Special Report on Russia (1st part)
Newsletter de Fundaci贸n ExportAr
The Case of AstroLab Motion
Argentine Exports over the Last Decade Special Report on La Rioja Argentine Looms in Chile Export Group AOG, Olive Oil ExportAr Plans for 2012 Bilateral Trade between Argentina and Chile Calendar 2012
The main strength of the Argentine commercial promotion system is the coexistence of public and private institutions at the national, provincial, and local level. This enables general and specialized organizations to interact with each other and share promotional activities for specific sectors or for the whole territory. In this framework, the National Government’s commercial promotion strategy (carried out by organizations and ministries) is crucial: it is clearly a frame of reference for promotional activities for Argentine products and services around the world. In this context, it is worth mentioning the active participation of thousands of Argentine companies in foreign trade businesses. They are responding to this commercial strategy while developing their own potential in markets abroad. They add value to their products and services and make them internationally competitive by incorporating technology in processes and quality in human resources. The efforts made by these companies should be supported by commercial promotion institutions. These organizations systematically work in conjunction with and under the guidelines of the National Government for the industrial development of our country and the social inclusion of our citizens. They particularly highlight the value chain and original products of manufacturers from each region of our country. In this sense, Fundación ExportAr, as a management institution working within the strategic guidelines of the National Government, follows the directives issued by its Administrative Board. Thus, Fundación ExportAr works in a coordinated fashion with national ministries, promotion agencies, national, provincial, and municipal governments, as well as chambers and related institutions. All of this means working jointly with most of the provinces and the ministries in charge of exporting policies. In ExportAr we believe that it is essential to foster synergies between government institutions, promotional agencies, organizations, chambers, and companies, in order to promote exports of small and medium-sized enterprises (SMEs). Our commitment is, and will always be, to keep working together in this unified effort to increase opportunities for Argentine entrepreneurs.
Juan Usandivaras News
The Newsletter from Fundación ExportAr
Papudo International Integration Fair 2012 7 The Market
Administrative Board-President Miguel Acevedo
8 Interview | Gilda Corralez, Loom Artisan
Administrative Board-Secretary Secretary for International Economic Relations Amb. Cecilia Nahón Administrative Board-Treasurer Undersecretary of Investment Development and Trade Promotion Amb. Carlos Alberto Bianco Executive Director Juan Usandivaras Manager Diego Nelli News Editor-in-Chief Eduardo Bevacqua News Staff Héctor Lorenzo Verónica Scornik Javier González Ojeda Rosario Menéndez
ExportAr Activities 12 Services for Exporters 14 Exporting Services 16 Exports Promotion
News Contributors Sebastián Fratto Bárbara Bonelli Josefina Gorritti José Alberto Bekinschtein Diego Molina Muscará
20 Institutional Relations
News Designers Pablo Caruso Sebastián Feinsilber Omar Baldo Flavia Visconte News English Version M. Verónica Muñoz, PhD Typography: : Bree, © Type together
w w w . e x p o r t a r . o r g . a r Total or partial reproduction of the articles and photographs is allowed provided you
News 2cite “News”, the Newsletter of Fundación ExportAr, as the source of the materials in any reproduction, publication, distribution or transfer of the materials.
Interview I Federico Badía, AstroLab Motion
Argentine Export Performance over the Last Decade
Bilateral Trade between Argentina and China: Plenty of Room for Improvement and Expansion
Special Report. La Rioja
Interview I Francisco Gobbee, Grupo AOG ( Argentina Olive Group)
Special Report. Russia (1st part)
Fiesta Nacional del Sol Fairs
Gulfood 2012, Dubai Biofach 2012, Germany
Prodexpo 2012, Russia Training
Introducing Argentine Entrepreneurs, City of Buenos Aires
Papudo International Integration Fair 2012 The purpose of this Fair is the socio-economic and cultural integration between Argentina and Chile.
Papudo, Chile February, 2 to 7 Multisectorial
The 6th Papudo International Integration Fair (FIP) takes place from February 2-7, 2012. It is being held at the Parque Municipal of Papudo, a small seaside resort city from the 5th Region of Valparaíso. This Fair is organized by the Municipality of Maipú (Mendoza, Argentina) and the Town of Papudo, in collaboration with the Municipality of Luján de Cuyo (Mendoza) and the SMEs Agency from Mendoza Government. Rosa Prieto Valdés, Mayor of Papudo (Chile), and Adolfo Bermejo, former Mayor of Maipú and actual National Senator (Argentina), first organized this fair in 2006 when the Town Hall of Papudo and Maipú reached an agreement. The idea was to foster the exchange between these markets in order to seek the socio-economic and cultural integration of both countries and regions. Senator Adolfo Bermejo highlights the integration of both nations when he affirms that, “what we do here is an integration effort, seeking brotherhood and friendship. This is much more than a trading exchange; but, in fact, a socio-cultural experience”. Each year, the organizers meet to coordinate the details of the exhibition. Thanks to this shared effort between Argentina and Chile, the quality of the products displayed and the excellence of the artists and their performances is remarkable. In fact, both products and shows make an outlasting impression on the visitors year after year.
The Papudo International Integration Fair takes place in a seaside resort where Chileans and their families spend their vacations resting by the sea and the ravines. Since the exhibition is open to the general public, it has become a popular event for locals as well tourists. They can buy all kinds of products and enjoy different entertainment venues, such as concerts and traditional dances. They can also enjoy traditional food from each region in the food court area of the fairground. Exhibitors have many reasons for attending this fair. On the one hand, they can show and sell their products, obtaining both revenues and promotion. On the other hand, they can evaluate the feasibility of introducing their products into the Chilean market. It is important to remember that these promotional activities are a key aspect of the development of the country because they facilitate the creation of commercial alliances. They also enable the sharing of experiences between peers who can discuss aspects of their businesses, from the marketing and labeling of their products, to added value and tourism. To strengthen the promotional activities of the Fair, Business Rounds are organized between entrepreneurs and public service representatives from different sectors. Thanks to this initiative, many Argentine companies have been able to do business with their Chilean counterparts and have started exporting their products after participating in the Fair.
The FIP is a multisectorial fair and includes representatives from industry, tourism, agriculture, agro-industry, small business, and small & medium size enterprises (SMEs). In this exhibition, you can find a variety of products: foods and olives, homemade and varietal wines, liquors, cider, homemade beer, olive oil, preserves, and home canning products. There are also silver, wooden and leather handicrafts, as well as glass crafts (stained glass and glass fusion). Finally, there are leather and textile clothing, tourist promotion, and several services offered, among many other things.
A seminar and business round took place the morning of February 3rd. Argentine and Chilean representatives talked about commercial and tourist integration and particularly about the future Aconcagua Bioceanic Corridor that will unite both countries, confirming that it is a regional priority.
In 2011, 18,000 people visited 140 exhibition stands from Argentina, Mexico, Colombia, Peru, Ecuador, Guatemala, and Chile. More than sixty Argentine exhibitors displayed their products in almost eighty stands. This venue gave great visibility to Argentine entrepreneurs, particularly those from the Province of Mendoza. In fact, many of them had a chance of entering into new international markets with their high-quality products. They also received hands-on experience during the fair, and realized the importance of these events in promoting their products and doing business. They also received consulting services and learned about the requirements for exporting their products.
Since 1990, the commercial exchange between Argentina and Chile has constantly grown. Our exports to this country have doubled during this period with revenues of $4.67 billion dollars. Last year, Chilean exports to Argentina reached $1.14 billion dollars, an increase of 31 percent compared to previous years. It is worth mentioning that, during the first semester of 2011, Argentina had a trade surplus of $1.55 billion dollars.1
In 2012, the Mayor Rosa Prieto ValdĂŠs and authorities from the 5th Region (Province of Petorca) inaugurated the Fair on February 2nd at 9:00pm. Authorities from the Municipality of LujĂĄn de Cuyo (Mendoza), Senator Alejandro Bermejo, who had signed the mutual cooperation agreement, and the Mayor of Potrero de los Funes (Province of San Luis) also attended the opening ceremony.
This bilateral commercial relation strengthens the ties between Argentina and Chile. Both countries unite efforts in this international venue to bring their markets together and promote their exportable products and services.
(1) Source: Argentina Trade Net (www.argentinatradenet.gov.ar)
It is the third time Fundación ExportAr has participated in this Fair with an exhibition stand. This enables the promotion of its activities and services, granting financial and technical support.
In 2012, almost a hundred and seventy people travelled to Chile to exhibit and promote their products in seventy-six stands. They offered innovation, quality, and our rich Argentine culture.
The participation is essential because Fundación ExportAr helps Argentine manufacturers with all their inquiries, encouraging their participation and training them in international foreign businesses.
Companies Participating in the Fair Arte en vidrios Sayen Vitrofusión y diseños Artesanías Avanicama La Damajuana Regionales Rubia & Lopez Rubia Vitarux Mónica Sykes Vitrales Cueros Adriel Pincanta Juegos de ingenio y didácticos Como Hadas y Duendes Magnetizarte Artesanías Mendocinas en cuero M y A Finca Gerardo Pablo Arte en vidrio y accesorios Artesanías Ayun Tejidos Crochet Laura / Bijouterie Cuadros para regalar Cascaritas Creaciones Camila Solum Artesanías Aninu – Akacia Telares argentinos Mies Antuan Bijouterie y accesorios Arte en vidrio y accesorios Vinos Artesanales “Los Reinas”
“MG” Fieltro y Papel Olivícola Simone Carmin Artesanías Caricaturas Cromos Cueros Nadyas Arte y Cuero Con Alma Cesar Artesano en cuero Acuarela Bichito de Luz M.P.L. Esmaltado en metales MF Calados en Madera Cuadros para regalar India Magdalena Giraluna Indumentaria “Mío Cané” Cueros Fe Arrulé Las manos de mi abuela Místico Naranjo en flor Quetec Terruños de Mendoza Sidra Cortesía Cuerolámparas Alapipetuá Cerámicas
Pinceles Mágicos Liano Accesorios y aromas Elunei Joyas de luz Chichino O y H Orfebrería Solana O Indumentaria Lucia Mar Juliá – Argumedo CB O Noseve Pehuenart María E. Porri Come Coco Potoco Tejidos Roxi Arlequín Grace Gym Empanex Arte Francés Essen Flores Naturales Prensadas Irma Tahan Dirección Promoción Pyme Municipalidad de Luján de Cuyo Municipalidad de Maipú Fundación ExportAr
Papudo International Integration Fair 2012
The Market The Republic of Chile has 756,102 km2 and a population of 16.8 million inhabitants. Its main cities are Santiago de Chile with a population of 5.8 million and ValparaĂso with 865,000. Chile is one of the most developed economies in the region. Its GDP for 2010 was $281 billion dollars, while its GDP per capita was $16,100. The service sector is the largest component of the GDP with 53.1%, followed by the industrial sector at 41.8%, and the agriculture that represents only 5.1%. Moreover, the life expectancy in Chile is 77.7 years, a figure similar to developed countries. During 2010, Chilean exports increased by $86.1 billion dollars. The most significant exports are minerals, timber and wood products, paper and pulp, fruits, fish, and wine. This merchandise mainly serves the needs of Asiatic and American markets. Chileâ€™s main trade partners are China (23.8%), Japan (10.2%), the USA (10%), Brazil (6%), and South Korea (where 5.9% of the total shipments are sent). In terms of bilateral trade between Argentina and Chile, sales to said market in 2010 reached $4.67 million dollars. Among the main products exported to Chile are crude oil (with shipments worth $903 million dollars, 19.4% of the share of total exports), followed by propane ($204 million, 5.5%), natural gas ($189 million, 4.8%), vegetable oil ($158 million, 3.4%), and fodder ($150 million, 3.2%).
Entrevista | Gilda Corralez
Argentine Weaving Crafts in Papudo 2012 Gilda Corralez is a weaver artisan. She creates tapestries and felts with her loom, using materials such as wool, ribbons, wire or jute among others. Her work has been exhibited in fairs and competitions all around the country, as well as in Chile and Costa Rica.
Papudo International Integration Fair 2012
By Verónica Scornik Gilda Corralez clearly states: “My main short and medium term goal is promoting Argentine culture”. In this sense, the artisan says that “our products are acknowledged for their artistic quality all around the world”. The successful 5th International Biennial of Textile Art took place in Buenos Aires in April 2009 and the recognition of Argentine culture was clear. Our country entered in a competition with Canada, Mexico, and Guatemala for the location of this event which has been organized for more than a decade by the World Textile Art (WTA). It is worth mentioning the magnitude of the exhibition because it lasted a whole month. The works were shown in fourteen museums and cultural centers all around the city, with special exhibitions prepared by national and international artisans. Twenty art galleries from the City of Buenos Aires also participated in this large event. Laura Casanovas, journalist from La Nación, wrote about the Biennial stating: “today, the so called ‘textile art’ is not considered either decorative or minor art, but instead a strong artistic expression. Its materials can be widely adapted and used for aesthetic expression in the field of contemporary art”. For Corralez, another important event for Argentine local textile art was the Encounter of the Iberoamerican Art Textile held in San José, Costa Rica, on September 2010. Gilda Corralez is a member of “Productive Identities”, a program sponsored by the State Secretary of Culture. This program promotes the creativity of social groups formed by artisans, designers, visual artists, and small manufacturers, who wish to improve their own projects by interacting with peers and other interested parties. The program courses are based on the “Plan for Training in
Design”, which aims to produce material technologies and local symbologies. The program started in 2005 and is run in several provinces (La Pampa, Chaco, Chubut, Formosa, Jujuy, Mendoza, Río Negro, San Juan, Santa Cruz, and Santiago del Estero). Each collection is inspired by different aspects of the local identity, so they reflect the origin, landscapes, and life of each group. The program “Productive Identities” fosters the development of local traditions and encourages a transformation towards collective engineering standards for each region. Its goals are to promote regional economies, foster social and labor inclusion, support and strengthen productive projects, highlight the importance of cultural diversity, and facilitate networking between citizens. Gilda Corralez is the group coordinator from the Province of Mendoza. She explains: “We have searched and found the ‘identity’ of Mendoza. We received training on the techniques for tapestry and felt weaving, which caught my attention most. I think this is what I like doing so I have become the coordinator of this group”. Corralez makes textile accessories combining materials such as felt, ribbons, wool threads, and synthetic bulrush. This is not the first time Corralez has ever participated in activities organized by Fundación ExportAr. She also attended International Business Rounds held during MICA (Market for Argentine Cultural Industries). She has attended the Pampudo International Integration Fair twice. She admits that “this is the third time I’m receiving the support from Fundación ExportAr and each year we increase our sales and get a better understanding of our customers”. Regarding the future of this sector, she says that “there is an important demand of Argentine designs and a particular interest placed on our products, especially on those that deeply reflect our native identity”. News
Fundación ExportAr Agreement
SENASA at International Exhibitions The National Service of Agrifood Health and Quality (Senasa) takes part in different national and international exhibitions in order to give advice to exporters and importers of agrifood on phytosanitary requirements that the Argentine Republic and buyer countries of said products demand.
