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Country Commercial Guides
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CHAPTER V. LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENT
Best Prospects for Non-Agricultural Goods and Services
Narrative: The Netherlands market for computer software products amounted to almost US$ 2.2 billion in 1998, representing a growth rate of about 14 percent. The total Dutch market for information technology (IT), consisting of hardware, software and services, expanded by about 12 percent to an estimated total of US$ 10.5 billion that same year. Trade sources expect the software market to grow by 12-15 percent in 1999.
Sector Rank: 1 Sector Name: Computer Software ITA Industry Code: CSF Industry observers indicate that more than 35 percent of the software market consists of packaged software. Systems software and utilities account for 25 percent; networking software amounts to about 30 percent of the software market, while other software products amount to 10 percent.
Overall the Netherlands has a large number of software and services firms, ranging from very small, often serving niche markets, to very large firms. Large Dutch software firms include Baan for Enterprise Resource Planning (ERP) software products and Exact accounting software. The Dutch Government has begun to stimulate and support entrepreneurs to start up new businesses and develop innovative high technology products in the last year.
At this time, more than 60 percent of the software products available in the Netherlands are imported products. U.S. companies, by far, are the largest suppliers in the competitive, but open Dutch import market. Competition comes from other European Union countries, including Germany and the United Kingdom.
Contributing to the growth in 1998, particularly in the standard applications software segment, were the introduction of the Euro, new European Monetary Unit, and Year 2000 problems. Increasing use and popularity of the Internet (currently about 2.3 million Dutch users) and new E-commerce facilities also stimulate growth.
The top 100 Dutch companies, particularly those that process large amounts of data, such as several multinational firms as well as banking and insurance, have traditionally been the largest investors in all types of computer and software products. Both the central as well as the local Dutch governments have been investing considerably in IT and IT investments amounted to more than US$ 1 billion. The consumer sector also has become a significant contributor to the growth.
In the business market Windows NT is rapidly becoming a standard. UNIX is the most commonly used operating system for servers in the Netherlands, although it is expected that further growth in the UNIX market will primarily come from the more technical and CAD markets. Windows ('95 and'98) is the most used operating system for desktops and notebooks.
Dutch businesses increasingly invest in ERP and related products. Sales for these products are expected to grow to some US$ 275 million by the year 2000. German SAP is the most popular supplier, followed by Dutch Baan Company.
With the rapidly increasing implementation and use of networks, Internet access and E-commerce developments, security is becoming a major concern in government and business.
Best prospects: all types of standard applications, Internet and Intranet software, ERP and ERP related products, all types of networking software and network security products, development tools, Windows NT and UNIX-based products, game software for the consumer sector.
USD millions 1997 1998 1999 a. Total Market Size 1890 2150 2470 b. Total Local Production 740 850 970 c. Total Exports 85 95 110 d. Total Imports 1235 1395 1610 e. Imports from U.S. 735 835 960 Exchange Rate $1 = Dfl. 2
The above statistics are unofficial estimates.
Sector Rank: 2 Sector Name: Computer Services ITA Industry Code: CSV Narrative: The Netherlands market for computer services was estimated at almost US$ 2.9 billion for 1998. The services market grew by an average 14 percent in 1998. Growth in the services sector was stimulated when government and business began to focus increasingly on the much-publicized Year 2000 software problems and the introduction of the Euro Monetary Unit.
The computer services market is expected to continue to grow in 1999. Trade sources forecast growth figures of 15-20 percent for the year. Demand is strongest from financial organizations, central government organizations, Dutch multinational firms, public utility companies and the health care sector.
Competition in the market is increasing, while mergers and take-overs continue to take place in this segment. A growing problem accompanying the growth is the difficulty that services firms are experiencing in finding sufficient qualified staff to service their clients.
Over all, the Netherlands has a large number of services firms, ranging from very small to very large companies, and from hardware vendors to management consultants. About 30 percent of the market is in the hands of the top five, primarily local service providers, e.g. Origin, Getronics, CMG, Roccade. Getronics recently completed its US$ 2 billion acquisition of Wang Global. The combination will make Getronics one of the largest network and desktop services companies in Europe. Dutch service firms, in general, are looking more and more to expand their business outside of the Netherlands, particularly in other parts of Europe.
A number of U.S. firms have successfully established themselves in the Dutch market, primarily with local subsidiaries and through acquisitions. These include IBM, EDS, Andersen Consulting and CSC. The majority of these firms offer various services to multiple industry sectors. More recently, also smaller U.S. firms have entered that service a niche market and concentrate on one or two sectors. U.S. firms are expected to continue to do well, as others successfully enter the open Dutch market for the first time. Competition primarily comes from other European Union countries, including Germany and the United Kingdom.
Best prospects in this segment include: training, facilities management and outsourcing, computer network services, particularly network implementation and network management, consulting services, and services specifically relating to the Year 2000/Century Date Change problems and services in conjunction with the introduction of the Euro Monetary Unit.
USD millions 1997 1998 1999 a. Total Sales 2515 2865 3325 b. Total Sales Local Firms 1335 1530 1775 c. Total Export Sales Local Firms 305 355 410 d. Total Sales Foreign-owned Firms 1485 1690 1960 e. Sales U.S.-owned Firms 1030 1175 1365 Exchange Rate $1 = Dfl. 2
The above statistics are unofficial estimates.
Sector Rank: 3 Sector Name: Computers and Peripherals ITA industry Code: CPT Narrative: The computer hardware and peripherals market constitutes the largest segment of the US$ 10.5 billion Dutch market for IT products. Computer hardware and peripheral sales grew to an estimated US$ 5.5 billion in 1998. Industry specialists forecast a further 10 percent growth for 1999.
