V. MARKETING U.S. PRODUCTS AND SERVICES 1. Distribution and Sales Channels In C te d'Ivoire, there are seven major population centers: Abidjan (2.5 million) on the coast, the economic capital; Bouake (494,000) in the center; Daloa (182,000) in the midwest; Man (134,000) in the West; San Pedro (80,000), the second seaport north of Abidjan; Korhogo (164,000) in the North; and Yamoussoukro (160,000), the political capital, two and a half hours north of Abidjan. Many banks and insurance companies and one supermarket chain maintain branch operations in these centers, and Air Ivoire, the national airline, services them on a regular basis. The principal methods of selling are: retail outlets (either in the indigenous market or an established chain), a direct sales force, an agent or distributor, established wholesalers or dealers, and selling directly to the government, cooperatives and other indigenous organizations. The common forms of business organization adopted in C te d'Ivoire are discussed below. It would be wise for the exporter to consider the requirements of the product and its potential market before choosing a distribution channel. 2. Use of Agents/Distributors and Finding a Partner There are no laws requiring the retention of a local agent or distributor for a foreign company exporting to the C te d'Ivoire. However, it is advisable that a company attempting to break into the market retain a person or persons resident in C te d'Ivoire. An agent or distributor should possess a thorough understanding of the economy and be fluent in French. If the exported product requires servicing, qualified personnel and a reasonable inventory of spare parts must be considered. Exporters should be aware that agents and distributors commonly represent several product lines. European competitors inevitably market their geographic proximity as a competitive advantage; they are often able to provide a technician or part on short notice. Failure to address the issue of after sales support and service has been a principal reason for limited U.S. marketing success in C te d'Ivoire. Prior to committing to a long-term relationship, exporters are advised to visit C te d'Ivoire to gain firsthand knowledge of the country. The U.S. and Foreign Commercial Service (US&FCS) can help exporters locate agents and distributors through the Agent Distributor Service (ADS) program. Information regarding this program is available through the US&FCS district offices located in all 50 states and Washington, DC. The cost of one report is $125. 3. Wholesalers and Retailers Many of the goods sold in the C te d'Ivoire pass through wholesale organizations, many of which are government- controlled or private monopolies. Examples include: alcohol and tobacco products, pharmaceuticals, and consumer food products. Commodities, such as cotton, coffee, cocoa, sugar, rice are handled by cooperatives and marketing boards. Traders, who are also wholesale distributors, handle minor cash crops and produce. Most of the wholesale establishments and modern retail outlets are concentrated in Abidjan. These include the company headquarters, branch banking and insurance operations, supermarkets, car dealerships and specialty stores. Both within and outside of Abidjan, most of the retail outlets are small-scale, individual proprietorship operations that lack specialization. The "general store" concept, stocked with a wide variety of goods, is generally used outside of Abidjan. A small number of banks, insurance companies and one supermarket chain have operations in the larger cities outside of Abidjan. 4. Forms of Business Organization The four common forms adopted by businesses in C te d'Ivoire are: Branch of a Foreign Company (Succursale): Branches of foreign companies may not be established until they are registered with the Tribunal de Premiere Instance. Once registered, the branch is regarded as an Ivorian judicial entity and is legally independent of the parent company. Joint Venture (Association en Participation): Although not regarded as legal corporate entities, joint ventures are allowed in C te d'Ivoire. As a result, persons entering into joint ventures should each register under his/her own name as legal entities in C te d'Ivoire. Presently, it is possible for the non-Ivorian partner to hold 51% or more of the company's assets. Limited Liability Company (Societe a Responsabilite Limite - SARL): All SARLs must have a minimum capital of approximately $900 (CFA 500,000) and at least two shareholders. No share certificates are issued. Stock Corporations (Societe Anonyme - SA): In order for a corporation to be formed, it must have at least seven shareholders. Each share must have a value of at least approximately $10 (CFA 5,000) and a minimum capital requirement of approximately $2,000 (CFA 1 million). Directors' meetings are required on a regular basis. If a corporation has share capital below approximately $4.5 million (CFA 2.5 billion), there is a stock registration tax of one percent of the value of the stock for the company. For corporations with capital valued above CFAF 2.5 billion, the registration tax is lower than one percent. Other business forms include regional offices, sole proprietorships, local agency or distributorship arrangements, and various entities which are analogous to limited and general partnerships and state-owned or partially government- owned companies. Franchises are not a factor as yet in the Ivorian environment. 