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Opportunities in Construction in East Africa Present Potential

Chinese Cities Continue to Open Economic Missions in Israel

Craft Beer Boom in Brazil

Canadian Power Generation Equipment Opportunities

Mexico City’s New International Airport

US Cutting Tool Manufacturing Industry

Australia Investing in Smart Transport Tech and Mobility-as-a-Service

China’s Two-child Policy Reviving the Baby and Mother Care Industry

ICT Opportunities in Indonesia’s E-Commerce Market

Japan: Changes in Keiretsu Supply Chain

South Korea’s Booming Blockchain Sector

Taiwan Gives the Green Light to British Pork

India’s Baby Food Market Offers Huge Opportunities

Central & Eastern Europe Is One of the Fastest Growing Defense Markets

France: Luxury Groups and Fashion Retailers Take on Online Sales

Digital and Creative Industries in Germany

Italy: Opportunities for Investors in the Cosmetics Sector

Expected Growth of Plastics Recycling in the Netherlands

Japanese Fast Fashion Chain Enters Sweden

UK Cider Market Serves up a Crisp Challenge for Craft Cider Producers

IBG GLOBAL NEWSLETTER ISSUE NO 5 SEPTEMBER/OCTOBER 2018

FEATURED NEWS:

Opportunities globally

IBG QUARTERLY

IBG GLOBAL NESWLETTER AUTUMN 2018 Page 2

SUB-SAHARAN AFRICA:

Opportunities in Construction in East Africa Present Potential INTERESTING PROJECT

BMI Research has shown that the Kenyan construction industry is projected to

grow at an annual growth of 6.2% until 2016 which will see Kenya outperforming all

sub-Saharan countries. The real estate and construction sectors continue to be key

drivers of economic growth, contributing 7% to the GDP. Estimates are that more

than 210,000 new residential units need to be built annually to keep pace with

Kenya's expanding population. Office and retail, apartment blocks and gated estates

are huge growth markets. Kenya Roads infrastructure is one of the key growth

components. According to the Kenya National Bureau of Statistics, overall

expenditure increased by 38.3% from US$1.1 billion in FY2016 to US$1.5 billion in

FY2017. Firms manufacturing construction inputs, architectural services and other

requirements may wish to pay attention.

The German Federal Government

is hosting a trade mission to

South Africa on 11-17

November 2018. IBG Africa and

Germany are managing the

recruitment and all operations

of this important event. Ten

companies are expected in

sectors such as e-learning,

training management and

other platforms. Africa presents

huge opportunities in many

sectors of training such as

healthcare, technical and

university distance learning.

by Richard Zurba IBG Sub-Saharan Africa /

Zurcom International

MIDDLE EAST:

Chinese Cities Continue to Open Economic Missions in Israel INTERESTING PROJECT

Xiamen, a port city on China’s southeast coast, opened a trade mission in Israel in

August, becoming the third Chinese city to do so this year after Beijing and

Dongguan. This is a result of the recent global realignment of economic and

political interests and the growing reputation of Israel’s tech sector (e.g. IT, Life

Sciences, Agri-tech, Cybertech, Defense and Security). New opportunities for

companies worldwide abound. Israel’s continuing economic growth (Moody’s and

S&P both rank Israel A1 Positive), strong currency (among the five strongest in the

world) and its reputation for innovation makes it an attractive market both for

export and potential joint ventures.

Ukrainian Trade Mission to Israel

hosted by IBG-Middle East.

Seven furniture manufacturers

and seven software developers

based in the Ukraine were in

Israel in June to meet potential

business partners. IBG-Middle

East set more than 70

appointments with importers

and distributors as well as

potential joint venture partners.

by Sherwin Pomerantz IBG Middle East / Atid EDI Ltd.

BRAZIL: Craft Beer Boom in Brazil INTERESTING PROJECT

Despite Brazil’s third place in the world’s beer market with over 13 million liters

produced in 2017 (China is #1,with 41 million liters, USA is #2 with 24 million liters

and Germany is #4 with 8.4 million liters), the craft beer market is still very small

and accounts for ca. 1%.

Craft breweries continue to grow each year, creating a very interesting market for

new investors. There are already over 300 registered micro-breweries (and many

other unregistered), with consumption growing at an amazing rate of over 40%

per year. At the end of 2018, there will be 1,000 registered craft beer

manufacturers in Brazil.