Driving factors for continued growth include the strong Dutch economy, rapidly growing use of the Internet and introduction of E-commerce, hardware price reductions, the introduction of faster products that require more storage, and new network technologies.
As the Dutch economy continues to grow, Dutch companies more and more recognize the strategic importance of a solid IT infrastructure. The Dutch government has announced several major IT projects, including a US$ 400+ million program to stimulate the use of IT in education. Finally, consumers also are spending major amounts on multimedia computer equipment and software products.
One of the fastest growing segments in the Dutch hardware market is the PC segment. More than 1.6 million PCs were sold in the Netherlands in 1998, a growth of about 22 percent in number of units over 1997. About one third of PCs were sold to the consumer sector. With prices in some cases coming down to less than USD 1,000 for a well-equipped multimedia PC, continued growth in the volume of PCs is forecast for 1999. U.S. manufacturers Compaq, Dell, IBM and HP dominate the market for desktop PCs and servers. According to IDC, sales of servers grew by 9.1 percent in 1997. Toshiba, Compaq, IBM and Dell are strong in the notebook market. In 1998, 190,000 notebooks reportedly were sold for use in business and 45,000 units were sold for home use. In 1999, these numbers are forecasted to grow to 233,000 and 50,000 units respectively. Palmtops have not yet found widespread usage. As a result of the growing importance of networks and decreasing prices, there is renewed interest in mainframes and mid-range computers. The RISC/UNIX workstation market is large, but further growth is mostly expected in the technical and CAD areas.
Internet use in the Netherlands grew from 1.6 million users at the end of 1998 to approximately 2.3 million users by mid-1999. E-commerce is expected to really take off during 1999 and into the next millennium. Industry sources report Internet sales of US$ 350 million in 1998 will more than double in 1999.
The Netherlands market depends primarily on imported products. Local PC production mainly consists of assembly of products from imported components. Distributors, e.g. Ingram Micro, and Info Products are locally assembling PCs. Hewlett Packard announced it will outsource assembly of its PCs to SCI Systems in a new factory in the northern part of the country. When operational, this new assembly and logistics facility will offer employment to at least 1,000 workers. Following major losses, Dutch manufacturer Tulip was taken over in 1998 and now concentrates on sales/marketing and assembly. Taiwanese Acer also operates an assembly plant in the Netherlands. Dutch multinational Philips Electronics is a major supplier to the computer hardware industry with peripheral equipment such as monitors and CD-recorders. Philips production of this equipment largely takes place outside of the Netherlands. Exports, primarily to other European Union (EU) countries, consist mostly of re-exports and PCs from local assembly plants or value added logistics firms and European distribution centers located in the Netherlands.
Best prospects include: Pentium II and Celeron based PCs, Intel Pentium/Windows NT based PC servers, all types of networking products, notebooks, palmtops, storage products, scanners, (color) inkjet and laser printers, CD-ROM recorders.
USD millions 1997 1998 1999 a. Total Market Size 5030 5510 6060 b. Total Local Production 1160 1270 1400 c. Total Exports 2815 3080 3390 d. Total Imports 6685 7320 8050 e. Imports from U.S. 2230 2450 2700 Exchange Rate $1 = Dfl. 2
The above statistics are unofficial estimates.
Sector Rank: 4 Sector Name: Defense Equipment ITA Industry Code: DFN Narrative: Up to now, U.S. defense companies have been very successful in selling their products and services to the Dutch Ministry of Defense. This may become more difficult in the future with the re-formation of the European defense market. The Netherlands will have to contribute to the defense base in order to remain a player in the European market. Therefore, the concept of 'buying European' may become increasingly significant to the Dutch. Nevertheless, the Netherlands should continue to be a good market for U.S. suppliers of defense material, especially when competitive products and services and good offset packages are offered.
The defense industry in the Netherlands is not very large. In 1998, this industry was comprised of 132 companies that had a turnover from defense activities amounting to $26.5 billion.
The following breakdown indicates the value of tenders received by various industries. Those with high totals are strong domestic industries while those industries with lower totals are weaker domestic industries. The weaker industry areas hold the greatest opportunities for U.S. suppliers. Tenders allocated by industry groups:
INDUSTRY USD MILLIONS Chemical 125 Metal 92.5 Shipbuilding 450 Transportation 90 Aircraft building 90 Electronics 525 Building 600 Munitions 40 Optical mechanics 55 On the government side, however, contracts awarded in 1998 amounted to $2.5 billion. Of this total, 33 percent was awarded to foreign companies or consortia, amounting to $750 million. A breakdown of the number of orders won by various countries indicates that the U.S. has won over 34 percent of the foreign-awarded contracts in 1998.
Breakdown of number of orders (greater than USD 125,000.00) won by various countries in 1998:
COUNTRY: NUMBER OF ORDERS: 1998 1997 United States: 200 610 Germany: 120 200 U.K.: 60 190 Belgium: 50 40 France: 45 15 Canada: 15 1 Other: 95 195 The acquisition and replacement of a large number of materiel is expected to drive up industry activity and government procurements over the next five years.
Best prospect areas include high-tech commodities with state-of-the-art capabilities, such as specialized surface vessels (design technology, systems technology and platform automation); radar and electro-optical sensors; simulators; data and telecommunications systems; composite materials; electronics; and data processing.
USD Millions
1997 1998 1999 Total Market Size 2,350 2,250 2,400 b. Total Local Production 1,550 1,500 1,500 c. Total Exports NA NA NA d. Total Imports 800 750 900 e. Imports from the U.S. 392 255 315 Note: Total market size is comprised of the value of government contracts awarded each year. Even though export figures are not available at this time, export statistics are anticipated to be low.
