Vision - November/December 2007 - (Page 37)

ury goods. The Polish economy’s expansion in the first three months of this year was the best quarterly growth since 1997, boosted by an influx of EU funding. An Associated Press reporter this summer observed three shoppers within less than half an hour emerging from a suburban Warsaw Saturn Electronics Superstore with large-screen LCD TVs. One of the customers was quoted as saying, “You can see the economic growth around you, and I can feel it in my wallet.” Ukraine, ranked as the fifth “most prospective retail market” in the world by A.T. Kearney, poses some of the greatest challenges in the region. It is among the largest, with a population of nearly 47 million people. But only about 10 percent of Ukraine’s citizens live in the three largest cities, which means that retailers must reach far and wide to attract customers. Nonetheless, Ukraine’s retail sector has matured rapidly, as the U.S. Commercial Service points out, with superstore chains and CE retail specialists singled out for significant growth. Even in Romania, where customers remain loyal to the old corner shop, there’s a new taste for “modern shopping”, according to a report from Euromonitor International. Discount merchants, backed by multinational investors, are opening a variety of retail formats. distribution and pricing Amidst all these fundamental changes there is an array of anomalies. As the U.S. Commerce Department explains in its advisory about operating in Russia, the “fast-moving and growing economy…remains a complex place to do business.” U.S. officials also cite the challenge of building relationships during the on-going “erratic transition from a socialist, centrally planned economy to a more open, market-oriented one.” That caveat is pertinent in several of these countries. For example, in Ukraine, where “officially” there are only seven computers per 100 people, a thriving PC-building subculture exists. The U.S. Commercial Service notes that, “Desktop PCs assembled in Ukraine currently account for more than 97 percent of the market.” On the other hand, when it comes to laptops, 75 percent come from international www.ce.org brands such as Acer, Dell, Samsung and Toshiba, says the Commerce Department analysis. Each country maintains its own tariff and trade process. In Ukraine, there’s a two-tiered system; imports from Western countries are usually assessed preferential tariffs, which vary according to the types of products. The Czech Republic, Hungary, Poland and other EU members abide by Community standards, which generally mean a consistent process. However, each country has the ability to levy value added taxes (VAT) and other fees. As CE companies explore opening business in Eastern European countries, U.S. advisors suggest working with a local distribution agent. However, most of the large companies are setting up their own offices staffed by local personnel, as JVC’s Somsen points out. The national differences are distinct. Compact Hungary and Czech Republic can be serviced from a handful of key distribution sites. At the other extreme, Russia extends across 11 time zones, (the world’s largest country by land mass), thus requiring regional distribution schemes. Officials recommend that a variety of national, regional and local distribution alliances work best in this situation. Analysts frequently also note that one legacy of the old Soviet planning system is a lingering obsession with price. “Consumers are attracted to bargains, but increasingly are willing to pay for quality merchandise,” the Commerce Department points out. Organization (WIPO) and a signatory to other international agreements. Nonetheless, the U.S. Commerce Department warns that despite such paperwork, Ukraine “remains a trans-shipment point, storage location and market for illegal optical media produced in Russia and elsewhere.” Poland is improving its enforcement of Intellectual Property laws, but lingering violations have put the country on the U.S. Trade Representative’s “Watch List”. The USTR has deemed Hungary’s intellectual property laws as “adequate”, but notes that the country’s insufficient resources, court delays and relatively light penalties hamper enforcement. In Romania, enforcement is also a problem, although the country was a founder of WIPO and has adhered to almost all its procedures. The government there organized a regional conference last year, supported by the U.S. government’s STOP (Strategy Targeting Organized Piracy) initiative; the U.S. Commerce Department calls Romania’s efforts “on the right track”. The agency also notes that “theft of intellectual property is not a major problem in the Czech Republic.” richer but older—and fewer As the European Union grows—and as Eastern Europe blends into the continentwide community—policy makers are grappling with a stunning reality: declining population. The aging market means that there are wealthier, acquisitive customers, along with greater demands on the economy itself. On the other hand, the youth population, ages 15 to 24 years old, lingers at about 10 to 12 percent of the overall population in most Eastern European countries. That ratio is significantly lower than the youth-market age cadre’s share in newly emerging economic powerhouses, such as India or the Arabian Gulf region. Nonetheless, the demographic alignment hardly has damped the appeal of the Eastern European electronics opportunity. Just as the National Gallery’s “Foto” exhibition demonstrated the innovations of last century’s avant-garde juggernaut in that region, so does today’s aggressive high-tech expansion underscore the appetite for what’s new in the old countries. • November/December 2007 Improved Ip atmosphere The notorious legacy of copyright, patent and trademark violations continues to haunt the region. U.S. and multinational companies have been moderately successful in countering infringements through the Russian court system, the Federal Customs Service and ROSPATENT (the Russian agency that oversees intellectual property.) Last year, the Russian Supreme Court Plenum adopted a long-pending resolution, issuing guidelines on enforcing intellectual property resolution. Similarly Ukraine is strengthening its legal protections in this sector. It now is an active member of the World Intellectual Property 37 http://www.ce.org

Table of Contents Feed for the Digital Edition of Vision - November/December 2007

Vision - November/December 2007 Contents Shapiro's Spectrum In This Issue The Economist C4 Visionary Tech Speak Going Global Eye on Business Tech Policy Special Supplement: CES Unveiled 2008 CES Technologies to Watch Eastern Europe Embraces CE M&A Fest Displaying the Future CEA Newsline Market Insider Just the Stats

Vision - November/December 2007

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