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Import channels in France.

Developing country exporters selling to the French market should be aware of changes underway in import channels for their products.

France is one of the largest markets for exporters in developing countries. Information on the structure of French marketing channels is thus of interest to a considerable number of suppliers in these countries for determining the most appropriate marketing strategies. Recent ITC research using import statistics of individual importing firms in France highlights the basic patterns for imports from developing countries into this market.

General trends

Market channels in France for imports from developing countries have become more diversified in recent years. This is clearly reflected by an analysis of French import statistics at the enterprise level broken down by products and supplying countries over the 1985-90 period.

Competition among French importers for trade with developing countries is considerable and expanding. For instance, in very few cases does a single French importer handle all of France's imports of a given product or all of its imports from one specific developing country. More than 90% of French import products from developing countries come into the country through at least two different import firms. Along the same line, at least two importers in France handle goods from each of about 90% of the developing countries selling to this market.

In 1990 only slightly over a dozen developing countries depended on a single importing company for their sales on the French market. In all of these cases the supplying country exported just one product. Such situations accounted for a very small portion (less than 1%) of France's total value of non-oil imports from developing countries that year, and a large part of those involved least developed and island developing countries.

The major share of developing countries' sales to France over the five years reviewed in value terms consisted of products imported by a large number of French firms and sourced from a wide spread of developing countries. In 1990, for instance, the 57 products imported by more than 50 French firms each and originating in more than ten developing countries accounted for over two-thirds of the value of French non-oil imports from developing countries.

For the large majority of developing countries, therefore, bilateral trade with France is handled by several different French importers. Imports from some of the more industrialized of the developing countries are purchased by quite a large group of intermediaries, sometimes reaching more than a thousand French importers.

The number of French firms that participate in major import transactions from developing countries increased from 5,761 to 7,789 over the five years reviewed (1985-90). The number of developing countries and territories from which France imported also went up over this period, from 264 in 1985 to 286 in 1990. Overall the average number of French importers per exporting developing country expanded notably between 1985 and 1990, from 104 to 140. This situation, however, varied significantly for different supplying regions.

Over the same period developing countries were able to diversify their exports to France in terms of types of products provided. The average number of different export products per supplying country moved up from 20 to 23. Among developing countries exporting the same product to France, the largest supplier among them rarely held a predominant position. The concentration of supplies from a few major exporting developing countries was more pronounced for manufactures than for commodities.

Channels

One of the fundamental decisions for exporters in developing countries selling to any market is whether to supply their products direct or through intermediaries. Relying on an intermediary for exporting relieves a producer of international marketing activities. At the same time, however, the producer foregoes part of the export profit and does not obtain firsthand information on the market, which in turn may reduce the firm's product adaptation capacity.

Among intermediaries, trading companies played an important role for developing countries in the past, but the share of such entities in international trade appears to be declining. This is partly related to changes in the product composition of world trade (commodities in which these companies have traditionally been strong account for a decreasing share of international trade) and to a trend among leading international manufacturers to establish their own worldwide sourcing networks.

Two other marketing channels have been gaining importance for exporters in developing countries over the last several years, namely large retail groups that purchase direct and major manufacturing companies that subcontract production.

Reducing costs of supplies has been behind the heightened interest of these two types of institutions in sourcing direct from developing countries.

TABULAR DATA OMITTED

Direct imports by manufacturers:

Apart from the petroleum companies, the largest importers in France over the last several years been the country's leading manufacturers. Direct imports by such firms account for the majority of French imports from developing countries. In 1990 manufacturers handled more than two-thirds of total imports from these sources including fuels, a proportion that was more or less stable over the latter part of the 1980s. Their share of non-oil imports from developing countries, however, went down somewhat over the period, from 60% in 1985 to 52% in 1990, for reasons that are not entirely clear. (For details on various aspects of the import channels for 286 different product groups see the study on which this article is based.)

Imports by manufacturers of finished consumer goods tend to reflect subcontracting arrangements. For instance clothing imported direct by French garment producers has probably been manufactured in the exporting country under a sub-contracting arrangement.

The implication for exporters in developing countries is clear: French manufacturers are interesting clients not only for suppliers of raw materials and intermediate goods, but also for those of finished items that are similar or complementary to the range of the exporter's own products.

Trading firms and wholesalers:

This category of importers consists of three different types of companies: commodity traders specializing in primary products, wholesalers with large import activities (both independent wholesalers and marketing affiliates of foreign producers) and traditional agency houses that specialize in bilateral trade between France and a particular developing country or region.

In contrast to direct imports by manufacturers, French imports by international trading firms and wholesalers have increased in recent years.

The share of wholesalers in French non-oil imports from developing countries moved up from 37% in 1985 to 41% in 1990.

Trading companies and wholesalers were particularly active in imports of fruits and vegetables, fresh fish and fish products, computers, vegetable oils, intermediate wood products and toys, with import shares of over 50% for these products.

In addition, their imports from developing countries grew particularly rapidly in the categories of base chemicals, electrical components, cars and transport equipment, precision instruments, leather and leather articles, and jewellery. In all of these product groups, their share in total imports from developing countries increased by more than 10 percentage points between 1985 and 1990.

Imports by retailers:

More than 100 French retailers were involved in direct imports from developing countries during the period reviewed. They proved to be the most dynamic channels for imports from these countries, although they started from a low base. From 1985 to 1990 they more than doubled their share, from 3% to 7%.

Clothing, textiles and shoes were their leading import items, followed by toys, jewellery and watches. In each of these product groups they reached import shares of more than 10%.

In value terms, the main product lines in 1990 imported by French retail establishments were outer garments, shirts, underwear and shoes. These product groups accounted for TABULAR DATA OMITTED close to half of retailers' total imports from developing countries. In each of these categories, between 30 and 100 retailers were involved in imports, and these imports came from at least 20 different countries for each product group. While the number of retailers per product was below that of international trading firms and wholesalers, the sourcing country diversification was nearly as high as for wholesalers. Significantly, the average imports per firm were much higher for retailers than for wholesalers or manufacturers.

The above-average size of their transactions may have been one of the underlying factors for the rapid growth of retailers in the overall picture of French imports from developing countries. This is a channel that in any case should be examined closely by suppliers in developing countries wishing to diversify their exports to this market.

Friedrich von Kirchbach is ITC's economic research officer. This article is based on a research paper that he recently wrote, French Imports from Developing Countries: An Enterprise-level Analysis of Concentration, Specialization and Marketing Channels.
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Author:Kirchbach, Friedrich von
Publication:International Trade Forum
Date:Jan 1, 1993
Words:1429
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