Wisconsin WENT to the GO Expo

  Shiver Me Hard Drive: Software Piracy

Over a third of the software running on personal computers around the world is counterfeit or was obtained illegally, amounting to nearly $40 billion in global losses due to software piracy.  The Business Software Alliance (BSA), an international association representing the commercial software industry, recently reported the findings in its fourth annual global PC software piracy study, which was conducted independently by IDC, a global market research and forecasting firm.

Of the 102 countries covered in this year's study, piracy rates dropped moderately in 62 countries, while increasing in 13.  In more than half of the countries studied, the piracy rate exceeded 60%.  In approximately one third of the countries, the piracy rate exceeded 75%.  Emerging markets in Asia/Pacific, Latin America, Eastern Europe, and the Middle East and Africa accounted for one-third of PC shipments, but only 10% of spending on PC software. 

The United States, the European Union (EU), and Canada continue to have high losses despite low piracy rates.  While the United States had the lowest piracy rate of all countries studied at 21%, it also had the greatest single country losses at $7.3 billion because of the size of the market.  The EU had losses of $11 billion with a 36% piracy rate, while Canada had losses of $784 million with a 34% piracy rate.

More information on the study and a chart showing piracy rates and losses in each of the 102 countries can be found at http://www.bsa.org/globalstudy/.

  Chinese Subsidies Reduced

By David Semo Scharfman, Commerce Intern

As of July, 1, 2007, the Chinese government will reduce its Value Added Tax (VAT) rebates on more than 2,800 export categories or 37 percent of all export items.  Specifically, tax rebates on 553 “high energy-consuming” or resource-intensive products such as cement, fertilizer, and non-ferrous metals will be eliminated while tax rebates on 2,268 “easy to trigger trade friction” products such as garments, toys, and steel products will be reduced from a range of 8-17 percent to a range of 5-11 percent.  This is a sign of the Chinese government’s desire to increase pressure on businesses that were energy inefficient, polluting, or strictly trading operations.  These moves are intended to move Chinese manufacturing up the value chain, while streamlining operations and cutting back on wasteful and unnecessary processes.  The change will also trim subsidies frequently cited as trade distorting practices that have helped swell the U.S. trade deficit with China.

Since the rebates were available to Chinese exporters, these changes will most likely mean an increase in the price of products imported from China unless Chinese producers find ways to increase efficiency and cut costs.  Less efficient factories that make counterfeit or “knock-off” products may be phased out, and large, well-managed operations with engineering capacity will survive and probably grow.  In addition, small operations with very little overhead will probably survive as well.

If you are seeking more information on market opportunities in China, contact Ms. Beng Yeap, beng.yeap@wisconsin.gov, ph: (608) 266-1480.

  Expat Expense

Moscow is the world’s most expensive city for expatriates for the second consecutive year, according to the latest Cost of Living Survey from Mercer Human Resource Consulting.  London climbed three spots to take the #2 position.  Seoul moved down one place in the ranking to take third place, followed by Tokyo in fourth.  Asunción in Paraguay is the least expensive of the 143 world cities that were included in the survey. The Cost of Living Survey measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment.

Europe dominated the top 50, placing 30 cities on the list and capturing six spots in the top ten.  Strong currencies helped push most European cities higher in 2007.  Eight Asian cities were on the top 50 list.  The biggest mover was Taipei, which dropped from 28th to 48th.  Tel Aviv was the highest ranked Middle Eastern city in 17th place.  Istanbul declined from 15th to 38th.  Only two U.S. cities were among the top 50 (New York City at 15th and Los Angeles at 42nd) thanks to the weak US dollar.  No Canadian or Latin American cities were in the top 50.  More information on the survey as well as the results of a Quality of Living Survey can be found at http://www.mercerhr.com.

  Bridging the Atlantic More Difficult than Expected

Senior European and U.S. executives have very different views on the importance of transatlantic cooperation.  While nearly all European managers (95%) would like closer relations, 40% of U.S. CEOs view increased collaboration with Europe as unimportant.  This was one of the findings of a survey of 120 European and 50 US CEOs from companies of various sizes and different industries, carried out by Roland Berger Strategy Consultants and TNS Opinion.

