Industry
reports series
November 2007
Author:
Beibit Yerubayev, Bisnis
Representative in Kazakhstan.
INTERNATIONAL
COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE,
2006. ALL RIGHTS RESERVED FOR USE OUTSIDE OF THE UNITED STATES.
The objective of this report is to
provide U.S. companies with an overview of the consumer goods industry in
Kazakhstan, current major projects and potential market opportunities. The information provided will be useful not
only to U.S. exporters of physical goods who include domestic distribution in
their business model, but also to exporters and investors who are assessing the
market potential. This report also
provides information about certification, registration and customs procedures,
if applicable, and provides with the appropriate process description,
government entities and documentation necessary to export consumer goods in
Kazakhstan.
1.1 U.S.-Kazakhstan market Trade
From
all foreign countries United States have been a major trade partner to
Kazakhstan and it accounts for 2.5 percent of the Kazakhstan’s external
trade turnover. In 2006, bilateral trade turnover between Kazakhstan and the
USA totaled USD 1 567.3 million. Kazakhstan exports mainly included crude oil
and petroproducts, heavy distillates, gasoil, titanium. Major US exports
included equipment, electric devices, trucks and passenger cars.
The USA has also been a leading investor into the Kazakhstan’s economy. Gross
US direct investments from 1993 to September 2006 made up USD 13.8
billion, which is about 30 percent of all the direct foreign investments to
Kazakhstan.
Kazakhstan’s
accession into the WTO, efforts to expand bilateral economic ties and attraction
of US investments into the Kazakh economy have been among the major vectors of
trade-and-economic cooperation in the current year.
Foreign Trade (in millions of
USD)
Country and Region |
2005 |
2006 |
||||
|
Export |
Import |
Balance |
Export |
Import |
Balance |
USA |
666,0 |
1204,5 |
-538,4 |
462,2 |
1105,1 |
-642,8 |
Europe |
17100,8 |
4622,9 |
12477,9 |
24032,4 |
6506,5 |
17525,9 |
Asia |
4887,8 |
2883,8 |
2004,0 |
7648,7 |
4385,0 |
3263,8 |
China
|
2423,9 |
1251,8 |
1172,1 |
3592,5 |
1925,0 |
1667,6 |
Japan |
137,3 |
598,9 |
-461,6 |
214,1 |
914,1 |
-700,0 |
Source: The Committee of
Customs Control of the Ministry of Finance Republic of Kazakhstan
The U.S.-Kazakhstan Bilateral
Trade Agreement, which came into force in 1993, grants reciprocal trade
relations treatment. The bilateral investment treaty (BIT) came into force in
January 1994.
The total growth of Kazakhstani economy over the past decade and a half has inevitably led to significant growth in consumption. In 2006 nominal consumer income increased by 25 percent, which clearly influenced consumer activity and continuous consumption growth. This trend has been apparent for several years. As a result, Kazakhstan is a very attractive market for fast-moving consumer goods (FMCG) companies.
In 2006 retail sales grew by about 15
percent in volume and accounted for nearly one-fifth of GDP in value. Most
consumer-goods markets rely on imports, as domestic production cannot meet
demand. Although 100 percent foreign ownership is allowed in most
consumer-goods industries, FDI into the sector is very low.
The potential for further
expansion in the retail sector is promising, as current market trends will be
enhanced by a boom in consumer loans, which in turn reflects rising liquidity
in the banking sector. All segments of the consumer-goods market are expected
to grow fairly rapidly over the medium term
1.2 Market
peculiarities
According to Andrei Lyan, External Relations Manager for Procter & Gamble Central Asia, during the last ten years there has been a qualitative shift in consumer habits. In early 90s people had a ‘Soviet’ style of consumer behavior. They considered Western branded products as luxury goods. Many product lines and categories were either unknown or hardly developed. Social attitudes were marked by misunderstanding and prejudices that affected consumer behavior.
Consumer goods industry in Kazakhstan was very challenging in previous years due to reasons including marketing strategies, consumer behavior and consumer education. Procter & Gamble, the leading operator in the industry, implemented several educational programs in Kazakhstan starting from 1998. As a result of the program, over one million consumers were educated about feminine hygiene, oral care and infant care.
