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Chapter II   

Macro and Micro Analysis

2.1  Demographic and Economic Profile of Germany

Germany occupies a strategic position in Europe, both as a market place in its own right as a focal point from which to approach a lucrative market of 320 million European consumers.

The Federal republic has a total area of 357021 square kilometres. This area is divided into Laender or states, Regierungsbezirke (Administrative Districts) divided into Kreise (Urban and rural administrative Sub districts). The rural sub districts in turn consist of Gemeinden (Communities). The Federal Republic and the individual federal states have their own government, the supreme authority, however rest with the Federal Government.   

.In 1997, the residential Population of the Federal Republic of Germany was 82,057,400. The total figure comprises 39992300 male and 420651000 female. The age group between 25 to 45 is 31.72%, followed by the age group 45 to 60 25.51% and older 15.80%

At the end of 1997, the total foreign population was 9.04%

�         Population at glance:

                                                                       Source:Statistisches Bundesamat

�         Tendencies in population distribution:

Spreading of urban ways of life, expansion of the large agglomeration areas, decline in the number of people living in the down town areas. More than a third of all households in the federal Republic are found in the commercial centres or agglomeration area of Berlin, Hamburg, the Rhur areas, the Rhine main areas, Stuttgart and Munich. 

The important city and foreign trade centres are Hamburg, Bremen, Luebeck, Duesseldorf, Frankfurt and Berlin.

2.1.1 Economic profile and foreign trade:

The economic profile of the Federal the republic of Germany is characterised by a high degree of industrialisation, strong emphasis on foreign trade, and a high degree of integration into the world economy as well as by a large consumption, economic and growth potential. Germany is one of the largest producer and consumer among the countries in Europe.

With over 82 million consumers, it represent a market with a proven capacity for absorbing imports including products from developing countries. Germany does offer favourable conditions for exporters in developing nations, owing to its liberal trade policy, along with sufficient foreign exchange reserves to pay for the imports.

�         Economy and trade at glance:

                                                   Source: Key Data on Germany1999; Statistisches Bundesamat

2.1.2. Market Characteristics and apparent consumption

�         Market structure, size and significance

In Germany there is well-established crafts and handicrafts industry. This includes not only a large number of artisans and those are operating a cottage industry, but many other establishments that provide various services to this industry.

Some handcrafted articles, particularly high quality items, are successfully marketed as limited editions. The mostly handcrafted and allied product produced by Individual person, wholesalers and retailer sale their product in the form series and collections. However this particular type of collection are limited in the market. Sometime the sources of these collections are from the developing countries too.

Other than collections the handcrafted souvenirs are having a good market potentials. These souvenirs are of different in size and shape with cultural and ethnic value fulfilling the need of approximate. 500 million tourist every year. However this is the one time business both in the point of buyer and seller but in term of market volume and share, having great importance.

Beside some time frequently use in domestic purpose and fulfilled by handicraft industries. Though there is always a big debate in comparison of quality and price of these product compare to industrial product but still this product capture good market share.

�         Market potential and volume

Among the members countries of the European countries (E C), Germany has the greatest market potential. With a per capita Gross National Product (GNP) of DM 3768.8 billion in the year 1998, Germany is one of the richest countries in the world and strongest economics in Western Europe.

The Federal Republic�s integration into the world economy, which has been growing every year, has been a major contributor to the country�s economic growth.

The large economic capacity of the federal Republic is also reflected in its position in world trade. Its total trade volume (imports and exports) is second only that of the United State of America. On the whole, the prospect of selling products from developing countries in the federal Republic appears to be quite good. The following factors create favourable conditions for sales:

�       A large consumption capacity and considerable purchasing power
�       A continuing trend towards an increase in the mass purchasing power.
�       Changes in competitive conditions, production patterns and in the present form of international division of labour relating to man power, raw materials and environmental problem.
�       Increasing international competitiveness of semi-manufactured  and finished goods supplied developing countries
�       Greater willingness of consumers to buy imports form developing countries.
�       The Federal Republic�s import policy, which is by international standards, is highly liberal.

