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Country Commercial Guides
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CHAPTER V. LEADING SECTORS FOR U.S. EXPORTSA. Best Prospects for Non-Agricultural Products
1. Computer Software and Services (CSP)
Software and associated services account for nearly two-thirds (67%) of the entire EDP market. Software sales increased by 13.1% in 1998 vis-à-vis 1997 and amounted to AS 38.9 billion ($3.1 billion). Sales of consulting and system integration services increased 11.1% and accounted for 40.5% of total software sales in 1998. Standard off-the-shelf software accounted for 26.6% of software sales, an increase of 17.2% in 1998. Software sold to individuals amounted to 19.7% of the entire software volume, growing by 19.8% in 1998 over 1997. System maintenance accounts for 6.6%, a decline of 1.9% and training has a share of 6.6% of the entire software market, an increase of 7.5% in 1998.
We expect overall software sales to grow by about 10% in 1999, with an emphasis on purchasing applications for the year 2000 and the implementation of the Euro. The Internet offers new business opportunities, as well as an efficient way to reduce costs in selling products and services. There are about 600,000 commercial Internet users in Austria, and this is growing swiftly. Many industries are developing electronic commerce projects, but bandwidth and tariff structures are limiting. Graphical user interfaces and integration with office software is "state-of-the-art," while demand for workflow applications increases.
Our figures, above and below, are based on industry and association sources, but must be considered unofficial estimates only.
Data Table (million $) 1997 1998 1999 A) Total Market Size 2,828 3,230 3,589 B) Local Production N/A N/A N/A C) Total Exports N/A N/A N/A D) Total Imports N/A N/A N/A E) Imports from the U.S. 1,131 1,292 1,435 1998 exchange rate: $ 1 = AS 12.38 (base year)
Note: The above statistics are unofficial estimates.2. Automotive parts and equipment (APS)
U.S. exports of automotive parts and equipment to Austria have risen by an order of magnitude this decade. Where total exports in 1991 were only $30 million, 1998 saw an export value of over $370 million. The American share of the aftermarket in Austria is still very low at around 5%, though this is understand due to the Rotterdam Effect, i.e., U.S. products enter Austria through an EU border and thus escape the statistics.
The explanation for the phenomenal growth in this sector is to be found in the decision several years ago by Chrysler (now DaimlerChrysler) to invest in assembly operations in Austria, where they have assembled Jeep Cherokees and Voyager vans. We saw a dip in U.S. sales for 1998, reflecting expansion of European production by DaimlerChrysler's suppliers. This will be reversed in 1999 and 2000 with the beginning of assembly operations for the new Mercedes off-road vehicle, which has a U.S. content of over 60%. Planned are 30,000 vehicles per year, increasing DaimlerChrysler's output in Austria by a whopping one-third.
We predict the total market for auto parts and equipment will increase by around 15% in 1999, reflecting the production launch of the new Mercedes. Imports from the United States of automotive parts and equipment will jump significantly in 1999 and 2000, and then tapering off a bit as local content levels are increased.
Data Table (million $) 1997 1998 1999 A. Total Market Size 2,162 2,332 2,762 B. Total Local Production 4,539 4,993 5,592 C. Total Exports 4,168 4,595 5,054 D. Total Imports 1,843 1,934 2,224 E. Imports from the U.S. 429 371 427 1998 exchange rate: $ 1 = AS 12.38 (base year).
Note: The above statistics are unofficial estimates.3. Aircraft and Parts (AIR)
Diamond Aircraft Industries is Austria's sole general aviation manufacturer, and it produces only motor gliders (the HK 36R Super Diamona). In 1998, Diamond manufactured 75 motor gliders with an estimated value of AS 112.5 million (about $9.1 million). The firm is developing a new 4-seater Katana A-40, and production will begin in 2000 with about 150 units being rolled out annually in Wiener Neustadt. About 85% of Diamond's production is exported. Diamond uses engines from the Austrian firm ROTAX and avionics from King in the United States and Becker of Germany. Our production figures are obtained from the Civil Aviation Office and directly from Diamond Aircraft Industries.