Subjects on which senior decision makers from both sides of the Atlantic have similar concerns are the emerging economic power of China and India and taking joint action against organized crime and international terrorism.  The issue of environmental protection, very important to European managers, triggers little interest among their US counterparts.  Nearly 100% of European managers would like more collaboration on this issue, but just over a third of their U.S. counterparts share the view.  America's business leaders also express little interest in increased collaboration in science, technology or foreign policy.

Interestingly, American and European CEOs see business practices on the opposite side of the Atlantic as more progressive than their own in some regards.  Europeans are given credit as role models regarding corporate social responsibility, while Americans are considered leaders in genetic engineering, data protection, and open markets.  In the areas of research funding, industrial policy, corporate governance, and damage compensation schemes, both Europeans and Americans look to the other region for ideas.

  More Ways to Pay

PayPal, the provider of internet payment solutions, recently added 87 new markets in which customers can use their on-line services, bringing their network to a total of 190 countries or customs territories.  PayPal allows customers to send, receive, and hold funds in 17 currencies worldwide.  PayPal serves as an electronic alternative to traditional paper methods such as cheques and money orders.  In addition, customers using PayPal.com will now be able to view the site in Spanish, French, and simplified Chinese.  PayPal is owned by eBay Inc.

  International Market Research Available to Wisconsin Food and Ag Companies

With hundreds of countries to choose from, one of the most challenging aspects of exporting is determining which international market to enter.
Wisconsin food and agriculture companies can simplify the daunting task of researching a market by taking advantage of the Market Builder service offered by Food Export Association of the Midwest.
 
The Market Builder service is cost-effective, market research that helps companies focus in on the most viable markets for their products. The service includes a two-tiered approach, the Market Scan and the Rep Finder.
 
Included as part of the Market Scan are:

• Store check and distribution analysis: listing the brand names, packages, sizes, price and shelf allotment for similar products.
• Competitive Product Shopping: offers first-hand information and samples of similar and competing products sold in the market.
• Distributor Referrals : Importers provide feedback on package size, labeling, taste, appearance and price.

 
As part of the Rep Finder service, companies receive:

• Distributor Referrals: Importers provide feedback on package size, labeling, taste, appearance, price, and marketability.
• Target Importer List: Companies receive a list of potential importers including contact names/information and a brief summary of
• importers’ profiles.
• In-Market Assistance: A minimum of three one-on-one appointments will be arranged with participating companies and
• targeted importers. An International Marketing Expert will assist in communication and interpretation and moderate meetings.

 
Both services are offered at special promotional prices through August 31, 2007. The Market Scan is available for only $300 and the Rep Finder service can be purchased for $375.  To learn more, contact Ms. Lisa Stout , lisa.stout@wisconsin.gov, ph: (608) 224-5126 or Food Export Association of the Midwest,  www.foodexport.org, ph: (312) 334.9200.

  Changing of the Guard in European Politics

By Brad Schneider, Commerce European Specialist and Outreach Consultant for East Central Wisconsin

Since the last edition of Wisconsin Worldwide, major elections and transitions of power have taken place in a number of European countries.

France
Nicolas Sarkozy, the conservative leader who has pledged to improve the European country's economy and get tough on crime and immigration, was inaugurated on May 16 and replaced President Jacques Chirac, who has led France for the past 12 years.  The current presidential term is five years.  President Sarkozy is often described as an Atlanticist and pro-American, but he opposed the war in Iraq.  He has not expressed close ties to Germany and also upset new EU members by saying those with lower taxes than old Europe should not receive EU subsidies.  He has voiced opposition to Turkey's bid to join the EU.

The French parliamentary elections took place in June and President Sarkozy’s party , the Union for a Popular Movement, won a majority but the Socialists fared better than expected, placing the opposition on a stronger foothold than in the previous parliament.  With 314 out of 577 seats, plus 22 seats taken by the New Centre, Sarkozy won the necessary majority to implement the economic reforms he promised during the May presidential campaign.  But it was not the landslide victory predicted in the polls prior to the election.  The Socialist opposition won 185 seats compared to the 149 seats in the previous Parliament.  The Socialists come out strengthened from the election and will prove a force to be reckoned with by the government of Prime Minister François Fillion.

