is felt even stronger in the eastern states. About 3/4 of
the more than 2,500 people surveyed in eastern and western Germany expressed their belief that women have to work
harder than men to achieve the same level of success (72% among westerners; 79% among easterners). Most respondents
agreed that women are comparatively disadvantaged in German society (62% of westerners; 75% of easterners) and
earn less than men for equal work. It is, therefore, no surprise that a majority wants to see more women in leading
positions (62% in western Germany; 67% in eastern Germany). Nevertheless, about half of those suveyed in the west
said that they were generally satisfied with life, compared with 42% in the east (which is a significant improvement
compared with the 35% of easterners who expressed satisfication in 1991). This survey was conducted by the Institute
for Applied Social Research (IPOS) on behalf of the Federal Ministry for the Family, Senior Citizens, Women
and Youth.
Seoul, KOREA -- A new card system for teenagers and young adults will be introduced in
early 1997 in Korea, giving cardholders significant discounted rates on purchases of goods and
services, such as books and clothes or public transportation. This card will likely stimulate
purchases by offering discounts to targeted cardholders -- youth between the ages of 9 and 24.
MEXICO -- The Mexican Ministry of Tourism announced a reduction in the hotel room tax for tourists, from 5% to 2%,
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| .....check back for more news this month! |
For more information about any of these topics in any foreign market, or
if you would like an in-depth market study, contact PANGAEA, International Consultants. With
an extensive network of marketing consultants, attorneys, logistics experts and more around
the world, PANGAEA is uniquely qualified to offer hands-on, local marketing and management
consulting services.
Reprints/copies of this issue are available for US$10.00 per copy.
(c) 1996 PANGAEACommunications. All rights reserved. Materials found on this website
are not for resale. No part of this file may be printed, copied, distributed
or disseminated in part or in whole without the express prior written permission of
PANGAEACommunications
Updated 5/15/96
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