Appearance of new product lines led Kazakhstani consumers to a qualitative change in consumer lifestyle, making Kazakh consumers similar to consumers in Western countries. The market has dramatically changed from a Soviet production-oriented market to a modern consumer driven market. Currently almost all consumer goods product lines are extensively available with real competition across all product categories.
Marketing and advertising are of increasing interest and concern to consumer goods companies. Kazakhsatni consumers are becoming increasingly sophisticated and knowledgeable about different products. Media channels that allow companies to communicate with consumers are growing in diversity and reach. Foreign brands remain very powerful in Kazakhstan, especially in clothing and personal care products. Advertising is becoming a bigger part of the marketing mix - companies are concerned about identifying consumer insights and the profusion of media channels.
Food and
beverage offer the greatest organized retail growth opportunities. The main
growth opportunity in the segment is in processed foods. Rapid growth in the processed food segment is
already apparent, changing lifestyles and food habits are resulting in the
rapid expansion of branded food outlet
and cafe chains.
Kazakhstani consumer markets are changing fast, with
rapid growth in disposable income, development of modern urban lifestyles, and
emergence of the kind of trend-conscious consumers that have not been
experienced in Kazakhstan in the past. . "Kazakhs are traveling abroad a lot more and they
bring back new attitudes and preferences."
Second-hand products market did not gain popularity among Kazakhstani consumers. First second-hand stores opened in early 90s and they were popular among rural population but in early 2000s those shops started disappearing.
Along with the growth of competition and the qualitative change of consumer behavior the significant growth of social awareness of consumer rights should be noted as well. Several dedicated NGOs representing consumers were established during these years. One of the most active and well known is the National Consumer League.
Another significant change in the industry was the fact that in major cities people prefer shopping in specialized shopping centers instead of going to street markets (bazaars), a trend apparent a decade ago. However, prices for recognized brands are much higher comparative to the ones from US due to the lack of competition.
Awareness of well-known brand names is another significant step in the development of the consumer goods industry. Well known brands such as: Warner Bros, Sony Ericsson, Tommy Hilfiger, Toshiba, DELL, Reebok, Hewlett Packard, Ralph Lauren, Kenneth Cole, Kasper, Jones New York, IZOD, Calvin Klein, Hugo Boss, Nautica, DKNY, Levi’s, Guess, Nike, Phat Farm, FUBU are becoming more and more popular among the young generation.
Distribution
continues to improve, but it still remains a major inefficiency. The poor
infrastructure quality, coupled with the poor quality of the distribution sector result in high costs of logistics as a
share of GDP. In addition, the inventories have to be maintained at an
unusually high levels.
Retail
Kazakhstan’s retail market is one of the most rapidly developing sectors of the country’s economy. Local chains currently dominate, but the outlook is changing with the entry of global retail companies.
Retail food sector
Major players
·
Ramstore (supermarket
chain) http://www.ramstore.kz
·
Gross (supermarket chain)
·
Pyatorochka (Russian
supermarket chain) http://www.e5.ru
·
Astykzhan (supermarket
chain) http://www.tsesnaastyk.kz
·
Smile (convenience store
chain) http://www.s.mile.kz/
Also a number of medium size supermarket
chains are increasing year by year.
Retail non-food sector
Major players:
· French house (cosmetics, apparel, fragrances) http://www.bsb.nursat.kz/bsb/
DIY sector
Major players:
Do-it-yourself stores recently appeared on the Kazakhstani market and have quickly gained popularity. Currently local operators dominate the market with the following major retail chains
Distribution
Trucks owned by individual
entrepreneurs and independent transportation companies distribute most of the
ready-made products or supplies of assorted commodities to food shops in
Kazakhstan’s cities. Large trade companies mostly have their own distribution
infrastructure with their own fleet of trucks.
Warehousing
Warehousing market in Kazakhstan is relatively young and has several problems. The lack of Class A and Class B warehouses and the oversupply of low class warehouses makes it challenging to find warehousing facility with satisfactory specifications for size, height, microclimate, and additional services.