Belgium
Yves Leterme is slated to become Belgium's next prime minister, after his Flemish Christian Democrat party (CD&V) emerged as the big winner of the general election held on June 10, putting linguistic squabbles back at the forefront of the country's political scene.  With the largest block of seats, 30 of the 150 seats in Chamber of Representatives, going to the CD&V, Mr. Leterme is starting consultations with other parties to find a new ruling majority in Parliament.  The process could take months, as the proportional voting system tends to scatter seats in Parliament.  Mr. Leterme's expected appointment heralds the return of the linguistic divide at the forefront of the national political scene as one of his main campaign lines has been to transfer more autonomy to the Dutch-speaking region of Flanders, which he currently heads.  Belgium is split between an economically mighty Flanders to the North and a French-speaking South, Wallonia, embroiled in deep industrial restructuring.  A change in the constitution sought by Leterme would require the support of a two-thirds majority in both Flanders and Wallonia.  But with the CD&V clearly leading the polls ahead of the election, French-speaking parties have agreed on a common strategy to block any further institutional reforms.

Ireland
Bertie Ahern has won re-election as Ireland's Taoiseach (prime minister), extending his ten years in power and clearing the way for a coalition government comprised of Mr. Ahern’s Fianna Fail (Soldiers of Destiny) party, the right-wing Progressive Democrats, and the left-wing Greens.  The Progressive Democrats have been Fianna Fail's partners since 1997, but this is the first time the Green Party has joined a coalition government in Ireland.  On 14 June 2007, Ahern received 89 votes in the 166-member Dail Eireann parliament, easily defeating his challenger, Enda Kenny of the major opposition Fine Gael party.  A coalition government has been required in Ireland after every election since the early 1980s, as the system of proportional representation means the amount of seats a party has in the parliament closely matches the election result.  The economic performance of Ireland under Mr. Ahern has been one of sustained growth and this, along with the brokered peace deal in Northern Ireland, took him to another five years in office.

United Kingdom
British Prime Minister Tony Blair left office on Wednesday, June 27, after a decade in office, opening a new era in British politics.  The governing Labour Party confirmed that Gordon Brown, the Chancellor of the Exchequer (the U.K.'s finance minister), had emerged as the sole candidate to assume the party leadership and thus succeed Mr. Blair.  Because of the lack of opposition, Mr. Brown was installed as Prime Minister without either a formal contest across the Labour Party or a national vote.

Messieurs Blair and Brown reportedly struck a deal in the mid ‘90s when the Labour party was still in opposition.  Mr. Blair would assume party leadership and, if he became prime minister, he would appoint Brown as Chancellor of the Exchequer with control over economic policy.  The deal also reportedly called for Mr. Blair to eventually step aside and cede full leadership to Mr. Brown.  As Chancellor of the Exchequer, Mr. Brown is widely credited with helping steer the United Kingdom through a decade of economic growth.  While soon after assuming office Mr. Brown said "This will be a new government with new priorities," the government he heads can be expected to maintain many of the same economic policies pursued while he headed the Treasury.

For assistance in European markets, contact Mr. Brad Schneider, brad.schneider@wisconsin.gov, ph: (920) 420-1796.

  Passport Please

The requirement for U.S. citizens to show passports, or similar secure documentation, at land crossings into the United States which was scheduled to be fully implemented next January, has been pushed back by six months and will not go into full effect until summer 2008.  The June 20th announcement marks the second time in a month that federal officials have scaled back security plans in response to complaints due to the backlog in issuing passports.

Beginning in January 2008, land and sea travelers returning from Canada, Mexico, the Caribbean, and Bermuda will be allowed to present a birth certificate and some form of government-issued photo ID like a driver's license in lieu of a passport.  Travelers will no longer be able to make a verbal declaration of U.S citizenship to re-enter the country as is currently allowed. 