�         Supply, demand and competition

Nevertheless, exporting to an industrial country such as Germany, requires permanent efforts on the part the Exporters, Entrepreneur�s and Organisation from developing countries. Dynamics entrepreneurs from developing nations, interested in exporting Germany can open opportunities and also maintain and also maintain a receptive market for their products. Exports to Germany should therefore, not be regarded as one time or temporary opportunity to make a fast buck. The ultimate goal of all exports should be achieved permanent and steady sales on the German market.

Moreover, German consumers are developing more sophisticated tastes. The consumer today a higher standard of living and greater purchasing power than before and in a position to make a careful selection among the goods offered to in the market. Hence it is important for the exporters from developing countries to realise the German consumer makes his individual choice and carefully scrutinise the offers available in the market before going in for a deal.

Under the condition like these, business success only can be define by meeting the demands and offer goods that largely satisfy the consumer�s choice. Only the suppliers understand the market potential, need, demands, tastes and habits of the consumer and the changes pertaining to various trends be in the position to spot and develop the market opportunities. Yet another factor influencing the exports, is the relative homogeneity of German market. This is not only true in term of population, but the even distribution of income also influences the homogeneity of the German market. Hence, the potential target of an exporter should not be merely particular strata of society but virtually a cross section of the entire German population.

�        Import regulations, taxes, trade agreements, customs duties,e tc.

The new generalised scheme of preferences for imports into nations belonging to the EU; valid from 1995 has been introduced from 1^st January 1995. This new scheme also applies to the exports from all developing countries to EU. It covers only the industrial products; for agricultural product the existing regime is being extended to 1995. Transitional arrangements have been provided for goods under the previously existing GSP scheme valid for July-Dec 1994, for which contracts were concluded in 1994 and consignments have left the country of origin before 1^st January 1995 and are released in the community market.

EU has decided on a � graduation � mechanism , devised to channels preferences from the more developed to less developed countries. The graduation mechanisam is both country and product spacific. Its criteria of application are related to the level of development of the beneficary country and its respactive trade specilization.

Countries with per capita GNP of over US$ 6000 in 1991 will recived only 50% of Gsp benefits w.e.f. 1^st April and will be excluded from GSP altogether w.e.f. 1at January 1996.

As since the post-war years major economic disadvantages of trade barriers have become apparent, more and more countries gathered to contract to the General Agreement on Tariffs and Trade (GATT) which currently associates 123 countries, 16 informal members who abide by the rules and 38 additional countries who contemplate participation in GATT's institutionalised successor, the International Trade Council (ITC) in Geneva. GATT's main objective is the careful regulation of world trade by reducing tariffs and creating a transparent trade environment.

The other important agreement effects the trade relation are as follows:

European Union Trade Agreement

The Lom� Convention

Multi-Fibre Agreement (MFA)

2.2       The European Union Market

The European Union create a single European Market, consisting of some 350 million people. As from January 1993, there are no longer any trade barrier concerning transference of goods, people and service. Naturally this implies advantage to exporters to the E U as well; for instance, it possible to re-export goods from one member state to another, with having to deal with complicated hindrances. Moreover, a number of countries no longer maintain technical, fiscal or even physical barrier.

�         Geographic and demographic of other European Union members

Even through the main part of Europe consists of reasonably flat country; there are several beautiful mountainous areas. These areas are found between Spain and France, the Pyrenees, in between France and Switzerland. The famous Alps, and in the north of Italy, the Dolomites. By and large most of Europe�s total area is taken up by agriculture, some 60%, whereas approximate 9% is covered by buildings, and approximate 22% is under forest area.

Highly populated areas are not evenly spread throughout Europe. One find the most populated areas in the north and west, such as in the Netherlands, the north western part of Germany, the south-western part of England and the northern part of Italy. Addition dense population is found in and around some major capital cities such as Paris, Athens, Copenhagen, Madrid and Rome; and their respective sub urban areas.

Industrial areas are mainly situated in the northern part of Spain, France and Italy and the southern and middle part of both Germany and the Netherlands, throughout entire Belgium and in the middle part of the UK. Large areas of mainly Spain and France, are either rural or strictly nature.

All twelve countries of the E U together take up a quarter of the entire United States of America. By and large every square kilometre. Contains 185 people, as opposed to some 26 people per square kilometre in the United State.