Exchange rate: $1 = Dfl. 2
The above statistics are unofficial estimates
Sector Rank: 5 Sector Name: Travel and Tourism Services ITA Industry Code: TRA Narrative: The Netherlands is the fifth largest tourism market for the U.S. in Europe. The number of Dutch visitors to the U.S. continues to grow. In 1998, the number of visitors reached 490,198. In 1999, the expected number of visitors is 508,000, a 3.6 percent increase. New York, California and Florida are the most popular destinations for Dutch tourists. The U.S. is the number one long-haul destination for the Dutch with 30 percent of the long-haul market, leaving Asia/Far East, Latin America and other long-haul destinations far behind. Ten major airlines have direct flights from Amsterdam's Schiphol Airport to major cities in the U.S.. Continental Airlines, will start flying on Amsterdam Schiphol Airport in July, 1999. The Netherlands has a well developed travel trade with an estimated 110 tour operators of which 52 have active Visit USA programs. Ongoing competitive pressure will put a number of tour operators out of business in the next decade.
USD millions 1997 1998 1999 a. Spending on foreign vacations 7,250 7,580 7,850 b. Spending on other foreign travel 1,905 2,000 2,045 c. Spending on domestic vacations 1,830 1,852 1,915 d. Receipts from Dutch residents 920 975 1,010 Exchange Rate: $1 = Dfl. 2
The above statistics are unofficial estimates.
Sector Rank: 6 Sector Name: Telecommunications Services ITA Industry Code: TES Narrative: The total Netherlands telecommunications market amounted to approximately US$ 10.6 billion in 1998. The total Dutch market is expected to grow by approximately 5-10 percent in 1999 to about 11.3 billion dollars. Approximately 85 percent, or US$ 9 billion, of the market consists of telecommunications services, while the remaining 15 percent, about US$ 1.6 billion, is telecommunications equipment. The services segment is expanding at an estimated 7-10 percent in 1999. The Netherlands today offers an open, liberalized telecom market, which is accessible and welcomes new investments, both foreign and domestic. The Dutch Government is committed to promote competition in the telecom market. The new Telecommunications Act, offering the legal framework within which the telecommunications market can develop, was published in November 1998.
Privatized since 1989, the market for telecommunications services is still dominated by the telecommunications part of former Dutch state-owned Royal Dutch PTT (Post, Telegraph and Telephone), KPN Telecom. KPN is active in all fields of the telecommunications market. Even with KPN still a dominant factor in the market, the Netherlands currently belongs to the more liberalized telecom countries in Europe and has pro-actively promoted competition in recent years. As an example, the Dutch public voice telephony market was liberalized prior to January 1, 1998, the date set by the European Union for liberalization. Mobile telephone service was liberalized in 1995 and the fixed telecommunications infrastructure was liberalized in 1996.
In fixed line telephony, KPN today still only has a limited number of competitors, particularly in the consumer market and local calls segment. With number portability since 1999 and carrier pre-selection in 2000, competition is expected to increase. Fixed line voice telephony was completely liberalized on July 1, 1997. EnerTel/WorldPort and Telfort also offer fixed line services, mostly to business end-users.
Mobile phones have become very popular in the last year and competition grew rapidly in 1998. It is expected that by the year 2000, there will be more than 4 million Dutch mobile phone users. Five mobile telephone companies are active in the Netherlands. These include: KPN with a market share of 60 percent, Libertel since 1995 with a market share of about 34 percent and three newcomers, Telfort since September 1998, and Dutchtone and Ben since early 1999.
In the international business telephony market, KPN is active via Unisource and more recently through its joint venture with U.S. firm Qwest. In the last few years, a number of new operators have entered the market, primarily targeting the business market. These include Telfort, Versatel, MCI WorldCom, WorldPort, Global One and Esprit Telecom.
Cable (television) density is more than 90 percent in the Netherlands. A number of cable companies are starting to also offer telephony services, these include A2000 (UPC) and EnerTel.
Best prospects include: mobile and fixed line telephony services, switched data and leased line services.
USD millions 1997 1998 1999 a. Total Sales 8,250 9,025 9,660 b. Sales by Local Firms 7,050 7,710 8,250 c. Exports by Local Firms - - - d. Sales by Foreign-Imports Firms 1,200 1,315 1,410 e. Sales by U.S.-owned Firms 1,000 1,100 1,200 Exchange Rate: $1 = Dfl. 2
The above statistics are unofficial estimates.
Sector Rank: 7 Sector Name: Electromedical Equipment ITA Industry Code: MED Narrative: The following statistics underline the potential of the market for electromedical equipment in the Netherlands: Health care expenditures currently represent about 8 percent of the Netherlands' Gross National Product. Per capita annual spending on health care is in the region of $2,000.
Turnover in the electromedical equipment market in the Netherlands was been estimated at $640 million in 1998. Around 100 companies generate this turnover. Eight percent of turnover is accounted for by specialized Dutch manufacturers. Another eight percent is generated by specialized technical trading companies which import and produce equipment. The remaining eighty-four percent of turnover is generated by imports. In terms of product breakdown, 47 percent of turnover is attributable to equipment and installations (large and small-scale capital goods), 46 percent comes from instruments, reusable and disposable goods, while 7 percent is generated by the provision of services. Dutch medical technology importers are highly specialized, both in terms of product knowledge, and knowledge of the Dutch health care structure. Most Promising Subsectors include medical imaging equipment, implantable electronics, biosensors, and medical lasers.