Homeland Security Secretary Michael Chertoff announced the proposed rules and new flexibility after requirements stipulating travelers arriving in the United States by air from Canada, Mexico, Bermuda and the Caribbean must present passports produced months long delays in processing passport applications at the State Department.

The State Department has acknowledged that it grossly underestimated the number of Americans who would apply for a passport.  The department has launched a campaign to encourage American diplomats stationed overseas to spend a month at the National Passport Center in New Hampshire or other offices in Washington during their annual summer holidays in the United States.

  Independence Day

While the United States celebrated Independence Day last week on the 4th of July, it can be useful in international business to recognize that many other countries also celebrate Independence Day, but on other dates and not from George III’s Great Britain.  Lithuania celebrates it twice, on February 16 in honor of independence from Russia and Germany in 1918 and on March 11 in honor of independence from the Soviet Union in 1990.

Some others include:

• Algeria – July 5 – from France in 1962
• Argentina – July 9 – from Spain in 1816
• The Bahamas – July 10 - from the United Kingdom in 1973
• Bangladesh - March 26 - from Pakistan in 1971
• Belgium – July 21 – from the Netherlands in 1831
• Brazil – September 7 – from Portugal in 1822
• Dominican Republic - February 27 - from Haiti in 1844, after a 22-year occupation
• Eritrea – May 24 – from Ethiopia in 1993
• Malawi – July 6 - from the U.K. in 1964
• Peru - July 28 - from Spain in 1821
• Portugal – December 1 – from Spain after a 60-year union ending in 1640
• Rwanda – July 1 from Belgium in 1962
• São Tomé and Príncipe - July 12 - from Portugal in 1975
• Sweden – June 6 - from Denmark in 1523
• South Korea - August 15 - from Japan in 1945
• Turkey - October 29 – independence from/dissolution of the Ottoman Empire in 1923
• Venezuela – July 5 – from Spain in 1811
  

Canada does not celebrate an Independence Day.  Just three days before the 4th of July, our northern neighbors celebrate Canada Day, which prior to 1982 was known as Dominion Day.  It celebrates the anniversary of the July 1, 1867 passage of the British North America Act (BNA Act) in the British Parliament, which united three British colonies—the provinces of Nova Scotia, New Brunswick and Canada (Ontario and Quebec) – into the Dominion of Canada, a major step to self-rule.

  Korean Free Trade Agreement Signed, but Doomed

On June 30, 2007, the United States and South Korea signed the largest free trade deal for Washington since the North American Free Trade Agreement in 1992 just hours before President Bush’s fast-track authority expired.  Since the agreement was finalized before the deadline, Congress must either vote for or against the pact and is not allowed to add amendments that would require further negotiation with the Koreans.  

The agreement would eliminate tariffs on 95 percent of consumer and industrial products on both sides within three years.  South Korea’s export-driven economy would benefit as the country obtains advantages over Japanese competitors in high-tech fields and Chinese competitors with low labor costs.  The agreement would give American companies a price advantage in the thriving Northeast Asian economy, where they have steadily ceded market share to Chinese, European and Japanese competitors.

Democratic leaders in Congress issued a statement saying that the agreement “does not address in an effective manner the persistent problem of non-tariff barriers, particularly those blocking access of U.S. manufactured products in South Korea’s market” and that they could not support the agreement.

  Another President Kirchner?

By Susan Dragotta, Commerce Latin America Specialist and Outreach Specialist for Southeastern Wisconsin

On Monday, July 3, Argentine President Néstor Kirchner announced he would not run for re-election in October.  He is stepping aside in order to allow his wife, Senator Cristina Fernández de Kirchner, to run.  Senator Fernández would represent the same political faction as her husband, the Frente para la Victoria (FV) of the Peronist party.  Prior to being elected to the Senate in 2005, where she represents the province of Buenos Aires, Fernández, served in the lower house of Congress.  Argentina’s constitution limits presidents to two four-year terms.  By bowing out of the race now, Mr. Kirchner preserves the possibility of running again in 2011.

