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Country Commercial Guides for FY 2000:
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CHAPTER IV: MARKETING U.S. PRODUCTS AND SERVICES
DISTRIBUTION AND SALES CHANNELS
Imported goods can enter Madagascar via air at Ivato international airport in Antananarivo or via sea to the ports of Tamatave, Majunga and Diego-Suarez. Products are then distributed by road or rail throughout the country. Distribution is usually handled by the importing company or by local retailers and wholesalers.
USE OF AGENTS AND DISTRIBUTORS ; FINDING A PARTNER
The use of agents and distributors, particularly those with prior experience in distributing imported products, is highly recommended. Local agents have contacts to develop a customer base, and can easily communicate in Malagasy and/or French.
Partners can be found by obtaining lists of importers from the Embassy Commercial Section or by contacting business groups and market survey firms. The Embassy recommends that U.S. firms visit Madagascar and negotiate a distribution contract face to face, in order to develop a sense for the realities of doing business in Madagascar and to develop trust between American and Malagasy companies.
FRANCHISING
A number of Malagasy businesspersons have expressed interest in establishing franchises of U.S. businesses in Madagascar, but insufficient consumer purchasing power makes such ventures questionable. Existing resale operations that appear to be profitable include Avon, Yves Rochard, Benetton, as well as the Score and Champion supermarkets. A number of leading U.S. products or services are sold through distributorships, including American Express, DHL, Caterpillar, General Motors, IBM, Dell, NCR, Sun Microsystems, Packard Bell, COMPAQ, and Apple.
DIRECT MARKETING
Although there are exceptions, direct marketing for U.S.-made products is difficult. The Malagasy consumer is unaccustomed to Western marketing styles. In addition, French language nuances may not be as evident to an American advertiser. The Embassy encourages U.S. businesspersons to direct market to local distributors and agents, however.
JOINT VENTURES/LICENSING
Joint ventures are a necessity for many foreign investors, as foreigners are de facto barred from owning land in Madagascar. The bureaucratic process for establishing a new enterprise is time consuming and requires considerable maneuvering. The benefit of joint ventures is that the Malagasy partner has a knowledge of and can quickly adapt to the bureaucratic intricacies which involve obtaining permits from several different government ministries. The drawback is that a Malagasy partner will likely be a minority shareholder in capital terms and needs to be carefully screened through independent references and past business history.
There are few licensing ventures in Madagascar, the most prominent being that of Coca Cola with Star Brewery (owned by Henri Fraise & Fils Co.), a relationship of over 40 years. Malagasy investors express an interest in licensing agreements, but it is recommended that contracts be negotiated carefully because of the lack of consistency in the Malagasy Commercial Code.
STEPS TO ESTABLISHING AN OFFICE
Office space can be found through a handful of real estate agents, advertisements in local papers, or word of mouth. Landlords will rent to new companies even if they have not obtained all their operating permits. Electricity and water service can be obtained quickly but obtaining fixed telephone service is still difficult in spite of capital improvements. However, with Telecel and the 3 GSM companies, cellular phones are easily available now. Office furniture can be obtained locally at reasonable prices, but imported office equipment (particularly computers) is very expensive because of high customs duties. There are increasing numbers of multilingual, qualified secretaries and administrative assistants interested in working with foreign businesses.
SELLING FACTORS/TECHNIQUES
The purchasing power of the average Malagasy citizen is very low. Most Malagasy can only afford immediate necessities. In addition, the Malagasy are culturally reserved, and often shy. As a result, and in part because of the recent socialist past, there is less value put on salesmanship than elsewhere. Retailers and sales clerks respond to customer's need and process sales, but there is only a dawning awareness of service or sales techniques common in the United States or Western Europe.
ADVERTISING AND TRADE PROMOTION
Marketing is a relatively new industry to Madagascar. Avenues of advertising include billboards, posters, newspapers, radio and television. Prominent campaigns have European influence and often link the product with leisure activities or personal enjoyment. The quality of advertising campaigns varies and appears to depend heavily on the budget of the advertiser. It is possible to pay a newspaper for a full page article/advertisement, or the five television stations to broadcast an info/advertisement program.
