B. BEST PROSPECTS FOR AGRICULTURE AND INDUSTRY SECTOR EXPORTS MATRIX OF BEST PROSPECTS FOR AGRICULTURAL U.S. EXPORTS TO CHILE A. Rank of Sector: 1 B. Name of Sector: GRAINS C. PS&D Code: 11 1993 1994 1995 D. Total Market Size 565.0 575.0 581.0 E. Total Local Production 388.0 382.0 382.0 F. Total Exports 0.0 0.0 0.0 G. Total Imports 177.0 193.0 199.0 H. Total Imports from U.S. 55.0 62.0 70.0 I. Average Exchange Rate 404.0 430.0 460.0 Comments: Includes Wheat, Corn & Rice. Chilean production of basic grains has stagnated in recent years in the face of reduced competitiveness. Although wheat is subject to import surtaxes (price bands), U.S. grains sales continue to have solid growth prospects in Chile. A. Rank of Sector: 2 B. Name of Sector: PROCESSED FRUIT & VEGETABLES C. PS&D Code: 16 1993 1994 1995 D. Total Market Size 98.0 104.0 107.0 E. Total Local Production 285.0 300.0 320.0 F. Total Exports 235.0 246.0 265.0 G. Total Imports 48.0 50.0 52.0 H. Total Imports from U.S. 12.0 12.0 14.0 I. Average Exchange Rate 404.0 430.0 460.0 Comments: Chile is a growing market for high value products reflecting expanded income and changes in consumer habits. A. Rank of Sector: 3 B. Name of Sector: SNACK FOODS C. PS&D Code: 24 1993 1994 1995 D. Total Market Size 57.0 60.0 65.0 E. Total Local Production 74.0 80.0 86.0 F. Total Exports 46.0 50.0 55.0 G. Total Imports 29.0 30.0 34.0 H. Total Imports from U.S. 8.0 10.0 13.0 I. Average Exchange Rate 404.0 430.0 460.0 Comments: Chile is a growing market for U.S. snack foods, reflecting expanded incomes and changes in consumptions habits. A. Rank of Sector: 4 B. Name of Sector: RAW COTTON C. PS&D Code: 04 1993 1994 1995 D. Total Market Size 32.0 32.0 33.0 E. Total Local Production 0.0 0.0 0.0 F. Total Exports 0.0 0.0 0.0 G. Total Imports 32.0 32.0 33.0 H. Total Imports from U.S. 3.0 3.0 4.0 I. Average Exchange Rate 404.0 430.0 460.0 Comments: U.S. cotton sales are at a disadvantage to other Latin American suppliers because of preferential duties for ALADI countries. Nevertheless, sales have increased as the Chilean industry realizes U.S. quality advantages. A. Rank of Sector: 5 B. Name of Sector: PET FOODS C. PS&D Code: 24 1993 1994 1995 D. Total Market Size 4.0 4.0 5.0 E. Total Local Production 3.0 3.0 3.0 F. Total Exports 0.0 0.0 0.0 G. Total Imports 1.0 1.3 2.0 H. Total Imports from U.S. 1.0 1.0 2.0 I. Average Exchange Rate 404.0 430.0 460.0 Comments: Demand for balanced feed particularly pet food has been increasing steadily during the last few years. A. Rank of Sector: 6 B. Name of Sector: TREE NUTS C. PS&D Code: 14 1993 1994 1995 D. Total Market Size 12.0 12.5 12.7 E. Total Local Production 35.0 35.0 36.0 F. Total Exports 24.0 24.0 25.0 G. Total Imports 1.0 1.5 1.7 H. Total Imports from U.S. 0.5 0.8 1.2 I. Average Exchange Rate 404.0 430.0 460.0 Comments: Chilean consumption of tree nuts is still low. Expanded market promotion could result in increased U.S. sales. A. Rank of Sector: 7 B. Name of Sector: FRESH DECIDUOUS FRUIT C. PS&D Code: 09 1993 1994 1995 D. Total Market Size 351.5 373.5 397.0 E. Total Local Production 1,100.0 1,122.0 1,144.0 F. Total Exports 750.0 750.0 750.0 G. Total Imports 1.5 1.5 3.0 H. Total Imports from U.S. 0.0 0.0 1.0 I. Average Exchange Rate 404.0 430.0 460.0 Comments: Currently, imports of U.S. fruits are restricted as a result of Chilean phytosanitary regulations. USDA is working to resolve this issue and hopes to gain access for U.S. exporters in the near future. MATRIX OF BEST PROSPECTS FOR INDUSTRY SECTOR EXPORTS TO CHILE A. Rank of Sector: 1 B. Name of Sector: POLLUTION CONTROL EQUIPMENT C. ITA Code: POL 1993 1994 1995 D. Total Market Size * 281.6 392.0 550.0 E. Total Local Production * 1.6 2.0 3.0 F. Total Exports 0.0 0.0 0.0 G. Total Imports * 280.0 390.0 553.0 H. Imports from the U.S. * 120.0 156.0 222.0 I. Average Exchange Rate 404.0 430.0 460.0 * No statistics of this nature are available in Chile. Import categories for pollution control equipment have not been identified by local authorities. Comments: Chile does not manufacture pollution control