Chapter 7 International

8/10/2019 Chapter 7 International

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Types of Food ExportsProviding what cannotefficiently be grown inimport market

High value/value addedLow value


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Types of Food Exports

Providing diversity in foodsupply

Niche productsCountry reputation

deSpaChocolatier bringsperfection to the art of Chocolatewith more than seventysumptuous varieties superblyhand-crafted and lavished withluxury.....


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VERY BRIEF REVIEW OF ECONOMICS

Trade balances and theirimpact on exchange rates ifthe US imports more from

Japan the exports there,there will be less demand for$ and more demand forJapanese yen- thus the priceof the yen, in $ will increase,so you get fewer yen for a $


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Comparative Food Spending

Percentages, 1994Philippines: 56%India: 51%

Mexico: 25% (modestincomes, relatively highprices)South Africa: 28%

Japan: 18% (veryexpensive food but highincomes)West Germany: 17%

Denmark: 15% (25%sales tax!)

France: 15%Netherlands: 11%U.K.: 11%Canada: 10%

Percentages of totalexpenditures includesnon-consumer spendingsuch as government andindustry. U.S. figure: 7%


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Measuring the Wealth: Nominal vs. Purchase Parity Adjusted GNPs Examples (2001)

Country Nominal GNP PPAUnited States $34,280 $34,280

Japan 35,610 25,550

Argentina 6,940 10,980

Czech Republic 5,310 14,320

Mexico 5,530 8,240

China 890 3,950

Source: World Bank (http://siteresources.worldbank.org/ICPINT/Resources/GNIPC.pdf )


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Measuring the Wealth: Nominal vs. PurchaseParity Adjusted GNP

Nominal GDP is the value of goods andservices produced per person in a countrywere to be exchanged into dollars.Purchase Parities of GPDGDP and GNP are almost identical GNP

include income made aboard


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Cautions on Interpreting Per

Capita Figures Averages are not very meaningful!

Regional variationsSocio-economic differences

Comparison to U.S. dollar and U.S.costs is arbitrary


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Protectionism

Differing interests ofconsumers and

manufacturersBenefits of tradetend to be morediffused thanbenefits to specificgroups ofprotectionism

U.S. ProtectionismImport limitations on

some crops (e.g.,sugar)Subsidies of others e.g., chickens


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Approaches to Protectionism

Tariffs a duty ortax or fee, is put on

products imported


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Quotas : A Countrycan export only a

certain number ofgoods to theimporting country


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Voluntary exportrestrictions: involve

agreements madeby countries to limitamount of goodsthey export to an

importing country


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subsidies to domesticproducers/exporters USchicken have receivedsubsidies for chickensexported


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Non-tariff barriersDifferent standards in testingforeign and domestic products forsafety, disclosure of lessinformation to foreignmanufactures needed to getproducts approved, slowprocessing of imports at port ofentry, or arbitrary laws which

favor domestic manufacturers.For perishable food products, asignificant danger is having ashipment held up waiting forcustoms clearance


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Justifications for Food Market Protection

Protection of an infantindustry notapplicable to foodproducts


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Resist unfair orinappropriatecompetition: US sugarindustry contends thatmost foreignmanufactures subsidizetheir sugar production,so the US must followto remain competitive

dost go well withWTO


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Maintain domesticliving standardsPreserve jobs Cantemporarily protectdomestic jobs Hawaiisugar workers

HILO -- Hawaii CountyCouncil ChairwomanKeiko Bonk-Abramson iscriticizing a Hamakuacoast land deal


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Variations in Food Taste Preferences

Often learned early

in life. It islikely that wewill continueto prefer the

kind of foodwe ategrowing up.


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Preferred foodsoften tied towardavailability and localconditions


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Ties to occasions


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Impact of religionKosher Law clearly

specifies that koshermeat comes fromanimals with splithooves that chew

their cud.


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Taste Variations: Some Favorites

Raw fish (Japan)Snails (France)

Insects (Africa)Fermented herring(Sweden)Blood sausage

(Denmark) Various animal organs

How strange couldthis be to others?


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Culture and Food Expectations

Attractiveness ofprepared foodsOccasions for eating

out


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Culture and Food ExpectationsRituals Food is essentialto existence, and to thereligious experience aswell. Every religion hasrituals where food isoffered to theworshipped, shared,

eaten, or even tabooedTolerance for individualdifferences in taste


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Food Positioning

Positioning strategies A country of origin may affectthe image of food products either favorably orunfavorably.

Emphasis for congruent products (e.g., Russian Vodka, Belgian chocolate, German beer)De-emphasis (e.g., French beer, German wine)

Attitudes among consumers in new market towardcountry of origin


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Food Adaptation Decisions

Positioning decision: to adapt or not toadapt

Optimizing food for local tasteMaintenance of product mystiquePartial adaptation

Position relative to competitorsResearch needed for adaptations


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Some Adaptation IssuesServing sizeLegal constraints

Taste e.g.,sweetness, spicinessLabelingPackagingHealth issues (e.g.,lactose intoleranceamong Asians)

PositioningPrice rangeUsage occasionPurpose served

Branding


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Some Diffusion Examples

Chinese foodIn the U.S.In Denmark

PizzaSushiMcDonalds across the World


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Some Other Issues

Promotional options and choices Availability

Cost effectivenessReach of appropriate target market


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State and Federal Exportsupport

Federal programsSubsidies

Foreign market development/marketresearchExport assistance

State programsPromotion of products from within thestate

Chapter 7 International

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Transcript of Chapter 7 International