CHAPTER III.- MARKET ANALYSIS AND POTENTIAL
3.7 Target Market/Product Scope
3.7.2 Initial Target field: Taiwan Exports to Honduras
國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
60
Unit price is determined by adding an 8.5% over the total costs/unit, which will be our profit margin for this product. The demand for cocoa is relatively inelastic. The number of units is expected to increase by 10% and 12% for 2013 and 2014, respectively.
Under the FTA between Honduras and Taiwan, cocoa as raw material and as powder and paste, fall under HS codes 1801 through 1805, are categorized as type A, meaning that these products can enter Taiwan duty free.
3.7.2 Initial Target field: Taiwan Exports to Honduras
Taiwan is world-known as a high-quality supplier of competitively priced products. It is a world-leading manufacturer of electronics, such as notebooks, LCD monitors, PC cameras, and wireless LANs. It is also home to the fabrication of a wide array of other electronics, such as mobile phones and other computer accessories. It’s no surprise Taiwan is called the Island of Innovation.11
Cup-sealing machines
Taiwanese juice selling companies have a very innovative method of sealing cups for beverages. They use a plastic film to seal cups instead of using traditional lids. This is a great business opportunity to exploit in Honduras. Guanxi Trading LLC, by importing this in Honduras, would have a first mover advantage.
This product has the potential to be distributed not only in Honduras, but throughout the rest of Central America and even South America.
11 Workman, Daniel. A Risk-Reward Analysis of the Taiwanese Business Environment. International Trade by Suite 101. http://www.suite101.com/content/evaluating-taiwan-as-a-trade-partner-a120263 May 2009.
‧
Direct Unit costs $500 $525 $551
Direct cost of sales $120,000 $138,600 $145,530
Import duties $0 $0 $0
Freight & stuffing charges $2,650 $2,915 $2,915
Customs brokerage $240 $252 $265
Throughout Honduras, there are many coffee shops, milkshake and juice bars which would benefit from using this machine. It would help these shops save costs, as well as helping to protect the environment. Also, they would provide customers with a better service by avoiding them any possibilities of spills.
Our initial target will be Espresso Americano, which is a chain of coffee stores in Honduras, specializing in hot and cold coffee drinks. As of now, they have over 100 stores scattered throughout the country, thus providing a great market for the cup-sealing machines.
Additionally, there are other chains of coffee shops we can target, such as The Coffee Cup, which is a Salvadorian chain that has numerous shops scattered throughout Central America. As well, there are numerous milkshake and juice bars scattered throughout the country, in addition to diners and cafeterias that could benefit from this machine.
This product also has the potential to be sold in South American countries; therefore we anticipate sales to that region as well.
Table 12: Cup-sealing machine sales breakdown
‧
國立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
62
Unit price is determined by adding a 17% over the total costs/unit, which will be our profit margin for this product. Number of units sold is expected to increase by 10% for 2013 and for 2014, it is expected that the number will maintain at the 2013 level.
These types of machines, with HS code 84223000, fall under category A of the FTA between Honduras and Taiwan, which means that this product can enter Honduras duty free.
Scooters
The highest scooter density area in the world is found in Taiwan. On average, every two people own one scooter and 88% of families have at least one scooter. Scooters are very convenient for commuters, which usually are office workers, students and small businessmen. And because they are cheaper than cars, more people are able to afford them.
In Taiwan, a scooter forms part of a person’s daily life. And as seen on Taiwan, scooters and automobiles can co-exist peacefully due to their scooter-friendly roadways.
In Honduras, public transportation is not convenient; therefore scooters are a great alternative, even in relation to cars, because of the increasing traffic congestion. Fuel consumption has increased tremendously because of the long time spent in traffic jams.
Thus, there is still huge potential growth for the motorcycle industry in Honduras.
Even though the Government is implementing a few strategic plans to lower traffic congestion in the main cities, these initiatives won’t solve the problem on the long run.