equipment (very few exceptions). The Chilean market prefers U.S. products because of its high technology and quality. There exists strong competition from Japan and European countries which offer soft loans and donations, and that usually require purchasing equipment from the donor country. The new Environmental Law, passed in March 1994, establishes environmental framework legislation. This law, tailored using EPA's standards as a model, includes three important concepts: a) responsibility for environmental damage and repair; b) environmental impact assessments prior to project development; and c) provisions which require payment from those who cause pollution. The full implementation of the law requires specific rules and regulations, which will define the magnitude of the market for environmental protection equipment and services. Most promising subsectors within this sector are: Air Pollution Control/Measure Equipment; Water Pollution Control Equipment; and Solid Waste Recycling Equipment. U.S. companies have an excellent opportunity to take advantage of this emerging market, which is expected to expand to US$5 billion dollars over the next decade, particularly in industrial areas such as mining, wood pulp and fishmeal production. Moreover, U.S. opportunities have been strengthened by the prospect of a Free Trade Agreement between Chile and the U.S. A. Rank of Sector: 2 B. Name of Sector: AIRCRAFT & PARTS C. ITA Code: AIR 1993 1994 1995 D. Total Market Size 550.0 558.0 567.0 E. Total Local Production N/A N/A N/A F. Total Exports N/A N/A N/A G. Total Imports 550.0 558.0 567.0 H. Imports from the U.S. 450.0 457.0 474.0 I. Average Exchange Rate 404.0 430.0 460.0 Comments: The best prospects for U.S. sales to Chile in 1994 include aircraft & parts, avionics and ground support equipment. New airport construction and the upgrading of other airports and air-traffic control systems will provide commercial opportunities to U.S. suppliers. The Chilean market for commercial and civil aviation uses by tradition and preference, U.S. made products and equipment which are preferred for their technology, quality and compliance with delivery dates. The Chilean armed forces are and will remain the principal purchasers of aircraft and avionic equipment. A. Rank of Sector: 3 B. Name of Sector: TELECOMMUNICATIONS EQUIPMENT C. ITA Code: TEL 1993 1994 1995 D. Total Market Size 405.0 486.0 583.0 E. Total Local Production 37.7 46.0 55.0 F. Total Exports 3.0 3.6 4.5 G. Total Imports 367.3 440.0 528.0 H. Imports from the U.S. 85.3 106.0 132.0 I. Average Exchange Rate 404.0 430.0 460.0 Comments: The telecommunications sector is one of the most booming sectors in Chile. Estimated projections are a yearly rate of 20-25 percent during the next 3 years with imports growing at the same rate. Total investments in the next three years are estimated at approximately US$400 million yearly. Telecommunications equipment is not manufactured locally. Main competition for U.S. suppliers is French, Japanese, German, Sweden and Italian manufacturers because of their aggressive marketing strategies and more attractive financial packages. Chile is open to foreign investment and many foreign firms, including U.S., are present in the telecommunications sector either as investors and/or suppliers of services and equipment. The new Telecommunications Law (3A), approved in early 1994, allows total transparency for the telecommunications market and provides open competition in long distance services. Multicarrier system will start operating in July 1994. Under the new law, a Telecommunications Development Fund was created to establish or improve communication services in areas that lack basic services (i.e. rural areas). The Undersecretariat of Telecommunications will provide partial funding for specific projects and call private companies to bid in providing communication services. In spite of the advanced telecommunications services already available in Chile, the market demand will continue to grow rapidly in all areas to keep pace with state-of-art technologies. U.S. suppliers