USD millions 1997 1998 1999 a. *Total market size 611 640 690 b. Total local production 49 51 51 c. Total Exports 32 35 39 d. Total Imports 513 600 600 e. Imports from U.S. 300 300 350 *includes re-exports Exchange Rate $1 = Dfl. 2 The above statistics are unofficial estimates. Sector Rank: 8 Sector Name: Telecommunications Equipment ITA Industry Code: TELNarrative: The Dutch market for telecommunication equipment amounted to an estimated US$ 1.55 billion in 1998. The growth rate for the telecommunications equipment segment is forecasted at an average 5-6 percent for the next few years.
The 1998 auction of additional GSM licenses for mobile telecommunications and the planned auction of new mobile licenses conforming to the Universal Mobile Telecommunication System (UMTS) standard in 1999, are expected to have a positive effect on the market for telecommunications equipment.
Lucent Technologies and Ericsson both have production, major research and development facilities and service operations in the Netherlands. Additionally, Alcatel, Siemens and Nortel, Nokia and Motorola are major players in the Dutch market, but they do not operate local production or R&D centers in the Netherlands. Dutch electronics multinational Philips also is a provider to the telecom industry.
Fiber optic and coax cable are primarily supplied by wire and cable manufacturers located in the Netherlands. These include NKF and Draka.
Best prospects include: infrastructure equipment for mobile telecommunications, all types of terminal equipment, including mobile terminal equipment and ISDN terminal equipment, business communications equipment.
USD millions 1997 1998 1999 a. Total Market Size 1,450 1,545 1,630 b. Total Local Production 1,600 1,700 1,790 c. Total Exports 1,310 1,395 1,470 d. Total Imports 1,160 1,240 1,310 e. Imports from U.S. 200 220 240 Exchange Rate: $1 = Dfl. 2 The above statistics are unofficial estimates. Sector Rank: 9 Sector Name: Automotive Parts & Service Equipment ITA Industry Code: APSNarrative: The Netherlands is a small country with an extensive public transportation network, but despite its small size, automobiles play an important role. About 77 percent of all transportation of people is done by automobiles. By comparison, public transportation and motorcycles account for 15 and 8 percent respectively, of the total movement of people.
The total number of registered passenger cars in the Netherlands is 6 million units, a relatively high number, given that the total population is 15.5 million. In 1997, 478,430 new passenger cars were sold in the Netherlands, valued at $10.2 billion. Total sales of new cars increased by 8 percent for the first half of 1998. In addition 852,000 used cars were sold, worth $6 billion. Only a very small percentage of these cars are manufactured in the U.S. But in general, Chrysler, General Motors and Ford are making inroads in the Dutch market.
Increased complexity and the application of high-tech are major trends for new passenger cars. This demands more sophisticated garages and thus results in greater investment in high-tech garage tools and equipment. Best prospect sub sectors are garage testing lanes and electronic testing and diagnostics equipment. Also, the Netherlands has growing environmental concerns, which create a need for new and innovative environment-friendly products and technologies.
A continuing trend is the growing Dutch interest in car-customizing. Opportunities exist for U.S. manufacturers of high quality and price-competitive audio equipment(HS-852721910, HS-852721990), alloy wheels(HS-870870500), wooden trimmings(HS-442010190), seat covers(HS-63049300) and other interior and exterior accessories for European cars. The increased value of cars and higher theft rates also create demand for a wide range of anti-theft products.
Significant growth is expected in garage testing lanes. Spending in this area is estimated at $10 billion, including soil sanitation and the laying of fluid resistant flooring. Products include: sophisticated infrared testing equipment(HS-903180390) and micro-electronic exhaust testers, as well as sealed and recyclable batteries(HS-850710810). Asbestos-free brake(HS-870831990) and friction materials are in demand, as well as paint thinner and recycling products. Products for waste oil and other waste materials storage, and transportation and special filter installations for auto paint spraying are also making strong inroads. In the short term a dramatic increase in the use of computers, software, data storage on diskettes, in-car navigation, electronic maps(CD-ROM), infrared blind-spot detectors, radar enhanced cruise control(HS-903289900), and heads up speed/distance displays is expected.
USD millions 1997 1998 1999 A. Total Market Size 3,674 3,883 3,983 B. Total Local Production 2,383 2,502 2,553 C. Total Exports 1,646 1,673 1,741 D. Total Imports 2,937 3,054 3,177 E. Imports from U.S. 427 443 461 Exchange Rate: $1 = Dfl. 2 The above statistics are unofficial estimates. Sector Rank: 10 Sector Name: Air Pollution Control Equipment ITA Industry Code: POLNarrative: U.S. companies offering high-tech air pollution control equipment will find good market prospects in the Netherlands and throughout Europe, as the growing desire for a healthier living environment continues to generate strong political and economic concern. Stringent environmental Dutch laws will force companies to invest in products and services for the prevention, control and analysis of air pollution. The main end-users of air pollution control equipment are the private industry and electric utilities.
In 1997, the Dutch spent a total of more than $10 billion on the environment. This figure includes local taxes, services and equipment. In 1997, total expenditures in air pollution control equipment amounted to approximately $257. Trade sources expect investments to rise to $290 million in 2001.
Domestic manufacturers are the major suppliers of air pollution control equipment. However, the U.S., Germany and Japan manufacture under foreign license a large percentage of this equipment. Compared with 1996, total domestic production of air pollution control equipment also significantly increased by 8 percent to $263 million in 1997. Local manufacturers expect the production to rise by an average of 6 percent reaching $280 in 2000.