However, if more and more people start driving scooters, traffic congestion will significantly improve.
Guanxi Trading LLC will start by importing used scooters with cylinder capacity above 50 and below or equal to 250. In 2010, Honduras imported around US$32 million in these types of scooters, of which approximately 69% were imported from China. Around 5% of imports were from India, 4% from Japan and imports from Taiwan only constituted around 2%.
‧
國立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
63
2012 2013 2014
Units sold 600 672 780
Unit Price $1,275 $1,324 $1,374
Sales $765,081 $889,397 $1,071,945
Direct Unit costs $800 $840 $882
Direct cost of sales $480,000 $564,480 $687,960
Import duties (10%) $48,000 $56,448 $68,796
Freight & stuffing charges $165,236 $185,065 $214,807
Customs brokerage $240 $252 $265
Insurance $2,052 $2,298 $2,668
Total costs $695,528 $808,543 $974,496
Total costs/unit $1,159 $1,203 $1,249
Net profit $69,553 $80,854 $97,450
Scooters
Year
Motomundo S.A., Corporación Masada, and Motinsa will be our target distributors in Honduras.
After initial assessment with distributors, we estimate to initially sell 50 scooters per month in 2012 and then expect the number of units sold to increase by 12% and 16% for 2013 and 2014, respectively.
Table 13: Scooter sales breakdown
Unit price is determined by adding a 10% over the total costs/unit, which will be our profit margin for this product.
The HS code for this product is 87112000. Under the FTA between Honduras and Taiwan, it falls under category E, with a base rate of 10%. Thus, products in this category are not subject to any duty reduction.
‧
國立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
64
Entertainment devices
Included in this category are television flat panel displays, computers, dvd players, gaming devices, cameras, projectors, cellphones, etc. Guanxi Trading LLC will start off by selling flat panel televisions and laptops/netbooks/tablets.
Taiwan has won a reputation as one of the world’s leading producers of low-cost, high-quality electronic goods. Over the past 20 years, Taiwan's information technology industry has played an important role in the worldwide IT market. Taiwanese companies account for about three-quarters of the world’s production of PCs and half of the world’s LCDs.
Furthermore, Taiwan makes about a quarter of the world’s semiconductors and about a fifth of the world’s mobile phones.
LCD Televisions
When it comes to televisions, LCDs are by far the most widely produced and sold television display type. Taiwan is one of the world's biggest flat panel producers. In 2007, the Taiwanese LCD TV industry’s total shipment volume rose to 15.4 million units and it is anticipated that Taiwan’s share of global LCD TV manufacturing will rise to around 30%
by the end of 2011.
In 2010, Honduras imported around US$54.9 million in televisions. Most of the imports came from Mexico, the United States and China, with 35%, 22% and 20% respectively.
Around 25% of total imports came from Asian Pacific countries, leaded by China, followed by Malaysia and then Hong Kong. No imports for this category were reported from Taiwan in 2010.
Target distributors in Honduras will be Jetstereo, La Curacao and PriceSmart, which are major retailers of electronics and entertainment devices in Honduras. We expect to start selling at least 60 units per month and then increase the number of units sold by 10% and 14% for 2013 and 2014, respectively.