Currently the rate of population growth is rather low, and still declining in some European countries. A phenomenon of the ageing population is observed in several E U Countries. The main explanation for this phenomenon is the �baby boom� after the second world war, during the fifties, and the sharp decline in births in the many years thereafter.

�         Tendencies in Geographic and demographic distribution

EC countries: total area in km 2(X 1000), total population (X 1000) and population density per sq. KM

Source: a survey of The Netherlands market and other major market in European union by CBI; The Netherlands ( UN Demographic year book)

�         Economy

The contribution to the Gross national Product (GNP) of the E U is not evenly spread over its member countries. Germany ,UK, Italy , France and Spain combined produce more than 80% of the GNP. Not only the GNP per capita vary per country, it varies region within a country even more so. In other words, the contribution to the average GNP of the rural area of Portugal, Spain, Ireland and Italy  is much less than the average contribution of the industrialised or developed areas of those countries.

Gross Domestic Product, E U countries 1990                     * thousand billion lires

Source: a survey of The Netherlands market and other major market in European union by CBI; The Netherlands ( I M F)

In general, there are enormous differences in consumption between E U member states. Most obvious are the differences between the northern and the southern countries. In the north, people spend much more money on heating and proper housing, whereas in the south this is not great importance. There, more money is spending on foods.

The values of the different currencies of the E U countries are monitored by European Monetary System (E M S). By means of the E M S all the currencies concerned are connected. Today, a specific European Currency Unit, the ECU, is available and used on limited basis.

�         Infrastructure.

As is the case in Germany, transport is possible throughout Europe by water, rail, road or air or a combination of these. Concerning the latter, there are numerous major seaports along the Atlantic Coast, the North Sea, and Mediterranean coast. The world largest seaport is Rotterdam in the Netherlands. It is serve as one of the most important transit harbour for the transportation of goods to countries like Germany, Belgium, France and Switzerland. All the major seaports are situated in such a way that it is possible to transport products over an intricate net of inland waterways throughout the greater part of E U. Rivers like Rhine,  Elbe, Rhone, Seine, Thames and other are of great importance for this kind of transportation. Railways are plentiful in Europe. The larger European cities are well connected to each other by a network of  �Euro City� railways. Throughout Europe in general, and particularly, throughout The Netherlands, Belgium, Luxembourg, France and Germany, there is an excellent railways system. All European capital cities and many other important cities are conveniently connected by means of very extensive airline network. Major airports are usually situated nearby capital cities. Nowadays there seems to be tendency to increase the number of regional airports within E U.

�         European market magnitude and trends of some of the handicraft product: 

In general, Germany, France, the United Kingdom and Italy are considered to be the four largest markets concerning Handicraft article in entire E U. The current trend in Europe do not differ essentially from Germany trend. By and large, Europe prefers authentically, natural materials and cocooning as opposed to the strictly clean, chromium and cold designs. Quality seems to be the keynote of any European market trend. For example, current German trends in interior decoration are very comparable to the Dutch trends. Today, the main trend emphasises all articles that are natural and authentic. All in all, as applies to all trends in handicraft product and articles, it remains awfully hard to predict what will be the next trend, and what will eventually sell and what not. Owing to the fact that handcraft articles are non-essential products, the main factors affecting demand are fashion and taste.

The new trend in textile arts has been inspired by several important institutions and master craftsmen. During the 1950, there was a trend for the development of fine craft as articles of utility; today, there is switch over to the object of value, more as individual pieces with stamp of a particular artist. The role of designs is pre-eminent in this sector as in consumer product. New outstanding designs are developed by unconventional experiments and methods.            

For textile, one notices a related trend towards the use of traditional weaving and decoration methods from all over the world, such as the Indonesian ikat weaving and the mainnese earth-coloured blankets.

Woven baskets are interesting as well, perhaps not the finely woven small baskets but large sizes made from rough cane.

The bulk of the decorative and gift items are imported from other countries of European union and from other countries in this trade. The largest category, which is imported (in value), is ceramic statuettes and decorative items, followed wooden decorative items. Looking at the whole field of decorative and gift items and interior decorative objects, there is a growth interest for painted ceramic, either remarks of old fashioned items ( like ceramic lace work baskets or rugged ceramic from the farmer world). The same interest for remakes of antique objects or objects from the ART DECO period exits in metal objects as well as farmer style metal objects such as simple chairs, and baskets made of metal wire in Spanish style. For wood, there may be an interest for sculpted frames, fitting in with the nostalgia trend and for original carving in classic African style.

