Tough Adjustments That Membership in the EC Will Bring Should Boost Demand for High-Tech Products and Services
Since Greece’s initial association with the European Community in 1962, but especially since full EC accession in 1981, foreign competition in the Greek import market has been fierce. From a high of 8.4 percent in 1980, the U.S. share of Greek imports declined steadily to under 3 percent in 1987. Total U.S. exports to Greece have been on the decline since 1980, falling-with some minor year-to-year upward fluctuations-from the $922 million peak in 1980 to $402 million in 1987. These figures are misleading, however, because they do not include imports into Greece from wholly-owned American subsidiaries in Europe.
Major U.S. exports to Greece over the past few years, ranked in order of magnitude, have been the following: soybeans, aircraft and parts, pharmaceuticals, cotton, wood pulp, telecommunications equipment, wood, instruments (for measuring, checking, and analyzing), animal feeds, fruits, and nuts. The government’s ambitious plans for development of its transportation, energy, telecommunications, metals/minerals, agricultural and health care sectors also offer major opportunities for U.S. firms marketing construction services; electric trains and related equipment; food processing and packaging equipment; telecommunications equipment, computers, peripherals, and software; medical instruments and equipment; analytical and scientific instrunients; and business equipment.
U.S. imports from Greece are dominated by four major groups-mineral fuels, beverages and tobacco, basic manufactures, and miscellaneous manufactures.
Greece has traditionally been a minor market for U.S. exports and a minor source of U.S. imports. In 1987, Greece was the 62nd largest export market for the United States, well behind even Portugal and Yugoslavia. On the import side, Greece ranked as the 57th supplier to the United States, and one of the smallest West European suppliers to the U.S. market.
Although Greece is a relatively small market, with a population of nearly 10 million, the Greek market should not be overlooked by U.S. exporters. American suppliers willing to make persistent and aggressive marketing efforts in Greece will continue to find a preference for American products and technology in many product categories. Greece’s need to modernize its industrial base to meet the stiff competition within the unified EC market should lead to increased demand for imported high-technology products, processes, and consulting services, areas in which U.S. firms offer a distinct advantage.
Another commercial development which has intensified the American business presence in Greece is its regional importance as a base for American firms’ Middle East and North African marketing operations. Nearly 100 U.S. regional offices are located in Greece under a special Greek Law 89 introduced in 1967. In response, the U.S. Department of Commerce through its Foreign Commercial Service at the U.S. Embassy in Athens assists these U.S. regional offices.
Best Export Prospects
Most export opportunities stem from Greece’s need to modernize its industrial base to compete in the- EC market. In recent years, the high cost of American products often deterred potential sales. The dollar’s recent depreciation should help redress this situation. The government’s ambitious plans for development of its transportation, energy, telecommunications, metals/minerals, agricultural, and health care sectors offer major opportunities for U.S. firms in the following categories:
Medical equipment-The Greek market for medical, hospital, and diagnostic equipment presents good prospects for U.S. firms wishing to expand their market share or actively seeking to penetrate a new market. U.S. products still enjoy a qualitative and technological edge. About 90 percent of market demand is satisfied by imports. Imports are projected to be $54 million in 1988, and are growing 12 to 18 percent annually. Trade sources believe that Americanmade medical equipment could capture 20 percent of this market by employing more aggressive marketing techniques. Four major Greek hospitals, with a total capacity of 2,500 beds, are now under construction. Six additional hospitals will also be completed in the near future. Medical equipment imported into Greece must conform to the technical requirements of the country of origin.
Computers, peripherals, and software-This market continues to be dominated by imports. Over the next four years, computer sales are expected to grow annually by 15 to 20 percent. In the public sector, the Greek Government continues to expand its computer use. Computer technology or informatics is an integral part of Greece’s efforts to participate in the technological revolution. Growth of computer sales in the private sector will continue in all areas, but mainly in manufacturing, chemicals, plastics, trading, transportation, banking, shipping, and petroleum. Demand for mini- and micro-computers is steadily increasing at the expense of medium and larger computer systems. The software industry is a rapidly growing import market. There are excellent opportunities for well-organized, aggressive software firms to enter this new market. The U.S. market share is 72 percent, if imports from both the United States and European subsidiaries are included. U.S. exports were approximately $10 million in 1986 and are projected to increase annually by 3 percent.