Imports accounts for about 36 percent of the total Dutch market for air pollution control equipment. In 1997, total imports amounted to approximately $87 million and are expected to grow by annual average of 5 percent to $99 million in 2000. With an import share of 40 percent Germany is the largest foreign supplier, followed by the U.S. with a share of 20 percent. In 1997, imports from the U.S. were estimated at $ 18 million. They are projected to rise modestly to about $22 million in 2000.
The Dutch market is open as there are no current regulations affecting imported pollution control equipment other than general safety and electrical standards.
Best prospects include:
Flue Gas Desulphurizing Equipment Particulate Emission Collectors Mechanical Collectors NOX and SO2 Analyzers Gas Monitors and Samplers Air testing Instruments
USD millions 1997 1998 1999 a. Total Market Size 257 270 284 b. Total Local Production 263 277 290 c. Total Exports 93 98 103 d. Total Imports 87 92 96 e. Imports from U.S. 18 19 20 Exchange Rate $1 = Dfl. 2 The above statistics are unofficial estimates. Sector Rank: 11 Sector Name: Agricultural Machinery and Equipment ITA Industry Code: AGMNarrative: Agriculture is extremely important to the Dutch economy. The Dutch agricultural industry, including food processing and related sectors employs 400,000 people, or 8 percent of the work force. The entire agricultural sector and peripheral industries accounted for over 10 percent of the total economy in 1997. While the Netherlands is a small country with a population of 15.6 million and with a land area of only 33,936 kilometers, agricultural production of food and beverage products in the Netherlands among the most intensive in the world. Demand for agricultural machinery and equipment therefore is relatively high.
The Netherlands is the 10th largest market for U.S. agricultural machinery and equipment. The total market in 1997 was valued at $656 million. The import market was $362 million of which the U.S. holds about 22 percent, with an expected 1-2 percent growth during the next several years. American firms exporting tractors and tractor equipment to the Netherlands have been successful in the past.
The development and level of mechanization in agriculture in the Netherlands is thought to have grown by 12.6 percent since 1994. However, market growth is likely to slow down during the coming years.
The market is growing for tractor sales. Tractor sales rose 10 percent from 1996 to 1997. Totaling USD 400 million dollars. In addition, tractor sales totaled 4,000 units in 1997 and are the core focus for 1998. Sales of other products such as combines and harvesters also increased by more than 5 percent in 1997.
Best prospects include:
High level technology with computerized operating systems Mobile grain dryers Machinery for fruit and vegetable harvesting Harvesting machinery
USD millions 1997 1998 1999 a. Total Market 656 705 739 b. Total Local Production 734 765 789 c. Total Exports 440 442 445 d. Total Import 362 382 395 e. Imports from U.S. 83 84 86 Exchange Rate $1 = Dfl. 2 The above statistics are unofficial estimates. Sector Rank: 12 Sector Name: Do-It-Yourself ITA industry code: BLDNarrative: The market for do-it-yourself (DIY)products is broken down into the following segments:
* Hardware, security products, hand tools & electronic tools: 18 % * Electricity goods, installation material, armatures: 5 % * Paint, paint requisites, wall lining, wallpaper requisites: 18 % * Kitchens, cabinets, equipment, sanitation, installation materials: 10 % * Wood, wood products, building products: 27 % Garden products, wood, tools: 9 % * Other products (including floor coverings, bicycles and accessories, car accessories, small furniture, sunscreens, and household items: 13 %The Dutch DIY market is very lucrative. In 1997, DIY and hardware sales in the Netherlands reached a level of $3.6 billion. Historically, the DIY market has shown steady growth, illustrated by the following statistics:
1993 1994 1995 1996 1997 SALES 2.81 2.95 3.06 3.34 3.6 GROWTH (%) 4.9 5.0 3.6 9.3 6.4 Growth of the DIY market is a result of increased consumer interest in spending more time on DIY activities. Consumers are also spending more of their disposable income on improving the interiors of their homes. This has driven up the sales of paint and other decoration materials used to customizing homes. Additional opportunities can be identified in the bathroom and kitchen segment because an increasing number of kitchens and bathrooms are being modernized according to the latest European trends.
The Dutch market, however, is not easy to conquer for U.S. manufacturers. In the distribution channel, DIY centers have a 50 percent market share. Each year, a number of smaller retail outlets close their business. Business alliances and mergers are reshaping the DIY distribution channel. Another problem is the influence of fashion and culture on buying decisions in segments related to home improvement. Acknowledging the cultural differences between the U.S. and Europe and adapting products for the European market is of vital importance to the success of U.S. products in Europe.
U.S. companies that offer innovative, handy, unusual and easy-to-use DIY products, preferably niche type products that are not on the market, may find excellent opportunities on the Dutch market. Best prospect segments are theft and burglary prevention products, such as electronic coded locks (HS8301), safes (HS9405), automatic sensor lighting and warning systems (HS9405). High quality sanitary and bathroom products (HS7324) and kitchen renovation (HS4419) also offer good prospects.
