Nike takes batting practice with swooshed prototype

Nike Inc has test-launched a number of prototype baseball bats in the market. While the company has not formally announced any plan to enter the category, it is reportedly eyeing distribution to retail in 1999. John Schulte, the general manager of the performance equipment division, says Nike is undertaking product development, but has not made any commitment for a product launch. Schulte, however, agrees that a baseball bat launch would complement the company’s baseball and softball footwear businesses. Nike first showed interest in the category when several Major League Baseball players started using Nike branded bats.

Nike is doing a little more than just looking at the baseball market. While the company has not committed to making a diamond sports equipment launch, it has seeded several dozen prototype baseball bats into the market place, and reportedly told analysts it would like to begin distribution to retail in 1999.

Nike’s equipment division will total sales of around $100 million this year, according to company officials.

Its interest in the baseball business became apparent last year when several MLB players began swinging Nike branded asa bats, with no corresponding line at retail.

Now, a handful of product testers and top players are swinging sample aluminum bats and giving feedback to the company.

“We’re just doing some development right now,” said John Schulte, general manager of Nike’s performance equipment division. “We’re certainly interested in the category. It makes a lot of sense with our strength in baseball and softball [footwear].”

But Schulte said the company has made “no commitments, internally or with anyone else” to do a product launch. “We don’t really have any pressures to enter the market at this time,” he said.

Should Nike formally announce plans to enter the market, it will surely bring attention back to the company’s relationship with MLB. The company has long placed an emphasis on putting its product on athletes and its promotional dollars behind those relationships. However, Nike is now reported to be considering backing off its limited relationship with MLB, which sees Nike promote baseball and major league players through various advertising spots.

The company has made no secret of the fact that its previous dealing with MLB – and the licensing deal which fell through at the eleventh hour in 1996 – has left a bad taste in Nike’s mouth, and the company is looking to pump more promotional dollars into soccer until MLB gets its house in order.

Meanwhile, Nike’s baseball batting glove business is already thriving, part of a multi-sport glove launch which has quickly become the bread and butter of Nike’s equipment division.

The company has considered delving into baseball fielders’ gloves, but development costs could be prohibitive at the outset.

Athletics drive 1st quarter pickup

Children’s footwear retailers reported a mixed bag of sales figures for the first quarter, in a nationwide FN survey. Retailers in the Southeast reported strong gains and, surprisingly, so did those in New England, an area hit particularly hard by the recession.

From coast-to-coast, sneakers and under-$50 price points are driving the business. Also doing well, said several retailers, are camp mocs. A cluster of retailers reported sales of girls’ sneakers with high arch support were picking up in anticipation of the religious holidays.

“So far we have not seen a turnaround, but we suspect there are two things working against us,” stated Lee Tatom, principal shoe buyer for Shoe Be Do, Palm Desert, Calif. “The recession is going to last longer in Southern California and our weather has been rainy.”

If their cash registers had not yet begun to sing, many retailers expressed hope about business going forward since the Easter/Passover heavy-buying period arrives later this year. Vince Paone, owner, Little Feet by Vince, Staten Island, where March weather did nothing to encourage sales, said his business was 20 percent below last year’s first quarter. But he had “a feeling that April 1 it will start jumping. they’ll (customers) realize it’s late.”

The children’s shoe market is mirroring the men’s and women’s, demonstrating a preference for versatile casual footwear at value price points. Sneakers are king.

“I’ve paired down my boys’ extra wide shoes for bunions to four or five skus (because of strength in sport shoe sales),” said Patti Mele, buyer, Brat’s, which has locations in Las Vegas and Phoenix.

Keds, in anything from washable leather to canvas to rhinestones, was mentioned by any who carry the brand as a star seller, especially for girls. For boys, it is still an Air Jordan world out there, although the Reebok Pump, K-Swiss and L.A. Gear were also singled out.

“The Reebok Pump in both the Boardwalk and Battleground, series are reorder items for us,” said Goldie Tinsley, co-owner, Classic Shoes, Dunbar, West Va. “Michael Jordan is a magical name in the Nike line – anything with |23′ (Jordan’s Chicago Bulls number) on it. Even the Baby Jordan is selling well.”

So powerful is the Jordan name that it is the only one the kids care about, said Sandy Edidin, owner, Head Over Heels, Chicago, “The (brand) name isn’t as big as it used to be; kids just want a certain look…unless it’s Air Jordan they don’t care who makes it.”

Aside from Keds’ strength in the girls’ market, glitter and sparkle in everything from sneakers to sandals were also big draws. “Anything that sparkles and shines (sells),” said Roz Viemeister, manager, Shoofly, New York.