Under the agreement between Fundación ExportAr and Senasa, a decentralized organization of the Ministry of Agriculture, Livestock, and Fisheries of the nation, during 2011 Senasa will participate in different fairs and exhibitions at national and international levels, to give advice to agrifood exporters and importers about phytosanitary requirements that the Argentine Republic and buyer countries demand of said products. It is very common for Senasa to show its activities in different national fairs. With this agreement the authorities of the organization have decided to widen their scope and participate in well-known international exhibitions related to the agrifood industry and contribute to the development of the international trade of these products. The purpose of the agreement between these two organizations is to implement the necessary means and actions to reach mutual technical complementation and carry out in a coordinated way projects in areas of mutual interest, working in cooperation through different activities. In this regard, Senasa and Fundación ExportAr jointly assist small and medium agrifood exporters abroad, as well as boosting imports, in matters related to quality and health in agrifood. This joint work permits collaboration in the design of the necessary conditions for the development of actions towards the fulfillment of the export policies set forth by the national government. Thus the Senasa widens its regional scope by participating in these international meetings, adapting and accompanying its main goal which is to strengthen the role of the state on animal and vegetable health, food safety and environment care. SENASA – Servicio Nacional de Sanidad y Calidad Agroalimentaria/National Service of Agrifood Health and Quality
News News 10 10News
For further information: www.senasa.gov.ar 0800-999-2386
Federal Spirit & Joint Work The Managers and Heads of four Departments (Services for Exporters, Exports of Services, Exports Promotion, and Institutional Relations) in charge of exports at Fundaci贸n ExportAr have their say on this issue of News. They share how Fundaci贸n ExportAr works in support of small and medium size entrepreneurs from all over the country. In the following articles, the achievements of last year and the goals for 2012 are explained and analyzed. They all show the federal spirit of our activities and our joint work with provincial organizations.
Services for Exporters Balance and Results (2011) Throughout 2011, the Department of Services for Exporters achieved many goals due to the improvements from each of its areas. In fact, it was a very active and federal year. There were forty-three seminars on foreign business all around the country, five in the City of Buenos Aires and thirty-eight in different provinces. These activities took place in eighteen provinces, and more than 1,520 entrepreneurs from SMEs participated in them. Different topics were addressed, from “First Steps towards Exports” to “Kosher Certification” and “Exports for the Equestrian Sector”, among others.
On the other hand, our Customer Service Area has promptly responded to 1,704 technical inquiries.
Regarding the Export Groups Program supported by Fundación ExportAr and Standard Bank Foundation, twenty-two new groups were formed (eleven of which are funded by our organization). In all, we have seventy-two Export Groups with 472 entrepreneurs that trust this program. They have organized themselves and work jointly to gain competitive advantages when trading abroad. It is worth mentioning that forty-three of these Export Groups are from different provinces, another example of our genuine federal spirit.
In reference to Commercial Information, we have started a new publication called “Reports on Provinces” which aims to identify and describe the characteristics of each region, in terms of manufactures, local economy, and export potential. These reports have been done in collaboration with different organizations in charge of exports promotion all over the country. They were presented regionally.
We also worked on suitable commercial information about national companies to be displayed during International Fairs. This was possible thanks to the reports of Business Trips to the USA, Mexico, Brazil, Russia, and Germany. Updated date from almost 500 foreign buyers was included in these publications.
Diego Nelli, Manager of Services for Exporters
Our Achievements The Department of Services for Exporters was created in 2011. Its goal is to support the other technical areas of Fundaci贸n ExportAr, as well as to offer national entrepreneurs the tools and information necessary to start their export process, improve what they already have, or open new international markets. Thus, our main achievement has been the consolidation of this new space in Fundaci贸n ExportAr, which has allowed us to professionalize our own activities and those of Argentine foreign trade.
Within this framework and based on our federal premise, we have worked jointly with public and private organizations, and with promotional agencies in charge of foreign trade from all the provinces, through training seminars, the Export Groups Program, and Commercial Information. Thus, we have been able to identify the training needs of each sector in order to provide adequate seminars. We have also evaluated regional economies in detail and gained greater support for the Export Groups from Provinces and Municipalities.
We double our efforts to incorporate even more SMEs Plans for 2012 We expect to expand the Federal Training Plan, addressing the issues of each particular sector and/or regional economy. We also want to implement an E-learning Training Program to reach more manufacturers in our country through a virtual platform. Finally, through our areas of Commercial Information and the Export Groups Program, we will strive to assist SMEs that wish to become exporters in the near future.
Exports of Services The Department of Exports of Services was created in April 2011. Its purpose was to work directly on promotional activities on services (not on goods). To organize this new area, a calendar was set up according to the service sectors Fundación ExportAr was already working with, and keeping in mind several new sectors to be incorporated in 2012. Originally, there was not an area in charge of promotional activities for the exports of services. As a consequence, in 2011 we started organizing and promoting those services we already worked with, such as software, health tourism, education, animation and design. Later on, we added new services and even activities without international recognition. Regarding new services to be promoted in 2012, it is worth mentioning four key sectors. First, the development of franchises, which means offering Argentine brands through franchise business plans abroad. Thus, Fundación ExportAr will work jointly with the Argentina Association of Brands and Franchises to promote and develop this area around the world. In fact, Argentina will participate in the International Franchise Fair in Mexico City, on March 1-3, 2012. Secondly, the environmental sector has great potential as well. Argentina is the “guest of honor” at Pollutec, the most important fair in this sector that will take place in Lyon, France, from November 27-30, 2012. Today, factories around the world need to develop an environmental engineering strategy for its production plan. Our idea is to offer an exportable service to support this environmental requirement. Thirdly, we are incorporating architecture services to be exported. Fundación ExportAr will work jointly with the Central Association of Architects to organize activities for local architecture and design studios. The purpose is to help them participate in international real estate development.
When promoting the exports of services, it is very common to work extensively in each sector before deciding to offer services abroad. In the architecture sector, there are fewer international fairs, so Fundación ExportAr has organized workshops. In fact, several Argentine companies with the support from Fundación ExportAr will participate in the 100 Showrooms Fair in Santiago de Chile on June 21-23, 2012. This fair gathers suppliers for architecture, design, decoration, and interiors. A meeting with local developers will be held at the Embassy of Argentina in Chile in order to offer a detailed catalog with information on Argentine architecture and design studios. Finally, advertising/marketing is another sector of Argentine exports. It is worth mentioning that over the last decade, Argentina has been rated the third most creative country after the USA and UK; thus we have received several advertising awards in festivals and related events.
Emiliano Cisneros, Manager of Exports of Services
Achievements in 2011 Among the activities done in 2011, it is worth mentioning our participation in Annecy 2011 (France), the most important animation fair in the world. Argentina was guest of honor country and our exhibition stand was constantly visited. We obtained very good results.
Argentina’s presence in the NAFSA (Association for International Educators) Annual Conference and Expo is also important; it is the leading fair for international education with more than seventeen universities and colleges in attendance. We previously participated in pre-fair workshop in Miami. Attending the World Medical Tourism & Health Congress was highly successful, with regards to the health tourism industry, as we made several deals and connected with potential businesses.
In 2012, the Department of Exports of Services will also organize activities for new sectors, such as environment, real estate, advertising, and science & technology. In fact, twenty seven activities will take place throughout the year. Advertising can be subdivided in two sectors. On the one hand, there is the filmmaking industry. We have highly-skilled people in this area, renowned professionals, state-of-the-art technologies, and excellent filming locations. In fact, we have become a creative player in the international area. Creativity is one of our strengths. As a consequence, we plan to develop Argentine creative industries on a global scale for further internationalizing them. The Argentine Association of Advertising Agencies contacted Fundación ExportAr with the purpose of making Argentina a preferred global location for outsourcing in the creative industries. The biggest challenge is reaching advertisers and interested parties who generally do not attend festivals or fairs; thus, it is important to contact national associations of advertising agencies or advertisers that most countries have. We will participate in Expo Publicitas in Mexico on May 23-25, 2012; and we will organize workshops in Mexico, Chile, and Miami. In regards to the science & technology sector, we will work jointly with the National Ministry of Science and Technology on a common agenda. We will participate in international conferences and seek potential partners for developing outsourcing in this sector.
At the same time, we will have twenty-seven activities to help those sectors already promoted in 2011. For example, in education, Fundación ExportAr will work jointly with the National Ministry of Education in the Program entitled “Promotion of Argentine Universities”. Within this framework and for the past four years, representatives from local universities have attended international fairs or meetings and signed exchange student agreements with foreign universities. The calendar for 2012 includes participating in NAFSA (USA) and EIAE (China). Several educational workshops will be held in Sao Paulo (Brazil) during August, in Barcelona (Spain) in September, and in Bogota (Colombia) in November. The health and medical tourism sector is a very dynamic area, with several international conferences, as well as business rounds. In all of them, we try to show the best of our health care system. The health tourism industry is quite new, so only a few promotional events are available; thus, we will organize workshops with potential buyers. We have scheduled a workshop in Lima (Peru) from July 2nd to 4th. Furthermore, it is worth mentioning the participation in two other events: the World Health Medical & Global Healthcare at Miami (USA) from October 25th to 26th; and the Health Tourism Congress at San José (Costa Rica) from April 25th to 27th.
International Fairs Participation in International Fairs is one of the most effective ways to promote Argentine exports. These events enable Argentine entrepreneurs to meet face to face with potential buyers interested in their products and/or services.
Investment Development and International Trade Undersecretary, Ambassador Carlos Bianco. Fundaciรณn ExportAr and these institutions design a trade agenda and carry out programs and commercial promotion activities.
International Business Rounds
Since the creation of the Foreign Trade Secretariat (Ministry of Economy), Fundaciรณn ExportAr has worked jointly with Beatriz Paglieri, head of this office, in order to coordinate all interested parties. The purpose is to strengthen the commercial insertion of Argentina and the international promotion of our small and medium-size enterprises (SMEs) and the regional economies.
The activities organized by the Department of Exports Promotion are founded on two key principles: federal spirit and teamwork. On the one hand, it is important to have a strong federal coordination with promotional organizations from Argentine provinces and representatives from each sector (associations, chambers, etc.). It is also essential to work jointly with all the other departments from Fundaciรณn ExportAr. All of this is achieved under the guidelines from the International Economic Relations Secretary, Ambassador Cecilia Nahon, and the
Furthermore, several calendars of activities are organized year after year with organizations in charge of promoting exports from different provinces: Cรณrdoba, Santa Fe, Buenos Aires, Tucumรกn, and San Juan, among others. This also happens with chambers and associations from each sector.
Mauricio Pellegrino, Manager of Exports Promotion
For example, the industrial sector of agricultural machinery and equipments sets up a calendar of activities in coordination with Fundaci贸n ExportAr as well as with all the provinces where manufacturers are located.
This Department works jointly with other areas from Fundaci贸n ExportAr, which provide technical support to promotional activities. The area of Commercial Intelligence prepares pre-fair reports and studies about the benefits of offering a particular product or service at certain markets, or the commercial opportunities for specific sectors. For example, if the analysis shows that the auto parts sector in Brazil is growing, then the promotional activities for this industry will respond to this demand.
We also work closely with the Department of Promotion of Services. We have obtained excellent results during workshops organized as pre-fair activities. For example, we organized a promotional workshop in Shangai, with all the attending companies, previous to attending the Beijing Fair.
Regarding our federal commitment, we work constantly with the Training area to complement our participation in International Fairs and Business Rounds,. Most of the participants of Training seminars belong to SMEs located in different provinces. Apart from offering significant technical information about foreign trade, we are able to be in contact with these SMEs and offer them a foreign trade plan or a business profile. All of this could later result in their participation in an International Fair or Business Round organized by Fundaci贸n ExportAr.
This year we have a clear example that combines all the aspects mentioned above. We have planned events in several cities from the six cultural regions of Argentina. All of these activities are aimed at the promotion of culture (cultural industries). Foreign buyers will be able to contact SMEs from each region. We can organize this kind of event because we coordinate our efforts with national institutions and provincial organizations, in order to find the best buyer for each region and export. We also provide training seminars on foreign trade with local manufacturers and entrepreneurs. We believe it is very important to visit their factories and see them with their people, working in their own locations. News
Mauricio Pellegrino, Manager of Exports Promotion
The Department of Exports Promotion organizes the Annual Calendar of Activities, which includes promotional activities such as International Trade Fairs and International Business Rounds.
We have accomplished several positive things in the previous months, such as changing the image of Fundación ExportAr. Both entrepreneurs and the general public have praised this new image during the promotional events in which we have participated. We knew that it was necessary to renovate our image and keep it in tune with the “Marca País” (Strategy Country Brand-national logo of Argentina) and the organizations we work with. At the same time, giving a unique image of the country has been positive, and this has been shown in the website (www.exportar. gov.ar), our business cards, all letterhead paper, etc.
The presence of an architect in the Design Area, who helps us build effective exhibition stands for each particular venue or event, has also been helpful.
Regarding our achievements in 2011, Fundación ExportAr attended 17 percent more International Fairs than in previous years; with more companies participated in them. During ExpoPrado Fair at Montevideo, Uruguay (September), we received two prizes: the “Best Stand 2011” and the “Best Representation Award”; during SICAB in Seville (Horse Fair), we were the guest of honor; and during the food fair ANUGA, Argentine companies had record attendance.
In 2012, Brazil is very important for us. We want to offer them heavy construction machinery, auto parts, elevators, and footwear, among other things. Brazil is the sixth economy in the world, so there are many advantages to trading with them. Furthermore, Brazil will host the FIFA World Cup in 2014 and the Olympic Games in 2016, the first Olympics to be held in South America. Brazil is even planning an “Organic and Sustainable World Cup” to meet additional and extraordinary requirements during 2014. In fact, Brazil has to meet infrastructure requirements for buildings and hotels and Argentina can provide manufactures and services to respond to our neighbors’ demands. We have to pay attention to this because Brazil’s domestic demand has grown rapidly in the past years and will be in the athletic spot light in the near future.
For 2012, we are running several activities to cover twenty-one industrial sectors and promote their products and services jointly with Argentine provinces and different organizations. We strongly believe in the federal spirit of Fundación ExportAr. We want to expand our promotional activities and incorporate new SMEs from all provinces and subsectors. This international framework presents a great challenge since we need to reach alternative markets, such as China, India, Africa, and even Latin America. We want to avoid being dependant solely on traditional markets. This is the challenge of the Department of Exports Promotion. News
Institutional Relations Get Closer to Reach Further The Department of Institutional Relations of Fundaci贸n ExportAr is aimed to establish, maintain, and strengthen the ties with private and public organizations from each sector. It also provides support to other areas of Fundaci贸n ExportAr in institutional, academic, and training activities. We have set up seven action plans to fulfill our goals for 2012. In order to promote exports nationally, we have to strengthen our ties with the sixty-nine ExportAr Offices. We need to work jointly with them and consolidate the organization of activities with their institutions and organizations. Working in conjunction with other Departments or areas from Fundaci贸n ExportAr helps to maximize the synergy between promotional activities we organized and other activities set up for commercial promotion, services to exporters, and communications. All of this builds up the successful performance of Fundaci贸n ExportAr.
Lucrecia Vanni, Manager of Institutional Relations
Our participation in National Fairs and the organization of institutional events is important in order to increase the number of beneficiaries who will promote our activities and provide technical support. All of this should be done in coordination with local municipal organizations and with sectorial and binational chambers. Fundaci贸n ExportAr aims to help Argentine entrepreneurs to export their products and services with greater added value. The International Cooperation Project serves as a complement to the promotion of national exports. It fosters higher competitiveness in strategic sectors (e.g. agrifoods) through financial tools for international trade. Finally, the annual Fundaci贸n ExportAr award, granted to exporters, is an acknowledgment of our commitment to the international insertion of Argentina in the world. We are planning a new competition for 2012: the redesign of our award. The purpose is to express our exporting culture (as leitmotiv) through the eyes and talent of our national artists.