The legislation base of Kazakhstan is very weak and outdated. The weakness of the system creates a lot of difficulties and regulatory problems. Many regulatory acts are outdated and need to be revised to correspond to current conditions. For instance, many of the current technical standards were drafted in the 70s and 80s in a Soviet regulatory regime. The Consumer Protection Law currently in force was adopted in June 1991.
According to Andrei Lyan, External Relations Manager for Procter & Gamble, Central Asia, contradictions exist between regulatory norms used in Kazakhstan and Western standards. Documents required by Kazakh agencies frequently do not exist in the exporting country and cannot be issued there. Laws are also often not clearly written and may be accompanied by a number of regulatory documents, allowing local bodies to interpret them arbitrarily.
3.1. Overview of Certification and Conformity Assessment System
The regulatory system of standardization and relations of government bodies and economic organizations in this sphere are governed by the Law “On Technical Regulation” of the Republic of Kazakhstan.
The Committee for Technical Regulation and Metrology of the Ministry of Industry and Trade of the Republic of Kazakhstan carries out its activities in conformity with the approved regulations. It is guided by the law “On Technical Regulation” of November 9, 2004, the law "On Measurement Assurance" of June 7, 2000, and the law "On protection of consumers' rights".
For further information the
contact for the Committee on technical regulation and metrology of the Ministry
of Industry and Trade of the Republic of Kazakhstan (Gosstandart of the
Republic of Kazakhstan) is as follows:
Centre of Measurement Standards
35 St., building 11
KZ - 010000, ASTANA CITY, KAZAKHSTAN
Tel: + 7 7172 793301
Fax: + 7 7172 240248
e-mail: standart@memst.kz
www.memst.kz
Provisions of government standardization system are set in basic standards and include merely traditional objects, but also social service sphere, education and environmental control.
Documents (standards) applied in the Republic of Kazakhstan
Standards
for imported goods are described further in the Law on Technical Regulation,
which specifies that contracts for the delivery of imported goods subject to
mandatory certification should be required to confirm
compliance with Kazakhstani mandatory certification requirements. Delivery
contracts must also be accompanied by documents describing the products and
listing the country of origin, the producer, the expiration date, and any storage requirements as well as the code of use
in both, Kazakh and Russian languages.
In addition, the law states that foreign certificates, testing protocols and
compliance indicators must be in accordance with international treaties.
GS RK (Government standard of the Republic of Kazakhstan) – standard approved by the authorized government body of the Republic on standardization, metrology and certification. It contains obligatory and/or recommended requirements and is available to a wide circle of customers. Such government body is Gosstandart of the Republic of Kazakhstan and its territorial branches (is authorized to approve and implement normative documents on standardization).
GOST – inter-governmental standards used jointly by the Former Soviet countries in compliance with the inter-governmental agreement of the Former Soviet countries “On carrying out agreed policy in the sphere of standardization, metrology and certification”.
GOST R – government standard of the Russian Federation. It can be applied only after the registration (actualization) in Gosstandart of the Republic of Kazakhstan (after actualization is named GS RK GOST R).
ISO – international standards worked out and adopted by the international organization on standardization. After translation into Russian and Kazakh languages and admission (actualization) by Gosstandart they are named ST RK ISO.
Application of international, regional and national standards of other countries in the Republic of Kazakhstan is possible on the basis of international agreements on cooperation after actualization by their state body on standardization.
Application of international, regional and national standards of other countries in Kazakhstan is possible due to international cooperation agreements. The standards are actualized by a state standardization body to be applied. Legal entities and individuals get information and normative documentation in the form of one-time request (by telephone, official letter, email) and subscription service on the base of a contract.
The State Fund of normative legal acts on technical regulations and standards under the Kazakh Institute of Standardization and Certification (KazInSt) is a state run company, which delivers standards, provides information upon a written request and gives normative documents for temporary use based on payment according to established pricelists.
The
Standards and Codes currently used in the Republic of Kazakhstan are mostly the
same as those used during the Soviet era, so
there are many similarities between certification of goods for Russia and for Kazakhstan. However, there are
some important peculiarities with respect to importing goods into Kazakhstan.
The GOST K
Certificate
The GOST K Certificate is not obligatory for customs
clearance, but for operation and for trading
purposes.