One of the consequences of this growth is the increasing interest of large

international craft breweries to export to the region, as well as international suppliers

of equipment and raw materials to this industry.

IBG Brazil recently completed a

market study on the potential

for craft beers in Brazil. The

second part of the market

research was done for a US

manufacturer of kits to check

the quality of water used in

beer followed by an event at

the most famous beer bar in

Brazil. Top ten craft brewers in

Brazil and potential distributors

of the client’s product were

invited to see the company

presentation and understand

the benefits in using the kits.

by Fabio Yukio Yamada IBG Brazil / Tradebrz

International Consultants

IBG GLOBAL NESWLETTER AUTUMN 2018 Page 3

CANADIAN Power Generation Equipment Opportunities INTERESTING PROJECT

The electrical energy sector in Canada has a total installed generating capacity of more

than 135 GW and is projected to reach 170 GW in 2035.

The primary sources of electricity generated in Canada are hydropower (61%), nuclear

(17%), coal (11%), natural gas (7%), and renewables (5%). Eighty percent of power

generation facilities will have to be replaced or upgraded during the next 10-15

years. Total investment is forecast to reach US$290 billion by 2030, more than

US$195 billion of which would be allocated to power generation stations, with the

remainder dedicated to the transmission and distribution segments. More than US$20

billion in investment is committed for nuclear reactor refurbishments.

IBG Canada can identify and

reach key contacts at large

engineering firms which

typically win contracts to build

or upgrade Canadian power

generation infrastructure. Often

such firms partner with a variety

of equipment providers to

deliver complete systems.

by Ron A. Straatsma IBG Canada / CDA Market

Services

MEXICO: Mexico City’s New International Airport INTERESTING PROJECT

Mexico City’s New International Airport (NAICM) is the most important

infrastructure project of the last fifty years and a solution to Mexico’s burgeoning

aviation demand, which has left the capital’s existing airport struggling to cope. With

just two runways, Benito Juarez International is currently the busiest airport in Latin

America dispatching 44 million passengers per year. NAICM is set to be one of the

biggest airports in the Western Hemisphere. After the completion of the first

phase it will have 3 parallel runways capable of simultaneous operation, 96 gates,

68 remote gates, 5,000 ha and will dispatch 70 million passengers per year.

Three further phases of development are set to follow, with the final phase

featuring a total of six runways, an additional terminal, and capacity for 125

million passengers by 2065. The total funding required for the construction and

initial operation of the New Airport is estimated at up to US$13.3 billion. Many

international and Mexican firms are part of this massive engineering project; the first

phase will be ready by 2020 so in some cases there are still some opportunities to

supply the actual contractors.

IBG Mexico has recently carried

out market research on student

mobility in preparation for a

mission of Irish universities that

will visit Mexico in November.

Over the last few years, the

number of Mexican students

studying abroad has increased

significantly. Though most still

head to Spain and the US,

students are now also looking

to study in Canada, Europe and

Australia.

by Ana Arroyo IBG Mexico / ARNI Consulting

Group

UNITED STATES’ Cutting Tool Manufacturing Industry INTERESTING PROJECT

The cutting tool manufacturing industry in the United States is characterized by a

large number of small operators. In 2017, industry reports indicated that just one

operator accounts for more than 5% of revenue. Cutting tools typically only account for

a very small portion of costs for the manufacturers that buy industrial products. The

result is that cutting tool operators tend to have a niche manufacturing focus on small

cutting tools and other accessories and thus lack the capacity to garner significant

market share. Instead, they work locally or regionally to supply various downstream

manufacturers with new tools, replacement parts and periodic service and repair of

existing machinery. Meanwhile, national industrial powerhouses are typically focused

on broader machinery manufacturing operations with only a small share of their

revenue being industry-specific. Concentration is forecast to remain low through

2022 as operations remain small-scale and fragmented. Still, some larger players

are likely to acquire small but potentially complementary businesses in the

industry in order to consolidate costs and expand reach.