of equipment and services for basic telephony, long distance and cellular services and value added services have excellent opportunities in the Chilean market. A. Rank of Sector: 4 B. Name of Sector: COMPUTERS & PERIPHERALS C. ITA Code: CPT 1993 1994 1995 D. Total Market Size 254.0 304.0 367.0 E. Total Local Production 2.0 3.0 4.0 F. Total Exports 2.0 3.0 4.0 G. Total Imports 252.0 301.0 363.0 H. Imports from the U.S. 123.0 173.0 223.0 I. Average Exchange Rate 404.0 430.0 460.0 Comments: Chile continues to provide an outstanding demand for computers and related equipment. Driven by an increasingly global marketplace, demand for computer systems is expected to continue as key industry sectors continue to automate. Other primary macroeconomic forces driving increasing demand for computer systems are the rising middle class, privatization, and increasing political stability. The latest statistics show a demand for US$252 million for 1993. The projected growth is of 19.8 percent through 1997, with PC's and workstation demand being the highest at 23 percent, followed by mid-range demand at 7 percent. Chile is a mature and sophisticated computer market and many of the factors that apply to the computer market in the U.S. and Europe apply in Chile, such as the commodity pricing at the low end, increased use of distributed systems and networking, and the drive toward open systems. A. Rank of Sector: 5 B. Name of Sector: AUTOMOTIVE PARTS & SERVICE EQUIPMENT C. ITA Code: APS 1993 1994 1995 D. Total Market Size 440.0 466.0 494.0 E. Total Local Production 60.0 63.0 67.0 F. Total Exports 99.0 105.0 111.0 G. Total Imports 479.0 508.0 538.0 H. Imports from the U.S. 130.0 150.0 173.0 I. Average Exchange Rate 404.0 430.0 460.0 Comments: The national vehicle fleet increased from 1.2 million vehicles in 1990, to over 1.7 million vehicles in 1994--600 thousand alone in the city of Santiago--and it is expected to reach 2.5 million by the year 2000. Leading vehicle sales are the U.S., Japan and Russia. The market of auto parts is principally supplied by imports from the U.S., Japan, Brazil and Germany. But, since 1992, there is a growing local industry of auto parts with some forty manufacturers, whose exports increased 54 percent from 1992 to 1993. Two years ago, their production was mainly for the three vehicle assemblers: General Motors, Automotora Franco Chilena S.A., and Cormecanica. For the past two years, sale of used cars represents an average of 72 percent of total market sales. The solution to Santiago's heavy contamination and vehicle congestion are two important priorities of the government. Consequently, the principal investments in the auto parts sector we foresee will have to do with the purchase of new non-pollution diesel motors for buses, the introduction of new fuel alternatives for taxis and bus engines, upgrading technical inspection stations to comply with very strict bus maintenance requirements. A. Rank of Sector: 6 B. Name of Sector: TRAVEL & TOURISM SERVICES C. ITA Code: TRA 1993 1994 1995 D. Total Sales 560.0 670.0 800.0 E. Sales by local firms 100.0 115.0 125.0 in their own market F. Sales by local firms 460.0 555.0 675.0 in foreign markets G. Sales by foreign-owned firms 370.0 443.0 535.0 H. Sales by U.S.-owned firms 90.0 112.0 140.0 I. Average Exchange Rate 404.0 430.0 460.0 Comments: Chileans' main point of destination when travelling overseas is the U.S., both for business and tourism purposes. The U.S. is only surpassed by the bordering country of Argentina. The number of Chilean outbound travellers has increased by 60 percent during the last four years, as a result of their higher income per capita and increased business. The United States is Chile's leading trading partner. In 1993, U.S. exports to Chile amounted to approximately 1.2 billion dollars, while Chilean exports to the U.S. totalled approximately 1 billion dollars. These figures reflect the increasing need for Chileans to travel to the U.S. on business. Chileans have always enjoyed visiting the U.S. for tourism and their main point of destination