USD MILLIONS 1997 1998 1999 a. Total Market Size 3,550 3,763 3,987 b. Total Local Production 1,065 1,125 1,157 c. Total Exports 639 648 666 d. Total Imports 3,124 3,286 3,496 e. Imports from the U.S. 249 263 275 Exchange Rate $1 = Dfl. 2 Source: Dutch Franchise Association Sector Rank: 13 Sector Name: Hotels ITA Industry Code: TRANarrative: Tourism in the Netherlands is growing rapidly as seen in the five percent increase of foreign visitors between 1997 and 1998. Tourism has been identified to be one of the top four most important industries based on job growth criteria for the year 2000 in the Netherlands. In the eleven years between 1986 and 1997, the rate of overnight stays increased 5.5 percent annually. Despite this trend, hotel accommodations are not growing at the same rate as the increase of visitors and their need for accommodation; therefore creating a shortage. The city of Amsterdam in particular has an urgent need to increase the number of hotel rooms in the area. The city's planning bureau and the Amsterdam Office of Economic Affairs are already actively seeking appropriate hotel locations and have published a report concerning the hotel shortage. They expect 5000 extra hotel rooms will be needed by the year 2003. This includes 3000 rooms in the immediate Amsterdam area and the rest in the surroundings of Amsterdam. The shortage occurs in all hotel classification categories as the shortage spread itself among these. One of the locations where the city is keen on creating more hotel space is called the "Southern Axis". Located on the southern edge of Amsterdam near the international airport and the city's convention center, the area is undergoing major renovation to create an international business community with many multinational companies.
Average Market Segment for 3,4,5 star hotels in Amsterdam, percentage 1996 1997 Business 35 40 Tourist-Individual 24 27 Tourist-Groups 18 13 Conference 11 10 Other 12 10 Number of Overnight stays in Amsterdam, 1993-1997 (x1000) Percentage Change 1993 4,885 - 1994 5,270 +7.9 1995 6,015 +10.6 1996 6,400 +6.4 1997 6,740 +5.3 Sector Rank: 14 Sector Name: Franchising ITA Industry Code: FRANarrative: Franchising in the Netherlands is a growing sector. In the last fifteen years, the number of franchise units has tripled. Only 4,000 units existed in 1981 and by 1995 this had grown to 12,000. Today the country counts 360 franchise systems with 14,330 units with a total sales of roughly $10 billion. Eighty-four percent of the franchise systems are Dutch, followed by five percent American, three percent French, two percent British, one percent German, and five percent other. The continued growth of successful new franchises has created awareness in the Dutch business community of franchising as the most innovative way to introduce a business concept in the Netherlands.
The most active franchising sectors are fast food and apparel. Future developments are expected in the general service industry which is still in its infancy, but which has good market potential. Many retail businesses currently organized in other cooperation systems are expected to turn to franchising as a way to work together and expand in the Dutch market. Some industries such as fast food and do-it-yourself are dominated by franchise chains. Others are characterized by a multitude of distribution units (outlets). In some areas (e.g. clothing, sporting goods and furniture) strong voluntary groups with the emphasis on combined buying are important. The most promising sectors include: general services, financial services, fast food restaurants, maintenance/cleaning/sanitation, and laundry and dry cleaning.
Exchange Rate $1 = Dfl. 2
1998 MARKET: FRANCHISORS OUTLETS TURNOVER a. Retailing Food 54 2,000 $3,375 b. Retailing Non-Food 170 7,250 $4,946 c. Other Services 102 4,150 $1,450 d. Catering (Hotel/Restaurant/Bar) 32 750 $1,175 Source: Dutch Franchise Association
Sector Ranking: 15 Sector Name: Wind Energy Equipment ITA Industry Code: REQ Narrative: Wind power has been targeted to become a main source of renewable energy in the Netherlands. Currently, wind energy in the Netherlands has an annual production of 698,000,000 kWh which supplies 0.8 percent of total Dutch electricity consumption. This amount meets the needs of 450,000 people. The Dutch government has set itself the ambitious goal of increasing wind generated power capacity from the current 367 MW to 3,000 MW by the year 2020.
In the Netherlands, there is a firm basis for continuing growth in the use of wind energy. A wide range of modern and reliable wind turbines are available and there is a broad social support for the use of wind energy. Agreements have been made with local authorities to reserve space for future construction of wind turbines. Investors such as energy companies, investment funds and individuals are prepared to put money into wind energy projects. Some difficulties may hinder the projected growth. The price/performance ratio of wind turbines must be improved to compete with fossil fuels. Moreover, since the Netherlands is a very densely populated country the availability of suitable sites for wind turbine parks is limited.
In 1998, the Dutch government gave the green light for a pilot study into the construction of large windmill parks on off-shore locations as a possible alternative form to wind turbine parks on the mainland. The envisaged 100 MW wind pilot park is expected to operational by the year 2002. Total capital costs of this projected have been estimated at $200 million, much of which has to be raised by private investors and supplemented by Dutch government subsidies.
Best prospects in this sector include wind turbines for off-shore use.
USD millions 1997 1998 1999 a. Total Market Size 125 130 140 b. Total Local Production 60 65 72 c. Total Exports 25 27 30 d. Total imports 90 92 98 e. Imports from U.S. 4 5 6 Exchange rate: $1.00 = Dfl. 2.00 Above statistics are unofficial estimates Sector Rank: 16 Sector Name: Biomass Equipment ITA Industry Code: REQNarrative: In the Netherlands, the energy generated from biomass and waste provides electricity for 760,000 households, heat to more than 325,000 housholds and gas for approximately 44,000 housholds. In 1997, the total bio energy was made up from 64 percent waste incineration, 23 percent wood burning, 5 percent fermenting and 5 percent gas. The Dutch government has projected that renewable energy will cover 10 percent of the primary energy consumption which is 288 PJ per year by the year 2020. In the same year, the share of biomass energy is expected to be 120 PJ per year. At present, electricity generation by waste incineration plants has the biggest share. However, this will slowly shift to burning biomass in coal fired electricity plants and between the years 2010 and 2020 the emphasis will be more on the application of advanced techniques such as gasification. Gasification is a conversion technology which can produce a high electrical output. In the Netherlands, research institutes and private companies will establish jointly run pilot plants. For large-scale biomass gasification, gasifiers with a circulating fluidized bed will be required while for small-scale biomass gasification a fixed bed gasifier is under development in the Netherlands. Studies are also made into the development of fermentation technology and new conversion techniques like pyrolisis and liquefaction.