5. Establishing an Office All business entities must register with the Registrar of Commerce within 30 days of commencement of activity. If the SARL or SA is the chosen form, the following must be filed with the Register of Commerce: a copy of the company by-laws, the Board minutes authorizing the establishment of the company, and the name of the manager. Companies must submit an annual balance sheet and profit and loss statements to the Ministry of Economy and Finance. Other periodic filings are required. Business entities must file a Declaration of Commencement of Business with the Tax Department of the Ministry of Finance and the Economy, the Labor Department and the National Social Security Fund. If the entity contemplates the importation or exportation of goods or materials, it must register as an importer or exporter with the Department of External Trade of the Ministry of Commerce and Industry. The prior permission of the Office of External Credit and Finance of the Ministry of Finance and the Economy must be obtained for all equity investments and loans which originate from a country outside the CFA Franc zone. Investment approval is routinely granted, generally within a few weeks. 6. Advertising/Trade Promotion and Selling Techniques There are over ten advertising agencies with headquarters in Abidjan offering a full range of publicity and sales promotion services throughout the country. Two agencies, Lintas and Nelson McCann Erikson, are affiliates of the American multinational, Interpublic Group of Companies. Lintas has offices in 20 African nations. Several agencies offer marketing research services as well. There over ten regular daily and weekly news publications circulating in C te d'Ivoire. The most widely read daily paper is Fraternite Matin which is controlled by the Ivorian government. Fraternite Matin also publishes "Le Guido", a weekly glossy publication highlighting events around Abidjan, television and cinema schedules, airline schedules, and interviews with people of note. The second largest daily is La Voie, whose editorial line supports the political views of the principal opposition party, the FPI. Ivorians own approximately 3 million television sets and 7 million radios and are accustomed to consumer oriented commercials and advertising and public service announcements. Contact information for Ivorian media (print, radio and TV) is listed in the Appendix Section 5.a. Suppliers of imported products are expected to provide advertising and promotional support, particularly if the item is a new product or brand. Radio and television spots are commonly used, as are posters, point of sale displays, coupons, and billboards. Short films run at local cinemas are another popular medium for automobile and tobacco products. Trade fairs are a sporadic, but nonetheless, popular means of reaching the Ivorian buyer. Packaging is important to the Ivorian consumer. Eye-catching, colorful designs, blister packs and small, reusable containers appeal to the consumer. Extended shelf life in a humid environment is also an important marketing characteristic. 7. Pricing and Credit Pricing in French Francs, especially for deliveries over a six to 12 month period, will help U.S. exporters penetrate the market. Costs should be computed on a c.i.f. basis. Local sources of commercial credit are extremely limited; therefore, the liberal credit terms usually offered by the competition may in fact outweigh a considerable price differential. Nevertheless, U.S. exporters are advised to utilize an irrevocable, confirmed letter of credit, especially if they are non-resident and new to the Ivorian market. Foreign competition often grants credits of 180 days for consumer goods and 24 months for small machinery and equipment. European banks often quote liberal terms and may discount paper for their exporters who are pursuing long-term credits. The U.S. and Foreign Commercial Service (US&FCS) can help exporters formulate sound credit policies applicable to local markets and credit information on individual Ivorian firms through the World Traders Data Reports (WTDRs) program. Information regarding this program is available through the US&FCS district offices located in all 50 states and Washington, DC. The cost of one report is USD 125. Similar information is also available from private agencies. 8. Sales Service/Customer Support Limited or unavailable after-sales support and service has been a principal reason for limited U.S. marketing success in C te d'Ivoire. They are especially critical for high-tech or heavy industrial equipment such as: computer hardware and software, telecommunications equipment, photocopiers, automobiles, and air conditioning/refrigeration units. A central service telephone number and radio-dispatched technicians are commonly used by local firms. French-language service manuals, frequent personnel training, and a reasonable supply of spare parts are also very important. 