In 1998, the total aircraft market in Austria amounted to $344 million (AS 4.3 billion), a decline of 19% (based on AS values) from $432 million (AS 5.3 billion) in 1997. In 1998, Austrian aircraft and parts imports amounted to $820 million (AS 10.2 billion), an increase of 59.4% (based on AS values) compared to $522 million (AS 6.4 billion) in 1997. Obviously, transshipment trade in aircraft parts is extremely important in this market.
We project an average annual growth rate of the Austrian aircraft market at 10%. Growth rates are problematic given the critical importance of government and military contracts, and the possibility of large one-time orders that greatly skew the statistics.
The principal end-users of civil aviation aircraft, parts and equipment are the national carrier Austrian Airlines, Lauda Air, Tyrolean Airways, Rheintalflug (commuter airline), and charter airlines. Emergency medical services and the police use civilian helicopters. The market for corporate fleets and business charter operators appears saturated. Austrian government agencies are considering significant procurements of helicopters, fighter aircraft and transports.
Data Table (million $) 1997 1998 1999 A. Total Market Size 432 344 382 B. Total Local Production 6 9 10 C. Total Exports 96 485 539 D. Total Imports 522 820 911 E. Imports from the U.S. 54 325 361 1998 exchange rate : $ 1 = AS 12.38 (base year).
4. Computers and Peripherals (CPT)
The Austrian market for computers and peripherals grew 4.4% in 1998 vis-à-vis 1997 and amounted to AS 19.2 billion ($1.6 billion). The turnover for mainframes remained unchanged from the previous year and totaled AS10 million (roughly $808,000) in 1998. Mid-sized systems declined by 4.7% in 1998 due to increasing demand for PCs. The share of UNIX systems is about 70% among mid-size systems.
PCs dominate computer hardware sales with a market share of 67.6%. Some 460,000 PCs and workstations were sold in Austria in 1998, an increase of 9% in volume and 8.5% in value. Network computers have not had significant commercial impact in this market. The trend for PC servers is toward high performance equipment. Monitors with a 17" screen are standard for PCs, and there is growing demand for 19" screens. Prices for color and laser printers are steadily declining.
The United States is the main source of imports followed by Germany. Industry experts forecast 10% growth for the entire computer hardware sector in value in 1999.
Data Table (million $) 1997 1998 1999 A. Total Market Size 1,751 1,845 2,050 B. Total Local Production 1,376 1,450 1,611 C. Total Exports 1,537 1,621 1,801 D. Total Imports 1,912 2,016 2,240 E. Imports from the U.S. 135 142 158 1998 exchange rate: $1 = AS 12.38 (base year).
Note: The above statistics are unofficial estimates.5. Drugs and Pharmaceuticals (DRG)
Health care expenditure in Austria represents about 10% of the GDP, higher than in most other European countries. Cost-containment pressure is high and focused on reducing prescription and hospital costs. An aging population, anticipated flexibility in the pricing of innovative products, and growth in private healthcare insurance are expected to have a positive impact on the market.
U.S. products enjoy an excellent reputation with respect to quality and safety. U.S. imports rank third after Germany and Switzerland. Access to the Austrian pharmaceutical market is subject to strict national and EU legislation. FDA-approved pharmaceuticals have excellent qualifications and chances to obtain EU approval. However, FDA approval is not recognized as a substitute for approval by Austrian health authorities. Product groups which the highest sales shares are: antiulcerants, psychoanaleptics, antidepressants, erythropoietin products, injectable anticoagulants, ACE-inhibitors, cephalosporins, cholesterol and triglycerin reducers, non-narcotic analgesics, and plain, peripheral and cerebral vasotherapeutics.
Data Table (million $) 1997 1998 1999 A. Total Market Size 1,727.9 1,901.3 2,187.3 B. Total Local Production 1,357.4 1,425.2 1,510.7 C. Total Exports 1,515.9 1,819.1 2,146.5 D. Total Imports 1,886.4 2,295.2 2,823.1 E. Imports from the U.S. 133.2 153.3 179.4 1998 exchange rate: $ 1 = AS 12.38 (base year).