Interview | Federico Badía, AstroLab Motion
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By Verónica Scornik
How was AstroLab Motion born? What were your goals and how did you grow?
What is the difference between AstroLab and other production companies from the same sector?
Astrolab was born in 2007 when a Spanish publishing company from Barcelona contacted me. They wanted to create a TV series for kids about ancient civilizations. I was the manager of the Department of Advertising at “Cuatro Cabezas”, a production company owned by Mario Pergolini and Diego Guebel. This project was a big challenge for me. “Time Compass” has been sold to more than twenty countries and it is available in five languages. The series has also received two international awards. Its success has enabled us to develop digital contents with excellent quality and the same innovative profile. We have produced three animated series, two documentary film series, and a TV documentary.
We are specialized in “edutainment”, a form of entertainment designed to educate as well as to amuse. We are the leader in the national and international markets. All of our products are conceived with a multiplatform vision. We have a fresh view and we are constantly exploring new ways to communicate. We stand out in the development and production of original contents, postproduction and 2D and 3D animation services.
To create high-quality audiovisual content, it is very important to participate in international markets. During the past three years, we have participated in the most important festivals and activities from the audiovisual sector. This presence, in addition to the quality of our products, has fostered several co-production agreements with production companies in Canada, South Korea, India, and Lebanon. These commercial alliances are essential to obtaining financial support for producing new series because it is uncommon for a single channel to fully cover the expenses of a film or audiovisual product.
How long have you been exporting and to which countries? Our first steps were in the international market because of the commission with SOL90, the Spanish publishing company. This first series was internationally distributed so this enabled us to build strong ties with public channels from different markets, such as ABC3 from Australia or EBS (Educational Broadcasting System) from South Korea. Our prime series “The Time Compass” has been sold to Sweden, Australia, Colombia, South Korea, Malaysia, Thailand, Kuwait, Hong Kong, Romania, Bulgaria, Croatia, Hungary, Chile, Uruguay, Brazil, Venezuela, and Ecuador, among other countries. It is available in five languages (including Mandarin Chinese).
What kind of funding and institutional support have you received from national organizations? There are three organizations that permanently support this industry: Fundación ExportAr and the Agency for the Promotion of Audiovisual Goods (UCINE) from the Argentine Chancellery; and also the Department of Creative Industries from the Government of the City of Buenos Aires. Fundación ExportAr generally sets up an exhibition stand for the Argentine exhibitors in International Fairs. It also organizes events to build networks of potential buyers and unite interested parties. Regarding filming production, in 2010 Argentina launched several national competitions for digital contents. These contests were supported by the Advisory Board (Audiovisual) and coordinated by the National Institute of Cinema and Audiovisual Arts (INCAA). These competitions have created new interest and several federal and high quality productions, all of which have placed Argentina among the top creative and innovative countries in the world. One of our projects won a prize in 2010 and as a result we received funding to produce another TV series that already has potential buyers. For those of us who create high quality contents, it is very important the consolidation of the new public national media (Encuentro Channel, Pakapaka, and TEC TV) because they are avid TV producers.
Why is this support so important? This institutional support is very important for Argentine producers because it shows foreign buyers that we are backed by our government. We don’t travel alone around the world to get financial aid for our projects. We are part of the National State policies that identify our industry as a strategic sector seeking growth and development. Without institutional support, it is very hard to gain the confidence of investors. Fortunately, Argentine audiovisual producers are in high esteem all around the world for their creativity and management. Without institutional support, it would be impossible to compete with other countries whose industries are already subsidized by their governments.
Interview | Federico Badía, AstroLab Motion
Even though Argentine presence in international markets is very important, SMEs are sometimes in a vulnerable situation. Without the support of institutions such as Fundación ExportAr, they could easily lose contracts or miss out on potential agreements. At the same time, foreign capitals want to invest and co-produce a film or series with those companies that are backed by government institutions. An international media channel would not risk signing a contract with a company that lacks institutional support. This type of co-production, like the project we are developing with EBS from South Korea, enables the creation of original contents from Argentina to the world, which means that we offer great exportable contents done by highly-skilled professionals, and partially funded by international investors. The National State (e.g. through the Agency Educ.ar from the Ministry of Education) covers 36 percent of the costs, which grants it the right to exploit the film contents forever in Argentina and in all Latin American countries. This enables our companies to co-produce with an important media channel, and to participate in international festivals. As such, our products obtain great visibility and we have the chance to offer contents “made in Argentina” to the whole world.
How was your experience with Fundación ExportAr? In which activities have you participated? What results have you obtained? We have participated in several activities organized by Fundación ExportAr. In 2010, we attended Kidscreen Summit in New York City (USA) and the Annecy Animation Festival in Annecy (France). In 2011, we participated in those venues again and also in the Business Rounds organized within Expotoons Fair. Fundación ExportAr’s support allows us to meet new professionals from our industry and contact potential co-producers from other countries. We have been able to meet people during cocktail parties and exhibition stands, and by meeting with commercial representatives hosted by the fair organizers. The support is very important since each entrepreneur is responsible for making the most of his/her meetings during the 4 or 5 days of the event. It is a very competitive market and everything depends on each person’s position and their ability to contact potential foreign buyers or competitors. In 2010 we were the only Latin American country with a series nominated at the Annecy Animation Festival. This is the most prestigious event in the world of audiovisual productions. It is the place where the ‘creative elite’ showcase new international trends. In 2010, Argentina was the “guest country” during the festival. Even though we did not receive the prize, being nominated was a high honor. During the festival, representatives from EBS (South Korea) wanted to meet me in person because they were very satisfied with the success of our series in their country. Thus, we ended up talking about the possibility of doing something together in the future.
You have developed educational digital content. Do you believe that these innovative tools can be more effective than traditional books? What are the pros for these new technologies in education? What steps did you follow after the festival to close a deal with EBS from South Korea? What new venues are possible thanks to these co-productions? In 2010 we started discussing this project and, in these conversations, we realized that we needed a business partner and a production coordinator in South Korea. Then, we had to offer the main topic and the guidelines of the series, and later develop them further. Representatives from EBS liked the way we addressed the contents from “The Time Compass”, its graphic interface, its artistic production, and the animation techniques used in it. Thanks to the support of Fundación ExportAr we participated in Annecy 2011 so we were able to sign our first co-production agreement with South Korea. Since mid-2011, we have been working on this contract and finally, in February 2012, we signed the contract to co-produce the series with South Korea. This new series will narrate the greatest scientific and technical discoveries which have changed our history. It is a global idea that has universal value; thus, it is a highly exportable product. After learning about this co-production from TEC TV (the Technology Public Channel), the internet education portal of the National Government called Educar decided to participate in this project. These are unique opportunities for Argentine companies: to coproduce contents with one of the most prestigious public channels in the world while opening Argentina to the South Korean market. It creates specialized job positions for many professionals. It also means making an exportable product that opens new windows for Argentine audiovisual producers in the international market.
Awards Received: • “The Time Compass” has been awarded the First Prize in the Prix Jeunesse Festival - Iberoamerican Edition – in the Non-Fiction, 7 to 11, TV series category (October 2009). This allowed us to participate in the Prix Jeunesse International Competition held in Munich 2010. • The series also won the Jury Special Award prize in the TV Series category in the last Expotoons (November 2009). • First Prize in the National Competition for the Production of Digital Contents (2011)
I believe there is a new cognitive paradigm, a new way of understanding what surrounds us and learning about the world. This is directly linked to digital media. Even though schools keep teaching within an obsolete cognitive paradigm, young people born in the 1990s think differently from those 10 or 20 years older; they need to be entertained. It is more frequent to find computers or interactive boards in classrooms. Some teachers resist this change as they have been traditionally trained without them. They are facing a new cognitive paradigm that might even be as challenging as the change brought by Gutenberg’s press in the 15th century. Today, a ten-year-old can be simultaneously on a chat, on Facebook, and writing e-mails, while watching a movie. These kids are multitasking; they can perform several activities at the same time while being entertained.
As a consequence, we need to think of creative contents with accurate and high quality information. Very few people are ready for this challenge. We are becoming specialists in developing digital educational contents. Within this new paradigm, it is clear that producing digital contents is essential to responding to the needs of our young people. Right now, we are in a transitional period that will probably last for a couple of years, though the demand for educational activities will continue. Thus, institutional support is essential to growing in this sector.
Interview | Federico Badía, AstroLab Motion
How is the future of this audiovisual sector? Do you believe there’s still a long way to go? High quality digital content is very necessary so there is a lot of production –this trend will definitely grow in the future. The demand of this educational content is high. We are immersed in a new paradigm, in which young people always need to be entertained. Our ability to respond to this increasing demand is a great opportunity for Argentine producers in this particular sector. We are able to become a production hub of high quality content for Latin American and the whole world.
Interview | Federico BadĂa, AstroLab Motion
What are the plans for the short and medium term? What new markets are you planning to explore? A couple of year ago, I started exploring nontraditional markets, such as Asia, the Middle East, and even Canada to develop high quality co-productions. Even though we got started thanks to the support of Spanish investors, it is becoming more difficult to access European financial support. The USA has always been a tough market for coproductions; we can generally sell our services, but it is unusual to coproduce contents. Today, we have the opportunity to co-produce with India. We have found interested parties in one of the three most important Canadian producers, and a Lebanon producer also. We are starting the first Argentine-South Korean co-production: an animated series. AstroLab Motion and TEC TV from Argentina, jointly with EBS and Grafizix Ltd. from South Korea, are funding this project. It is a wonderful story narrated in 26 episodes about breakthrough scientific discoveries that have changed our history. This series will be released simultaneously in Argentina and South Korea. From my understanding of the international market, I believe this project is exceptionally innovative and I am sure it will be very welcome in other markets and in international festivals.
Exporting more audiovisuals Ministerio de
Relaciones Exteriores y Culto
Argentine Export Performance over the Last Decade *
In 2011, Argentine exports reached over 85 billion dollars, which meant an increase of 24 percent compared to 2010. This increase should be seen within the total growth of 227.8 percent of Argentine exports over the last decade. In what follows, there is a detailed analysis of Argentine shipments and the main exporting sectors over the last decade (from 2002 to 2011).* By Javier GonzĂĄlez Ojeda In 2011, Argentine exports kept growing with the same dynamism shown in 2010. All main industrial sectors increased their foreign sales, except for fuels and energy. During this period, commodities (PP-Primary Products) registered an increase of 34 percent, manufactures of agricultural origin (MOA) 25 percent and manufactures of industrial origin (MOI) 23 percent. The strong rate of economic growth over the last decade is due to several factors. First, it was essential to stabilize the national economy, particularly with regard to main macroeconomic variables and the creation of an economy of scale. Secondly, the increase of the aggregated demand and supply had an impact on several development hubs. Lastly, the predictability of national currency was ensured. These three variables have been essential to providing competitive global pricing and establishing long term investment policies. In the international context, the recovery of the global economy and particularly the high rates of regional growth (main destinations of our exports) favored foreign sales from our country.
commercial surplus, debt reduction policies and accumulation of reserves as counter-cyclical reserve funds. At the same time, the prices of commodities have risen and there has been a favorable environment for low interest rates. Argentina is well-known as an exporter of agricultural products. However, in 2011 our leading exports were Manufactures of Industrial Origin (MOI) totaling over 29 billion dollars, with an interannual increase of 23 percent compared to 2010. From 2002 to 2011, shipments from this sector increased by 283 percent. As a consequence, the increase in the amount of MOI exported volume had a direct positive effect in the dynamics of Argentine economy. This increase in volume was mainly due to our countryâ€™s selective approach since it gave priority to those products and/or services which complement other economies based on more balanced trading patterns. Thus, Argentina and Mercosur have followed this business model, while some difficulties have arisen with the European Union and the USA.
Since 2003, Latin American development (which also affected interregional commerce) can be seen as seeking to reduce external vulnerabilities through a greater macroeconomic convergence. This process has shown exchange rate fluctuations, tax and
*This report is an analysis of Argentine exports of goods, so the exports of services are not included in charts, figures, or conclusions. This study is based on estimated values provided by INDEC (National Council of Statistics and Censuses of Argentina)
In this sense, the most important commercial business activities carried out by Argentina in recent years have boosted these high competitive sectors and favored industrial complementarity and investments. This situation has broadened and strengthened the internal market as well. Reinforcing this kind of business negotiations has been a great opportunity for countries with relative industrial development, such as Argentina or other Latin American countries. Manufactures from Agricultural Origin (MAO) totaled 28 billion dollars in 2011, which means an increase of 25 percent compared to 2010, and of 246 percent over the last decade. The growth of exported values shows the increase in the amount of shipments as well as the rises in global pricing. In the last years, developing countries have strongly increased their international market presence due to the sharp rise in exportation of agricultural products. This phenomenon means a significant increase in the commodity exports as well, not just of agricultural products. The catalysts behind this trend are extension and persistence. Extension implies that the word “commodities” includes all sorts of basic products, such as energy, metals, food, and general agricultural products. Persistence refers to the fact that this trend has lasted for a long time, showing high price peaks (like in the early 1970s). In this study, it is worth mentioning several key factors for the increasing demand of food related products.
First, it is important to point out the effect of rising standards of living for almost 4,000 people in developing countries. For many researchers, this situation has become the new “locomotive” of world trade, particularly in the Asian-Pacific region where India and China are trading giants. The rise in meat consumption is essential for Argentina. We can export meat directly, or indirectly, as well as send cereals and oleaginous seeds for animal feed. When populations grow, cereal consumption is essential; however, when the standards of living rise, meat consumption increases. Likewise, the economic growth of developing countries implies dietary changes. For example, where incomes have risen, so has meat consumption within the population. In 1985, China’s annual meat consumption per person was less than 20 kilograms (mainly pork). Today, however, it has risen to almost 50 kilograms per person. The demand of feed grains has also increased since it takes roughly 7 kilograms of grain to produce a 1-kilogram weight gain. For pork, the figure is over 3 kilograms of grain per kilogram of weight gain; while for beef it is over 8 kilograms. Meat consumption has doubled in recent years, raising the price of cereals worldwide; the last harvest reached peak records. There is a new underlying structural factor: despite record harvests, cereal prices remain high. At the same time, developed countries (from Europe and the USA) offer stimulus packages and funding to develop biofuels. Apart from the greater appreciation of international prices, both in absolute and relative terms, the increase in the volume of exports of high-added value food (with complex value chains), due to innovation, investments, and intensive labor is worth mentioning. In this sense, several shipments of these products have been sent to cover the internal market demands; such as beverages and liquors, sugar and confectionery, gourmet products, berry and cherry products, preparations of fruits, vegetables, and legumes, among others.
Argentine Exports Performance over the Last Decade
Graphic N掳1. Argentine Exports Evolution (dollars in millions) 90,000 80,000 70,000
60,000 50,000 40,000 30,000 20,000 10,000
Source: Fundaci贸n ExportAr (based on data from INDEC)
From the above mentioned data, it is clear that MOIs and MOAs jointly are 68.2 percent of the total exports in 2011. After regressing in 2009, exports showed a positive cyclical trend during the last two years. The increase of shipments abroad in 2010 was mainly caused by larger sales volumes, since global pricing remained the same due to the international economic crisis. Nevertheless, in 2011 commodities recovered their global prices and even exceeded pre-crisis levels.
