Franchising Trade Mission
to Malaysia, the Philippines, and South Korea
Sept. 28 to Oct. 6, 2000
Mission Description
The Office of Service Industries, in cooperation with the International Franchise Association, will lead a business development trade mission to Malaysia, the Philippines and South Korea to promote the U.S. franchise industry and focus on finding master franchisees and investors in these markets.
According to the Department of Commerce's Commercial Service officials in Malaysia, the Philippines, and South Korea, franchising represents "Best Prospects" for U.S. firms seeking business opportunities in these countries. The visit is scheduled for September/October 2000 with a full program of activities in Manila, the Philippines, September 28-29; Kuala Lumpur, Malaysia, October 2-3; and Seoul, South Korea, October 5-6, 2000.
The mission will include Commerce Department staff from the Office of Service Industries and U.S. corporate executives from the franchising industry interested in doing business in Malaysia, the Philippines, and South Korea.
Commercial Setting
According to the International Monetary Fund and the World Bank, the momentum of economic recovery in Asia increased significantly with growth far exceeding earlier expectations. Among crisis-hit countries, recovery has been strongest in South Korea and Malaysia. Also, the Philippines' economy has done well. Because of an improved economic outlook, U.S. and other foreign firms are interested in taking advantage of business opportunities in Asia. The U.S. Commercial Service offices in Malaysia, the Philippines, and South Korea believe that U.S. franchisors have a prime opportunity to expand their business venues into these markets.
South Korea
South Korea was the sixth largest global purchaser of U.S. exports in 1999. The real GDP of South Korea grew at a spectacular rate of 10.7% in 1999. With one of the most dynamic economies in Asia, South Korea is a country with immense business opportunities and an increased demand for imports is being fueled in part by generally lower tariffs and trade and investment reforms. The Korean government is emphasizing increased economic opportunities for the private sector through privatization, deregulation, and the removal of impediments to competition. U.S. exporters are now able to expand and participate in new business opportunities which contribute to making South Korea the United States' second largest export market (i.e., about $23 billion in 1999) in Asia after Japan.
Franchising Opportunities in South Korea: As a newly industrialized country with a sizable middle income urban population, the Korean market presents a great target of opportunity for many franchisors. Currently, there are three types of franchises in Korea: food, retail and services. U.S. firms' systematic management skills and established brands will be important factors in selecting the proper investment opportunity for potential Korean franchisees and for Korean end-users. Further, industry experts believe that South Korea offers a good potential market for business-to business franchise services over the next few years.
Malaysia
Malaysia was the seventeenth largest global purchaser of U.S. exports in 1999. The real GDP of Malaysia grew 5.4% in 1999, and is estimated to grow 6.0% in 2000. Malaysia is another dynamic economy in Asia. In 1999, Malaysia's imports from the U.S. amounted to more than $9 billion, behind only to Japan, South Korea and China (including Hong Kong). The boom in U.S. exports reflected pent-up Malaysian demand, as well as the Malay government's trade liberalization program. In 1998, the U.S. was the largest foreign investor in Malaysia, followed by Japan and Taiwan. U.S. goods and services are highly regarded in the Malaysian market.
Franchising Opportunities in Malaysia: Realizing the vast potential in franchising, the Malaysian government has accepted the franchising system as one of the strategies to national development and is encouraging franchising of local products, particularly foods. Currently, Malaysia has about 50, mostly homegrown, franchises. The Malaysian government has made loans available for small business development very affordable. With a growing economy and increasing middle income urban population, industry experts believe that franchising is likely to grow significantly in Malaysia in the next five years.
Philippines
The Philippines was the twenty-first largest global purchaser of U.S. exports in 1999. With estimated real GDP growth of 4.5% in 2000, the Philippines is one of the largest and promising markets in Asia. In 1999, Philippines' imports from the U.S. amounted to more than $7 billion. Among Asian countries, only Japan, South Korea, China (including Hong Kong) and Malaysia imported more U.S. goods and services than the Philippines in 1999. Philippines' strength and attractiveness lie not only in its size (as a country of 75+ million people), but also in its growing economy.
Franchising Opportunities in the Philippines: There are franchising opportunities in both food and non-food sectors. Manila's large population (10 million) and intense economic activity can absorb multiple outlets. It has become a common practice among franchise companies to open many outlets to meet the demand in the commercial areas. For example, there are as many as three McDonald's outlets in a single shopping mall. This is true also in other prosperous provincial centers such as Cebu, Davao and Cagayan de Oro. Thus, changing consumer preferences, diversity in food and services, an increasing urban middle class and the growing number of shopping malls will contribute to the growth of franchises in the Philippines.
Mission Goals
The mission leader and the business delegation will meet with corporate leaders and government officials to further the market access, market exposure, and market research efforts of U.S. franchise firms while gaining valuable contacts for future business deals that will increase sales of U.S. products and services to each country. This trade mission will provide participants an opportunity to understand more clearly the franchise industry in each country and establish important government and private industry contacts. Where appropriate, we will seek to discuss market access issues with host countries. In keeping with the goals of the mission, private sector participation will be concentrated among officers of franchise firms seeking business opportunities in Malaysia, the Philippines, and South Korea.
Mission Scenario
In support of the mission goals, the Commercial Service offices in each country will arrange individual, tailor-made business appointments for mission participants.
The program for the mission will include:
-Embassy/Consulate briefings on the commercial/economic environment.
-Meetings with potential buyers, agents, and potential business partners.
-Meetings with host country leaders at the national and state levels.
Timetable (2000)
September 28-29: Manila, the Philippines
October 2-3: Kuala Lumpur, Malaysia
October 5-6: Seoul, South Korea
The schedule will be further developed based on the availability of company officials, the unique goals and interests of mission participants, and specific recommendations from the Commercial Service in each host country.
Recruitment will begin immediately and should be concluded by no later than August 15, 2000. Applications received after that date will be considered only if space and scheduling constraints permit.
Criteria for Participant Selection
Companies that provide a product/service which is produced in the United States, or if not, marketed under the name of a U.S. firm and has at least 51 percent U.S. content of the finished product/ service, may participate in this mission. Any partisan political activities (including political contributions) of an applicant are entirely irrelevant to the selection process.
Recruitment will be conducted in an open public manner, including publication in the Federal Register, posting on the Internet, press releases to the general and trade media, direct mail and via telephone calls.
Contact: Mr. Raj Dwivedy @ (202) 482-1135 Fax: (202) 482-2669
E-mail: Raj_Dwivedy@ita.doc.gov OR Raj.Dwivedy@mail.doc.gov
Office of Service Industries
U.S. Department of Commerce -International Trade Administration
Room 1124
Washington, D.C. 20230