has been the State of Florida. January and February are the traditional vacation months for Chileans and almost 25 percent of the total travelling is done during these two months. The Commercial Section of the U.S. Embassy recently established the VISIT USA COMMITTEE Chile, which is oriented to promote tourism to the United States, and to increase the number of travellers to non- traditional destinations. All the services provided by hotels, cruises, car rentals, and tourist attractions are of high demand among Chilean travellers. A. Rank of Sector: 7 B. Name of Sector: PORT & SHIPBUILDING EQUIPMENT C. ITA Code: PRT 1993 1994 1995 D. Total Market Size 257.2 309.0 371.0 E. Total Local Production 1.2 1.3 1.3 F. Total Exports 2.0 2.1 2.2 G. Total Imports 258.0 310.0 372.0 H. Imports from the U.S. 136.0 163.0 196.0 I. Average Exchange Rate 404.0 430.0 460.0 Comments: The market for shipbuilding equipment is an estimated US$180 million per year. Chile builds, repairs, and exports steel vessels of over 50 Gross Registered Tons (GRT). It also builds smaller fishing vessels made of fiberglass and has started building sport vessels. The Chilean shipbuilding industry is expected to grow with the economy, at around 6 percent annually. Domestic production of low tech fishing vessels are expected to grow and gradually replace imported goods. The repair business should also grow strongly. Chile can build or repair for 20 percent less than it would cost in Europe or Asia. At present, shipyards are looking into the container construction and repair business. Container movement in Chile is expected to grow around 30 percent annually. Estimates for the 1991-96 period, forecast that the fishing sector will spend US$206.3 million for replacement vessels and US$381 million for newly authorized fleet. A. Rank of Sector: 8 B. Name of Sector: FRANCHISING C. ITA Code: FRA 1993 1994 1995 D. Total Sales 100.0 130.0 169.0 E. Sales by local firms 40.0 52.0 67.0 in their own market F. Sales by local firms 3.0 3.9 5.1 in foreign markets G. Sales by foreign-owned firms 60.0 78.0 101.5 H. Sales by U.S.-owned firms 54.0 70.2 91.3 I. Average Exchange Rate 404.0 430.0 460.0 Note: There are no official figures for this sector. Figures shown above are estimates obtained from Embassy contacts. Comments: Since 1990, franchises have rapidly expanded in Chile, even though this country still presents fresh and challenging grounds. There are currently 35 franchises operating in Chile, with 200 franchisees, who during 1993 totalled sales for US$100 million, accounting for 10,000 direct employment positions. Chile's good economic conditions, open market mentality, credit access, high cultural and educational level, provide an excellent opportunity for franchising companies to operate. Most franchises arrived in Santiago are of U.S. origin and operate in the fast food sector. McDonalds, Kentucky Fried Chicken, Domino's Pizza, Pizza Hut, Arby's, Au Bon Pain and Baskin Robbins among others are present in this market. It is said that in a much smaller scale, Chile reproduces the U.S. market; U.S. products and services have excellent receptivity. There is no special legislation for franchises. So far, franchise companies operating in Chile are subject to regular trade laws. The withholding tax on royalties and other off-shore charges is 40 percent; value added tax is 18 percent; import tax is a flat 11 percent with only a few exceptions for either luxury or restricted products. There is a practically unaddressed market for franchising companies in the areas of automotive, cosmetic, repair and rental services, cleaning (home and industrial), hotels/motels, clothes, apparel, fitness centers, real estate business, pharmacies, supermarkets, etc. A. Rank of Sector: 9 B. Name of Sector: MINING INDUSTRY EQUIPMENT C. ITA Code: MIN 1993 1994 1995 D. Total Market Size 672.3 739.7 813.7 E. Total Local Production 46.6 51.2 56.4 F. Total Exports 5.2 5.5 6.1 G. Total Imports 630.9 694.0 763.4 H. Imports from the U.S. 305.6 333. 