9. Selling to the Government The Ivorian Government periodically issues procurement tenders that are published in local newspapers and sometimes in international journals. The tender issuing board is usually the responsible ministry making the request. The procurement is typically financed by a multilateral lending institution such as the World Bank, the African Development Bank or the International Finance Corporation. There is usually a small charge to purchase the bid documents which will be in French. 10. Intellectual Property Rights Intellectual property rights in C te d'Ivoire are governed by the Bangui Treaty of March 2, 1977 which provides for a regional system for the protection of intellectual property rights in the predominantly French-speaking countries of West and Central Africa. The Bangui Treaty of March 2, 1977 extended the protection of the Libreville Treaty of September 13, 1962, which had created a regional regime in the domain of industrial property rights for the former French colonies, to all industrial property rights including, patents, trademarks, industrial designs and models, commercial names, licenses, captions, unfair competition. This autonomous regime affords these countries the ability to manage the creation, individualization and development of their products both internally as well as internationally. The African Organization for Intellectual Property ("OAPI") is the regional institution which handles all matters, other than judicial proceedings, arising out of or in connection with the application or interpretation of the Bangui Treaty. Judicial actions are to be brought in the national courts of the member countries pursuant to the terms and conditions of the Bangui Treaty. All rights to industrial property are filed with OAPI, whose headquarters are located in Yaounde, Republic of Cameroon. Each of the member countries have local offices which, in theory, are capable of receiving filings of registrations, which are then valid for the entire region. The member countries of OAPI are Benin, Burkina Faso, Cameroon, the Central African Republic, Chad, Congo, C te d'Ivoire, Gabon, Guinee, Mali, Mauritania, Niger, Senegal and Togo. 11. The Ivorian Legal System Prior to December 1958, the Republic of C te d'Ivoire was a colony of France. Following a brief interim period of dual governance between local representatives and French colonial officials, full independence was obtained in 1960. During the colonial period, the law in force in C te d'Ivoire came from three distinct sources: laws from France made applicable to C te d'Ivoire by specific French statutes, different decrees issued by the colonial authorities and the local customary law of the different ethnic groups. As a result of its colonial past, the Ivorian legal system originates directly from the French system. Pursuant to article 76 of the Ivorian Constitution, enacted by Law No. 60- 204 Of November 3, 1960, all legislation in effect in C te d'Ivoire during the colonial period remained in effect in the new republic to the extent that it was not inconsistent with the provisions of the Constitution. Nevertheless, if there has been subsequent legislation passed in C te d'Ivoire, then the French law in question is no longer applicable. French doctrine (treaties, legal articles, books) is instructive and informative on general principles of law and is often used as a reference to determine points of Ivorian law. All official documents, papers, contracts, court papers, corporate documents, among other things, must be in the French language. It should be noted that C te d'Ivoire has numerous local languages. Dioula (pronounced JOO-LA) is the language commonly used in the traditional market place as the lingua franca. The labor laws in force in C te d'Ivoire are considerably more burdensome than those that an American employer may be accustomed to in the United States. For example, expatriate labor contracts, as well as all fixed term contracts, must be registered with the labor authorities and approved before such employees may be hired. In addition, all employees accrue during the time with the company in question certain statutory benefits and entitlements which may not be waived by contract. The Ivorian courts have historically been viewed as favoring the employee in labor disputes. Recent decisions, however, have demonstrated a retreat from harsh judgments against the employer. It is advisable to consult a local attorney to ensure that the company is following all the appropriate laws and procedures with regards to employment matters. While there have been some changes in the legislation, such as the recently established right of a married woman to carry on a commercial operation without the approval of her husband, the commercial and corporate laws of C te d'Ivoire are for the most part those that were in force in France prior to independence in 1960. Establishing a presence in C te d'Ivoire for an American company is generally a more costly and involved procedure than in the United States. In addition, the law requires a business to provide certain corporate information on all its papers, letterhead, invoices, etc. Again, consult a local attorney with regards to these matters.