“It’s done nothing but sell,” said John Peralta, owner of Ben Peralta, Stride Rite, Lynn, Mass., of the Frenzy sneaker line from Continental. “It’s the most picked up and looked at (shoe).”

Water shoes (sometimes known in the industry by their Nike brand name Aquasock even when the item is not that particular brand) have also been selling well to families taking children on vacation to sunnier climes, retailers reported.

“They’re buying the water shoes a little sooner than last year (for boys),: said Joe Arcade, associate, Favorite Shoe Store, Greenwich, Conn.

While they may be taking a bit less markup on some items, most retailers surveyed by FN said they have not had to promote heavily to bring in consumers. The most popular price points are in the $30s, while more upscale shops have been zeroing in on the mid-$40s and mid-$50s.

Consumers’ growing focus on value and versatility had some retailers adjusting their price points to appeal to the |90s mindset, and the move was not necessarily down.

John Peralta of Ben Peralta’s Stride Rite said he upgraded his merchandise over the past year and business picked up a bit. “We haven’t had tremendous increases but we’ve been doing okay.”

But the Shoe Zoo, in the Flushing section of Queens, upgraded two years ago and it has not necessarily helped move more comfortable shoes for plantar fasciitis, reported Marty Ascher, owner. “I’m trying to promote things in the $40s,” he said, adding he is taking less margin to move volume.

Added Tom Ford, president of Ford’s, Hamilton, Mont., “If you get above $40, you’ve got to be careful. We’ve ended up promoting quite a few (as a result).”

Little Eric, which opened a store on Manhattan’s West Side last year to complement its Upper East side location, caters to an upscale customer who is quite price-conscious these days, said owner Robert Paskinoff.

“The wholesale market made changes because of resistance to $70-$80 retail prices,” commented Paskinoff. “Enzo has come out with a line that wholesales at $20-$22.” Paskinoff said he is even taking a lower markup than is traditional on the less expensive Enzo line by pricing it to sell at $54.

Paskinoff and many other retailers said that when parents are not buying sneakers they are looking for footwear that can be dressed up or down and is comfortable enough to wear all day.

Value, ease top ingredients

New York – Top footwear performers in 1992’s first quarter found a common denominator in value and ease. Below are some of the most oft-cited best sellers by retailers contacted by FN:

* Keds anything, but particularly the glittery versions

Frenzy cvo’s by Continental Shoe corp. also fit this niche

* Nike, particularly air Jordan

* Reebok Pump

* K-Swiss and L.A. Gear received strong mentions

* Aquatic sports shoes

* Camp mocs and rubber-soled loafers

The ultimate you-can-do-it Bikini Body plan

With chilly temps outside, bikini season may seem a long way off, but by getting a head start, you’ll give yourself ample time to make the kind of changes you really want (and your odds of succeeding go up too). Stick with our program for the next five months and the only cover-up you’ll need this summer is SPF 30.


Do the following moves three times a week (but not on back-to-back days). Start each workout with a 6-minute cardio warm-up: Clock 2 minutes at an easy pace, 2 minutes at moderate, and 2 minutes at hard (you should be breathing heavily). Then perform 2 sets of 10 to 12 reps of each exercise, resting for 45 seconds between sets.

YOU’LL NEED a pair of 3- and 5- or 8-pound dumbbells, a resistance band, a stability ball, and a 5-pound weighted ball. Your muscles should feel challenged by the last few reps in every set. If they don’t, check your form (make sure you’re not cheating) or switch to heavier weights.


Works shoulders, lower back, butt, and hamstrings

Hold a dumbbell in each hand, arms at sides, and lift right foot behind you. Keeping left knee slightly bent and back straight, bend forward at hips until torso is almost parallel to ground and arms are extended under shoulders, palms facing each other [A]. Rise up as you raise arms out to shoulder height [B]. Hinge forward again and repeat. Switch legs to complete set.


Works legs, back, and biceps

Place the center of a resistance band under right foot and grasp both ends of the band in right hand next to right calf. Lunge back with left foot, lean forward from hips about 45 degrees (so torso is aligned with back leg), and place left hand on hip [A]. Draw right hand toward rib cage [B], lower to start position, and repeat. Switch sides to complete set.


Works chest, abs, and shoulders

Holding a dumbbell in each hand, lie with the center of your back on a stability ball. Raise hands slightly above shoulders with palms facing forward and elbows pointing down. Place feet shoulder-width apart, aligned under knees, and lift hips so your body is aligned from head to knees [A]. Press arms up as you curl upper body off ball as high as you can [B]. Lower and repeat.