Comparative to Russia the list of goods subject to mandatory certification is much smaller in Kazakhstan. It includes mostly:
A GOST K Certificate of Conformity can be issued by certification bodies accredited by Gosstandard of Kazakhstan.
A GOST K Certificate is usually valid for a certain specified delivery (for a one-time batch Certificate), or for a three- year term (for a type Certificate). During that period, multiple shipments can be made. Certificates valid for a 3-year period will necessitate the testing of goods, inspections, and audits, with an associated additional cost.
Long-term Certificates
Permit of State Inspection for Prevention and Elimination
of Extreme Situations ("GGTN K")
An additional permit is required
for shipment of potentially dangerous goods to be used in certain industrial
locations in Kazakhstan. This is the "Permit of State Inspection for
Prevention and Elimination of Extreme
Situations" issued by the Ministry for Extreme Situations of the Republic
of Kazakhstan. This permit is required to indicate that the potentially
dangerous equipment meets Kazakhstan's safety standards. Any goods
handling hazardous materials such as oil or natural gas would automatically
fall into this category. Such permit is
required when starting an operation utilizing equipment or hazardous materials.
The commissioning of the plant will not go through without the certificate.
Typically, the necessary calculations are done including a review of the
maintenance and repair procedures, review of control
systems, hydraulic tests, non-destructive tests, and a review of the possible
effects on the environment, such as discharges, leakages, emissions.
A Metrology Certificate is required for all measuring instruments implemented in potentially hazardous installations, such as level/flow transmitters, pressure/temperature gauges, differential pressure indicators/recorders and specialist measuring instruments such as gas- and dew-point analyzers, where accuracy of measurement and repeatability is important for the safe operation of an installation and for commercial counting. Such instruments must be entered on the Gosstandard Register in Astana. There are two types of Metrology Certificate - a one-time batch certificate valid for the whole service life of the instrument; pattern or type Certificate valid for 5 years. However, according to local companies obtaining a Metrology Certificate in Kazakhstan is a very difficult and costly procedure. There are no laboratories to carry out necessary tests and Kazakhstan Gosstandard require the provision of test laboratory facilities, either at the manufacturer’s or some other properly equipped laboratory in Russia or elsewhere. For that reason it is strongly recommended to purchase measuring instruments already certified in Kazakhstan.
Explosion Proof Certificate
There are currently no specialized bodies for explosion proof certification in Kazakhstan. Normally this aspect is incorporated into the GGTN K Permit, based on relevant European certificates (ATEX). However, Kazakhstan authorities are currently considering the establishment of a testing and certification centre, which might make the issue of a Kazakh Explosion Proof certificate obligatory in the future.
Fire Certificate
A Fire Certificate is required for fire-fighting equipment and systems. This applies to fire/gas/ heat detectors, spray system, and fire extinguishers to name a few. The Certification Body of Fire Inspection issues the Certificate, and testing of the equipment is usually involved.
Hygiene Certificate
A Hygiene (or Sanitary) Certificate is required for goods that are typically used in the food or pharmaceutical industries or any other industry where human consumption is concerned. Such a certificate, which is issued by the State Sanitary (Epidemiological) Inspection, is awarded after a full review of materials and methods of construction and tests.
Technical Passport
Some items, such as pressure vessels, boilers, and pumps imported into Kazakhstan also require a Technical Passport to Kazakhstani standards. The Technical Passport is a logbook of the standard form that accompanies the equipment, and contains manufacturing data and information normally stated in data sheets. The preparation of the technical specifications for the Technical passport is a responsibility of the Supplier, and must be signed and stamped by the Manufacturer.
Obtaining these Certificates requires assistance of a company or organization that specializes in such services. The following companies and organizations can assist in this procedure
National center of expertise and certification of Kazakhstan
Tel: +7 (7172) 31-84-43.