Note: The above statistics are unofficial estimates.6. Travel and Tourism (TRA)
Austrians increasingly prefer to spend their vacations abroad. In 1998, we saw an off year when Austrians spent AS 38 billion ($3.1 billion) traveling abroad, a decline of 10.5% compared to 1997. They spent AS 2.3 billion ($186 million) for travel to the United States, a decline of 15%. We think this was a momentary dip in a general upward trend that will resume in 1999 or 2000.
The United States enjoyed the highest popularity among long-haul destinations (meaning a destination outside Europe) for Austrian travelers. We expect the number of Austrian travelers to the United States to increase about 3% a year. However, there was a marginal decline in 1998 vis-à-vis 1997 of 1.1%. Total arrivals from Austria in 1998 were 185,799. Austria ranked 28th overall for arrivals to the United States. It was the 10th largest market in Europe generating visitors to the United States.
The average age is 37.9 for travelers from Austria to the United States. The top ports of entry for Austrian travelers are in order: New York, Atlanta, Miami, Los Angeles and San Francisco.
The most popular U.S. destinations are New York, Florida (Orlando, Miami), California (San Francisco, Los Angeles, San Diego), National Parks, Nevada and Hawaii. The most popular attractions are Disney World, Disney Land, Universal Studios, Sea World, ranches and shopping malls. Travel industry representatives see potential for adventure trips to Alaska, Washington State, Oregon, Colorado, Texas and Louisiana. However, New York, Florida, California and Las Vegas will remain strong attractions for the Austrian traveler. Repeat travelers choose destinations like New England, the Carolinas, Tennessee, Georgia and the Great Lakes.
Data Table 1997 1998 1999 Total Market Size (Number of Austrians traveling to the United States) 187,942 185,799 191,373 Note: The above statistics are from Tourism Industries, ITA, USDOC.
7. Electronic Components (ELC)
U.S.-made, highly sophisticated active electronic components such as ASIC's, RISC's, RAM's and MOS PLD's have good market opportunities for 1999, and we expect to see annual real import growth rates of 7-9% over the next three years. Imports from the United States ($100 million in 1998) understate the impact of American companies in this market, because many U.S. companies source their products from Asian production facilities. Major competitors are Japan and Germany. The 1999 U.S. import market share of electronic components is expected to be 9.5%. Several multinational companies have production facilities of electronic components in Austria. The Austrian firm AMS, partly owned by an American investor's group, is a very strong competitor for U.S. suppliers in the entire European market.
Data Table (million $) 1997 1998 1999 A. Total Market Size 1,026.7 1,093.7 1,050.9 B. Total Local Production 992.4 1,008.2 1,010.0 C. Total Exports 940.9 983.7 1,136.2 D. Total Imports 975.2 1,069.2 1,177.1 E. Imports from the U.S. 91.4 100.1 111.2 1998 exchange rate: $ 1 = AS 12.38 (base year).
Note: The above statistics are unofficial estimates.8. Pollution Control Equipment (POL)
Austria has long been known as a pioneer in environmental protection, and the country's environmental expenditures equal a lofty 2.3% of the Austria's GDP. The European Union average is 1.4%.
Austria has a well-established environmental technology base and environmental industry. Strict environmental legislation has produced considerable local know-how and demand for the best available technology. Austrian industry is particularly strong position in water management and air pollution control and has great expertise in end-of-pipe technologies and pollution prevention systems. Some 55% of industrial innovations concern environmental aspects of products. There are around 250 suppliers of environmental products in Austria, excluding companies supplying environmental services. U.S. companies will find strong competition from both domestic and third-country suppliers, especially Germany.
That said, there are some promising prospects for U.S. exporters in this competitive market. Industry experts tell us that technologies and equipment for waste management, soil remediation, remediation of contaminated sites and waste-to-energy technologies offer promising opportunities. Our best prospects include innovative analyzing instruments, measuring and monitoring instruments and apparatus, computers for measurement and analysis, and computer software. The best opportunities are seen for smaller, portable equipment that needs a minimum of attendance, that can calibrate and "zero" itself, and is robust enough to survive extreme conditions without constant supervision. Remote sensing technologies may also find a market.