Argentine Disaggregated Exports- Main Sectors In 2002, manufactures from agricultural origin (MOA) were the main products for export in Argentina and reached $8.1 billion dollars. In 2011, sales in this sector rose by 246 percent compared to the last decade with an increase of more than $20 billion dollars. On the other hand, the sales of manufactures of industrial origin (MOI) reached $7.6 billion dollars in 2002. By 2011, there had been an increase of 286 percent, which meant an absolute increase of more than $21 billion dollars. In fact, this sector led exports for the second consecutive year. The growth in MOI exports took place within a stable context for international prices in this sector. Thus, the number of shipments abroad is related to the increase in the amount of exports and productive investments.
Chart N掳1. Argentine Exports-Main Items (dollars in millions) Items Years Var %
Commodities (Primary Products)
5,290 6,460 6,828
9,306 15,142 20,341
Manufactures of Agricultural Origin (MOA) 8,168 9,991 11,932 13,138 15,244 19,188 23,883 21,212 22,661 28,268 246,08% Manufactures of Industrial Origin (MOI)
Fuels & Energy
Source: Fundaci贸n ExportAr (based on data from INDEC)
7,703 9,522 11,984 14,826 6,171
22,059 18,713 23,816 29,193 7,996
6,438 6,515 6,466
Argentine Exports Performance over the Last Decade
In 2011, Commodities or Primary Products (PP) were the third sector in foreign exchanges and accounted for more than $20 billion dollars. Between 2003 and 2011, there was an increase of 284 percent in this area, which represented $15 billion dollars. Finally, fuels and energy accounted for $6.4 billion dollars. Its increase in the last decade reached 40 percent, earning $1.8 billion dollars.
Argentine Exports of Manufactures of Industrial Origin (MOI) The disaggregated analysis of MOI products shows that ground transportation led exports in 2011, with shipments totaling $10.2 billion dollars. There was an increase of 28 percent compared to 2010, and a 529.7 percent rise over the last decade. There are two main reasons for this growth: on the one hand, the implementation of active public policies complemented the economies of several countries in the region (particularly Brazil and Mexico); on the other hand, the expansion through strategic investments aimed to increase the productive base of vehicle and auto parts industries (see Chart N째2).
The growth of exports on materials for ground transportation is mainly due to the increase of shipments sent to Brazil, Mexico, Venezuela, Chile, and to a lesser extent, the USA and Europe. It is important to point out a diversification of destinations for this sector, because over the last decade, nontraditional markets have been added (such as South Africa, Australia, Central America, Africa, and China).
The second main sector of MOI is chemical production, totaling $5.98 billion dollars in 2011. This means an increase of 343 percent over the last decade. This sector offers diversity in products and added value, ranging from pharmaceutical products, chemicals for agriculture, to dyestuffs used in textile industries. The growth of this sector is due to shipments sent to Mercosur countries, particularly Brazil, and the USA (see Chart N째2).
The strategic development of this sector is essential because of the large value chain that several sectors need to develop high quality exportable products. Base metals and articles thereof are the third sector of MOI, totaling $3 billion dollars in 2011. This means an increase of 97.2 percent over the last decade. This increase is, both in the amount of sales and in pricing, because this sector is highly dependent on international oil prices. In general, this sector offers seamless tubes and raw materials for the oil industry. Other products in foreign trade are semi-elaborated metal and steel wire sent to the USA, flat-rolled products of iron sent to Spain and Italy, and aluminium alloys sent to Japan (see Chart N째2). The following graphics show the exports growth of disaggregated MOI from 2002 to 2011:
Chart N째2. Disaggregated Industrial Manufactures-Main Chapters (dollars in millions) Chapter
Ground Transportation Equipment
2,068 2,891 4,033
Chemicals and Related Products
2,018 2,301 2,609
Base metals and articles thereof
1,671 2,319 2,483
Stones, Precious Metals, Coins
Machinery, Electrical Equipment
Plastics and Artificial Materials
6,227 6,210 7,893 10,134 12,470 14,826 18,957 16,202 20,965
Source: Fundaci처n ExportAr (based on data from INDEC)
9,522 11,984 14,826 17,321 22,059 18,713 23,816
Argentine Exports Performance over the Last Decade
Graphic N掳2. Argentine Exports Evolution-MOI (dollars in millions)
90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000
Manufactures of Industrial Origin Source: Fundaci贸n ExportAr (based on data from INDEC)
Graphic N掳3. Argentine Exports Evolution-Disaggregated MOI (dollars in millions)
Ground Transportation Equipment
Chemicals and Related Products
Base metals and articles thereof
Stones, Precious Metals, Coins
Source: Fundaci贸n ExportAr (based on data from INDEC)
Argentine Exports of Agricultural Manufactures (MOA-Manufactures of Agricultural Origin) Over the past decade, the Manufactures of Agricultural Origin have shown an important dynamism due to the rise of international prices and improvements in productive structures. Through stimulus granted to enhance regional economies in the past years, our country has been able to build up a solid productive structure, which aims to improve value chains, norms of quality, and logistics. A paradigmatic example of this is the wine industry with exports totaling $744 million dollars in 2011. Other important sector are the preparations of fresh fruits, sauces, and juices based on berries and cherries, lemons, oranges, and apples. The gourmet “delicatessen” products are key in the confectionery sector. MOA sales in 2011 were led by fodder (1), with shipments totaling $10.6 billion dollars. There was an increase of 282.4 percent over the last decade. These products are highly dynamic and are constantly in demand internationally. Main fodder destinations were European countries and Egypt (see Chart N°3). Fats and oils are the second largest sector of MOA as well as the fourth main export. In 2011, we earned $6.98 billion dollars. This means an increase of 234 percent over the last decade. This sector has consolidated its position as one of the main producers and exporters of vegetable oils, such as shipments of soybean oil for $4.92 billion dollars and sunflower oil for $1.04 billion in 2011 (see Chart N°3). The growth in exports of fats and oils over the last decade is also due to both, the rise of global pricing and the increase in the volume of sales. Sales to the European countries were stable while shipments to China and India were not. In 2011, meat and related products totaled $2.15 billion dollars, which indicates an increase of 276 percent over the last decade. This growth is not only due to rises in global pricing, but also to an improved quality in the products offered. Thanks to the implementation of adequate national sanitary policies, we were able to supply European countries suffering the lack of meat in their internal markets due to mad cow disease (see Chart N°3). Apart from traditional markets for our MOA products (Germany, Netherlands, Italy, among others), meat and similar products have found new venues in Russia, Israel, and Chile. It is worth mentioning shipments sent to Southeastern Asia, where the progressive incorporation of consumers to this market will favor our own industries.
(1) According to INDEC, this sector of prepared animal fodder includes waste and residues from food industries.
Argentine Exports Performance over the Last Decade Chart N°3. Disaggregated Agricultural Manufactures-Main Chapters (dollars in millions) Chapter
2,791 3,500 3,843 4,032 4,654 6,196 7,794 8,620 8,783 10,674
Fats and Oils
Meat and Related Products
Preparations of Vegetables, Legumes, and Fruits
Hides and Leather
Beverages, Spirits, and Vinegar
6,915 8,647 10,309 11,305 12,934 16,577 20,643 18,335 19,574 24,710
8,168 9,991 11,932 13,138 15,244 19,188 23,883 21,212
Source: Fundación ExportAr (based on data from INDEC)
The following graphics show the performance of Argentine exports of MOA over the last decade.
Graphic N°4. Argentine Exports Evolution-MOA (dollars in millions) 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000
Manufactures of Agricultural Origin
0 Source: Fundación ExportAr (based on data from INDEC)
Graphic N°5. Argentine Exports Evolution-Disaggregated MOA (dollars in millions) 12,000 Fodder 10,000 8,000
Fats and Oils
Meats and Related Products
Vegetables, Legumes, and Fruits Source: Fundación ExportAr (based on data from INDEC)
Argentine Exports of Commodities (PP, Primary Products) The increasing volume of exports and goods (commodities) is not only due to the rise of global prices, but also to technological changes in agriculture. This means an improvement in the yield per hectare, as well as an increase of cultivated land, making semi-arid areas new arable regions. In 2001, cereals were the main commodities export, totaling $8.32 billion dollars. This means an increase of 287 percent over the last ten years, with shipments mainly sent to Brazil and Latin America, and even Africa and the Middle East (see Chart N°4). Fruits and oilseeds were in second place in 2011. While in 2002 these products reached $1.28 billion dollars, in 2011 sales rose to $5.91 billion dollars. Over the last decade, the increase was 361 percent. The main destinations for our shipments were Southeast Asia and China (see Chart N°4).
Chart N°4. Disaggregated Commodities (PP)-Main Chapters (dollars in millions) Chapter
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
2,149 2,307 2,691 2,808 2,955 4,660 6,772 3,214 4,621 8,325
Oil Seeds and Oleaginous Fruits
Copper and Articles thereof
Fish and Raw Seafood
Unprocessed Vegetables and Legumes
5,042 5,903 6,375 7,602 8,065 11,700 15,243 8,438 14,072 18,828
8,627 12,352 16,083
Source: Fundación ExportAr (based on data from INDEC)
Apart from cereals and oilseeds, Argentina has become an exporter of pears (with shipments totaling $418 million dollars in 2011), apples (for $193 million dollars), natural honey (for $229 million dollars), and lemons (for $177 million dollars). The following graphics show the performance of Argentina’s exportation of Commodities (PP) over the last decade.
Argentine Exports Performance over the Last Decade Graphic N掳6. Argentine Exports Evolution-Commodities/PP (dollars in millions) 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000
Commodities/ Primary Products
Source: Fundaci贸n ExportAr (based on data from INDEC)
Graphic N掳7. Argentine Exports Evolution-Disaggregated PP (dollars in millions) 90,000 80,000
Oil Seeds and Oleaginous Fruits
Copper and Articles thereof
Fish and Raw Seafood
Source: Fundaci贸n ExportAr (based on data from INDEC)
Argentine Exports of Fuels and Energy
Fuels and Energy exports show no significant change because our country has mainly favored the internal demand of energy for industries. Thus, over the last decade fuels and energy exports increased by 40 percent, because we fulfilled regional demands, particularly from neighboring countries, of petroleum gas, and electric power. Fuels are the main export of this sector, totaling $2.77 billion dollars, which means an increase of 103 percent over the last years (see Chart N°5). The detailed analysis of Fuels and Energy products shows that crude oil was the second export of this sector in 2011, with shipments totaling $2.2 billion dollars. There was an increase of 1 percent over the last decade (see Chart N°5). The growth in exports of Fuels and Energy over the last decade is due to the increase of global prices. The volume of petroleum gas sold to Chile and the shipments of fuels and crude oil to the USA have been important factors. It is also worth mentioning exports of biofuels, totaling $2.14 billion dollars in 2011, which means an increase of 75 percent compared to 2010.
Chart N°5. Disaggregated Fuel & Energy-Main Chapters (dollars in millions) Chapter
1,368 2,017 2,389 2,998 3,361 3,857 4,350 2,309 2630 2,777
Petroleum Gas Power Total Total Fuels & Energy
56 37 93 100 193 95 202 382
4179 5225 5,928 6,861 7,471 6,540 7,699 6,187 6,318 6,197 4,618 5,412
The following graphics show the performance of Argentine exports of Fuels and Energy over the last decade.
Fuente: Elaboración Fundación ExportAr en base a datos del INDEC
Argentine Exports Performance over the Last Decade Graphic N掳8. Argentine Exports Evolution-Fuels & Energy (dollars in millions) 90,000 80,000 70,000 60,000 50,000 40,000 30,000
Fuels & Energy
Source: Fundaci贸n ExportAr (based on data from INDEC)
Graphic N掳9. Argentine Exports Evolution-Disaggregated Fuels & Energy (dollars in millions)
4,000 3,500 3,000
2,500 2,000 1,500
Source: Fundaci贸n ExportAr (based on data from INDEC)
Nota | José Alberto Bekinschtein, apoyo estadístico Diego Molina Muscará, PROARGEX
Argentina & China Plenty of Room for Improvement and Expansion By José Alberto Bekinschtein and Diego Molina Muscará
In 2011, our exports to China reached $6.5 billion dollars; eighty-four percent of total sales came from commodities. It is worth mentioning that this volume represents 21 percent of China’s imports, while ten years ago it was only 15 percent. This article explains that there is plenty of room for improvement and expansion for a complementary relationship between both countries that will provide mutual benefits.
In 2010, Chinese imports reached $1.74 trillion dollars and Argentine sales to China were 0.37 percent of its total imports. In the past five years, Argentina has remained in the same position (except for a year when sales were 0.6 percent of the total Chinese imports). Argentine participation in the Chinese market does not differ from the same performance in international markets. Even though the volume and prices of Argentine exports have increased, our country is in the 0.45 percentile If we compare the growth of Chinese imports in 2000 (before the incorporation of China to the World Trade Organization) with Argentine exports to said country, there is clearly a parallel evolution of both lines (both values multiply eight times though they are different absolute values).
Comparative Evolution of Bilateral Trade: Argentina-China 900 800 Index
700 600 500 400 300 200 100 0
AR exports to CN
Source: UNCTAD, Stat 2011
Argentine exports to China (including Hong Kong and Macau) reached an estimated $6.5 billion dollars according to INDEC. These exports are mainly commodities (excluding fuels), which makes up 21 percent of Chinese imports. It is interesting to point out that ten years ago our exports were just 15 percent of their imports. In 2011, our shipments to China were 7.7 percent of our total exports, which also represented the 0.37 percent of Chinese total imports mentioned above. Food and related products (with different added value) are 4 percent of our total exports to China, so they are not very relevant for the Chinese buyer profile. Nevertheless, in recent years, this sector represented a larger percentage than what China itself exports.
China: Share of Food Commerce Exports
(on total share) Imports
(on total share)
Fuente: UNCTAD Stat 2011.
Even though Chinese imports of food reached $60 billion dollars in 2010, only one fifth of these imports have some added-value, which means food with potential differentiation and with technology added to its production or marketing processes. Argentine agrifood only has a share of 2.5 percent. In the past five years, the Chinese demand of agrifood has increased by 25 percent due to the rise of salaries and changing patterns in food consumption. Today, Argentine exports to China are almost 2.5 percent of the total Chinese imports. In particular, oilseed and soy shipments do not reach more than 2 percent of Chinese total imports. In summary, Argentine exports can be considered of little significance in relation to Chinese foreign trade, particularly when we see our participation in Chinese total imports and what was sold. If we consider what we export and what would be an alternative profile for Chinese buyers, it is important to consider the following factors: First, we need to revise the myth on China, production, and cheap labor. The idea of specialized industrial manufactures based on cheap low skilled labor is not accurate.
Chinese Exports of Manufactures (share on total exports) 2000
Intensive Labor Manufactures Based in Resources
Manufactures with Less Intensive Skilled Labor and Technology Manufactures with Medium Intensive Skilled Labor and Technology
Manufactures with High Intensive Skilled Labor and Technology
Other Total productos
Source: Fundaci贸n ExportAr based on UNCTAD, Stat 2011
The chart above shows the evolution and growth of high-skilled labor from 2000 to 2010. After thirty years of a model based on intensive low-skilled labor, Chinese industry is facing the challenge of remaining competitive today with high-skilled labor and technology incorporated in the production process. This creates a challenge for China, but an opportunity for the rest of the world. The more developed industries have Boeing, Microsoft, and Cisco Systems exporting technology to the world. In fact, these corporations produce technology in China and ship it everywhere. It is interesting to compare this general export profile from China with Argentine. In order to do so, we prefer to start in 2003 (after the crisis in 2000), with both years representing a clear trend.