IBG US recently assisted South

Korea-based Penguin Ocean,

the manufacturer of the world’s

first semi-submarine boat. Our

team provided a market

overview and regulatory study

for the US market. We also

successfully organized meetings

with potential customers during

the Miami International Boat

Show. We are looking forward

to the sale of the first Penguin

Ocean semi submarine boat in

the US!

by Bruno Tateossian IBG USA / Ouino Consulting

IBG GLOBAL NESWLETTER AUTUMN 2018 Page 4

AUSTRALIA & NEW ZEALAND: Australia Is Investing in

Smart Transport Technologies and Mobility-as-a-Service INTERESTING PROJECT

The future of transportation in Australia is being molded by urbanization, social trends

and emerging technologies. The result is clear investment by the public and private

sectors to develop new Intelligent Transport Solutions (ITS), Connected and

Automated Vehicles (CAVs) and Mobility-as-a-Service (MaaS).

To facilitate greater innovation, transport agencies are pursuing initiatives to engage

with local and international transport technology firms. In 2018, Transport for NSW

(TfNSW), the New South Wales government department managing transport services,

launched the Future Transport Strategy 2056, the MaaS Innovation Challenge and

The Research Hub to explore, fund and foster collaboration and information sharing.

Australia has over 20 driverless vehicle trials across the country and a major smart

transport project currently underway is the M4 Smart Motorway Project, a US$345

million project introducing intelligent motorway technology.

From 4-8 June 2018, IBG

Australia hosted several U.S.

companies as part of their

participation in the Export

Delaware Trade Mission to

Australia.

As part of their in-country

support, our office faciliated

individual high level face-to-face

meetings with key players from

state and federal governments

and the private sector.

By Angela Foley IBG Australia & New Zealand /

Foley & Associates Pty Ltd

CHINA:

Two-child Policy Reviving the Baby and Mother Care Industry INTERESTING PROJECT

A recent research IBG China carried out highlighted that the second child policy will

bring out a promising market for China’s baby and mother care industry.

In October 2015, following the announcement of the 13th Five Year Plan, China

started to release the second child permitting policy nationwide. The policy has

effectively promoted increased birth rates – in 2016 and 2017, births amounted to

17.86 million and 17.23 million, respectively, recording an increase of 1.42 million

births (in 2016) compared to the years of the 12th Five Year of Plan period.

In 2010, the value of the baby and mother care market reached US$152 billion

and increased to US$354 billion in 2015. That said, the baby and mother care

industry is waiting for a more sophisticated market demand and opportunities to grow.

IBG China has signed a contract

with a leading US electron

microscope client for their

China market incubating

services. The client will have

great potential in the scientific

research sector following the

recent developments in China’s

national policies.

by Annabel Rong IBG China / Alglory Investment

Limited

SOUTH EAST ASIA:

ICT Opportunities in Indonesia’s E-Commerce Market INTERESTING PROJECT

The Indonesian e-commerce market has grown by 60–70% annually since 2014 and

is expected to expand from US$8 billion in 2016 to US$60 billion by 2020. This

represents huge opportunities for technology solutions providers across the

value-chain, from data management and logistics to website design. Companies

providing data analytics solutions that can understand customer behavior are expected

to have a key role in Indonesia’s e-commerce growth. Logistics is also another area

with significant potential for ICT-driven integration and optimization. Lastly, e-payment

services are projected to increase as the country appears to be on the verge of a

cashless payments boom. However, only Indonesian companies can obtain an

Electronic Money Operator License, therefore foreign players seeking to enter the

market will have to incorporate a local entity.

IBG South East Asia conducted

an export strategy workshop

for Brunei companies seeking

to export their products to the

South East Asian market. Key

topics covered during the

workshop included developing

an export strategy, finding

distributors, and pitching to

prospective buyers in the

region.

by Sarath Menon IBG South East Asia / Orissa

International

IBG GLOBAL NESWLETTER AUTUMN 2018 Page 5

JAPAN: Changes in Keiretsu Supply Chain INTERESTING PROJECT

In FY 2017-18, Toyota, Nissan, Honda and Suzuki yielded the biggest profits in their

history, mainly attributed to 1) global expansion and 2) connected car development that

now requires different capabilities of the supplier network (i.e. global coverage and IoT

technologies). Japanese automotive producers have started changing their supply

chain strategy from the exclusive approach in Keiretsu to a global open way and are

now opening doors to foreign suppliers outside their Keiretsu. That said, their

centralized decision making system has not yet changed. Replacement of core

components is still always decided at headquarters level. Potential suppliers need to have

sales representatives in Japan to be able to benefit from this opportunity.