Data Table (million $) 1997 1998 1999 A. Total Market Size 3,673.4 3,991.3 4,286.8 B. Total Local Production 2,198.7 2,374.9 2,541.1 C. Total Exports 1,037.9 1,123.2 1,213.1 D. Total Imports 2,512.6 2,739.6 2,958.8 E. Imports from the U.S. 84.5 88.7 93.1 1998 exchange rate: $ 1 = AS 12.38 (base year).
Note: The above statistics are unofficial estimates.9. Medical Equipment (MED)
With its location in Central Europe and as one of the EU member states, Austria represents a desirable, affluent pilot market for U.S.-made advanced medical equipment. U.S. manufacturers have good opportunities in the Austrian market with such state-of-the-art diagnostic equipment as electrocardiographs, ultrasound apparatus, endoscopes, scanners, computer tomograph imaging equipment, dialysis equipment, pace makers, sophisticated digitalized x-ray equipment, nuclear medical instruments and clinical laboratory equipment. An annual 4% real growth rate of U.S. imports over the next three years seems realistic. U.S. manufacturers have seized a respectable portion of the medical equipment market and are the second-largest supplier following Germany. Our share of the import market for medical equipment is expected to be 11.6% in 1999. U.S.-engineered medical equipment sales are actually much larger than reflected in official import statistics, as many products imported from Western Europe and Far Eastern countries were assembled by subsidiaries of U.S. firms.
Data Table (million $) 1997 1998 1999 A. Total Market Size 378.5 390.5 413.3 B. Total Local Production 153.9 159.6 168.2 C. Total Exports 194.1 205.2 221.8 D. Total Imports 412.7 436.1 466.9 E. Imports from the U.S. 48.7 51.4 54.0 1998 exchange rate: $ 1 = AS 12.38 (base year).
Note: The above statistics are unofficial estimates.10. Telecommunications (TEL)
The Austrian telecommunications market is liberalized, well developed and highly competitive. Despite the liberalization, Telekom Austria, the former monopolist, continues to dominate the market, but is under great pressure to maintain its market-leading position and become more competitive. There are about forty licensed fixed network operators and three cellular operators who pose a threat to Telekom Austria's dominance. The prime competitors in the fixed market are tele.ring (majority-owned by Mannesmann), UTA Telekom, (owned by Swisscom and nine Austrian regional electricity utilities), and Priority Telecom which offers services over Telekabel, Austria's largest cable TV company (ultimately owned by U.S.-based United International Holding). Additional U.S. operators include RSL COM and MCI/Worldcom.
Mobilkom, a Telekom Austria subsidiary, is the premier cellular operator, but there are two challengers: max.mobil (majority-owned by Deutsche Telekom) and Connect Austria (owned by Radex Haraklith, VIAG, Orange and Tele Danmark). A fourth mobile license was awarded to tele.ring in May 1999, which expects to start operations in the first half of 2000.
The main equipment suppliers are Siemens, Kapsch, Alcatel, Ericsson, Nokia, as well as Motorola, Lucent Technologies, and Cisco Systems.
The fastest growing market segment is the mobile phone market. Between April 1998 and April 1999, the Austrian cellular market expanded by 15.8%. With a market penetration rate of 32.6%, Austria ranks seventh behind Finland, Sweden, Denmark, Italy, Portugal and Luxembourg and lies far ahead of Germany. We anticipate a market penetration of 40% or more at the end of 1999.
Imports of U.S. telecommunications equipment rank second after Germany and ahead of Sweden, Japan and France. American telecom products enjoy an excellent reputation and are known for state-of-the-art technology. Unique product features, design, quality and price, as well as technical assistance and reliable after-sales service, are determining factors for long-term sales and profitability. The best sales prospects for U.S. suppliers include mobile infrastructure equipment, mobile terminal equipment (GSM/DCS 1800 and DECT), ISDN terminal equipment, business communications equipment, teleconferencing equipment, value-added services, Internet applications and services, and call center equipment and services. GE Capital is expanding a call center in Burgenland, and we hear reports of other call centers likely to be established in Austria.