Chinese Exports to Argentina (share on total exports)
Manufactured Goods Intensive Labor Manufactures Based in Resources Manufactures with Less Intensive Skilled Labor and Technology
Manufactures with Medium Intensive Skilled Labor and Technology
Manufactures with High Intensive Skilled Labor and Technology
Other Source: Fundación ExportAr based on UNCTAD, Stat 2011
It is important to point out that most of Chinese sales to Argentina are industrial products. There has been a relatively larger increase in manufactures with less intensive low-skilled labor, while a general decrease in industrial manufactures with high-skilled labor and incorporated technology. An overview of the sales per export chapter indicates that chapter 85 is the most important one: Electrical Machinery, Equipment, and Parts thereof; Sound Recorders and Reproducers, Television Image and Sound Recorders and Reproducers, and Parts and Accessories of such Articles. This represents one third of Chinese imports. If we exclude the equipment used for production and research, we have a large amount of consumer goods.
The second most important is chapter 84: Nuclear Reactors, Boilers, Machinery and Mechanical Appliances. These represent one fourth of Chinese imports and are basically capital goods. En orden de importancia, pero más lejos, con sólo un 6% de participación siguen los productos químicos orgánicos (capítulo 29) un insumo intermedio para el agro y la industria.
With only six percent of participation, chapter 29, Organic Chemicals, means supplies for agriculture and industrial manufactures. These three chapters are two-thirds of Chinaâ€™s sales to Argentina. In a sense, this reflects potential driving forces for our local economies that China can support and complement. What can be concluded of this peculiar trading scenario? First, we should highlight the degree of complementarity between both nations, in terms of their particular needs and commercial exchange. We have not included the increased amount of Chinese investments in extractive industries (which refers to those industries using non-renewable resources). Other funds are used to take advantage of local and regional tariff barriers. In fact, there is a significant difference between the absolute and relative weight of each economy on the other. Even if we consider the needs of the Chinese economy for certain agricultural commodities, Argentina is only one of many primary goods providers. In fact, as we have already mentioned above, those commodities are not relevant to Chinese imports.
Secondly, as Argentina is not a decisive commercial partner for China, we should avoid conflict and seek opportunities to place our goods in their market by opening new venues or offering diversified products. To a lesser extent, we can also see that those conflictive products in the national market tend to become expendable and less important. This opens room for capital goods with high-skilled technology. Purchasing or/and manufacturing these goods would be a key factor in building a sustainable plan to develop infrastructure, which metaphorically means less investment per track-kilometer. This is the framework of our bilateral commercial relationship. There is plenty of room for complementary exchanges that would benefit both nations. The only thing needed is to foster a bilateral strategic vision.
LaRioja Special Report
By Bárbara Bonelli Josefina Gorritti Agustín Bozzotti
“La Rioja is the land where Man is part of the landscape, an inherent part of it; its wild fragrance and vital colors are precisely tailored to inspire him” (1)
1 Excerpt from Cantata Riojana (music from Ramón Navarro, lyrics from David Gatica)
Characteristics Total Area: 89.680 km2 Total Population: 333,642 inhabitants Location: North-East of Argentina
Capital City (180,995 inhabitants) Chilecito (19,432 inhabitants) Arauco (15,418 inhabitants) Chamical (14,160 inhabitants) Rosario Vera Peñaloza (14,054 inhabitants) Main Airport La Rioja “Capitán Vicente A. Almonacid” (Local)
(2) Data from the Province, Census 2010 (3) Data from the Province, Census 2010
Special Report. La Rioja
Surface Area and Natural Resources
The Province of La Rioja is located in the northeast of Argentina. To its northeast, it borders Chile, to the west with the Province of San Juan, to the south with San Luis, to the east with Córdoba, and to the north with Catamarca. It is located between parallel 28° south and 32° south, and meridians 66° west & 70° west. According to 2010 National Census, the population is 333,642 inhabitants, which represents 0.8 percent of the Argentine population. The most populated city is its homonymous capital. The province has 3.7 inhabitants per km2. La Rioja covers an area of 89,680 km2 which represents 3.2 percent of the national territory. It is a mountainous landscape, with several geographic features, such as ranges and plains between hills and valleys. La Rioja’s ochre landscape alternates with colorful plantations. Heat from the sun and scarce humidity define its semiarid climate. La Rioja has two main regions: the northwestern mountains, and the flat and sandy southeastern region –each with distinct climates and vegetation. As a consequence, the production of olives and grapevines require different types of irrigation systems. In the last years, tourism has grown considerably thanks to La Rioja natural beauties. Its main tourist centers are Chilecito, in the piedmont of the Massif of Famatina; Nonogasta; the Rio Grande Valley; the Valley of Los Sauces; and Villa Unión. From this location, it is possible to access the Talampaya National Park, highly esteemed for its landscapes and paleontological riches, which has been declared by Unesco a World Heritage Site (like Ischigualasto, in the neighbor province of San Juan).
La Rioja’s Performance in National Economy
La Rioja has a diversified economy with many different important sectors. In the Graphic below, the main sector in 2008 was services, which means 30 percent of the activities in the province. This sector concentrates on real estate, rental, and entrepreneur services. Public administration is 13 percent of La Rioja’s economy. Wholesale and retail level businesses are 8 percent of the activities.
Main Sectors in the Economy of La Rioja (2008)
Agriculture, Livestock, Hunting, and Forestry Other
Public Administration, Defense, Social Security 1 2
3 Wholesale, Retail, Vehicle 4 etc. Repairs, 5 6
Real Estate, Rental, and Business Services
7 Manufacturer Industries
Source: Fundación ExportAr based on data from INDEC and the Department of Statistics and Information Systems from the Province of La Rioja
Main Production Chains The main productive activities of La Rioja are the following:
Agriculture The main agricultural products from La Rioja are wines, walnuts, olives, jojoba, fresh vegetables, and fruits such as peaches. Vineyards are located in the departments of Chilecito, Famatina, Vinchina, Sanagasta, and Castro Barros, with 8,300 cultivated hectares. The annual production is 118,308 tons, most of which is used by the wine industry (almost 90.5 percent) and by raisin manufacturers. On the other hand, green or black olives from the department of Arauco are the second most prominent agricultural product of La Rioja. There are also other types of olives used in the olive oil industry. Furthermore, walnut plantations are located in Famatina, Chilecito, Castro Barros, San Blas de los Sauces, Sanagasta, and Coronel Felipe Varela. Lastly, there is also a great variety of fresh fruits used forpreserves and dried fruits, such as oranges, peaches, plums, quinces, and date palms. In the southeast of the City of La Rioja, there are several horticultural farms that produce onions, tomatoes, peppers, melons, and spinach.
Livestock La Rioja rears cattle and goats in its flatlands. These animals are fed with natural fodder, particularly with sorghum grown in the most arid regions. The main cattle breeds are Aberdeen Angus, Hereford, Zebu, and Brangus, which adapts better to La Riojaâ€™s climate and soil.
Industrial Activity Manufacturing in La Rioja has expanded considerably and there are several producers of plastics, sports footwear, chemical and pharmaceutical products, textile articles, electrical equipment and appliances. The cotton production (from 30,000 hectares) is used by textile industries. Leather manufacturers are also important. Other key industries from the food and beverages sector produce TorrontĂŠs Riojano, Malbec & Cabernet Sauvignon wines, olives, and dried nuts.
Special Report. La Rioja
Gross Geographic Product
The evolution of the Gross Geographic Product (GGP) of La Rioja, together with the Argentine GDP, has seen steady growth since 2004. The GGP of the province rose sharply over the last decade. Even though production was affected by the 2001-2002 financial crisis, from then on it has continued to rise steadily. The approximate average growth rate of the province in the last eight years was 6 percent, getting closer to the National GDP of 8.5 percent. The GGP of La Rioja for 2008 was ARS 4.32 billion pesos, which means an interannual growth of 5.2 percent, and a value of ARS 12,664 pesos per capita.(4)
Evolution of National GDP and La Rioja GGP 5,000,000.00
National GDP (AR pesos in millions)
La Rioja GGP (AR pesos in millions)
Source: Fundaci贸n ExportAr based on estimated data from INDEC and the Department of Statistics and Information Systems from the Province of La Rioja *Estimated Data
Main Economic Indicators (pesos in thousands) GDP per capita for La Rioja Year
GDP-regular Price (AR pesos in thousands) ,
GDP per capitaregular Price (AR pesos in thousands)
Source: Fundaci贸n ExportAr based on estimated data from INDEC and the Department of Statistics and Information Systems from the Province of La Rioja
4 Source: Fundaci贸n ExportAr based on data from INDEC and the Department of Statistics and Information Systems from the Province of La Rioja
Sectors from La Rioja Economy
Primary Sector Secondary Sector Terciary Sector
Source: Fundación ExportAr based on estimated data from the Department of Statistics and Information Systems from the Province of La Rioja *Estimated Data
The structure of La Rioja’s GDP has remained constant in recent years. The most important economic sector is related to services from tourism, communication, commerce, and marketing among others. Thus, services are 70 percent of La Rioja’s GDP. Secondary sectors are industries that produce electrical power, mining related products, and construction materials, all of which makes up 20 percent of provincial GDP. This share shows a growth of 13 percent between 2002 and 2008. Finally, primary products from forestry, agriculture, livestock, and mining have grown 25 percent, even though they have a smaller share in the La Rioja economy. TAX BENEFITS Promotion of Productive Activities Law 6141 offers tax benefits and money reimbursement to companies in order to promote productive activities in the province. La Rioja stipulates fiscal stability for thirty years, allowing it to offer provincial tax benefits for fifteen years (taxes applied to gross income, seals, real estate property, and contracts). It also reimburses up to 30 percent of investments within five years (in activities considered priority by the province), with 50 percent of the money allocated to infrastructure. La Rioja provides technical state assistance, and special terms for purchasing state properties. It also organizes commercial missions between local entrepreneurs and foreign buyers. Promotion of Biofuel Crops Law 8190 offers tax benefits to biofuel companies in order to promote development and industrial projects in this area. Stimulate and Strengthen the Emergent Tourist Destinations Program This Program fosters state tax exemptions, financial concessions, and low rates to tourism industries to promote the development of this sector. Law 22021 offers promotional benefits to the Province of San Luis, La Rioja, and Catamarca
Special Report. La Rioja
Analysis of Exports from the Province of La Rioja Influence of Main Activities in Exports In 2010, our country exported goods to all destinations for $67.33 billion dollars. Compared to this total, La Rioja accounted for 0.4 percent of the national GDP, with foreign sales totaling $273 million dollars (FOB). This figure shows an increase of 23.5 percent compared to the previous year, accounting for $221 million dollars. Regarding sales abroad, over the last decade the exports from La Rioja saw a considerable interannual increase of ten percent. Among the main exporting sectors in 2010 are paper and cellulose with sales around $99 million dollars (representing 36 percent of the total share), leather and hides for $48 million (17 percent). Wine production was an important activity in 2010, reaching $10 million dollars and representing 4 percent of the total share of exports. This shows the consolidation of wines from La Rioja in the international market. Paper and cellulose, leather and hides, and fresh vegetables make up 75 percent of La Riojaâ€™s shipments. The other twenty-five percent is quite diversified: fats and oils for $15 million dollars; chemicals and related products for $14 million; beverages, liquors, and vinegars for $12 million; textiles fabrics and textile articles for $7 million. The following graphic shows the share of main items in La Riojaâ€™s total exports.
Share of Main Items in Total Exports from La Rioja (2010)
Preparations of fresh vegetables, legumes, and fruits
Paper, Cardboard, Printed, and Publications 1 2 3 4
Source: Fundación ExportAr based on data from INDEC
Regarding its share in the country’s trade, La Rioja was the third exporter of paper and cellulose, with a share of sixteen percent in national exports during 2010. The main exporters in this sector were Misiones (with a share of 29 percent) and the Province of Buenos Aires (23 percent). The same pattern applies to leather and hides led by the Province of Buenos Aires with fifty percent of the total share, Santa Fe with thirty percent, and La Rioja with six percent.
Special Report. La Rioja Main Exports from La Rioja (2010)
Manufactures from Agricultural Origin Manufactures from Industrial Origin 1 2
Source: Fundación ExportAr based on data from INDEC
Main Destinations for Exports from La Rioja Hong Kong Peru 1
3 4 5 6
Chile Source: Fundación ExportAr based on data from Info-Just
Sales from La Rioja are highly diversified. Its exports reach several countries and different regions, such as Southeastern Asia, South Africa, and Oceania. The main destinations of La Rioja’s exports are Chile, which represents 23.5 percent of the total shipments in 2010, followed by Brazil (14.9 percent), the USA (8.5 percent), and Peru (7.9 percent). Hong Kong is the fifth largest export destination for La Rioja (6.7 percent of total exports), which shows the diversity mentioned above.
in the Northeast of Argentina
The Export Group AOG (Argentina Olive Group) was born in 2009 in the provinces of La Rioja and Catamarca. It is formed by five companies that produce and export olive oil. With the support of the Standard Bank Foundation and Fundación ExportAr, this group set up a plan to conquer international markets. Its vast experience in the agro-exporting business guarantees AOG excellence and commitment to enhancing their international production.
Francisco Gobbee, AOG coordinator, summarizes their activities: “With 8,000 hectares of fertile land and 4,000 olive plantations, we keep our harvest in stainless tanks under controlled temperatures. Consumers value the excellent price, flavor, and quality of our oils, because we process our olives in our own farms. Thus, we start this process the same day we harvest the olives, keeping their freshness”.
How do you produce your olive oil? Our plantations are located in the Province of La Rioja and Catamarca, and in the center of Cuyo (San Juan, San Luis, and Mendoza). We pick, select, and start the olive milling to extract extra virgin oil. Our agronomists, with more than 15 years of experience, are in charge of deciding the best timing for harvesting olives, milling them, and extracting the oil in order to avoid losing quality through oxidation. At the same time, a dry climate and the best height above sea level (1,000 meters) grant our product natural and fresh flavor, all of which guarantees sustainable development. Our goal is to make the best olive oil, so we choose olive varieties from different parts of the world. Our technical professionals deal with plant genetics and DNA seedlings from the best plants; and we clone olive cuttings in certified nursery trees, ensuring a stable and reliable supplier. Some of our olive varieties include Arbequina, Manzanilla, Frantoio, Picual, Coratina, and Arbosana. 60
Furthermore, we are committed to preserving our environment so we promote pollution-free olive growing.
How much did you produce in 2011? We sold more than 5,600 tons of Extra Virgin Olive Oil. We expect to produce more than 8,000 tons in the next five years. This means consolidating our place in the market and building a long-term business relationship with foreign importers and strategic partners.