Daily newspapers: L'Express de Madagascar P.O. BOX 171 Antananarivo 101 - Madagascar Tel: (261 20) 22 203 10 Fax: (261 20) 22 213 83 E-Mail address: lexpress@bow.dts.mg Midi Madagasikara P.O. BOX 1414 Antananarivo 101 - Madagascar Tel: (261 20) 22 300 38 Fax: (261 20) 22 273 51 E-Mail address: midi@dts.mg Madagascar Tribune P.O. BOX 659 Antananarivo 101 - Madagascar Tel: (261 20) 22 226 35 Fax: (261 20) 22 222 54 E-Mail address: tribune@bow.dts.mg Business Journals: DMD(Dans les Media Demain) 58, rue Tsiombikibo - Ambatovinaky Antananarivo 101 - Madagascar Tel: (261 20) 22 277 88 Fax: (261 20) 22 359 79 ROI (Revue de l'Ocean Indien) P.O. BOX 46 Antananarivo 101 - Madagascar Tel: (261 20) 22 225 36 Fax: (261 20) 22 345 34 E-Mail address: roi@dts.mg Television: Television Malagasy (state) Immeuble Solima - Antaninarenina Antananarivo 101 - Madagascar Tel: (261 20) 22 268 30 Fax: (261 20) 22 248 52 MA TV (private) P.O. BOX 1414 Antananarivo 101 - Madagascar Tel: (261 20) 22 208 97 Fax: (261 20) 22 344 21 TVF (private) 41 bis, Rue Andriba - Mahamasina Antananarivo 101 - Madagascar Tel: (261 20) 22 207 30 Fax: (261 20) 22 203 02 RTA (private) P.O. Box 7547 Antananarivo - Madagascar Tel: (261 20) 22 627 76 Fax: (261 20) 22 628 04 OTV (private) P.O. Box 4100 Antananarivo - Madagascar Tel: (261 20) 033 11 00 312 Fax: (261 20) 22 454 51PRICING PRODUCTS
Pricing of imported products depends on import duties, which range from 0 to 25 percent and on the location of the sale. Profit margins on all products tend to be small, around 7 to 10 percent. As a result of the devaluation of the Malagasy Franc in May 1994, local prices of imported goods have risen dramatically.
SALES SERVICE/CUSTOMER SUPPORT
The concept of sales service and customer support is relatively new to Madagascar and is limited primarily to distributors of computers and automobiles. Retailers of most consumer goods rarely accept returns of defective products. In addition, companies that offer servicing very often lack spare parts and their technicians have limited training. Objects in need of repair frequently have to be sent to Europe or the company may have to wait months to receive a necessary spare part.
To protect consumers' rights, two private consumer organizations were created in 1992 and 1994, but their action has so far been very limited.
SELLING TO THE GOVERNMENT
As part of its liberalization strategy, the government frequently advertises in official and local journals or via radio and television, requesting bids to supply the Government or Government-funded projects. Some of these are intended for international bidders and some only for local companies. These bids are opened publicly and tend not to be contested. However, it is still common to cancel international bids for political reasons and to award government contracts without making a public request for bids.
PROTECTING YOUR PRODUCT FROM IPR INFRINGEMENT
Officially, Malagasy law protects against intellectual property rights infringement. Madagascar is a member of the World Intellectual Property Organization (WIPO) and has created two offices dedicated to IPR protection: OMAPI, Office Malgache de la Propriété industrielle (Malagasy Office for Industrial Property) and OMDA, Office Malgache des Droits d'Auteurs (Malagasy Office for Copyrights).
Unfortunately, there is little enforcement capability or even willingness. Pirated audio and video recordings are the most flagrant violations of property infringement in Madagascar, and imported "fake" consumer goods can also be found (such as imitation Cartier bags or Rolex watches). Local industry is not capable of producing quality imitations.
To fight against counterfeiting, the government has just adopted a decree forbidding the import of counterfeited goods.
NEED FOR A LOCAL ATTORNEY
It is recommended that foreign investors or businessmen ask the assistance of a qualified local attorney before finalizing any contract or operating agreement in Madagascar.
PERFORMING DUE DILIGENCE/CHECKING BONA FIDES OF
BANKS/AGENTS/CUSTOMERS
Performing due diligence is common in the country and it is performed by accountants. Securing the bona fides of banks is also common in the country.
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[end of document] Note* International Copyright, United States Government, 1999 (or other year of first publication). All rights under foreign copyright laws are reserved. All portions of this publication are protected against any type or form of reproduction, communications to the public and the preparation of adaptations, arrangement and alterations outside the United States. U. S. copyright is not asserted under the U.S. Copyright Law, Title17, United States Code.
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