363.1 I. Average Exchange Rate 404.0 430.0 460.0 Note: All amounts are estimates based on historic data, and expected growth rates. Comments: Mining is clearly the most important sector of the Chilean economy, and remains the most attractive to foreign investors. The value of mining exports for 1993 is US$4 billion, copper accounting for US$3.3 billion. Production of copper is expected to reach US$2.1 million tons during 1994, US$2.85 million tons by 1995, and US$3.5 million tons in the beginning of the next century. Gold production was 29 metric tons in 1991, and is expected to reach 47 metric tons by 1998. Estimated value of investment in mining projects for the 1994-1997 period is US$9 billion. By 1998, equipment demand could have grow to US$1 billion, over 60 percent could be imported. U.S. suppliers have an advantage due to their advanced technology, excellent quality, and a traditional presence in the market. U.S. suppliers should be advised to develop more favorable financing terms. Competition will be increasing from countries such as: Brazil, Canada, Japan, Germany, France, Sweden and the U.K. Some specific equipment imports for 1993 were: a) Mining excavation equipment (drills, Jumbos, cutters, excavators) US$45.2 million, b) Conveying and transportation, (trucks, tractors, conveyors, cranes, LHDs, loaders, and scoops), US$125.6 million, c) Mineral preparation, (pumps, compressors, grinders, crushes, furnaces, and equipment for washing and drying minerals and flotation, US$8 million. U.S. share of market in the three groupings for 1993 was: a) 53 percent, b) 62 percent, c) 29 percent. A. Rank of Sector: 10 B. Name of Sector: CONSTRUCTION MACHINERY C. ITA Code: CON 1993 1994 1995 D. Total Market Size 301.9 315.4 353.5 E. Total Local Production 1.0 1.0 1.0 F. Total Exports * 4.5 4.7 5.0 G. Total Imports 305.0 319.1 357.4 H. Imports from the U.S. 165.7 182.3 200.5 I. Average Exchange Rate 404.0 430.0 460.0 * The local contribution to the total market can be considered insignificant. The export amounts correspond to products re-exported. Comments: Construction has been one of the strongest-growing sectors in response to Chile's six percent average growth rate in the past twelve years. For 1994 it is expected to decrease to around 4.5 percent, and to recuperate in 1995. The principal user of construction machinery is public and private infrastructure development. Chilean Chamber of Construction estimated on March 1994 US$20 billion of private infrastructure productive investment for 1993-1997; this includes mining projects, commercial building and malls, power generation projects, government funded transport and public service infrastructure. The mining sector, whose investment programs are more stable than other sectors should generate strong sales of equipment in the next few years. Hydraulic excavators are said to have best growth potential, followed by shovel loaders and bulldozers. Paving machinery holds promise. There are established local firms with gaps in their product lines. U.S. products have high preference, and have very professional local representatives. A. Rank of Sector: 11 B. Name of Sector: RAILROAD EQUIPMENT C. ITA Code: RRE 1993 1994 1995 D. Total Market Size 57.0 68.0 82.0 E. Total Local Production 1.4 1.5 1.6 F. Total Exports 2.3 2.4 2.6 G. Total Imports 57.4 69.0 83.0 H. Imports from the U.S. 25.0 30.0 36.0 I. Average Exchange Rate 404.0 430.0 460.0 Comments: In 1992, the Chilean Congress approved the privatization of 51 percent of the cargo portion of the State Railroad Company (Empresa de Ferrocarriles del Estado, EFE). Ferrocarriles del Pacifico, FEPASA, an affiliated of EFE, is in charge of the privatization process, which opens unique opportunities to U.S. suppliers of new and used railroad equipment, as well as know-how on railroad operations. Railroad freight cars with a loading capacity per axle of 20 tons, as well as signalling and communications equipment are in great demand. With regard to the passenger transportation area, EFE requires US$350 million investment to update its infrastructure and equipment for the next 10 years, financing