IBG Japan supported a trade

mission from Mississippi to

Tokyo in May, 2018. The

delegation consisted of several

Mississippi companies mainly

in the automotive and defense

industries. The scope of work

included arranging B2B

meetings and accompaniment.

by Yasushi Hasegawa IBG Japan / Fenetre Partners

SOUTH KOREA: Blockchain Sector Booming INTERESTING PROJECT

South Korea’s government has announced investments of over US$800 million in

blockchain technologies, AI and IT-related sectors. The estimated size of the South

Korean blockchain market jumped from US$18.1 million in 2016 to US$47.2 million

in 2017 and is expected to grow to US$299.9 million through 2020. Since the

blockchain market is considered to be promising and the country is a major technology

powerhouse, South Korea is becoming a major destination for the blockchain

community. International blockchain related start-ups have already established

partnerships with local conglomerates, in addition to knocking on doors of leading

Korean universities to carry out blockchain research. The booming blockchain sector

may offer opportunities for international blockchain related businesses to explore,

collaborate and expand their businesses in South Korea.

IBG Korea has been organizing

technical seminars with North

American tree nuts growers to

showcase how to use the nuts

for baked products and

desserts. An internationally

recognized registered dietitian

nutritionist and three-time

winner of the James Beard

Foundation Award for

excellence in food journalism

has been invited as a speaker.

by Ken Yang IBG South Korea / Korea

Business Services, Inc.

TAIWAN Gives the Green Light to British Pork INTERESTING PROJECT

Taiwan has opened itself to pork imports from the U.K. for the first time, with first

shipments to reach Taiwan in late 2018. British farmers and food producers are set

to benefit from a valuable new market as Taiwan has the highest level of meat

consumption per person in Asia. It is expected that the new deal will allow for

cuts of meat that are unpopular in Europe, like offal, to find keen buyers in

Taiwan. The agreement signed in London in December 2017 is expected to be

worth more than US$65 million over the next five years. .

An annual promotion project

conducted jointly with a central

Taiwan based supermarket 6 years in

a row has successfully raised the

profile and sales volume of California

fresh vegetables in central Taiwan. A

meticulously planned campaign by

IBG Taiwan assisted a U.S. fresh

produce association to tailor their

offer to regional consumers.

by Irene Tsai IBG Taiwan / AIM Development

Corporation

INDIA’s Baby Food Market Offers Huge Opportunities INTERESTING PROJECT

Baby food is one of the fastest growing categories in baby care and overall FMCG

industry of India. A combination of factors – social and economic - are helping India’s

baby food market grow rapidly. A growing middle class, increasing number of

women in work force, and increased nutritional awareness among Indian

parents are some of reasons behind the demand for healthy and organic baby

food products. There are international as well as domestic/Indian manufacturers

present in this segment. Some of the international brands have a sizeable presence,

including manufacturing facilities in India.

IBG India assisted a US non-

profit company working in the

field of clean energy, by

providing market insights and

strategic planning. The founder

visited India in July 2018. The

product aims at improving the

respiratory health of rural

women and reducing pressure

on forest resources.

by Supriya Kanetkar IBG India / SRK and Associates

IBG GLOBAL NESWLETTER AUTUMN 2018 Page 6

CENTRAL & EASTERN EUROPE Is One of the Fastest

Growing Defense Markets INTERESTING PROJECT

The increase in military spending for CEE states is the largest in all of NATO. The Baltic

States, Poland and Romania have already reached spending levels of 2% of GDP on

defense, and some of them, notably Estonia and Poland, will increase their defense

spending even further beyond the 2% mandatory GDP level. That said, a few CEE

countries including the Czech Republic and Hungary may struggle to reach the 2%

threshold in the foreseeable future. According to Avascent Analytics, the CEE defense

expenditure will swiftly increase from US$23.29 billion in 2018 to US$31.37 billion

in 2023. Cumulative defense spending is expected to reach US$165.15 billion by 2023,

with a compound annual growth rate (CAGR) of 6.1% during the forecasted period.