Data Table (million $) 1997 1998 1999 F. Total Market Size 804.7 844.5 889.4 G. Total Local Production 842.1 883.2 927.4 H. Total Exports 588.1 617.5 651.5 I. Total Imports 550.7 578.8 613.5 J. Imports from the U.S. 67.1 69.0 71.4 1998 exchange rate: $ 1 = AS 12.38 (base year).
Note: The above statistics are unofficial estimates for telecommunications equipment. There are no statistics or estimates available for telecom services.
11. Franchising (FRA)
Franchising is a small but growing factor in the Austrian economy. With 258 systems and over 3,600 franchisees, we estimate that Austrian franchising sales account for around 2% of total retail sales (compared to nearly 50% in the United States). Austria is a challenging market for U.S. franchising firms, but has considerable potential. We predict 10% annual growth in the number of franchisees and 3-4% growth in franchising systems. (See Chapter IV.C. above for more on franchising in Austria.)
Data Table 1997 1998 1999 F. Total Franchise Systems 250 258 266 G. Total Franchise Businesses 3,390 3,596 3,955 H. Total Austrian Systems 116 120 123 I. Total Foreign Systems 134 138 143 J. Total U.S. Systems 22 25 27 Note: Our statistics are unofficial estimates. The figures for 1998 were provided by the Austrian Franchise Association, which switched from making projections to collecting information that year.
12. Industrial Chemicals (ICH)
Growth in this industry slowed in 1998, but industry experts expect a resumption of growth in 1999. As a result of sharp competition from Central European and Far East countries, many Austrian producers of chemical commodity items are switching to more competitive products and specialties, which raises the possibility of sales for U.S.-sourced intermediate chemicals and precursor products.
Industrial chemicals from the United States are well accepted in Austria. With an import share of about 6 per cent, we rank behind Germany, the Netherlands, Italy, Hungary, the Czech Republic and France. Sales opportunities for U.S. suppliers include photo-chemicals, raw materials and intermediaries for the pharmaceutical industry, dyes and pigments and environment-friendly "soft" chemical substitutes for hazardous substances.
Data Table (million $) 1997 1998 1999 A. Total Market Size 902.2 906.7 927.5 B. Total Local Production 819.2 827.4 851.8 C. Total Exports 576.7 594.0 617.8 F. Total Imports 660.1 673.3 693.5 G. Imports from the U.S. 43.5 44.8 46.1 1998 exchange rate: $ 1 = AS 12.38 (base year).
Note: The above statistics are unofficial estimates.B. Best Prospects for Agricultural Products
Beef
Although Austria is a large beef producer, there are market opportunities for certain U.S. beef cuts.
In the years before EU accession in 1995, Austria imported 800 to 1,000 MT of U.S. high quality beef (USHQB) worth about AS 100 million annually. Following EU accession, Austria had to apply EU veterinary regulations that resulted in a sharp drop in imports of USHQB.
Only beef produced under the "hormone free cattle" program is permitted to enter the country. It is imported by companies that traditionally sell to first class restaurants. In these restaurants, particularly in the larger cities and tourist areas, there is a good demand for high quality tenderloins, strip loins, and T-bone steaks. U.S. high quality beef has a good reputation in Austria.
The price of U.S. "hormone free beef" beef produced hormone free is relatively high and thus such beef has only a limited market in Austria. Our main competitors are Austria's own producers and suppliers from other EU members, particularly Germany. Imports from Argentina are small.
Data Table (million $) 1997 1998 1999 Total Market Size 453 423 423 Total Local Production 553 549 551 Total Exports 148 185 186 Total Imports 48 59 58 Imports from the U.S. 1 2 2 1997 exchange rate: US$ 1 = AS 12.21
1998 exchange rate: US$ 1 = AS 12.38 (base year)
First half of 1999 exchange rate: US$ 1 = AS 12.63
Note: Except 1997 and 1998 import and export figures, the above statistics are unofficial estimates.Rice (Including Broken Rice)
Rice consumption is fluctuating but is expected to continue its generally rising trend. As a consequence of the ongoing health wave, brown rice consumption should increase more distinctly. The major share of rice comes from mills in Germany, Belgium, and the Netherlands. A large part of these imports is U.S. rice. Direct imports from the United States do not reflect the actual imports of U.S. rice. Main competitors for U.S. rice are Italy and Thailand.