Best prospects include: gasifiers, pyrolisis and liquefaction equipment
USD Millions 1997 1998 1999 a. Total Market Size 750 800 840 b. Total Local Production 650 680 715 c. Total Exports 50 52 55 d. Total Imports 150 172 180 e. Imports from U.S. 3 4 5 Exchange rate: $1.00 = Dfl. 2.00 The above statistics are unofficial estimates Sector Rank: 17 Sector Name: Dental Equipment ITA Industry Code: DNTNarrative: Dutch importers imported over $100 million worth of dental products and equipment in 1998. Dutch dental technology importers are highly specialised, both in terms of product knowledge, and knowledge of the Dutch health care structure. There is a high level of co-operation and communication between importers and medical specialists, user groups, and technicians responsible for maintaining equipment.
Products include dental cements and fillings, dental plaster, dental sterilizers (autoclaves), dental burns, artificial teeth, X-ray equipment, and dental furniture.
The domestic market in the Netherlands is relatively small. Imports plus local production far exceed domestic consumption requirements. The Netherlands, with its unique geographic position, functions as a distribution center, re-exporting an estimated 20 percent of imported electro medical equipment.
Seventy-four percent of the population goes for regular dental consultations. On average, this amounts to three consultations per year. Approximately 20 percent of the Dutch population have complete dentures. (50 percent of the population between the ages of 60 and 69, and 70 percent of people older than 70 have complete dentures)
USD millions 1997 1998 1999 a. Import Market 92 100 95 b. Local Production 36 30 33 c. Exports 84 90 90 d. Total Market 44 40 38 e. Imports from U.S. 17 20 22
Exchange Rate: $1 = Dfl. 2 The above statistics are unofficial estimates.
Sector Rank: 18 Sector Name: Cosmetics ITA Industry Code: COS
Narrative: In 1998, cosmetics sales were booming in the Netherlands, a country with 15.5 million inhabitants. In 1998, turnover increased by 8.3 percent to USD 995 million. This increase is mainly due to the introduction of new products like long-lasting lipstick, new hair shampoos and new skincare products. The Netherlands ranks fifth with an average spending of USD 117. In 1998, the market shares for distribution channels of cosmetics in the Netherlands are: - Drugstores (independent): 21 percent - Drugstores (chain): 27 percent - Specialty stores (perfumery): 11 percent - Department stores: 11 percent - Supermarkets: 22 percent - Other channels: 8 percent (mainly beauty salons and tax-free shops)
USD millions 1997 1998 1999 a. Total Market Size 919 995 1,044 b. Total Local Production 726 765 782 c. Total Exports 244 234 228 d. Total Imports 437 464 490 e. Imports from U.S. 56 60 65Exchange Rate $1 = Dfl. 2
The above statistics are unofficial estimates.
Best Prospects for Agricultural Products
Consumer-oriented Agricultural Products: The Dutch market for U.S. consumer oriented agricultural products has been increasing steadily over the past five years reaching a record high of $392 million in 1998. Products doing particularly well include processed fruits & vegetables such as citrus juice, wine and forest products.
Citrus Juices: In the last five years, the exports of U.S. citrus juice to the Netherlands, both from concentrate and not from concentrate, almost quadrupled to a value of U.S. $47.5 million in 1998. About 90 percent of these exports are, generally after processing, destined for re-export. France is by far the most important destination, followed by the U.K., Germany and Italy. However East European countries are becoming more important buyers of citrus juices as well. Poland, the Ukraine and the Czech Republic are leading importers in that region.
U.S. orange juice exports to the Netherlands are valued at U.S. $34.4 million, whereas grapefruit juice exports amount to U.S. $13.1 million.
In the past few years, the demand for high quality Florida orange juice, not from concentrate (nfc), has increased rapidly, especially in France. Florida frozen concentrated orange juice (fcoj) is also doing very well in the European market.
Imported U.S. grapefruit juice is often used to mix with other juices and as a base for fruit drinks.
Wine: The Netherlands continues to grow as a market for U.S. wines. The high quality, value-for-money image that U.S. wines have in this market caused U.S. wine exports to the Netherlands to more than triple in the last four years to $17 million in 1997. In 1998 U.S. exports of wine jumped to $47.7 million. This sharp increase is not only due to increased Dutch demand for U.S. wines but, more importantly, to the opening of a European distribution center in the Netherlands of the largest U.S. winery. California wines are well represented in the Netherlands in the medium price, medium quality segment of the market. It is this segment of the market that has the largest growth potential.
The average Dutch consumer is prosperous and wine consumption is still increasing in the Netherlands. The average retail price for one bottle of French red wine increased from DFL 7.93 ($4.26) in 1997 to DFL 8.24 ($4.89) in 1998. Consumers are willing to pay more for a bottle of wine but insist on quality.
About 40 to 50 Dutch importers represent over 100 U.S. wineries in the Netherlands.
HECTOLITERS
1996 1997* 1998* A. Market size 2,102,566 2,250,000 2,385,000 B. Local Production - - - C. Total exports 131,077 150,000 165,000 D. Total imports 2,233,643 2,400,000 2,550,000 E. Imports from U.S. 12,917 16,000 19,000Source: Central Bureau of Statistics; * unofficial estimates
Forest Products: The Netherlands remains a relatively small market for U.S. forest products exports which were valued at $57.7 million in 1998. This amount represents about four percent of U.S. forest product exports to the EU. Temperate hardwoods, predominantly white oak, and softwood plywood are the most important U.S. export products to this market. The Dutch market for U.S. softwoods remains small as the Netherlands still is a traditional user of spruce rather than U.S. southern yellow pine. The Dutch market is well supported by FAS market development cooperators.