The biggest cumulative defense spending, driven by the implementation of technical

modernization programmes, will be generated by Poland, Romania and the Czech

Republic with US$73.31 billion, US$28.59 billion, and US$19.16 billion, respectively.

Romania appears to be the most appealing market in the region for contractors looking

to support modernization as it is currently the most active in replacing obsolete armed

forces inventory amid a changing security environment.

IBG CEE recently researched

massive open online courses

and call centers for a global IT

player interested in identifying

potential customers. A

significant portion of the IBG

CEE’s in-market team was

involved as the research

encompassed 14 Central and

Eastern European countries!

by Filip Korinek IBG CEE / EasyLink Business

Services

FRANCE:

Luxury Groups and Fashion Retailers Take on Online Sales INTERESTING PROJECT

Facing the constant development of online sales, luxury groups and fashion retailers need

to remain innovative and adapt, notably through forging alliances with digital specialists

(e.g. Chanel with FarFetch, LVMH with Lyst), or with start-ups from various industries,

helping brands to imagine the fashion and luxury demands of tomorrow.

However, according to the CEO of a major retail group, the future of commerce is a fair

balance between physical and digital. The job of the physical distributor now is to ‘create

desire’, through constantly uncovering new fashion designers and establishing and

nurturing a privileged relationship with customers.

Paris remains an essential place for fashion designers from all over the world, who have

the opportunity to present themselves to professionals at many world-renowned fairs,

held in September of each year. It is also an attractive place for digital innovators.

Algeria produces around

600,000 tons of dates yearly,

most of them sold domestically.

A group of exporters were

interested in exporting to

France, but were soon rebuffed

by the mass-market distribution

buyers. IBG France assisted them

in penetrating the market,

explaining the large accounts’

expectations, helping the

exporters get listed and assisting

in their supply chain

performance improvement.

by Brigitte Le Borgne IBG France / Lily-Perf

Digital and Creative Industries in GERMANY INTERESTING PROJECT

The digital and creative industries are among the fastest growing industries in the

global economy. In fact, they have outshined major economic sectors in Germany, such

as the chemical industry, energy suppliers and financial services by adding nearly

US$115 billion to the German economy in 2017 and accounting for 3.1% of GDP.

The number of companies working in the fields of ICT, media and the creative economy

have been increasing steadily in the last few years. The largest sales revenue contributors

in these sectors are software and games developers, the design industry, the advertising

market and companies related to information and communication technologies. Berlin is

the leading location for the digital and creative economy in Germany. E-Sport is

transforming the German sports scene and growing enormously with revenues expected

to reach US$150 million by 2022.

IBG Germany and IBG Israel

are organized a market study

tour for German start-ups and

companies from the digital

and creatives sector. While

visiting the DLD Digital

Conference, the companies

learned more about the eco

system in the start-up nation.

by Dr. Linda von Delhaes-Guenther IBG Germany / AHP

International GmbH & Co. KG

IBG GLOBAL NESWLETTER AUTUMN 2018 Page 7

ITALY: Opportunities for Investors in the Cosmetics Sector INTERESTING PROJECT

The Italian cosmetics market is the fourth largest in Europe (13% of the European

market volume) behind Germany, UK and France, but it ranks first in the number of

SMEs in the industry. The domestic consumption of cosmetics was valued at ca.

US$11.7 billion in 2017. Thanks to the resilience of local cosmetics companies

combined with the effort to foster a steady transformation of companies the sector

recorded a positive trend in the last financial year. In line with global trends, Italy’s

green/organic cosmetics market is valued at ca. US$1.15 billion. Not only the

products, but also the packaging follows this trend aided by the fact that consumers

now buy fewer, but better quality products even if they have a higher price tag.