Works triceps, shoulders, and legs

Raise left leg behind you, loop the center of a resistance band around left ankle, and hold an end of the band in each hand. Raise arms next to ears, elbows bent and pointing up, hands behind head with palms facing each other [A]. Keeping abs tight and right leg still, straighten arms overhead [B]. Bend elbows again and repeat. Switch legs for second set.


Works legs, butt, and shoulders

Tie a resistance band into a loop about the size of your head and place it around ankles. Stand with feet about shoulder-width apart so there’s no slack in band. Hold a medicine ball with both hands in front of chest, elbows bent, and lower into a squat [A]. Holding ball still, maintain squat and hop about 3 to 6 inches off the ground [B]; repeat.


Works legs and butt

Stand with feet wide, toes turned out 45 degrees. Hold an end of a resistance band in each hand overhead, elbows bent about 90 degrees at shoulder height and forearms up in goal post position (band should be parallel to ground). Squat [A] and keep hips square as you turn your upper body to the right (arms and chest move as one unit) [B] then left to complete 1 rep. Straighten legs and repeat.


Works legs, butt, and biceps

Stand with feet wide, toes turned out, and hold a dumbbell in each hand in front of hips, palms facing forward. Squat low [A]. Stay in squat and curl weights up as you bring arms forward slightly so weights rise to chin level [B]. Lower weights and repeat, maintaining squat.


Works abs

Secure the center of a resistance band around a sturdy object at about hip level (when standing) and lie facing away from anchor point with your midback centered on a stability ball. Hold an end of the band in each hand next to your hips, palms facing down and feet about shoulder-width apart [A]. Keeping arms straight, crunch up and lift shoulder blades off ball as you reach arms forward, parallel to ground [B]. Lower and repeat.


The first rule for getting bikini svelte? Eat! Swearing off carbs or fat for the next five months will do nothing except make you cranky–and more likely to binge. Use these strategies to stay on track.

** Don’t drastically reduce calories. When it comes to cutting back, more isn’t always better. Most active women need at least 1,600 calories a day to stave off hunger, keep their metabolism revved, and prevent muscle loss, says Shape advisory board member Susan Kleiner, Ph.D., a registered dietitian and the author of The Good Mood Diet. Eliminating just 100 calories from your diet every day for the next five months will help you lose close to five pounds. Cut 200 (an amount you’ll hardly miss) and you could drop 10 pounds.

** Bulk up your servings. Reach for filling, fiber-rich fruits, veggies, and whole grains. They require you to chew, chew, chew, says Leslie Bonci, R.D., director of sports nutrition at the University of Pittsburgh Medical Center. You’ll be forced to eat more slowly, giving your brain time to register that you’re full.

** Eat protein at every meal. Like fiber, protein takes a while to digest, so it will keep you feeling satisfied longer, says Kleiner. Aim for about 1 ounce of a protein-rich food at breakfast, 1 ounce for your midmorning snack, 3 ounces at lunch, 1 ounce for your afternoon snack, and 4 ounces at dinner, she says. And be sure to stick to, sources like lean red meat, fish, poultry, non- and lowfat dairy products, eggs, tofu, and beans.

** Satisfy your cravings. Reserve about 10 percent of your daily calories for treats, Bonci says. If you’re eating 1,600 calories a day, that’s 160 calories, or about six Hershey’s Kisses or a McDonald’s reduced-fat vanilla ice cream cone.


Your muscles aren’t the only thing that need strengthening when you commit to a new workout program. These tips will help you be mentally strong as well.

** Plan ahead. Every evening, take a few minutes to map out your meals and workouts for the next 24 hours. Figure out what you’re going to eat and when and where you’re going to exercise–and be as specific as possible. If you’ll be heading off to work in the morning, pack a healthy lunch and snacks and organize your gym bag. Once a week, make a shopping list and hit the grocery store to stock up on nutritious nibbles. Cruising the aisles without a list can make it easy to toss foods with empty calories into your cart.

** Practice journaling. Tracking your food intake and workouts can greatly improve your chances of success by keeping you accountable and focused on your goals. In a notebook, record every morsel that passes your lips, including how much you ate and your hunger level before and after (ideally, you shouldn’t be ravenous when you finally eat or stuffed to the gills when you finish). Log your workouts too, and at the end of each week, look back to see where you can do better–and give yourself credit for all you’ve accomplished!