What plans do you have in order to enter into new foreign markets? We plan to set up a commercial office in the USA in order to increase our presence in its market and enhance our distribution channels there. We also plan to incorporate China and India, sending fractionated oil at source. We attended several international fairs: Sial Mercosur in the City of Buenos Aires; Fancy Food in Washington (USA); Caminos y Sabores in the City of Buenos Aires; ArgOliva in the Province of San Juan (Argentina); Hotelga in Buenos Aires (Argentina); Olive Experience in Sao Paulo (Brazil), and Fancy Food in San Francisco (USA). During the First International Olive Oil Exhibition in 2011, we contacted buyers from Brazil, Portugal, Russia, and Finland.
Interview | Francisco Gobbee, AOG Group (Argentine Olive Group)
International Certifications professionalism of the group:
ISO 9001:2000 Specifications and standards that guarantee quality IQNet Quality management certificate Kosher Orthodox Union from the USA Olive Oil brands produced by the group: AOG Premium Premium quality has an acidity index lower than 0.3 percent. It is produced from green olives (early harvest)
What are the benefits of working as an Export Group? All of our companies export by themselves and take advantages of all the benefits. This allows them to plan a strategic vision for a specific market, minimize costs, enhance business chains for sales, and reduce risks. As a group, it is easier to access government benefits and achieve quality certifications. Thus, we have a strong business position to negotiate with foreign partners as well as with local providers.
What other activities are you carrying out right now? At the end of last year, I gave a seminar on Olive Oil Marketing at the main auditorium of the National Institute of Industrial Technology (INTI) in Buenos Aires. I also talked about the benefits of olive oil on the radio. Right now, jointly with the Chancellery, I am organizing a seminar on olive oil to take place during the First Meeting of the Executive Committee of the International Olive Oil Board. This meeting will be held in the City of Buenos Aires, Argentina. I am also one of the organizers of the 7th International Symposium on Olive Growing that will happen in the Americas for the first time. It will be held in the City of San Juan (Argentina) from September 25-29, 2012 (http://www.olivesymposium2012.com.ar/).
AOG Extra Virgin Extra virgin quality has an acidity index lower than 0.8 percent, with intense, medium, or mild flavor. The group has three state-of-the-art “Pieralisi” brands olive mills with a two-phase continuous system. Olive is pressed within 24 hours after being harvested to produce oil with the lowest acidity level and the best quality. The oil is kept in stainless tanks. These stainless tanks have a capacity of 4,000 tons, with temperature control. It is, thus, possible to customize AOG products according to customer’s need, offering several varieties and blends that best suit the demands of each region.
Group Members All-Pack S.A. Altos Andes S.A. Compañía Olivícola Industrial de Poman S.A. Valle de la Puerta S.A. VG S.A. News
Russia First Part
The Russian Federation is a nation with lots of outstanding elements. It is the largest country in the world with a surface area of 17,075,400 km2, which is more than the ninth part of the earthâ€™s total surface. Its territory has borders fourteen countries from two continents, which makes of Russia a multiethnic society with more than a hundred different spoken languages. Russia also has nine time zones. Regarding resources, it holds a fourth of the earthâ€™s unfrozen fresh water, the most important forestry reserves in the world, and the largest unexplored mineral and energy resources. Thanks to its oil fields and natural gas reserves, Russia is also the biggest energy superpower in the world. The economic development of the country varies from one region to another. Moscow, its capital city, has the largest GDP. Most of the territory, particularly rural communities, is significantly less developed when compared to Moscow or Saint Petersburg. Even though these inequalities exist, the middle class has grown from 8 to 55 million people between 2000 and 2006. According to the World Bank, the GDP per capita was $10,761 dollars in 2010, which means 23.9 percent higher than in 2009. The main factors of Russian economic growth are the sales of commodities and its large internal market. Russia is the seventh largest market in the world. In fact, both Russia and China have the highest retail sales rates in the world. In 2010, the Russian economy exceeded expectations by four percent, which indicates a recovery of previous years. After the collapse of 2008, manufacturer productions have grown 13.4 percent and represent two percent of the increase in the GDP. This figure is still a little behind from the pre-crisis values (those from 2008-2009). In 2011, the Russian economy seemed to follow the same trends of 2010. Manufacturer production has grown 5.9 percent in the first trimester, particularly in the local automobile industry. On the other hand, international reserves keep growing (reaching almost 523.95 billion dollars); there is a monthly reduction of the fiscal deficit; and oil prices continue to rise. Within this positive economic framework, several Argentine producers are offering services and products to the Russian Federation in order to deepen the commercial ties between both nations. This report offers important information to Argentine exporters who seek to improve their sales in this remarkable market.
According to the International Monetary Fund (IMF), Russia is the tenth economy in the world. Its nominal GDP is $1.48 trillion dollars, with a GDP per capita of more than $10,761 dollars. The following chart shows the composition of the Russian GDP per sector during the last four years:
RUSSIAN GDP PER SECTOR/ITEM seCtoR
2007 en %
2008 en %
2009 en %
2010 en %
LIVestoCK FoRestRy & FIsHeRy
HoteLs, BARs, RestAURANts
tRANsPoRt & CoMMUNICAtIoNs
eLeCtRICAL PoWeR & WAteR
MANUFACtURes BUILDING CoMMeRCe
tAxes oN PRoDUCts
4.46 1.44 6.14 .34 15.79
Source: Fundaci贸n ExportAr based on data from ICEX
In 2010, commerce was the main sector represented in the Russian GDP, having a share of 18.13 percent of the total. In fact, it recovered the previous position held in 2008 (before the economic crisis). Manufactures made up the second sector, which meant 16.49 percent of the total GDP, registering a constant growth (except for 2009). The third main sector was represented by taxes on products (15.79 percent of the total GDP), which also recovered after the crisis.
GDP Distribution by Sector (2010)
Source: Fundaci贸n ExportAr based on data from Argentina Trade Net
Economic Sectors The Russian GDP in 2010 highlights the importance of the services sector, which makes up 62 percent of the national GDP; followed by industries with 33.8 percent, and agriculture with 4.2 percent. The relationship between these sectors and employment shows that, in 2010, services composed 58.1 percent of the total workforce. In fact, only ten percent of the population performed agricultural activities, while 31.9 percent had jobs in the industries. What follows is a detailed description of each sector and the main characteristics of their economic activities.
Primary Sectors Russia has 17,098,242 km2, making it the largest country in the world. According to the Ministry of Agriculture, 49.4 percent of the land is forested, with 7.5 percent of arable land, 0.1 percent of land for other crops, and the remaining forty-three percent for other purposes. In fact, Russia has nine percent of the arable land in the world; so it has a production zone for growing exportable crops in the south of Europe. The subarctic region, located to the west of the Urals and western Liberia, grows cereals to cover internal market demands. Most of Russian lands are public. In fact, 69.1 percent of productive land belongs to the Federal or State Government. Private property is 23.3 percent of the territory with only 1.6 percent of the total land belonging to legal entities or associations. The crop forecast for 2011-2012 estimates a total production between eightyseven and ninety-four millions of tons; wheat is its main crop. Grains are among Russiaâ€™s most important crops, occupying more than fifty percent of crop fields. Wheat is the dominant crop in most grain-producing areas: it covers twenty-three million hectares, which represents 63.6 percent of total cereal production. In fact, the total cereal production was 61.7 million of tons in 2009, which was three percent less than the previous year. Winter wheat is cultivated in the North Caucasus and spring wheat in the Don Basin, in the middle Volga region, and in southwestern Siberia. Barley, second to wheat in gross yield, is grown mainly for animal feed and beer production in colder regions and well into the highlands of southern Siberia, covering ten million hectares. In 2009, eighteen million tons of barley was produced, though it is twenty-three percent less than in 2008. Beer production needs 1.2 million tons of barley per year. Production of oats, which once ranked third among Russiaâ€™s grains, totaled 5.4 million of tons in 2009; followed by rye (4.3 million) and corn (3.9 million). Finally, the production of rice and millet are less than a ton each. Russiaâ€™s livestock industry is relatively small and mainly serves the dairy industry. The cattle pastures are located in the south, in the Caucasus, Volga region, and Krasnodar. In the past years, Russia has faced a low annual production of beef so imports have risen to cover daily demand. Argentina has traditionally been a supplier. For example, in 2009 Argentina exported beef for $411 million dollars. At the same time, Russia is the fifth-largest poultry producer, with a four percent share of the total world production. From 1994 to 2008, poultry production grew 252 percent, and the consumption of chicken increased as well. Even though Russia production rose, this increase was not enough to cover market demands; so in 2009 Russia became the largest importer of poultry in the world. The Russian fishing industry has an exclusive economic zone including access to twelve seas in three oceans, together with the landlocked Caspian Sea and more than two million rivers. There are three main industrial fisheries: marine fisheries (including brackish water and anadromous species, and estuarine fisheries), inland fisheries, and aquaculture.
Marine capture fisheries in Russia’s territorial seas provide up to 56 percent of the total reported catch from the Pacific coasts; forty percent from the Northeastern Atlantic, and four percent from the Arctic. The main species are Alaska Pollock (44%), herring (13%), cod (10%), and Pacific salmon (9%). On the other hand, sixty species are caught in the inland fisheries of Russia. In terms of volume, whitefish (coregonidae), cyprinids, zanders, and perch are most important. Inland fishing areas include the Irtysh River Basin (27 percent of the catch), the Volga Basin (7.6 percent), Lake Ladoga and Onega (6.9 percent), Lake Pskovsko-Chudskoe (5.6 percent), and Lake Baikal (3.5 percent). Potential development areas for freshwater aquaculture include 960,000 hectares of agricultural water bodies, 143,000 hectares of ponds, plus other areas in big lakes and water reservoirs suitable for cage farming. Russia has more forests than any other country on the planet so it is essential for our environment. In total, Russia’s forests cover over twenty-two percent of the world’s forest cover, and 23.1 percent of its growing stock. Most of the forests in the boreal zone have coniferous trees (70%) and are called “taiga” in Russian, with birch as the major hardwood species. There are also deciduous hardwood trees like oak (16.7%) or softwood trees like spruce (2.4%). All of these represent 89.7 percent of the country’s forests so, in fact, Russia has low biodiversity forests. The timber industry has a key economic and social role with a workforce of twenty million people.
Secondary Sector Russia’s industrial sector has been reorganizing its manufacturing and technology lines since 2000, and it is the main force behind the economic development. Main Russian industries are energy, oil, iron and steel industry, nonferrous metallurgy, chemicals and petrochemicals, machine building and manufactures of basic metals, forestry, construction materials, light industry, and food industry. According to the Ministry of Industries of the Russian Federation, there are 200,000 companies and industry associations. State-owned companies compose 2.5 percent of these manufacturers and produce 8.4 percent of the total volume of products. 15.1 percent are public limited companies producing 61.9 percent; while 3.6 percent are mixed companies with the participation of foreign investments (1); and 79.9 percent are private companies which produce 26.1 percent of the total manufactures. Companies with more than 500 employees are an important industrial base that accounts for seventy-five percent of the total volume of industrial production. In 2010, industrial production grew 8.3 percent, which represented thirty-four percent of the GDP. Extractive industries, oil, natural gas, and coal are essential for petrochemical manufactures. Food processing, transportation equipment, construction materials, electronics, shipbuilding industry, and all defense-related industries are highly developed.
Machinery Machinery manufacture is a key Russian industry and accounts for twenty-two percent of the total industrial production. In general, this industry has decreased over the last decade, although since 2000 three sectors have grown: agricultural machinery, light machinery, and transportation equipment.
(1) These companies are 2.5 percent of the total.
Agricultural Machinery Agricultural machinery production has undergone two key periods. During the 1990s, this industry struggled with cash shortages, a crumbling agricultural infrastructure, and skyrocketing prices; though since 1999, there has been a gradual recovery. Today, however, agricultural machinery is in an extremely unfavorable situation because it cannot supply the internal demand. Most of its companies are saddled with considerable debt and lack any permanent investments.
La producción de maquinaria es una de las industrias más importantes ya que aproximadamente el 22% del total de la industria rusa pertenece a este sector. En general la producción ha decaído en los últimos 10 años en todas las ramas, aunque a partir del año 2000 se aprecia un incremento en la producción de maquinaria agrícola, maquinaria ligera y elementos de transporte.
In 2006, Russian Federation had 57,500 tractors (36% less of what was required), 156,600 grain harvesters (48% less), 40,300 forage harvesters (37% less), 199,100 cultivators (47% less), and 248,200 tillage and sowing machines (32% less).Russia’s fleet of machinery is in poor condition and machinery is deteriorating faster than it is being replaced. In fact, eighty percent of agricultural machinery is twenty years old or even more. According to local authorities, if obsolete machines (almost 25,000 units) are to be eliminated in the next two years, farmers will require 17,000 harvesters and 45,000 tractors per year over the next 3 to 4 years to cover the internal demand. Automotives Automotive production is a significant industry in Russia and was deeply affected by the global economic crisis. The government supported this industry through anti-crisis measures, such as the massive purchases of cars for government officials or subsidies to consumers. In 2008, the government under President Vladimir Putin backed state aid worth $6.7 billion dollars to Russia’s automotive industry. During the 1990s, this industry produced between 1.8 and 1.9 million vehicles. However, in the first months of 2009, the industry only manufactured 369,000 light vehicles and 55,200 trucks, due to the global economic crisis. Today, they are implementing several programs to reorganize this industry in order to compete in the foreign market. One of the most ambitious programs intends to attract investors to this sector. The aim is to achieve $40 billion dollars in investments by 2015, which will be a fivefold increase in their production by 2020. Shipbuilding Industries The Russian shipbuilding industry has a workforce of 200,000 and comprises 160 enterprises, which are shipyards, scientific centers, ship design bureaus, machine building and compressor manufacturing factories. Russia has the capacity to design and build combat vessels and supply ships, as well as arms, ammunition, and supplies. Over the last century, they have exported 2,000 surface vessels, submarines, fast attack craft, patrol boats, logistic ships, and tons of naval and coastal armament. The most important specialized centers of shipbuilding in Russia are in the Baltic Sea (St. Petersburg and Viborg), Barents Sea (Murmansk), Caspian Sea (Astrakhan), and Japan Sea (Vladivostok). In the northern ports, industries produce nuclear-powered icebreakers.
Aircraft Industry Aircraft manufacturing is an important industry sector in Russia and highly respected worldwide. It is a diversified sector, which produces civilian, military, or space aircrafts. In 2005, the government (under President Vladimir Putin) initiated an industry consolidation program to bring the main aircraft producing companies under a single umbrella organization: the United Aircraft Corporation (a holding which includes most of the industry’s key companies). The aim was optimizing production lines and minimizing losses in order to compete with Western aircraft companies. The Russian government injected money into the companies, which made this industry grow twenty times in the last five years. For example, Russian government spent $2.5 billion dollars in 2009.
Most of Russia’s nickel and cobalt metal production comes from the mineral region Norilsk. Tin mining takes place in Yakutia, Chukotka (production center of Pirkakai), in Jabarovsk and Primorie. On the other hand, the subsoil of Altai is rich in polymetals. Gold mines are located in the Urals (Berizovski) and Transbaikalia (Darasun). Non-metallic minerals, such as fosforites or apatites, are common in the Kola Peninsula and the province of Murmansk; potassium salt and gems in the provinces of Perm and Irkutsk; asbestos in the Urals and Tiva; graphite in the Urals and south Siberia; mica in the provinces of Murmansk, Irkutsk, and Yakutia. Finally, diamond mines are located in Yakutia and the Urals.