IBG Italy is cooperating with an

Italian firm that operates in the

cosmetics market, in particular in

the trichology field. Deliveries

include a market overview of the

Dutch and French markets and a

tailored partner and agent search.

by Rita Malavasi IBG Italy / Warrant Group SRL

NETHERLANDS: Expected Growth of Plastics Recycling INTERESTING PROJECT

Over the past decade, recycling rates have gone up by 75% and landfills, as the

primary method of plastic waste disposal, have been replaced – recycling of

plastic packaging now accounts for more than 45% in the Netherlands. That said,

further improvements are still needed to fulfill the objective of the “Circular

Economy”, a new endeavor set forth by the EU. China’s ban on imports of

plastic waste from 1 January 2018 provides companies with an opportunity to

fulfill the demand for innovative solutions that increase plastic waste recycling. In

the Netherlands, the government´s aim is to implement a complete “Circular

Economy” by 2050.

IBG Benelux was closely involved in

the organization of Holland Circular

Economy Week, an international

event, from 11-14 June 2018,

attended by 170 companies from 20

different countries. Covered topics

included plastics, infrastructure, water

management, electronics, agrofood

& biomass and textiles.

by Peter E. Sanders IBG Benelux / psps consultants

Japanese Fast Fashion Chain Enters SWEDEN INTERESTING PROJECT

On August 24, 2018, the large Japanese Fast Fashion chain, Uniqlo, opened their

first store in Stockholm. Uniqlo will primarily compete with the dominant Swedish

Fast Fashion chain H&M. The first Uniqlo store in Scandinavia will be followed by an

effort to establish online sales for lower-end fashion. One of the strategies will be

to combine traditional store sales with e-trade – for example it will possible to

exchange clothes bought online in the store. The launch of a Stockholm store will be

followed by the opening of another store in Copenhagen in 2019. Initially, the online

sales concept will be launched in Sweden, Norway and Finland.

ING Sweden assisted a German

company, RIEGLER & Co. KG, in

exploring opportunities in the

Swedish market. IBG Sweden carried

out a partner search project and

development of a local sales

network. RIEGLER’s products and

offer were well received and they

are now in talks with a number of

potential distribution partners.

by Henrik Hjelm IBG Sweden / Eastnet Business

Development AB

UK Cider Market Serves up a Crisp Challenge for Craft

Cider Producers INTERESTING PROJECT

The UK is the largest cider market both globally and across Europe with the UK

cider market representing 39% of the global market. The UK cider market has grown

by 900% in terms of hectolitres sold from 1969 to the current day. Although the

popularity of cider in the UK cannot be denied, IBG UK’s research showed that new

entrants to the UK cider market face an uphill challenge as UK consumers have a very

wide choice (there are over 500 cider makers). The big players have deep pockets for

advertising but craft players do have a place if they are brave, determined, innovative

and above all have a great product.

IBG UK was trusted to lend its

market knowledge and experience

to support a specialist in geospatial

technologies and applications in the

UK market. We provided in-market

research & strategy advice to this

high profile, major exporter from

North America and assisted with

multiple UK market development

visits, arranging 10 high level

meetings with C-level staff at UK

government bodies and the MOD.

by Tony Aggarwal IBG UK / Kinetic Cubed

www.ibgglobal.com

IBG Sub Offices and major territories: Austria, Belgium, Bulgaria, Cambodia, Chile, Colombia, Croatia, East Africa Community, ECOWAS, Egypt, Estonia,

Hungary, Indonesia, Jordan, Kenya, Latvia, Liechtenstein, Lithuania, Luxembourg, Mauritius, Myanmar, New Zealand, Oman, Paraguay, Peru, Philippines,

Poland, Qatar, Romania, Russia, Serbia, Slovakia, Slovenia, Southern Africa Development Community, Switzerland, Tanzania, Turkey, UAE, Ukraine, Vietnam

IBG Partners: Australia, Brazil, Canada, China, Czech Republic, Germany, France, India, Israel, Italy, Japan, Mexico, Netherlands, Saudi Arabia, Singapore,

South Africa, South Korea, Sweden, Taiwan, United Kingdom, USA

IBG GLOBAL The International Business Group (IBG Global), founded in 2000, is a

Partnership of private commercial consulting firms with offices and staff

in 53 countries, covering a total of over 150 country markets in

the Americas, Europe, Asia-Pacific, Africa, and the Middle East.

Trade and Investment promotion in new markets

More than 40,000 projects completed

Global presence

GETTING YOU CLOSER TO YOUR MARKETS

.

IBG Global carries out high quality agent/distributor, end-buyer searches, research and in-country

support specific to your company or organization, industry and target market requirements.