is needed. Future private investment in the passenger area will be a matter of law. A. Rank of Sector: 12 B. Name of Sector: BUILDING PRODUCTS C. ITA Code: BLD 1993 1994 1995 D. Total Market Size * 445.0 471.0 528.2 E. Total Local Production * 264.4 280.7 306.6 F. Total Exports 62.6 67.6 73.0 G. Total Imports 255.0 268.0 286.0 H. Imports from the U.S. 83.0 87.0 93.0 I. Average Exchange Rate 404.0 430.0 460.0 * Estimates for 1993 Comments: Construction has been on of the strongest-growing sectors in Chile. In 1993 the investment in construction grew by 14 percent and for 1994 it is expected to decrease to around 4.5 percent, but will recuperate in 1995. In this sector, 40 percent of total investment is in the building sectorr (mostly private), and 60 percent in infrastructure projects (mostly public). Building permits for private housing with no government subsidies are expected start recuperating in the second semester of 1994. In 1993 public infrastructure investment grew by 12 percent, private infrastructure grew by 12.1 percent, projects related to mining, energy and industry were the most relevant. The projections for the housing sector will effect the market for related building products. Growing worries about safety and the environment will present opportunities for US suppliers. Ceramics, wallpaper, coverings, and refractory bricks are areas in which the U.S. has not historically had much market share, but now has potential. Main competitors are Spain, Italy, Brazil and Argentina. The most promising sectors are: glass, floorings (non wood), refractory bricks, plastic tubing and fittings, iron or steel structures, and plumbing fittings, faucets and the like. Wood will not sell, total building products exported to the U.S. by Chile were US$96.8 million in 1993, almost all in shaped wood and furniture parts. A. Rank of Sector: 13 B. Name of Sector: MEDICAL EQUIPMENT C. ITA Code: MED 1993 1994 1995 D. Total Market Size 110.0 120.0 132.0 E. Total Local Production 0.0 0.0 0.0 F. Total Exports 0.0 0.0 0.0 G. Total Imports 110.0 120.0 132.0 H. Imports from the U.S. 47.0 57.0 67.0 I. Average Exchange Rate 404.0 430.0 460.0 Comments: Chile's medical equipment market looks promising for the next few years. Several programs for large-scale purchases of modern equipment as part of an effort to upgrade the public and private health sectors have received government approval. The Congress approved 1994 government budget for the health sector was increased for the fifth consecutive year and amounts to US$2,200 million. In 1993 the Chilean medical equipment and supplies market imported approximately US$110 million. In 1994 this sector's imports will reach US$120 million and growth is estimated at 10-15 percent for 1995. A. Rank of Sector: 14 B. Name of Sector: OIL & GAS EQUIPMENT C. ITA Code: OGM 1993 1994 1995 D. Total Market Size 87.2 113.4 287.0 E. Total Local Production 0.0 0.0 0.0 F. Total Exports * 11.6 12.2 13.0 G. Total Imports 75.6 98.3 249.0 H. Imports from the U.S. 29.0 37.7 95.4 I. Average Exchange Rate 404.0 430.0 460.0 * The local contribution to the total market can be considered insignificant. The export amounts correspond mainly to drilling & boring machinery and tools that are re-exported. Note: There are no statistics for oil and gas equipment imports as such. The size of the market must be deduced from the investment figures for significant up-coming hydrocarbon or petrochemical projects, estimating the amount of equipment based on typical industry experience. Considering projects of US$2,490 million, we estimate equipment purchases of US$1,150 for the period 1994-2003. For 1995 the estimate is US$287 million, and US$337 million for 1996. The nature of projects, however, results in irregular equipment demand and sales curves. The 1993 amounts are real data. Comments: The U.S. is the principal supplier for critical and specialized, technically advanced items required for oil and gas related projects. South Africa, Argentina, Brazil, Venezuela and Mexico are strong competitors in tubing and plate steel. Valves also