TARGET MARKET MAPProduct: Hand-Knotted Carpet

Target Market: Canada

HS Code: 57.01.10

Names of participants: Mr. Bala Ram Gurung

Mr. Dawa Sherpa

Ms. Mamata Maharjan

Ms. Nisha Shrestha

Ms. Renu Koirala

Mr. Rajendra Singh

A.1 Export reason and vision

Export Reason

– The company is established targeting export market.

– Very low domestic market & valued by Western market.

– Tariff Advantage (GSP eligible)

Vision

– To establish Nepalese hand-knotted carpets (rugs) as a

decor in every homes within 2020.

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A.2 Product overview

Nepalese hand-knotted carpet is a double knotted

High pile

Cotton warp

Tibetan wool is resilient, less medullate, luster as it ages.

Customized as per color, design and size.

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A.3 SWOT Analysis

Present your analysis of the internal factors: Strengths and Weaknesses

Strengths Weaknesses

• Decades of production experience

• Product adaptability according to

market demand

•Consistent quality & delivery

•Applicable Code of Conducts

• Migration of skilled workers

•Lack of local raw materials

Opportunities Threats

•Good manufacturing background

•Custom carpets popular in high end

niche market

•Wholesalers & designers' order directly

• Cheaper & imitation products

introduced as indo-Nepal carpet

•Manufacturing cost getting

higher

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B.1 Global Trade Overview

• Imports characteristics:– USA, Germany & Turkey are the 3 largest importers (in value in 2012).

– Share of the top 3 importers is nearly 54%

Ranking ImportersShare in World

Imports, %

Annual Growth in

value between

2008-12, %

1 USA 30.9 -10

2 Germany 14.8 -7

3 Turkey 8 -6

TOTAL 53.7

Source: ITC Trade Map

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C.1 Nepal’s export performance for hand-knotted carpet

Nepal Ranks 5th in world

Top 3 importers in 2012 (value): USA, Germany & UK

Ranking Export value in 2012Share in World

Imports, %

Annual Growth in value

between 2008-12, %

Total World

ExportUS$ 838 million 100% -5%

Nepal US$ 74 million 8.8% -3%

Source: ITC Trade Map

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• Nepal has duty free preferences (under GSP) in Canada

• India, Pakistan, Turkey, Iran, China faces MFN rate = 6.5% duty.

Market

shareTariffs faced Trade Regime

Nepal 8.8 0 GSP for LDC's

Nepal’s main

competitors in

target market

Market

shareTariffs faced Trade Regime

Tariff advantage

for Nepal

(yes or no)

India 27.5 6.5 MFN yes

Iran 15.2 6.5 MFN yes

Pakistan 13.6 6.5 MFN yes

Turkey 10.6 6.5 MFN yes

China 4.2 6.5 MFN yes

E.1 Tariff faced and tariff advantage in target market

Source: ITC Trade Map

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D.1 Market Scan – Trade IndicatorsMarket Size Market Dynamism Competition

Target

Country

Value

Impor

ted

(milli

on $)

in

2012

World

Import

Market

Share

(%)

Unit

Value

(US$/

unit)

Grade

(1 to 5)

5= best

Annual

Growth

Rate in

value

2008-12

(%)

Import

market

more

dynamic

than world

average

(yes or

no)

Grade

(1 to 5)

5= best

Nepal

exported

value

(million $)

in 2012

Nepal

Annual

Growth

Rate in

value

2008-12

(%)

Nepal is

gaining

market

share

(yes or

no)

Grade

(1 to 5)

5=

best

Total World

Imports847 100% - -5% 74 -3%

Gaining

(-5%)2

A Germany 125 14.8% 20,537 5 -7% No 2 20 -7% Losing 2

B Japan 43 5.1% 45,524 3 19% Yes 5 0.3 -14% Losing 1

C Canada 27 3.2% 46,590 2 3% Yes 3 5 9% Gaining 5

Source: ITC Trade Map

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Canada is seen as top market

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C.2 Selected Target Market

Importers

Exported

value

2012

(USD

million)

Share in

Nepal's

exports

(%)

Exported

quantity

2012

Quantity

unit

Unit value

(USD/unit)

Export

growth in

quantity

between

2008-

2012 (%,

p.a.)

Export

growth in

value

between

2011-2012

(%, p.a.)

Ranking

of

partner

countries

in world

imports

Share of

partner

countries

in world

imports

(%)

Total

import

growth in

value of

partner

countries

between

2008-

2012 (%,

p.a.)

Tariff

(estimated)

faced by

Nepal (%)

TOTAL 74 100 0No

quantity-3 -16 -8 100 -5

Germany 20 26.6 827 Tons 23,701 -7 -16 -26 2 14.8 -7 0

Canada 5 6.1 32

1000

square

meters

138,679 9 -9 6 3.2 3 0

Japan 0.3 0.4 6 Tons 44,333 -14 -13 6 4 5.1 19 0

Nepal’s target export market potential are:

Germany, Canada & Japan. Source: ITC Trade Map

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9

Export

growth

in value

between

2008-

2012

(%, p.a.)

PANAROMA

Political factors: Canada-Nepal Trade Relations

Textile Agreement

• Canada's announcement in January 1, 2003 – Nepal allowed duty free tariff

concession

• Opportunity to increase exports to Canada.

• May 13, 2003, Nepal and Canada signed a Memorandum of Understanding.

– The MoU allows Canadian Customs and Revenue Agency's access to Nepal

to verify that Nepali exporters are complying with the Rules of Origin and

other requirements.

Source: http://www.cconepal.org.np/trade/#3

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Economic Factors: Economy of Canada

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Social Factors: Canadian Market

Source: Preliminary Housing Start Data, CMHC, August 2013

The total of the housing market is

increasing in Canada.