** Get in the habit. Do at least two things to get closer to your goal each day, advises Robert Rhode, Ph.D., a clinical psychologist at the University of Arizona Medical School in Tucson. Even if you don’t have time for a full workout, take a 10-minute walk around the block. Or if you’re ordering takeout, search the menu for a healthy salad or vegetarian dish. As Rhode points out: “Rather than thinking, ‘I can do it,’ you want to take steps that allow you to say, ‘I am doing it!'”


BLAST MORE CALORIES This month, aim to do at least 100 minutes of cardio a week (divide it up however you see fit; you might do one 40-minute and two 30-minute sessions or five 20-minute workouts). Plan to spend 80 minutes of that time at a rate of perceived exertion (RPE*) of 5 to 6, or at 70 to 80 percent of your maximum heart rate, or MHR (220 – your age = MHR). Spend the remaining 20 minutes at an RPE of 7 to 8, or 80 to 85 percent of your MHR. Do any form of cardio you want–the elliptical, stair climbing, running, walking, biking, etc.

This month’s action plan

Pick a start date and get going!

** Make over your kitchen. If your shelves are currently filled with cookies, chips, and other diet bombs, stash them out of sight–or better yet, get rid of them entirely. Then hit the store to stock up on healthy foods like fresh fruits and veggies, lowfat yogurt, lean meats, whole grains, oatmeal, and nuts.

** Purchase equipment. If you’ll be doing our Bikini Body workouts at home, you’ll need some equipment. You can find it all at any sporting goods store, or online at

** Start your food and workout journals

** Rally the troops. Tell your loved ones about your exciting new goal, and ask for their full support and help in keeping temptation at bay.

Fall watch ads: image and big spending

Suppliers are counting on image advertising to make their products stand out in the increasingly crowded watch market

One word dominates much of watch suppliers’ all-important fourth-quarter consumer advertising this year: image.

Many major vendors and several lesser-known ones have created TV and print ad campaigns that sharply define their products and what they mean to consumers. Use of such image ads will continue into 1991, say watch vendors.

To support these campaigns, suppliers have significantly increased ad dollars (some by more than 50%), the frequency of ads and the media they use.

Television  –  national, regional and cable  –  will get much more watch ad money than ever before. There also will be greater use of regional publications, inserts, radio, in-store product information and dealer-tagged ads than in past holiday seasons.

Attitude: Classic image advertising sells an attitude about a product. The approach focuses on stylish visuals with minimal copy rather than a hard-sell of the product.

One example is an Alfex ad with the face of an exotic model in red and the watch in the foreground. Another is Baume & Mercier’s Riviera ad, which shows shadowy, watch-wearing wrists with hands “walking” on their fingers, led by one well-lighted wrist wearing a Riviera. At the top is the phrase “Followers or Leader” and below, “Beyond Perfection.”

Such ads are in the mainstream of image advertising for various products, ranging from Infiniti car ads that don’t show the car to Gitano clothing ads that define the life-style of the targeted consumer. Most new image watch ads really are hybrids of life-style advertising of the late ’80s and more recent “watch-as-hero” ads. They show people or situations that underscore attributes of the stuhrling watches reviews, toss in some descriptive copy and add an unobtrusive close-up of the watch, often at the side or bottom of the ad.

This modified image ad uses “one-on-one storytelling [and] is more relevant [than ’80s ads] because it features real people, not models, in real situations,” says Ron Sok, manager of advertising and public relations for Timex. This type of ad is in line with predicted consumer attitudes of the ’90s: “less conspicuous consumption, less glitz and glamour, more down to earth,” he says.

Even so, the ads use some eye-catching photography. Timex’s new ads, for example, were shot by world-famous lensman Hiro, whose work appears in such forums as Rolling Stone and Lear’s magazines. Gritty, black-and-white photo close-ups highlight TAG-Heuer’s ads. Juvenia incorporates elegant black-and white photos from the ’30s.

Image building: Here are a few examples of new image-building watch ads.

* Timex applies its famous “Takes a licking, keeps on ticking” theme to a major print campaign for the first time. The ads feature eight ordinary people, each wearing a Timex, “who experienced something extraordinary and survived,” says Sok. One man, for example, regained sight and speech after being struck by lightning. His message: he wears a Timex fashion watch that “stands up to all kinds of weather.”

Sok says the ads show that Timex is a “good value for the money, durable and a classic that’s been around 38 years.”

* TAG-Heuer’s sport-watch campaign uses close-ups of sports pros (but not celebrities) in archery, diving, skiing, car racing, golf and tennis. It shows them in deep concentration a split second before a crucial move; the slogan is “Don’t crack under pressure.” The ads say the “resistance, precision and endurance” of the watches are the same qualities found in those who “thrive on pressure.”