‧
Rank Country 2008 2009 2010 Grand Total
Percentage of Sales from 2010
1 Mexico $15,595 $24,606 $19,268 $59,469 35.11%
2 China $6,704 $5,437 $11,233 $23,373 20.47%
3 United States $3,279 $2,543 $12,335 $18,156 22.47%
4 Panama $5,330 $957 $5,625 $11,911 10.25%
5 Malaysia $4,278 $3,135 $2,153 $9,566 3.92%
6 El Salvador $1,448 $1,090 $1,715 $4,253 3.12%
7 Costa Rica $365 $1 $923 $1,290 1.68%
8 Guatemala $68 $169 $1,022 $1,259 1.86%
9 Hong Kong $292 $42 $219 $553 0.40%
10 Israel $0 $0 $364 $364 0.66%
11 Thailand $96 $3 $0 $99 0.00%
12 South Korea $0 $78 $0 $78 0.00%
13 Japan $1 $73 $4 $78 0.01%
14 Nicaragua $47 $28 $1 $76 0.00%
15 Taiwan $3 $38 $0 $41 0.00%
Top 15 Countries $37,507 $38,200 $54,862 $130,569 99.96%
Others $19 $15 $23 $57 0.04%
Grand Total $37,526 $38,215 $54,885 $130,626 100.00%
Honduras' TV Imports
Direct Unit costs $530 $557 $584
Direct cost of sales $381,600 $440,748 $525,308
Import duties $0 $0 $0
Freight & stuffing charges $13,513 $14,865 $16,873
Customs brokerage $240 $252 $265
Table 14: Honduras’ TV Imports
Table 15: LCDs sales breakdown
‧
profit margin for this product.Laptops
Taiwan’s Acer Inc. and AsusTek Computer Inc. are among the top 5 computer companies in the international market.
Taiwan exported around US$247.4 million in portable processing machines in 2010. For Taiwan, around 229 million units of notebook PCs were estimated to be shipped in 2010 and shipments for netbooks were expected to be around 26 or 27 million units. Taiwan’s main export markets for notebook PCs and netbooks are North America and Europe, around 58% and 22%, respectively.
In 2010, Honduras imported around US$50.2 million in laptops and netbooks, from which approximately 82% came from the United States. The top brands of notebooks sold in Honduras are HP, Sony and Apple.
Table 16: Honduras’ Laptop Imports
Rank Country 2008 2009 2010 Grand Total
Percentage of Sales from 2010
1 United States $31,589 $29,661 $41,394 $102,643 82.38%
2 Panama $1,044 $369 $3,080 $4,494 6.13%
3 El Salvador $122 $316 $1,833 $2,271 3.65%
4 China $841 $7,422 $1,619 $9,882 3.22%
5 Guatemala $232 $192 $981 $1,406 1.95%
6 Mexico $422 $2,359 $518 $3,299 1.03%
7 Colombia $0 $2 $430 $432 0.86%
8 South Korea $1 $199 $178 $378 0.35%
9 Taiwan $3 $11 $83 $96 0.16%
10 Costa Rica $9 $156 $37 $202 0.07%
11 Canada $36 $5 $26 $67 0.05%
12 Germany $223 $15 $16 $255 0.03%
13 Spain $80 $4 $10 $94 0.02%
14 France $545 $30 $9 $584 0.02%
15 Japan $6 $262 $6 $274 0.01%
Top 15 Countries $35,152 $41,005 $50,220 $126,377 99.95%
Others $771 $1,224 $27 $2,022 0.05%
Grand Total $35,923 $42,229 $50,248 $128,399 100.00%
Honduras' Laptop Imports
Value in US$ Thousands
‧
國立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
67
2012 2013 2014
Units sold 720 792 888
Unit Price $681 $715 $750
Sales $490,317 $566,184 $666,401
Direct Unit costs $600 $630 $662
Direct cost of sales $432,000 $498,960 $587,412
Import duties $0 $0 $0
Freight & stuffing charges $265 $291 $327
Customs brokerage $240 $252 $265
Insurance $1,404 $1,544 $1,732
Total costs $433,909 $501,048 $589,735
Total costs/unit $603 $633 $664
Net profit $56,408 $65,136 $76,666
Year Laptops
We expect to start selling at least 60 units per month and then increase the number of units sold by 10% for 2013 and 12% for 2014.
Table 17: Laptop sales breakdown
Unit price is determined by adding a 13% over the total costs/unit, which will be our profit margin for this product.
Televisions in Honduras are imported under HS code 85287290. Laptops fall under HS code 847130. Under the FTA agreement between Honduras and Taiwan, both of these items fall under category A, meaning that these products can enter Honduras duty free.
‧
國立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
68