come from Japan. Compressed gas storage is supplied by companies from Japan and Spain, with Belgium, France, Germany and Italy competing for a market share. Tank fabrication and installation services are provided by Mexican, Brazilian and Argentinean firms. Refinery processing units are all of U.S. origin. European products had until recently enjoyed a strong position versus U.S. manufactured goods because of a more competitive price situation. A. Rank of Sector: 15 B. Name of Sector: COMPUTER SOFTWARE C. ITA Code: CSF 1993 1994 1995 D. Total Market Size 94.0 113.0 136.0 E. Total Local Production 30.0 45.0 58.0 F. Total Exports 28.0 39.0 50.0 G. Total Imports 15.0 19.0 21.0 H. Imports from the U.S. 12.0 17.0 19.0 I. Average Exchange Rate 404.0 430.0 460.0 Comments: Chile is regarded as highly progressive in its use of sophisticated open system solutions and, based on a well-educated internal market, is emerging as a net exporter of software. There has been a strong increase in demand for software due to a rapid expansion in computer hardware sales and declines in computer prices. All well-known software companies are either directly represented in Chile or have an agent/distributor. As computer use continues to increase in Chilean businesses, we expect sales of higher-priced software to keep pace with projected hardware growth. Piracy is said to be a problem, although more at the individual than the corporate level. A. Rank of Sector: 16 B. Name of Sector: SAFETY & SECURITY C. ITA Code: SEC 1993 1994 1995 D. Total Market Size 95.8 116.0 138.0 E. Total Local Production 16.6 20.0 24.0 F. Total Exports 0.8 1.0 1.2 G. Total Imports 79.2 96.0 114.0 H. Imports from the U.S. 43.3 54.0 64.8 I. Average Exchange Rate 404.0 430.0 460.0 Comments: The Chilean market for safety and security equipment continues to grow at a sustained rate. Safety and security high tech equipment is not manufactured locally. Local production of some equipment is done with imported materials, or assembled in Chile with imported components. The U.S. is the largest supplier of safety and security equipment followed by Japan with 12 percent of market share. In both cases, access control equipment (card key and magnetic media devices HS847192) amounts almost to 60 percent of total imports. Chileans are conscious about protecting their lives and properties. Private industries, financial institutions and government entities are demanding more sophisticated products and equipment to ensure protection for its personnel and facilities. The highest demand of safety equipment is concentrated in access control equipment and other detection apparatus for industrial and commercial entities, and alarms for both residences and vehicles. A. Rank of Sector: 17 B. Name of Sector: SPORTING GOODS & RECREATION GOODS C. ITA Code: SPT 1993 1994 1995 D. Total Market Size 123.3 150.4 180.5 E. Total Local Production 42.0 49.9 58.9 F. Total Exports 16.3 19.4 23.3 G. Total Imports 97.6 118.1 141.7 H. Imports from the U.S. 22.1 26.8 32.4 I. Average Exchange Rate 404.0 430.0 460.0 Comments: Sports and outdoors recreational activity increases in Chile directly related to the improvement of economic conditions in the country. Another determining factor is an awareness of the general public of the need to become and remain fit and healthy together with a back-to-nature trend instigated by environmental awareness. This sector's market grew by 41 percent during the period 1991-1992 and by 47 percent during the period 1992-1993. Subsectors suffer extreme variations such as 107 percent market growth for bicycles and related equipment (1991-1992). Sporting goods of U.S. origin are regarded as being of excellent quality, but imports are limited due to higher prices when compared to its competitors Taiwan, Japan, Korea, China, Hong Kong and other Far East countries with inexpensive labor costs. Local production mainly consists of bicycles and related products, billiard an other game tables, boats, motorboats, sailboats and yachts, soccer equipment, sleeping bags and backpacks. There is a growing