Construction machinery and equipment-The total import market for construction machinery and equipment is estimated at $360 million in 1986. Apart from low-technology equipment, most construction machinery and equipment is dominated by imports. The market for construction machinery is expected to expand annually by 7 to 8 percent and reach $450 million in 1989. U.S. equipment enjoys a very good reputation in the market and is recognized for its superior quality and durability. There is good potential for U.S. road construction and tunnel boring machinery, crushers, pulverizers, and washing machines, as well as earthmoving and excavating machinery. The U.S. market was estimated at 3 percent or $11 million in 1986 from U.S.-origin manufacturers, but an additional 10 percent if U.S. subsidiaries in Europe are included. With an expected 8 to 12 percent annual growth, U.S. exports may reach $15 million in 1989.
Food processing and packaging machinery-Greece’s integration into the European Community in 1981 has necessitated a restructuring of the food processing and packaging sector. Increased demand for better processed and packaged products and stiff competition from its EC partners have created an attractive market for modern, high-technology processing and packaging equipment. The total market for food processing and packaging equipment is expected to reach $96 million by 1989, a 10 to 18 percent annual growth rate. The breakdown of demand by equipment category is 75 percent for processing equipment and 25 percent for packaging equipment. In 1986, the U.S. market share was estimated at 14 percent or $12 million. A more aggressive marketing effort is needed to strengthen ties with Greek buyers.
Renewable energy equipment-conditions are ideal in Greece for the growing application of solar, wind, and geothermal energy. With a total market estimated at $46 million in 1986, an annual growth rate of 12 to 17 percent is expected during the next five years in both the public and private sectors. The number of renewable energy applications is increasing in Greece in both the public and private sectors. Several major private and public projects have been planned, including wind parks, geothermal wells, and photovoltaic pilot projects, Trade statisticsare not available which show U.S. exports of renewable energy equipment because U.S. firms do not supply assembled or semifinished solar heaters to Greece directly from the United States but through their EC subsidiaries.
Commercial fishing equipmentGreeks are by tradition a maritime people: they operate numerous and varied vessels including many fishing boats. The fishing fleet is presently comprised of 20,000 coastal fishing boats (under 15 meters in length), 1,200 medium-range fishing boats (15 to 28 meters long), 25 ocean fishing boats, and 25 shrimp fishing boats. The size of the engine market is between $6 million and $7 million, with 150 to 200 engines sold every year at an average prices of $36,000. Imports supply nearly all engines destined for fishing vessels. The U.S. market share is estimated at 15 to 20 percent. The EC is not self-sufficient in fish production, and, therefore, has granted Greece approval for upgrading its fishing industry and modernizing its fishing fleet. Most purchase decisions for fishing gear replacement are made in Piraeus, the seaport adjacent to Athens. The entire Greek market for navigational and fishing electronic aids is estimated to be $10 million.
Report on Greece
The article on these pages was excerpted from a new publication in the Overseas Business Report series, titled Marketing ill Greece, (OBR 88-12). The full 61-page report contains a wealth of information that would be useful to anyone planning to do business in Greece. Copies are available for $1.50 from the Publication Sales Branch, Room H-1617, U.S. Department of Commerce, Washington, D.C. 20230. The full Overseas Business Rt,port series is available for $14 per year ($3.50 additional for foreign mailing); order from any Commerce Department District Office or from the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402. OBRs provide the latest marketing information on countries offering good potential as sales outlets for U.S. goods.
Greece’s Trade Profile
Greek Imports-$10,198 million in 1986, $12,556 million in 1987 (Bank of Greece data, on a settlement basis), Major suppliers 1986 (Customs data): West Germany-22.2 percent, Italy-12 percent, Saudi Arabia-6.8 percent, France-8 percent, and United States-3.2 percent. Principal imports: crude oil, machinery, meat, iron and steel, and chemicals. Principal imports from the United States: raw materials, chemicals, soybeans, aircraft parts, antibiotics, wood pulp, and navigational instruments.
Exports-$4,512 million in 1986, $5,614 million in 1987 (Bank of Greece data). Major buyers 1986 (Customs data): West Germany-23.7 percent, Italy-13.5 percent, France-9.5 percent, United States-7.1 percent, and United Kingdom-6.8 percent. Principal exports: textiles, petroleum products, metals, fruits and vegetables (preserved), and olive oil. Principal exports to the United States: tobacco, petroleum products, cement, mink wearing apparel, marble, iron, and steel.
Trade Policy-An EC member since 1981, Greece is adjusting its economy for full internal market liberalization in the EC by 1992. Aims at increasing economic and commercial ties with Balkan countries, the U.S.S.R., and the Middle East. Member of OECD, GATT, and IBRD.
Trade Prospects-Public projects in major infrastructure areas. Good prospects for sales in telecommunications, computers and software, construction and mining machinery, food processing and packaging, and security equipment.