Coal Russia is the third-largest exporter of coal in the world, with a share of eleven percent in the world’s market. The country produced 324 million of tons in 2009, from which 109 million were exported. Russia has one of the largest coal reserves in the world (2) and it is one of the main world producers. Almost all of the five hundred coal companies in Russia belong to the federal government, the largest being Rusugol. Private companies sell their production abroad and produce eighty percent of coal exports.
Iron Russia is the world’s fourth-ranked steel producer. These companies rely on iron ore from domestic deposits. Russia’s natural reserves hold 20.6 billion tons; and the country produces and consumes ninety-three million tons of iron per year. The iron ore deposits of the Kursk Magnetic Anomaly, close to the Ukrainian border in the southwest, are believed to contain one-sixth of the world’s total reserves. These reserves exceed twenty-five billion tons of iron ore. Other reserves are located in the Ural Mountains regions, the Angara-Ilim Basin. Other Minerals
The petroleum industry in Russia is one of the largest in the world; in fact, it’s the first producer after the OPEP countries (Organization of the Petroleum Exporting Countries). (3) Russia has proven oil reserves of 74.2 billion barrels, mainly located in Western Siberia. The Ministry of Natural Resources estimated that there are another 4.7 billion barrels of oil in Eastern Siberia. Oil production is a key sector in the Russian economy, almost ten percent of its GDP, 45.5 percent of the total share in exports, and 30 to 35 percent of federal budget tax revenues. The estimated production in 2010 was between ten to twelve million barrels of oil daily. There are ten oil companies and most of them are public. They also reach agreements with foreign investors or international corporations for assessment, extraction, refinery, distribution, and sale of oil related products. Only twenty-five percent of Russian oil is refined in the territory, which means that the remaining production serves the global market. All oil trunk pipelines are owned and operated by the stateowned monopoly Transneft. The 77,630 km long pipelines reach Europe and Eastern Asia. Today, oil exports reach an average of 4.4 million barrels per day, carried across a large pipeline network and through international ports. In 2009, Russia had forty-one oil refineries that processed 5.4 million barrels of crude oil per day.
Russia is also self-sufficient in nearly all major industrial raw materials and has at least some reserves of every industrially valuable nonfuel mineral. Manganiferous deposits are located in Siberia, the Urals, and Middle East. Bauxite and nefeline syenites deposits, as well as other high-quality aluminum raw materials, are also in the Northern and Southern Urals. In fact, aluminum production is central in the Jibini deposits at Kola Peninsula; while the largest copper deposits are located in the Chita province.
Este tipo de empresas sólo representan el 2.5% del total.
(2) Russia has 30% of the world reserves, approximately 157 billion tons. (3) If we look into the production of the OPEP countries, Russia in fact is the second world producer after Saudi Arabia.
Natural Gas Russia is also the world’s second largest natural gas producer; and in 2009 it produced 583.6 billion cubic meters of natural gas. Its proven reserves have been estimated at 47.57 billion cubic meters for 2010. Natural gas has also been one of the most successful parts of the Russian economy. In 2009, exports reached 179.1 billion cubic meters, which represented 13.1 percent of Russian sales and twenty-five percent of the world’s exports. It is important to mention that Russia’s main natural gas company, Gazprom, is the third corporation in the world. Gazprom leads the natural gas industry in Russia. (4) Not only are they leaders in producing natural gas, but they also own most of the gas pipelines and compressor stations. Gazprom’s administrative board is formed by governmental officials and a few private investors. Gazprom’s extensive system of pipelines (comprising almost 158,200km2) transports natural gas from enormous natural gas fields near the Obi Gulf, Yamalo-Nenets, and Western Siberia to the densely populated regions of the country and most of Europe. (5) The Yamal peninsula is expected to become the company’s main gas producing region in the future. Following, there is a list of several gas infrastructure projects in different construction stages
Yamal-Europe II This is a 4,196 km long pipeline connecting natural gas fields in Western Siberia, and in the future, on the Yamal peninsula, Russia, with Germany and Poland (through Belarus). Nordstream Pipeline The Nordstream pipeline runs from Russia to Germany and through a large part of the Baltic Sea to Finland. It has 3,200km and is capable of transporting 55 bcm a year when fully operational. The first pipeline is operational and started transporting natural gas in November 2011.2003. Blue Stream Pipeline The Blue Stream is a major trans-Black Sea gas pipeline that carries natural gas from Russia into Turkey. It is 1,200 km in length; the subsea section is 400km. According to Gazprom the pipeline was built with the intent of diversifying Russian gas delivery routes to Turkey and avoiding third countries. Kovykta Pipeline There is a project to build oil and gas pipelines between Russia and China. It is long term project and many things are yet to be considered, such as the pipelines routes and terms and stages of the construction. Electric Power Sector In 2009, Russia consumed 857,600 kilowatts but produced 925.9 billion kilowatts of power, which makes it the fifth largest producer of electricity in the world. In 2009, Russia exported 17.7 billion kilowatts. Its main trading partners for electricity exports are neighboring countries: Finland, Kazakhstan, Azerbaijan, Moldova, Latvia, and Lithuania.
(4) It produces eighty percent of Russian natural gas (5) For example, this company provides sixty percent of the natural gas used in Austria, thirty-five percent in Germany, and two percent in France. It also provides almost the total volume of natural gas consumed in Estonia, Finland, and Lithuania.
The financial system is almost exclusively dominated by banks. Other financial entities, such as retirement funds, insurance companies, or stocks and bonds, have a secondary role in the financial scenario. More than fifty percent of Russian commercial banks are located in Moscow, as well as eighty-five percent of the whole banking assets. This shows the geographical concentration of the financial sector in Russia.
Tertiary Sector The service sector has an important role in the national GDP. According to available data, this sector represents sixty-two percent of the countryâ€™s wealth each year. At the same time, 58.1 percent of Russians work in service industries. What follows is a description of each subsector and its influence in Russian total economy. Banking and Financial System The Russian financial system is entirely comprised of banks. Other types of financial institutions, such as retirement funds, insurance companies, or institutional investors have a secondary role in the financial scenario. Another significant characteristic lies in the fact that, in Moscow, there are more than fifty percent of commercial banks and eighty-five percent of all bank assets, showing the geographical concentration of this sector in the capital city. Even though the banking system can be rather small when compared to international banking holdings, it has grown considerably over the last decade. In 2008, its assets had an increase of 44.1 percent. (6) This growth is confirmed by the Russian Central Bank in its last report: it lists 11,000 operative banks compared to 1,300 banks registered in 2003. The report highlights the large public banking system, since the 24 state-owned banks (with clear advantages) make up 39.2 percent of total assets from the financial system. The state-operated financial system aims to channel the surplus from extractive industries to the rest of the economy. At the same time, several economists believe that, in the medium term, this surplus will enable public banks to become internationally recognized as financial groups. Finally, regarding international firms, the International Monetary Fund believes that in the next five years, branches of foreign banks will consolidate their position in the Russian financial market. For example, BNP Paribas, a global banking group, will double its presence in the country by opening new branches. Swedbank, which entered the Russian market in 2005, now holds five branches.
Transportation Roads for ground transportation run for 1,145,000 km but they are one of the least-used forms of transportation. Even though data is not up to date, seven percent of these roads are used for the transportation of products, even for the international market. On the other hand, railroads dominate cargo transport and they are central for the countryâ€™s economy. Russia has the second largest railroad system with 87,157 km, and some extra 30,000 km railroads are exclusive to certain industries. This system transports forty percent of all the merchandise within the territory. (7) It is the most efficient and cheapest system for long distance stackable product transportation, such as coal, minerals, sand, wood related products, and agricultural products. Russian Railways is the government owned national rail carrier that operates common carrier routes as well as a few hundred kilometers of industrial routes. .
(6) It is worth mentioning that in 2009 there was a rise, even though at a low rate due to the international economic crisis. (7) It is calculated in thousand of millions of tons per kilometer covered.
Russia has 87.157 km of common carriers routes and just 957 km of narrow gauge railways. (8) The difference in gauge between Russian tracks (1,524 mt) and European tracks (1,435) affects the international transportation of products. In 2008, the Russian government ratified the strategy for the development of the national transportation railway until 2030. Its plans include the construction of more than 20,000 kilometers of railroads in Altai, Yakutia, and the Republic of Tuva. Regarding maritime transportation, Russia has a large coastal line of more than 37,000 km with forty-three ports. As a consequence, maritime transportation plays an important role in Russian transit. Russiaâ€™s major ports providing access to the Baltic Sea are St. Petersburg, Arjangelsk, Kaliningrad, and Murmansk; to the Black Sea are Novorossiysk (main oil export port) and Sochi; to the Caspian Sea are Olya and Majachkala; and to the east are Vladivostok, Najodka, Vostochny, and Vanino. Right now, there are several projects aimed to develop the port system; for example, an expansion of the Port Novorossiysk, the building of new container terminals in Murmansk, Kaliningrado, Vostochny, and Taman; and the building of a new port close to St. Petersburg. In reference to air transportation, the Russia Federation has 1,213 airports, of which 593 have paved runways and 620 are unpaved. Passenger traffic concentrates in Moskow (at Sheremetyevo 1 & 2, Vnukovo, Domodedovo, and Bykovo airports), St. Petersburg (at Pulkovo airport), Kazan, Yakutsk, and Vladivostok. Aeroflot, former monopoly service and state-owned airline, was privatized and divided into smaller companies. As a consequence, the volume of traffic has declined. In 2009, air transportation accounted for 0.36 percent of the total passenger transportation of the country. . Telecommunications The telecommunications system in Russia has undergone significant changes since 2000, when several investors modernized this industrial sector and took advantage of the highly-qualified human resources. In the past years, telecommunications have become a very dynamic and fast growing sector in Russia. The telephone system also underwent important changes. It is mainly operated by private companies. Almost 1,000 companies have licenses for the provision of communication services. In 2009, there were 44.80 million main lines in use and 230 million of mobile. In fact, Russia has the fourth largest mobile network in the world. This sector is the most dynamic and is operated by three mobile phone service brands that cover all of Russia: Tele Systems Movil (MTS), VimpelCom (Bee Line), and Megafon.
(8) Located in the Island of Sakhalin
The use of web e-mail continues to grow. In 2010 there were 40.85 million users and 10.38 registered web domains, which ranked Russia in the twelfth global position. Russian Post is a state enterprise responsible for the delivery of mail in Russia and the issuing of postage stamps. However, it is highly unreliable for the delivery of mail sent internationally to Russia. There are some private companies as well. The telecommunications sector represents 3.3 percent of the national GDP, compared to 6.5 percent of this sector in Western Europe or the USA. This shows the great possibility of growth and expansion in Russian telecommunications. Communications and technology information sectors have grown significantly according to estimations from the Ministry of Communications, with revenues of $70 billion dollars. Mobile phone 3G networks are further developed in Moscow and St. Petersburg, and now cover largely most of Russia. (9) MTS, Beeline, and Megafon plan to develop a LTE network. Regarding landlines, 40 million lines are administered by the state company Svyazinvest, which has less investment than other telecommunication segments supported by private investors.
It is worth mentioning that success in developing and implementing new technologies is due to the support from national authorities who have made telecommunications their priority. In response to this national policy, last March the national government announced the investment of 250 billion EUROS aimed to expand and innovate in this industrial sector. (10) In sum, the positive outcome from recent years is the result of cooperation between public and private companies. The growth rate in telecommunications is estimated to increase by fifteen percent in the next three years. If we take into account that thirty-eight percent of the whole population has no phone lines and no internet access, then the scenario offers excellent opportunities for telecommunications growth. In fact, broadband services (like XDSL), cable TV, and Internet will grow up to twenty percent, while mobile phones will remain as of today.
(9) Estimations show 140 million of subscribers. (10) In this sense, authorities are supporting the transition towards digital TV and, by 2015 it is expected to have reached the whole population.
Since the end of World War II to the mid-1980s, the main commercial partners of the former Soviet Union were socialist countries, in particular from Eastern Europe. For example, in 1987 Comecon member countries accounted for sixty percent of Russian exports and sixty-four percent of its imports; while Western countries dealt with twenty-three percent of imports and twentyone percent of its exports. Among these countries, the former German Democratic Republic (East Germany) was the major commercial partner, followed by Czechoslovakia, Poland, Hungary, and Bulgaria. Outside the Eastern bloc (or Communist bloc), the Federal Republics of Germany, Italy, and Japan were Russiaâ€™s trade partners. Most of the purchases were mainly of commodities, foods and mechanical manufactures; while Russia sold capital goods and industrial products. Since the collapse of communism, foreign trade has considerably changed Russiaâ€™s participation in international markets and the volume traded. It is also important to mention that foreign trade is not monopolized by state companies, because in the 1990s, Russia granted the right of free trade operations by liberating commerce and through several complementary reforms. Although foreign trade has overcome previous barriers and limitations, the government still has an important influence on and control of this sector, especially through administrative regulations. Today, the government applies some protectionist measures through tariff quotas and equivalent measures. Russia is also finally a member of the World Trade Organization. The following chart shows the yearly increase of foreign trade, which reached $792.65 billion dollars in 2008. This represents a growth of 32 percent compared to the previous year and 108 percent compared to 2005. This trend was interrupted in 2009, because the total foreign trade dropped by 35 percent compared to 2008; however, those 2009 results show an increase of 37 percent compared to 2005. All in all, exports and imports have grown significantly compared to 2005. In 2009, there were sales for $303.38 billion dollars (which represents a decrease of 36 percent compared to 2008 while an increase of 24 percent compared to 2005); purchases totaled $210.98 billion dollars (34 percent less than in 2008 though 53 percent better than in 2005).
Source: Fundación ExportAr based on data from the Center for International Economy
In 2010, the Russian commercial balance was $167.5 billion dollars, which meant an increase of 24.7 percent compared to 2009. Russia’s commerce with countries belonging to the Central European Initiative (CEI) reached $28.1 billion dollars (with an increase of 12.4 percent); while with non-CEI, the revenues were $139.7 billion (27.5 percent). The total volume of exchange was $625.4 billion dollars, which shows an increase of 33.3 percent. The largest share ($534.1 billion dollars) was exchanged with non-CEI countries. The total exports reached $396.4 billion dollars, which meant an increase of 31.4 percent; while imports were $229 billion (36.8 percent). This growth was higher in exports to non-CEI countries ($336.7 billion which meant an increase of 32.1 percent); while imports grew higher from CEI countries (44.8 percent compared to 35.6 percent in the other group).
Source: Fundación ExportAr based on data from the Federal Customs Service of Russia
Evolution of Russian Trade Balance (dollars in thousands)
400,000 300,000 200,000 100,000 0 2005
Source: Fundación ExportAr based on data from Center from International Economy
In the first trimester of 2011, the commercial surplus was $52.6 billion dollars, which represents 2.3 percent less compared to the same period in 2010. The largest amount ($43 billion dollars) comes from the exchange with non-CEI countries, though the positive balance has been reduced by 5.5 percent. On the other hand, the commerce with CEI countries showed a surplus of $9.6 billion dollars, which means an increase of 27.8 percent compared to the same period in 2010. In 2010, Russian global commerce was 47.8 percent with European Union countries (which means 51.9 percent of the total international exchange); 16.5 percent with CEI countries (13.9 percent); 8.4 percent with the Eurasian Economic Community (7.6 percent), and 23.3 percent with the Asian-Pacific Economic Cooperation-APEC (20.4 percent).