Email:naceks@naceks.kz
www.nacek.kz
National Center for Accreditation
General Director - Serik Kurmangaliyev
Telephone: 7 (7172)
79-33-97
Fax: 7 (7172) 24-08-29
E-mail: nca_ncakz@inbox.ru
Companies
43, Vyborgskaya nab
194044 St. Petersburg
Russia Contact person
General Director
Vladimir Vokuev
+7 812 703 07 84
+7 812 703 07 83
vladimir@rustek.net
PromEK
115035,
Moscow,
Pyatnickaya 2/38 str.3
+7 (495)
795-94-10 (Russian English, Japanese spoken);
+7 (495) 795-52-36 (Russian spoken);
+7 (495) 795-94-06 (Russian spoken);
Email: info@promexgost.com
Alex Stewart
(ASSAYERS), LTD
Tel: +7 727 2596162, 2596163, 2596164, 2596165
Fax: +7 727 2543215
E-mail: asakaz@nursat.kz
Labeling and Testing
The Kazakhstani government accepts the addition of Kazakh language labels on some products. The government has also issued a wide-range of regulations exempting pharmaceutical products and several other categories of goods from the Kazakh labeling requirement.
Kazakhstan
intends to become a member of the International Laboratory Accreditation
Conference (ILAC) and the International Accreditation Forum (IAF). This step
would automatically make Kazakhstan a party to a number of international
treaties on standards and metrology.
The government has opened an Information Center to provide information on technical regulations to foreign companies and governments. Information on technical regulations is available on the Information Center's website, but only in Russian and Kazakh.
New legislation aimed at bringing the legal environment into compliance with the WTO Agreement on Technical Barriers to Trade is in a process of development. New draft laws and amendments, such as statutes dealing with product safety, are being considered by the Parliament.
3. CUSTOMS REGULATIONS AND REQUIREMENTS
Customs registration
All goods and vehicles moved across Kazakhstan's customs border must be registered by customs. To carry out foreign economic activities (FEA), residents of Kazakhstan must register with the customs authorities and receive an FEA participant's card. If a contract with a foreign partner exceeds $10,000, a transaction certificate has to be drawn up at the foreign exchange department of a customs body.
Customs registration of exported/imported goods for residents and non-residents may be carried out through a customs broker: a Kazakhstan-based legal entity set up under Kazakh law and holding a license from the central customs authorities to operate as a customs broker.
Minimum requirements for import customs clearance
Customs clearance is
defined as a set of actions and procedures accomplished by declarants and
customs officials in connection with transfer of goods or means of transportation
through the customs border.
Foreign entities cannot deal directly with customs officials in Kazakhstan and are legally required to use services provided by licensed customs brokers with legal right to operate in Kazakhstan
Customs clearance shall be carried out inside the
responsibility zone of the customs office with which a Kazakhstani
(consignee/supplier) entity has its registration. Storage, loading and
unloading of goods, inspections and other activities shall be conducted in
temporary storage places inside responsibility zone of the customs office
responsible for the clearance. Parties declaring goods are responsible for
payment of the charges for all services rendered by the temporary storage
facilities, including payments for each day of storage in a customs warehouse.
Consequently, it is in the best interests of the parties declaring goods to
pass through the clearance procedure as promptly as possible.
Overall clearance procedure consists of
A party declaring goods at a customs office in Kazakhstan is
responsible for submission of paper based and electronic copies of customs
declarations (one copy of each per shipment), as well as accompanying documents.
In addition to cargo customs declaration a party declaring
goods is required to provide customs officials with the following set of
documents
It should be noted that the Government of
Kazakhstan cancelled previously made amendments to the Customs Code about
mandatory submission of Shippers' Export Declaration (SED).
Additional documents might be required depending on the type of customs regime under which the goods will be declared.
Non-submission of accompanying documentation (including the items listed above) does not provide grounds for non-acceptance of the cargo customs declaration. However, if accompanying documentation is not provided at the time of submission of the declaration, customs officials issue a request for additional documentation. Requested documents will have to be submitted by the declaring party within time limits specified by the customs officials. Time limit cannot be expected to exceed 10 days.
Acceptance of the cargo customs declaration indicates the beginning of the clearance process and shall be associated with fulfillment of the prescribed formalities. Accepted declarations are passed on to documentary control and inspection.