The natural trend in combination with a certain amount of nostalgia and romanticism explain the popularity of flower prints on many article and materials, old metal garden furniture and table, decorative fruits made from coloured glass, wood and other materials, hand printed table ceramics in soft earth colour, cane baskets, inlaid oval wooden picture and mirror frame. Wooden, stone and metal statuettes, and so on and so forth.

As for decorative items coming from the developing countries into European union market, the product can be distinguished:

�       Hand �made art objects of high quality and price of following traditional design; decorative items often based upon local designs: article which are partly industrially produced, and partly hand made, or article which are entirely industrially produced.
�       Utility items: products which have a function other than being beautiful such as spoons, trays, candle holders, lamps shades etc.

The following categories and gift items could be identified having a demand in E U:

Plaited materials and wickerwork; statuettes; pots and vase (other ceramic article);cases (wood); fancy jewellery; leather goods; household utensils etc.

It appears that France, Germany and Italy spend most on home furnishings. The United Kingdom and Spain are also important in this respect. In general, consumers in the European countries spend about 10% of their income on household goods and service.

Chapter III 

Analysis of the Handicraft Industry in India

Profile:    Handicraft in India

The story of Indian craft goes back somewhere into the mists of antiquity, When the story of man itself began to written or articulated, when the capacity of the hand to create was respected, even reverenced. Since time immoral it�s provide the economic supports to many family in India and maintain the livelihood to various section of society irrespective of class, clan and religion. The painstaking labour of India�s craftsmen found fulfilment in the unique objects of beauty they made. In these went beyond the confines of their centre of production and spread out all corners of India and the world.

Handicrafts in India are not just an industry as the word commonly understood, but it plays a vital role in the socio-economic aspect of a country. In one hand it is the symbol of ethnic art and culture of the country on the other hand it provide huge employment and only source of livelihood for many family. In India handicraft is only a product for symbolising the art and culture of the society but also fulfilment the internal and external desire of the community. The various pieces of handicrafts whether metalware, pottery, mats or wood work, clearly indicate that while these are made to serve a positive need in the daily life of the people, they also act as a vehicle of self expansion.

In Indian context handicraft industry continue to remain an integral part of the society and provide a means of livelihood to thousands of families particularly living below the poverty line. Many times it involves the entire family and become a family venture and only source to maintain the life. As per the source this labour intensive industry providing the employment to more than 3 million people called artisans. Although the importance of this sector is highly important both in the point of employment generation and livelihood maintenance of huge population, the sector is still unstructured most of the artisan working with no future.

The different type of handicraft item is spared out over the county, mainly in state such as Delhi, Gujrat, Maharastra, Rajesthan ,Uttar Perdesh and other part of South India. Although the industry is spread over the country, providing mass employment and as result having a large production base but to unstructured pattern production of almost all handicraft is inadequate to cope with the demand.

Product for European Market

Handicraft items in India are basically of two types

�       Artistic of high unit value and essentially in demand by the affluent
�       Utilitarian of low per unit value and primarily used by the common man

Both the type having different feature in term of product, value and speciality in global International market and having great impact on the overall business and effect the whole system involves chain from producer to seller. The artistic items are threatened by low productivity of craft person and consequently poor return to him where as the utilitarian items are unable to compete effectively in term of price with the price produced by organised industrial units. 

Product strength as wide Varity range

As a product strength India offer a verity of product to entire world in handicraft sector. This rang include from carpet to embroidery; metal artwork to jewellery; cane, bamboo and straw to flax and fibre; paper mach to leather; horn and bone to incense and perfumery; hand printing of textiles to oil canvases and sculptures handicrafts have constituted rich vignettes in the country�s landscape. The each and every type and Varity of product having its own ethnic, cultural and utility value.

However keeping in the mind the trend of market and the flow of type of product in current position Indian handicraft industry offer the following Varity of sections:

The textile�based handicrafts

Hand-printed textile includes block and screen-printing, batik, kalamkari and bandhani. This section includes the broad range of product from bed cover to bed sheet, dress material to upholstery and tapestry.