Local polls and surveys show Fernández as an early front-runner and likely to win the necessary 45 percent of the vote to avoid a run-off.  She is expected to formally announce her candidacy on July 19.  Election opponents include Elisa Carrió, a former congresswoman who leads a center-left coalition, Roberto Lavagna, known for having pulled Argentina out of its worst economic crisis as the economy minister in 2001, and former President Carlos Menem, among others.

Wisconsin exports to Argentina grew over 23 percent in 2006 to almost $56 million.  The two strongest product categories, industrial machinery and medical devices, grew by 52 and 22 percent respectively.  U.S. exports grew by 17.5 percent, to over $1.2 billion.  The Latin American Monitor forecasts Argentine GDP growth of 7 percent in 2007, following 8.5 and 9.2 percent in 2006 and 2005 respectively.  While economic growth has been strong, inflation continues to be a challenge.  Forecasts for 2007 expect inflation to hit 8.9 percent this year, after an estimated 9.8 percent in 2006, and 12.3 percent in 2005.

According to the Country Commercial Guide available through the U.S. Department of Commerce, growth sectors for U.S. exports to Argentina include building materials, food processing and packaging equipment, medical equipment and supplies, mining machinery and equipment, and plastics production machinery, among others.

Information on a multi-state trade mission to Argentina as well as Brazil and Chile can be found by clicking here.  For more information on the mission or other assistance in the Argentine market, contact Ms. Susan Dragotta, susan.dragotta@wisconsin.gov, ph: (262) 691-5147.

  Trade Shows are not Just Fun and Games

  Limited Spots Remaining on Trade Mission to Japan and China

A limited number of spots with the negotiated reduced airfares remain for the State of Wisconsin Trade Mission to Japan and China, September 9-17, 2007.  Once those seats are taken, business people will still be able to register for the mission, however, ticket prices and schedules will be subject to availability at the time of booking.

Schedules can be customized for individual business priorities.  The delegation will be in Tokyo from September 7 to 11 to coincide with the U.S. Midwest - Japan Conference, which promotes bilateral trade and investment between the Midwest and Japan. Mission members will be in Shanghai September 12 to 15.  On Friday and Saturday, September 14 and 15, participants will have the option of traveling to Ningbo, Milwaukee’s sister-city and the home of China’s second largest port, or Harbin, capital of Heilongjiang Province (Wisconsin’s sister-state) to learn about agricultural and environmental opportunities.  On September 15 to 19 mission events will take place in Beijing, the Chinese capital and site of the 2008 Summer Olympic Games.

For more information on the trip, contact Commerce's Trade Show/Mission Coordinators Ms. Jennifer Winner, jennifer.winner@wisconsin.gov, ph: (608) 266-0413 or Ms. Christine Stamm, christine.stamm@wisconsin.gov, ph: (608) 264-7824.

  World Dairy Expo – International Registration

International registration for the World Dairy Expo can now be done on-line.  Attendees from other countries or international guests or clients of Wisconsin firms can register on-line at http://www.worlddairyexpo.com/gen.internat.reg.cfm.  

Over 2,000 international visitors come to World Dairy Expo each year.  This year’s event will be held in Madison, October 2-6, 2007.  More than 65,000 dairy industry enthusiasts come to see modern dairy equipment and the newest dairy technology and innovations, including animal health supplies, milking systems, feeding products, forage handling and manure equipment plus embryos, semen and genetic research.  North America's top dairy cattle compete for honors in seven breed shows.  All visitors will still be required to pay admission at the gate.  Admission is $7 USD per day.  Season passes are also available for $21 USD.

  Know Your ABCs

Argentina, Brazil, and Chile account for 57 percent of U.S. exports to South America and these three markets have experienced double-digit growth in purchases from the United States over recent years.  In 2006, U.S. exports increased by 16 percent to Argentina, 25 percent to Brazil, and 31 percent to Chile.  If you are interested in expanding your business opportunities in these important markets, consider joining a multi-state trade mission organized by the Council of Great Lakes Governors in April 2008. 