Documents Review and Inspection
In Kazakhstan documents review and inspection stages of the customs clearance procedure include
§ Review of the harmonized code under which the goods are declared, country of origin and applicability of non-tariff regulatory measures
§ Currency control and review of the declared customs value
§ Customs duties and tax control
§ Inspection and release of goods
Customs officials have the right to ask for additional supporting documentation, if chief of the customs office approves such a request. At each of the stages customs officials have to sign off on the documents indicating either their agreement with the information provided or the need to submit additional documents. If customs officials have no objections at the documentary review stage, the documents are then passed for final inspection and release of the goods. In the event that there are any objections or requests for additional supporting documentation the documents have to be returned back to the first stage of the clearance process.
§
There are no professional
consultant services in the industry
§
Kazakhstani retail market is
rapidly developing, however the lack of well-known brands creates significant
demand for them. Most of textile products are imported to Kazakhstan from
Turkey and China and those are unknown brands. Well-known western brands are
considered luxury products.
§
Quality surplus merchandise
(overstock, shelf pulls, floor stock, liquidated and discontinued products and
store returns)
§
Food and beverages are also
an opportunity for the US exporters. Variety of products that can be seen at
regular supermarkets are still underrepresented compared to the variety in
Russian supermarkets, more specifically in the stores in Moscow.
6. USEFUL RESOURCES
Alamaty, 050010
85 Dostyk Ave.
office 519
Tel: 7 (3272) 613551
Fax: 7 (3272) 728310
E-mail: paltasheva@nursat.kz
Almaty, 050000
45/91.Tole bi St.
Tel: 7 (327)
2610187,
Fax. 7 (327)
2610301,
E-Mail:alcci@mail.kz
Almaty 050020
12 Chaikinoy St.
Phone/ Fax: 7(327)
2915616
Email: marketingkam@nursat.kz
http://www.marketingkam.kz
Association
of National Freight Forwarders
Almaty 050000,
127 Fyrmanov St.
Tel. +7 (327)
261-01-38, 61-02-95
E-mail: info@kffanek.kz
Web site: www.kffanek.kzTrade associations and information portals
USG Resources (local offices)
Embassy of the United States of
America in the Republic of Kazakhstan
Astana, 010010
Ak Bulak 4,
Str. 23-22, building
#3
Phone: 7 (3172)
70-21-00
Fax: 7 (3172)
34-08-90
Email: info@usembassy.kz
American Chamber of
Commerce in Kazakhstan
tel.: 7 (3272) 587938, +7 (3272) 587939, +7 (3272) 587940
fax: 7 (3272) 587942,
Email: info@amcham.kz
US Embassy Almaty
U.S. Foreign Commercial Service
Samal - 2, 97
Zholdasbekov St. - 11th fl.
050099 Almaty,
Kazakhstan
Tel: 7 (3272)
50-49-50, 50-48-50
Fax: 7 (3272) 50-49-67, 50-48-74
Email: almaty.office.box@.mail.doc.gov
Almaty, 050000
531 Seyfulina St.
office 421
Tel: 7
(327) 2582252
Fax: 7(327) 2582388
E-mail: ia_scc@nursat.kz
Deloitte & Touche
Almaty, 050059
Address: 240-v
Furmanov St.
Tel: 7 (327) 2581340
Fax: 7 (327) 2581341
E-mail, almaty@deloitte.kz
Almaty, 050000
Address: 177
Makatayev St. 4th floor, office # 401
Tel/Fax: + (327)
2795298, 2343987
E-mail: office@regcon-asia.kz
For more information on
Kazakhstan, visit BISNIS online at http://www.bisnis.doc.gov/bisnis/country/kazakhstan.cfm
For further
information on this topic or how BISNIS can help you in Kazakhstan, contact:
Beibit
Yerubayev
BISNIS
Representative—Kazakhstan
4 Bogenbai Ave.
office-6
Astana,
Kazakhstan 010000
Telephone: (+7
3172) 23 63 17
Fax: (+7 3172) 23 63 17
Disclaimer: The information provided in this
report is intended to be of assistance to U.S. exporters. While we make every
effort to ensure its accuracy, neither the United States government nor any of
its employees make any representation as to the accuracy or completeness of
information in this or any other United States government document. Readers are
advised to independently verify any information prior to reliance thereon. The
information provided in this report does not constitute legal advice.
BISNIS (www.bisnis.doc.gov) is part of the U.S. Commercial Service (www.export.gov).