In addition, there is a vast range of other handmade textile product, used for decorations and furnishings purpose.  These products are commonly used in the other part of world as utility item and decorative item also. The other very important sections of handicraft in textile sector are hand woven product known as handloom. This particular section includes large range of product and widely accepted both in domestic and world market; which includes Kitchen ware item such as kitchen towel, napkins etc; bathroom rang and running linen fabric use for making shirts and other fashionable dress items.

The textile�based handicrafts are famous in European countries for its cultural and ethnic value and having a great demand. This section of product are known for fine and miniature hand work called embroidered and used it different ways in various product in home decorative items to dress metals. Beside innumerable style are found in tribal embroidery, with striking effects both on silk and cotton, often embellished with mirrors, shells, beads and metallic pieces. Some of the best known Indian embroidery and probably the oldest, is gold and silver zari work. zari and zari articles are famous through out the world and find a market in U.S.A., U.K., Japan, Saudi Arabia and Germany.

The Clay and metal

A widely known handicraft product entirely based on the imagination and creativity of human mind. This particular craft is widely throughout the world. All most in all European countries this crafts is popular and having an obtained a good market share. In India some of the region are famous for this particular craft of which vanarasi and Moradabad are famous for their excellent metelware , both plain and ornamental.

Basketry

This craft is particularly belong to the tribal communities spread throughout India. It represents basically a folk craft mostly practised by tribes inhabiting vast stretches of land in the hells and forest, especially of Assam, Bengal, Bihar and Kerla.

Jewellery

This craft includes a wide range both in terms of  raw materiel use and finished product. This craft is an age-old artefact. Scintillating ornaments are fabricated in wide rang of patterns, style and consumption, from precious as well as base metals, plastic, precious as well as synthetic stones, ivory both archaic and traditional as well as stylised and modern. From Kundan to filigree, Jewellery has numerous forms and features characteristic of different regions, depicting the art and individually of most craftsmen. As varied in respect of metals and other materials so also in term of designs and styles; jewellery has been used as a traditional adornment all over the country.

Wood work     

Woodcarving may be the oldest craft in India and widely spread throughout the country. Not only in India but also in other countries this craft is having enormous demand. This craft may be one of the most profitable craft in the view of export. For its special workmanship over sandal and other precious wood it is one of the best among all the crafts available in India.  This craft as a product having high domestic value both in term of utility and demand. Wooden artwork making use of ebony and rosewood with brass inlay is fabricated largely in Uttar pardesh, Rajesthan and southern part of India.  

Pottery

Pottery is a basic craft ancient origin, ordinary as well as glazed pottery is widely manufactured. Some of the popular forms are the blue pottery of Delhi, glazed pottery of Madras, Painted pottery of Saurasthtra and gift pottery of Rajesthan.

Stone Crafted

Carving in stone has been done through centuries. Sculptures mostly found in temples are a living testimony of art and imagination of the craftsmen, Several other articles are made from marble, alabaster, soap stone. Agra is well known for stone carving inlaid with semi-precious stones. Innumerable styles and delicacies are seen in the sculptures of Tamil Nadu, Andra Pradesh, Kerla, Kernatka, Orissa and numerous other place elsewhere in the country.                                                         

Marketing of handicrafts in Germany 

In last decades Indian handicraft has  good demand and tremendous growth in the Germany and European union market. Notwithstanding the high competition with other  Asian and African countries, Indian handicraft its own product value and having good market share. Some of the important factors in the marketing of handicrafts are price, quality and delivery schedule. While prices are, no doubt, an important decisive factor in terms of marketing competition, quality of the product and its presentation are as important. The competitiveness of a product in the market like Germany for instance, is not determined by price alone; the terms of delivery and payments are also play decisive role.

Beside the factor such as Environment friendly and related issue are very decisive factor in recent years; as a result the demand of Eco friendly textile having special attention both in the view of consumer and revenue generation.

Trends in Handicraft exports from India to Germany

                                                                                  Source: Statistisches Bundesamat

Product wise  export of Handicrafts

                                                                            Source: Statistisches Bundesamat             

Projekt Titel     Executive Summary     International Marketing-mix