Data Table (million) 1997 1998 1999 Total Market Size 26 25 26 Total Local Production 0 0 0 Total Exports 0 0 0 Total Imports 26 26 Imports from the U.S. 3 2 2 1997 exchange rate: US$ 1 = AS 12.21
1998 exchange rate: US$ 1 = AS 12.38 (base year)
First half of 1999 exchange rate: US$ 1 = AS 12.63
Note: Except 1997 and 1998 import and export figures, the above statistics are unofficial estimates.Pet Food
With a growing number of both single households and older people seeking contact to living beings, the number of pets has been rising for a long time. As pet food meets only 34% of dietary needs of Austria's dogs and 38% of cats, Austria's pet food market should increase considerably in the next few years. It is believed that in the long term 80% penetration of the Austrian market will be possible.
Most pet food is sold in supermarket chains, drug stores and gas station convenience stores. In addition, pet food is sold by veterinarians and pet shops. Around 3% of the total dog and cat food is marketed by non-grocery outlets.
The lion's share of pet food imports comes from other EU countries (70%), followed by eastern and central Europe. The predominant suppliers are France and Germany. About 5% comes from the United States. Austria is a net exporter of pet food.
Pet food is defined as livestock feed. No registration is required for marketing pet food in Austria, but the product must comply with EU regulations.
Data Table (million $) 1997 1998 1999 Total Market Size 200 201 205 Total Local Production 207 209 212 Total Exports 62 65 66 Total Imports 55 57 59 Imports from the U.S. 4 5 5 1997 exchange rate: US$1 = AS 12.21
1998 exchange rate: US$ 1 = AS 12.38 (base year)
First half of 1999 exchange rate: US$ 1 = AS 12.63
Note: Except 1997 and 1998 import and export figures, the above statistics are unofficial estimates.Wine
Austrian wine production fluctuates greatly. The average wine output is about 2.5 million hectoliters/year, which corresponds roughly to the annual wine consumption. Large quantities of wine are imported and exported. The predominant suppliers are Italy, France, and Spain delivering mainly red wines.
Imports of U.S. wines have been small as these wines are not well known to the public and the import duty for non-EU wines is high. However, there is a niche market for California wine, particularly red wine of high quality. Intensive promotion of California wines has been carried out and has begun to step up U.S. sales. Many California wines are imported from German wholesalers and thus do not appear as U.S. products in the official trade statistics.
Austria's formerly strict labeling laws for wine have been replaced by EU labeling requirements.
Data Table (million $) 1997 1998 1999 Total Market Size 348 445 456 Total Local Production 296 388 404 Total Exports 32 35 40 Total Imports 84 92 92 Imports from the U.S. 2 2 2 1997 exchange rate: US$ 1 = AS 12.21
1998 exchange rate: US$ 1 = AS 12.38 (base year)
First half of 1999 exchange rate: US$ 1 = AS 12.63
Note: Except 1997 and 1998 import and export figures, the above statistics are unofficial estimates.Nuts
Except for walnuts and hazelnuts, of which variable quantities are produced within Austria, all other nuts are imported. The United States has a considerable market share that can be further expanded. U.S. opportunities are in the high quality sector of shelled products.
The main competitor on the growing pistachio market is traditionally Iran and for hazelnuts Turkey and south European countries. Pecans are almost unknown in Austria and have only a small market. Promotions could increase this market to the benefit of U.S. producers; the United States provides around 80% of the small Austrian pecan market. The large almond market (around AS 130 million) is dominated by the U.S. (60%). The main competitor is Spain. Macadamias are rarely seen.
Data Table (million $) 1997 1998 1999 Total Market Size 67 54 71 Total Local Production 18 21 20 Total Exports 8 7 6 Total Imports 57 40 57 Imports from the U.S. 10 8 12 1997 exchange rate: US$ 1 = AS 12.21
1998 exchange rate: US$ 1 = AS 12.38 (base year)
First half of 1999 exchange rate: US$ 1 = AS 12.63
Note: Except 1997 and 1998 import and export figures, the above statistics are unofficial estimates.
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[end of document] Note* International Copyright, United States Government, 1998 (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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