interest in manufacturing locally under a license agreement, payment of royalties, etc. Labor cost in Chile is relatively inexpensive compared to the United States. Best subsectors are camping, outdoors and recreation, water sports, bicycles and fitness equipment, products and accessories. A. Rank of Sector: 18 B. Name of Sector: ELECTRICAL POWER SYSTEMS C. ITA Code: ELP 1993 1994 1995 D. Total Market Size 156.6 172.3 192.4 E. Total Local Production * 31.0 32.9 36.1 F. Total Exports 0.7 1.3 1.6 G. Total Imports 126.3 140.2 157.0 H. Imports from the U.S. 27.6 30.1 33.1 I. Average Exchange Rate 404.0 430.0 460.0 * Estimates for 1993 Comments: The market is good and, although small, it is growing at ten percent a year. Installed capacity will grow from 5,100 MW to 6,300 MW in the 1993-1997 period, and to 20,000 MW in the next two decades. Competition is fierce. By early 1993 the U.S. had lost market share to competitors from Japan, Germany, and also to Brazil. Lower price and better financing terms were crucial in their success. Dominant forces are the fast-growing demand for electricity and the government's desire to develop well-diversified and an environmentally cleaner base of energy, like natural gas. Investments worth US$1.5 billion were planed for the 1993-1997 period, sixty percent for thermoelectric plants. About one third of all investment projects will be done by state-owned companies, and the rest by the large superstars of Chile's stock market, Endesa and Chilgener, which expanded into neighboring Argentina and will probably expand to Peru in 1995. Ongoing further privatization of Chilean power generation-distribution, as well as joint ventures among Chilean and U.S. companies will be positive factors. This provides opportunities for U.S. to retrofit old, polluting thermoelectric plants as well for supplying generating equipment for new projects. A. Rank of Sector: 19 B. Name of Sector: APPAREL C. ITA Code: APP 1993 1994 1995 D. Total Market Size 358.0 393.0 432.0 E. Total Local Production 180.0 198.0 218.0 F. Total Exports 73.0 84.0 96.0 G. Total Imports 178.0 195.0 214.0 H. Imports from the U.S. 20.3 23.0 26.5 I. Average Exchange Rate 404.0 430.0 460.0 Comments: The growth of Chile's economy, low unemployment and inflation rates have resulted in higher income per capita for Chileans. The apparel market demand in Chile is growing in the same manner as the income of Chileans is increasing. The local apparel industry supplies most of the market demand. Imported apparel is concentrated mainly in highest quality and exclusive brands (from U.S., U.K., Italy, Spain and France) and in very low priced clothing supplied by Asian countries. The Chilean market follows both the European and U.S. fashion styles. Chilean adults prefer European style for formal dressing and U.S. fashion for leisure and sporting wear. The Chilean youth and children definitely prefer U.S. fashion styles, heavily influenced by T.V. shows and movies. Chileans still prefer the traditional infants' wear manufactured locally, however, imported and exclusive children's apparel has a market among the highest income level people. The Chilean apparel market provides U.S. manufacturers good opportunities. However, U.S. suppliers must keep in mind that Chile is a small and very competitive market, and that price is the main obstacle to the success of U.S. products. A. Rank of Sector: 20 B. Name of Sector: LABORATORY & SCIENTIFIC INSTRUMENTS C. ITA Code: LAB 1993 1994 1995 D. Total Market Size 62.0 71.0 81.0 E. Total Local Production 0.0 0.0 0.0 F. Total Exports 1.0 1.0 1.0 G. Total Imports 62.0 71.0 81.0 H. Imports from the U.S. 22.0 25.0 29.0 I. Average Exchange Rate 404.0 430.0 460.0 Comments: Chile with its open trade system and its healthy economy offers U.S. manufacturers of laboratory and scientific instruments a broad range of market opportunities. Local manufacture of laboratory equipment is still very limited and most of market demand is satisfied with imported products. New hospital projects are expected to dramatically expand growth in this sector.