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People: Demographics

Main consumer group - Age group 55 - 64

• They are relatively wealthy & have disposable income to spend on

redecorating their living space.

• Canadians are fashion-conscious, want their homes to have a unique look.

Source: Canada Census 2006

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People: Trends

• Neutral colours - top sellers

• Latest colours: soft turquoise, aqua, green blue and lavender

• Traditional Oriental designs - still popular

• Big sellers - Modern, geometric, folk art and floral designs

• Popular – Area-rugs of wool, nylon, cotton, silk and fine animal hair

Source: TFOC, Canada

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Key regulations

1. Flammability Test Requirements & Test Methods1

2. Labeling Requirements

Voluntary Standards

Indoor Air Quality (“Green Label”) Carpet Testing Program

• Canadian General Standard Board (CGSB)2 listed certified floor coverings for

commercial and residential use criteria:

• Style, Suitable application, Pile weight, Pile density, and Flame spread ratings.

Shipment

Shipping from Nepal to overseas requires to cross India.

Customs Transit Document is required for shipments via India.

PERMISSION: Regulatory standards

1 Industry Guide to Canadian Requirements for Carpets and Other Textile Floor Coverings2 http://www.tpsgc-pwgsc.gc.ca/ongc-cgsb/index-eng.html

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PLACEMENT: Channels of distribution

• Existing exporters prefer: Distribution from exporter to wholesaler

• For higher knots: Air shipment

• For lower knots carpet: Sea-cargo

broker importer wholesaler retailersExporter

Source: Trade Facilitation Office of Canada

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PLACEMENT: e-marketplace

In Nepal, e-market place: www.nepalhandicraftmarket.com is available for

handicrafts sales which also places Area Rugs & Wall Hangings.

Regional e-market places for your product following the e-Market services checklist

Ownership and history = Federation of Handicrafts Association of Nepal (FHAN)

Liquidity = B2B virtual market,1200 members

Membership and cost = Free listing and Premium Listing for yearly Rs. 3,500.00

Trading tools = Free listing

Ethics = To explore markets & introduce them to the international arena.

Service orientation, training and support of e-marketplace users = FHAN

Other e-market sites are:

http://www.alibaba.com

http://www.selectrugscanada.ca/

http://rugsontime.ca/

http://www.helleniccanada.com/

https://www.facebook.com/naturalhomeproducts

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PACKAGING

• Outer Packaging:

• Consistency of packaging & sizes.

• Sturdy enough for multiple handlings.

• Reusable packages

• Retail Packaging:

• Need to provide designs, artwork, translations.

2http://www.inspection.gc.ca/english/plaveg/for/cwpc/wdpkgqae.shtml

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Labeling: Labels on imports must conform to Canadian standards.

Private Labeling

Private label from imports should fulfill terms of

colour, textile, styling, sizing, quality, labeling, and pricing.

• Exporters must check with the importer for details on specifications and

what is allowed prior to producing for the Canadian market.

Source: Trade Facilitation Office of Canada

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PACKAGING

PRICE• CIF wholesale price = US $ 139/sq. m

• Retail prices = US $ 800/sq. m

• The CIF wholesale price is increased by 9% in 2008-2012.

• The CIF wholesale price is decreased by 9% in 2011-2012.

• Product price is higher than the world average and the rest of exporters as seen from the

table below.

Exporters USD/Sq. m

World 47

India 26

Iran (Islamic Republic of) 78

Nepal 139

Pakistan 65

Turkey 58

China 59

Afghanistan 45

Source: ITC Trademap & www.modernrugs.com

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PromotionTrade Fair: Domotex Hannover

Venue: Hanover, Germany

Organizer: Deutsche Messe AG, Messegelände, 30521 Hannover, Germany

Date: 11.01.-14.01.2014 (interval: every year)

main product group: Carpets, Woven Carpets, Textile Floor Coverings, etc.

Opening hours: trade visitors: daily 09:00-18:00 h

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Key figures 1/2011 1/2012 1/2013

Net exhibition space 86 018 m3

95 959m3

89 300m3

domestic 17 409m3

22 323m3

15 850m3

foreign 65 108 m3

69 667 m3

67 796 m3

Exhibitors (59 countries) 1 319 1 362 1 323

domestic 222 233 188

Foreign 1 097 1 129 1 135

Visitors (number of admissions)

37 054 45 793 37 012

domestic 13 414* 20 882* 14 583*

foreign 23 640* 24 911* 22 429*

* = ascertained by a representative survey

Promotion

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Trade Organization: Trade Facilitation Office of Canada

Trade & Export Promotion Centre

Social Networking: Linked In, Facebook, Twitter

PRODUCT DIFFERENTIATION

AUGMENTED

PRODUCT

Shipping

and

Handling

Mystic Durability

Customized

CSR “Ethical

Production”

Premium

Quality

ACTUAL

PRODUCT

Floor Covering

No

harmful dyes

chemicals

Color

Season

Variety

Shape

Size

Luxurious Texture

Resilient

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Rendering

Value Proposition

• Premium Quality

• Timely Delivery

• Ethical production facility and working condition

• Prompt communication

• Think proactively in regards to fashion and new trends

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OTHER USEFUL INFORMATION

• Nepalese Embassy in Canada http://canada.mofa.gov.np/

• Diaspora’s associations http://www.blog.nrn-canada.org

• Trade and Export Promotion Centre, http://www.tepc.gov.np

• Trade Facilitation Office of Canada http://www.tfoccanada.ca

• High Commission of Canada in India http://www.canadainternational.gc.ca

• Kompass: http://www.kompass.com

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RECOMMENDATIONS AND NEXT STEPS

• Recommendations:

• Based on the market research, Canada is target market.

• Next steps:

• Market Strategy should be made next.

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