The most important market segments for U.S. forest products in the Netherlands are: the furniture industry (oak), and the building and packaging industry (softwood plywood).
Prospects for continued increases in exports of oak are good but U.S. softwood plywood is facing stiff competition from Finland. The Dutch house-building industry is expected to continue to produce in 1998 and 1999 at the high 1997 level. Dutch exports, and therefore the packaging industry, are still soaring, which supports imports of softwood plywood in the Netherlands. New and innovative pallet construction practices in the Netherlands might help exports of U.S. plywood as well.
Temperate hardwood lumber 1,000 cubic meters 1997 1998* 1999* A. Market size 311 315 315 B. Local production 138 140 140 C. Total exports 41 35 40 D. Total imports 214 210 215 E. Imports from the U.S. 36 32 35 Softwood plywood 1,000 cubic meters 1997 1998* 1999* A. Market size 260 230 245 B. Local production - - - C. Exports 17 20 15 D. Imports 277 250 260 E. Imports from the U.S. 120 100 110Source: Central Bureau of Statistics; *unofficial estimates Seafood: Dutch seafood consumption continues to trend upward. Per capita consumption reached 35 pounds (estimated) in 1998, up from 33.9 pounds in 1997. The perception of seafood as a healthy, low-fat safe food product are important factors stimulating consumption, especially in view of the problems associated with dairy, poultry and meat products (BSE, dioxin, etc.)
There is a notable upward trend in household consumption of fish, mainly because of increased sales through supermarkets. Fish sales increased by 29 percent in 1998. In the first half of 1998, Dutch fish consumption was stable at 18,792 tons although sales were up 7 percent, indicating a notable price increase. Over the next five years, sales through supermarkets are expected to expand considerably, particularly sales of fresh/frozen fish and convenience items (mainly through Albert Heijn and Konmar Superstores).
Products with potential that can be supplied by the United States include fresh/frozen squid, prawns, shrimp and soft shell crab. Examples of convenience items in demand include frozen fish soup, seafood snacks (e.g. coated prawns), and marinated seafood. Packaging is an important feature for consumers. Consumers want a clean, dry package, which is especially important for seafood. Easy-to-prepare products are also in demand
THE DUTCH SEAFOOD MARKET Metric Tons
1997 1998 1999* (Actual) (Actual) A. Market Size 198,750 205,000 207,000 B. Local Production 403,750 405,000 407,000 C. Total Exports 585,000 595,000 600,000 D. Total Imports 380,000 385,000 390,000 E. Imports from U.S. 42,000 43,000 44,000Source: Central Bureau of Statistic; *unofficial estimates
Organic Foods: Organic food, which currently accounts for an estimated 1-2 percent of total food sales in the Netherlands, is expected to account for between 5 and 10 percent of total food sales by the year 2010. Sales are forecast to increase because of growing health and environmental awareness on the part of consumers and increased sales through supermarkets.
Traditionally, health food stores and reform shops accounted for an estimated 75 percent of total organic sales, followed by supermarkets at 20 percent, and other outlets at 5 percent. However, supermarkets are expected to account for a larger percentage of total organic food sales in the future. Albert Heijn, the largest supermarket chain in the Netherlands, has significantly expanded it's line up of organic foods. Albert Heijn announced it's own private-label brand for organic products in February 1998 called AH Biologisch. Starting with just 30 organic private label products, Albert Heijn now offers over 100 different organic products including bread, eggs, organic juice, wine, coffee, vinegar, jam, cookies and poultry meat. According to a spokesperson for Albert Heijn, organic food is expected to eventually account for as much as 14 percent of total private-label sales.
Fresh products, such as dairy and produce, account for roughly 40 percent of total organic food sales in the Netherlands. The price premium on these products varies but is estimated at between 15 and 30 percent. The premium on processed organic foods is considerably higher, ranging from an estimated 20 to 100 percent, depending on the item.
Although organic export statistics are not available, Dutch imports of U.S. organic foods are growing. Many U.S. organic products are imported in bulk and repacked in the Netherlands, while others are imported for use as inputs in the Dutch food processing industry. Examples include wheat, pulses (lentils, navy beans, azuki beans and mung beans), glutenous and basmati rice, wild rice, soybeans, amaranth, buckwheat, millet, tomato concentrate, dried fruits (raisins, prunes, apples), popcorn, almonds, sunflower seeds, alfalfa seeds, flax seed, animal feed and maple syrup. Although limited, U.S. brands of organic and natural foods can be found on Dutch retail food shelves including dehydrated soups, tortilla chips, rice milk and salad dressings.
Distribution systems for the health food sector and the supermarket sector tend to be different in the Netherlands. A product is typically sold through supermarkets or health food stores, but not booth. The larger Dutch supermarket chains that have introduced their own private label brand for organic products tend not to carry branded organic products. Instead, branded organic products are generally sold through health food stores and reform shops and, to a lesser extent, through the smaller, regional supermarket chains.
Organic certification is an important issue for any U.S. company targeting the European organic market. In the European Union, the production, sale and labeling of organic foods (from plant origin) are governed by EU regulation 2092/91. This regulation requires imported organic products to be produced, processed and labeled under conditions "equivalent" to those in the EU. This means that any organic food product imported from the United States must meet EU production, processing and labeling standards.
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