7 Es importante destacar que en 2009 también se incrementaron, aunque a una tasa menor, debido principalmente a la crisis financiera internacional. 8 A su vez, este banco participa en la elaboración de la legislación sobre el negocio derivativo, títulos de infraestructura y otras leyes para el negocio bancario.
Exports to All Destinations
According to Evgueni Yasin, former Minister of Economy, the transition of the Russian economy into the free market during the 1990s was a process of adaptation without resurrection of its basis. Thus, it differs from other countries in transition, because economic liberal reforms did not increase productivity and negatively affected national industry, which lacks diversification and competitiveness. For example, from 2002 to 2008, the extractive industries sector, in charge of mineral resources, was the only sector that grew: in 2002 it was 6.79 percent of the national GDP, but in 2008 it represented 9.5 percent of it; showing a peak of 11.25 percent in 2005. In fact, in 2008 mineral resources were 69.7 percent of Russian foreign trade. The importance of mineral related industries and energy exports contrast the slow pace of all the other economic areas. Russian dependency in extractive industries is not quiet recent. Even though during the Soviet Union gas and oil were extracted, these resources were distributed differently because they meant the growth of the national economy. As a result, exports of hydrocarbons in the 1980s were less than 10-12 percent of the total production. In 1990, Russia produced 571 million tons of oil, but exported only 159 million. Today, however, it is the opposite: in 2008, Russia produced 488.1 million tons of oil and exported 362.4 million, keeping 126 million in the internal market (just a quarter of the total production).
Main Exports from Russia (2010)
Fuels & Minerals Iron & steel Manure Aluminium and Manufactures Wood, Vegetable Coal, and Related Products Nuclear Reactors Nickel & Manufactures Copper & Manufactures
Source: Fundaci贸n ExportAr based on data from Center from International Economy
Even though the relevance of mineral fuels is decisive in Russian exports, it is important to disaggregate these products. Thus, oil and natural gas represent 95.7 percent of the sector production. The main reasons for the lack of diversification in the exports are underdeveloped technology, minimal innovative activity, and remarkably, the many and rich natural resources of the country. The Russia Federation has the largest territory on earth and many important reserves of natural resources. Thus, Russia does not depend on foreign natural resources; in fact, natural resources are one of the key products in the economy, particularly in foreign trade. According to Yuri Trutnev, Minister of Natural Resources and Ecology, minerals and related primary products make up sixty percent of the revenues in the Russian budget. At the same time, the ruble devaluation of 1998 had a positive effect that is losing strength, so foreign competence is gaining space in the local market and negatively affecting national industries and manufacturers.
However, the diversification of exports is highly important for national security reasons. According to the Ministry of Commerce and Economic Development, if the economy does not decrease its dependency on exporting primary products, then the Russian economy will not grow more than four to five percent per year, even if they keep high oil prices. There is another negative consequence of dependency on products which are strongly linked to global economics, and are also highly volatile. For example, in 2009 the international crisis caused a decrease in the demand of energy exports, an abrupt fall in oil prices, and an important outflow of foreign investors. While the global GDP fell 2.2 percent and oil prices started to reverse the trend by late 2009, the total amount of exports that year suffered a reduction of approximately 35 percent. Due to the gradual recovery of oil prices in the second semester, the commercial balance evolved favorably. As a consequence, the estimated growth in 2010 was two and a half times greater than the commercial balance in the same period of 2009.
Disaggregated Exports According to Main Destinations (2010)
USA Other Source: Fundaci贸n ExportAr based on data from WITTS/Comtrade
Regarding export destinations, the situation is quite different. The chart above shows that destinations are highly diverse. The five most important buyers of national products represent 37.5 percent of all national exports. These countries are Holland (with 13.5 percent of the total share), Italy (6.8 percent), Germany (6.3 percent), Ukraine (5.8 percent), and Turkey (5.1 percent). Other important destinations are China (5.1 percent of the total share), Byelorussia (4.5 percent), Poland (3.7 percent), Japan (3.2 percent) and the USA (3.1 percent). This diversity shows that there is no high concentration of shipments since the top ten destinations are 57.1 percent of total exports.
Imports from Every Origin As it was already mentioned, reforms in foreign trade during the 1990s liberalized most of the import regime. Russia eliminated non-tariff customs barriers on most of the imports, though some licenses still are required for public health and security reasons. It is worth mentioning that changes were not immediate. In fact, by mid-1992, government took control of some basic goods imports (like industrial equipment and foods) which were sold at subsidized prices. Then, most of these regulations progressively disappeared over the last decade.
In order to show its commitment with ongoing changes, Russia also established a two-column tariff regime in harmony with the United States and other members of the General Agreement on Tariffs and Trade (GATT), which in January 1995 became the World Trade Organization (WTO). After 18 years of talks, Russia finally became a WTO member in December 2011. For a long time, Russia was by far the largest economy yet to join the global trade body. Russian Economic Development Minister, Elvira Nabiullina, said: “this is an event we have been waiting for a long time. In these difficult times, risks of protectionism are looming on the horizon and Russia will contribute to combat protectionism as a WTO member.” She added that this accession was not a finishing line, but a starting point for Russia. (11)
Main Imports to Russia (2010)
Vehicles, Tractors, Ground Transportation, Auto Parts
. Pharmaceutical Products
Plastics and Articles thereof Optical , Photographic, Cinematographic Instruments and Appartus Articles of Iron & Steel Meat, Waste and Residues of Food Industries Edible Fruits; Peel of Citrus Fruits or Melons
Iron and Steel Other
Source: Fundación ExportAr based on data from WITTS/Comtrade (11) Source: WTO News from 2011 (http://www.wto.org/english/news_e/news11_e/acc_rus_16dec11_e.htm)
During 2010, Russian purchases abroad reached $248.7 billion dollars, which means an increase of 45.6 percent compared to total imports in 2009. At the same time, this value shows a recovery of the economy after the global crisis. Russia’s main exports have ended the recession cycle which started in the second semester of 2008 causing a drop in the foreign demand. In the chart of Russian imports, 14.8 percent of purchases are nuclear reactors, and 10.5 percent are machinery and electrical appliances. On the other hand, 9.1 percent of imports are vehicles and automotives. These three are the main industrial sectors which represent 34.4 percent of the total of foreign purchases.
It is also important to analyze the source of the imports (i.e. countries of origin). The following chart shows China as a major provider, with a share of seventeen percent of the total imports ($39 billion dollars), followed by Germany with twelve percent ($26.7 billion dollars). In fact, six percent of Russian imports come from Ukraine and the volume exchange is $14 billion dollars; while five percent comes from the USA ($11.23 billion dollars). China, Germany, Ukraine, and the USA represent forty percent of Russia’s total imports.
Disaggregated Imports According to Main Origins (2010)
Source: Fundación ExportAr based on data from WITTS/Comtrade
Trade in Services
According to data from the Central Bank of Russia, exported services totaled $44.47 billion dollars while imported services were $72.27 billion in 2010. This has a negative difference of $27.79 billion dollars. Non-CEI countries received eighty-one percent of the exports and shipped ninety percent of the imports. The following chart shows a detail of these values. In 2010, there was a negative difference except in transportation due to the surplus of $2.77 billion dollars in pipeline transport. The highest deficit of $20.83 billion dollars is in trips (mainly tourism), which is compensated by the surplus of $3.3 billion dollars in business trips.
FOREIGN TRADE IN SERVICES
DoLLARs IN MILLIoNs
RoyALtIes & CoPyRIGHt otHeR CoMMeRCIAL seRVICes
LeIsURe & CULtURe
Source: Fundaci贸n ExportAr based on data from the Federal Statistic Service of Russia
• Fairs • Rounds • Promotion of Services • Training
Rounds 3rd International Business Round Fiesta Nacional del Sol City of San Juan, Argentina February 22-25 Wine
Within the framework of the 40th Anniversary of “Fiesta Nacional del Sol” (National Day of the Sun), Fundación ExportAr in conjunction with the Government of San Juan organizes the 3rd International Business Round in the Civic Center of the City of San Juan. This is an annual celebration of nature that takes place during February. It gives a sample itinerary of economic activities, customs, characters and historical events of the province and the country. There are agro-industrial exhibition stands, a parade (called Carrousel of the Sun), artistic performances in charge of local and national artists, and a final impressive show of lights and sound effects with many artists and amazing choreographies. It also includes a beauty contest, which elects the National Queen of the Sun and the Sun Virreina, candidates representing each of the nineteen departments of the province. This year, the main topic is “Argentina Wine, National Beverage”, so it is an excellent framework to exhibit our exportable production of wines, grape juice, and wort. This shows the great restructuring process of Argentine viticulture which enables the elaboration of excellent wines. This event is a great opportunity for wine producers to participate in Business Rounds in order to diversify the destination markets of their exports or meet potential buyers interested in the exportable products from the region and the province. The event exhibits all the grape varieties from the region and the high quality of its wines. For the viticulture producers, wines, gastronomy, shows, and entertainment gather together to offer a unique experience. Fundación ExportAr invites several foreign companies as potential buyers: Ramírez Díaz de Espada (from Asuncion, Paraguay), López & López (from Lima, Peru), Trade World Company (from Madrid, Spain), Hippo Supermercados Ltd. (from Florianopolis, Brazil), Inga Distribuidora (from Recife, Brazil), and Disanisac (from Lima, Peru). These are importers, buyers, and supermarket distributors in need of variety, quality, and competitive prices. 82
Fairs GULFOOD 2012 Dubai, United Arab Emirates February 19-22 Food, Beverages, Hospitality, Equipment,
The most important Middle Eastern Trade Show for food, beverages, hospitality, and equipment is being held at the Dubai International Exhibition Center from February 19-22, 2012. Dubai World Trade Center (DWTC) is in charge of its organization. Year after year, professionals from the food and beverages industry gather together during the fair to meet new buyers, do businesses, and access the Middle Eastern and African markets. For producers, distributors, and providers, Gulfood is a shop window to the world. The fair exhibits foods, beverages, processed or canned food, nonalcoholic beverages, seafood, bakery and confectionery, frozen and processed food, dairy, catering equipment, food services, cooling equipment, hotel supplies and services, food processing appliances, packaging & labeling, codes and measuring tools, hospitality, table accessories, suppliers for stores/displays/retailers, and food storage systems. Gulfood is the largest and most important fair in that region. In 2011, the ground fair had 60,777m2, and 35,516m2 held exhibition stands, among which there were 75 international pavilions. Last year, 3,300 companies showed their services and products; 87% were international exhibitors from 76 countries and 13% were local entrepreneurs. According to the last fair report, 60% of exhibitors were from the foods and beverages sector while the other 40% displayed food equipment and appliances. Furthermore, 45,400 professionals from 152 countries visited the fair. 87% of exhibitors said that the fair exceeded their expectations, and 90% of visitors considered the fair excellent with a large variety of high quality products available. In 2012, Fundación ExportAr will organize the national pavilion (324m2) in which 46 Argentine companies, particularly from the provinces of Santa Fe, Mendoza, Chubut, and Tucumán, will exhibit their exportable services and products.
BIOFACH 2012 Nuremberg, Germany February 15-18 Ecological & Organic Products
From February 15 to 18, Biofach opens its doors to exhibitors, visitors, and press from all over the world in the city of Nuremberg, Germany. It is the most important annual fair for ecological and organic services and products. Professionals from this sector participate in this event to exchange experiences and contact other specialized professionals. They can also attend workshops, conferences, and seminars on current issues. All these activities are beneficial to get new insights on this market which is experiencing a boom worldwide. At Biofach there are biological products, from its production and certification to its transformation and marketing. The highlights are textiles and ecological toys, organic foods, medicines, and natural cosmetic products. In 2011, more than 2,700 exhibitors and 44,600 visitors participated in the fair. Biofach is an international event and producers, manufacturers, retailers, and distributors from 121 countries attended the fair. It had 14 percent more than participants in the previous year; here was also a larger exhibition space for innovative products and recent market trends. The distribution of exhibitors within the exhibition ground in halls and sectors make buyers access efficiently all products. This year, Fundación ExportAr organizes the National Pavilion (of 129m2). Twenty-three companies and national organizations from Argentina will attend this event. Eleven of them will have their own exhibition stands and the remaining twelve will be located in workstations within the “Organic Business Center” at the Argentine Pavilion.
Fairs PRODEXPO 2012 Moscow, Russia February 13-17 Food & Beverages
Prodexpo is the most important fair for food & beverages from the Russia Federation and Eastern Europe. It has the support of the Ministry of Agriculture and Food of Russia and the Government of Moscow. All professionals from this sector gather at Expocentr from February 13-17. Each year, the fair exhibits the best quality in food, innovative products (organic, diet, and functional sectors), and high tech foods like frozen, fast, or dried food. At the fairgrounds, visitors can find meat and poultry, fish, cheese and dairy products, groceries and spices, vegetable fats, confectionery and bakery items, nuts and dried fruit, tea and coffee, canned food and sauces, gastronomy products for restaurants, beverages (juices, sodas, water), fruits and vegetables, alcoholic drinks, tobacco and cigars and cigarettes, packaging and storage solutions for the food industry. In 2011, 2,000 exhibitors showed their products; sixty percent of them belonged to leading Russian companies, and the remaining were from 55 countries all around the world. More than 51,000 visitors participated in the expo; 95 percent of them were professionals from the agrifood sector. Fundación ExportAr organized the National Pavilion (42m2) located in the Pavilion 8, Hall 2 of the fairgrounds, close to Germany’s and Latvia’s stands. Argentine companies that attended this event reported that they made 350 business contacts, from which 11 percent could end up in deals. It was also estimated that after attending Prodexpo, their sales could approximately oscillate between $950,000 dollars to $1.8 million dollars. This year, Fundación ExportAr organizes again the National Pavilion (42m2) in order to strengthen our exporting image in such international venues.
Training Seminar: “Introducing Argentine Entrepreneurs” City of Buenos Aires February 2
Fundación ExportAr jointly with the Undersecretary of Social Responsibility from the National Ministry of Social Development organizes the seminar “Introducing Argentine Entrepreneurs” in the City of Buenos Aires (CABA). The seminar program includes topics such as “FOB Price Calculations”, “Basic Steps for Exporting”, and “How to Associate for Exporting together”. Marcelo Wiñazky is responsible for the module “FOB Price Calculations”. He will explain what should be considered in order to calculate this price. For example, it is important to have information about the market, use strategies of penetration pricing, analyze export pricing and how to calculate it, and gett formulas for FOB price. Regarding exports, it will review the tariff system and customs duties; and on imports, it will review the export taxes and promotional activities. Furthermore, Mercedes Maceira will explain the “Basic Steps for Exporting”. She will deal with those things to be considered when thinking on exporting services or products, on internationalizing manufactures, accessing a target market, payment and collection methods, transportation, and agents involved in an export process. Oscas Alexandro will discuss exports and how to associate with peers. He will explain the role of SMEs in exports, the importance of associativism, the forming and benefits of export groups or consortiums. Finally, María Florencia Gómez will share practical information on how to prepare a commercial promotion tool (e.g. International Fairs and/or Business Rounds) if the group was able to complete the promotional activities set up in February and March 2012 in Milan and Paris.
Special Report on Russia (1st part)
Newsletter de Fundaci贸n ExportAr
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Argentine Exports over the Last Decade Special Report on La Rioja Argentine Looms in Chile Export Group AOG, Olive Oil ExportAr Plans for 2012 Bilateral Trade between Argentina and Chile Calendar 2012