Brazil's export-led economy continues to grow due to strong global demand for commodities, especially in China.  Inflation is under control and interest rates have come down, assisting in the continued growth of consumption and investment.  Thanks to a steady appreciation of the Brazilian real, imports are also expanding at a fast pace.  Chile experienced unexpectedly strong growth in the first quarter of 2007, due in great part to high copper prices and the resulting exports.  Government consumption, and investment in machinery and construction also contributed to the expansion.  Argentina, while having demonstrated an impressive recovery from its economic crisis of 2001/2002, continues to experience a challenging inflation rate.  The government intercedes to keep the peso weak in order to increase exports, but this has adversely affected imports into the country.  However, the economy continues to recover and is growing at a greater rate than its neighbors, Brazil and Chile.

For more information about the Council of Great Lakes Governors mission or South American markets in general, contact our Latin American specialist, Ms. Susan Dragotta, at susan.dragotta@wisconsin.gov, or 262-691-5147.

  Food Focused Trade Mission to Chile

Wisconsin retail food companies looking to expand into South America will have another opportunity to do so on the Focused Retail Trade Mission to Chile scheduled for November 4-7, 2007.  The Trade Mission, sponsored by the Wisconsin Department of Agriculture, Trade and Consumer Protection and Food Export Association, will offer companies an introduction to the Chilean market, one of the fastest growing in South America.  Chilean consumers, with their increasing disposable incomes, are especially interested in snack foods, gourmet foods, candies, confectionaries and natural products.

Companies participating in the mission will benefit from:

• An import analysis and competitive store check for one of the company’s products
• One-on-one meetings with 4-6 key retailers, importers and/or distributor
• A market briefing by the local foreign Agricultural Trade Office
• A guided specialty foods retail tour
• Interpreters during the mission
• For more than a decade Chile has been one of South America's success stories. Its market-oriented economy, stable government and financial institutions make Chile an ideal export market for Wisconsin’s products.

For more information about the Chile Focused Retail Trade Mission, contact Ms. Jen Pino-Gallagher at the Wisconsin Department of Agriculture, Trade and Consumer Protection, jen.pinogallagher@wisconsin.gov, ph: (608) 224-5125.

  Japan Gourmet Foods Mission

A Gourmet Food Mission organized by Food Export Association of the Midwest and the Wisconsin Department of Agriculture, Trade & Consumer Protection will be going to Tokyo, Japan September 10-14, 2007.

Japan is emerging as a premier market for U.S. gourmet food products and the Gourmet Food Trade Mission is a low cost opportunity for U.S. gourmet food manufacturers to meet with a variety of buyers (importers, distributors, retailers and HRI operators) there.

Features of the mission include:

• Market briefings,
• Product showcase and tastings,
• Cooking demonstrations with the Grand Chef of the Intercontinental Hotel,
• One-on-one meetings with importers, distributors, retailers, HRI operators,
• Presentation to Japanese buyers by National Association for the Specialty Food Trade, Inc., on Specialty Food Trends, and
• Retail tours.

The cost of the mission is $475, and includes sample shipments and in-country ground transportation to mission events.  Participants will be responsible for their airfare, lodging, and meals.  Qualified participants may be able to obtain 50% reimbursement of their airfare, lodging, and meal expenses through the Food Export Association of the Midwest’s Branded Program.  The registration deadline is July 16, 2007.  Information on the mission, including the Branded Program is available from Ms. Lisa Stout at the Wisconsin Department of Agriculture, Trade and Consumer Protection, lisa.stout@wisconsin.gov, ph: (608) 224-5126.

  Trade Mission to Mexico

Wisconsin companies are invited to join a trade mission to Mexico in February 2008. Any Wisconsin company is welcome to join the mission to investigate market opportunities in Mexico, meet potential distributors or sales reps, and make key contacts in the market.  Wisconsin exports to Mexico were $1.9 billion in 2006, with year-on-year growth of 39.1%.  If you are interested in exploring the Mexican market, please join us on this trade mission.  For more information on the mission, please contact Mr. John Konkel, john.konkel@wisconsin.gov, at (715) 833-6441.