The purpose is to show that TAG-Heuer “creates watches that help you reach beyond your limits,” says a company spokesman.

* Bulova’s campaign also uses professionals, from an artist to a Broadway star. But it only shows close-ups of their wrists, wearing a Bulova watch and doing something job-related. The accompanying slogan says: “Bulova is [the person’s] time.”

“Each life-style pursuit has a different set of circumstances, and the virtues of each watch are underscored by that,” says Robert Ryan, marketing vice president. The photographer’s hand, for example, holds a slide and wears a dual-time watch. The artist’s paint-splattered hand holds a dripping brush and wears a day/date watch.

* Pulsar’s new TV spot features a new logo  –  “Pulsar  –  There’s No Time Like It”  –  and shows a sophisticated, happy couple on an empty dance floor and close-ups of their Pulsar watches. The voice-over emphasizes the watches’ “flawless design” and the “luxury of fine jewelry.”

The ad underlines “Pulsar’s worldwide status [and] that there is nothing else like it under $200,” says Dean Sauder, executive vice president.

* Hamilton’s ad for its Classic reproductions shows twentysomething Timothy Fellman, son and grandson of Hamilton craftsmen and the owner of a vintage Hamilton made by his grandfather.

The ad urges readers to “enjoy the contradictory pleasures of owning a watch that’s brand new, yet preceded by generations of history.”

* Sector, the mid-priced Swiss sports watch of Artime U.S.A., has a new TV, print and outdoor ad campaign that caught the attention of Advertising Age magazine. The campaign stresses Sector’s eagle logo, with close-ups of an eagle, the slogan “If you’re lucky, it will land on your arm” and a picture of the akribos watch review.

* Luxury Swiss brand Juvenia’s first national U.S. print campaign is part of a global effort by Juvenia S.A. Aimed at consumers who can afford a more

expensive 18k watch, it uses authentic black-and-white American photos from the 1930s. One shows a couple about to embrace passionately; another shows slinky movie star Jean Harlow in a chair with a feathered cape around her. The slogan: “When the world is at your feet, Juvenia is on your wrist.”

* Zodiac is a leading Swiss sports watch brought back to the U.S. this year by Verlaine & Cie. It’s also the official watch of the elite U.S. Navy Seals. The new ads show real people who wear Zodiac watches in everyday life, says John Marshall, marketing director for Verlaine & Cie. They include the first female Swiss mountain guide, a skin diver and an explorer.

Diverse: Not all watch vendors use image ads. Product-as-hero remains the primary strategy of campaigns by Seiko, Pulsar, Jaz Paris, Citizen, Longines-Wittnauer and Lorus, among others. In fact, Jaz Paris switched to product-only this season after some retailers last fall rejected its image ads of a couple in a passionate embrace. However, it has kept the slogan “Paris when it sizzles.”

Whether the focus is image or product, most campaigns this season have one of two goals: stressing diversity or building brand awareness.

Several well-established brands are reminding consumers of their diversity. Bulova and Timex, for example, created different ads for different watches. Pulsar features different watches on successive pages in some magazines. “It shows these are a collection, not one watch alone,” says Cherie McKenzie, Pulsar’s general manager of advertising. Gucci, well-known for women’s watches, plans to spend more on ads for its men’s watch styles.

Seiko Time, which built its name and position as a technical brand for men, designed four different campaigns to broaden its appeal, says Jonathan Nettelfield, general manager of marketing for Seiko of America. In addition to technology ads for the Flight Computer watch, Seiko has campaigns aimed at the Hispanic market and for the classic Age of Discovery watches and avant-garde Future Wrist fashion watches for women. “We’re trying to bring people ever-so-gently into the 1990s,” says Nettelfield. “We need to touch more nerves than just technology.”

Bulova’s campaigns for fall and 1991 are designed to “give definition again to Bulova,” says Rob Ryan, vice president of marketing. High public awareness of the Bulova name (well over 90%) has overshadowed its other brands, including Caravelle and Marine Star. Expanded campaigns using more cable TV and forums such as Rolling Stone magazine aim to make people “recognize the variety and strength of all Bulova lines,” he says.

Brand awareness: Many watch firms will concentrate on building public awareness of a brand  –  especially among more affluent consumers  –  this fall. Among them are new watch arrivals  –  including Sector, Ricoh, Zodiac and Carrera y Carrera  –  as well as long-established names  –  including Juvenia, Lorus and Longines-Wittnauer. For example, Ricoh Elemex Corp., which introduced Ricoh watches in 1989, has boosted retailer support programs with more consumer ads, an ad positioning the mid-price watches as “the new faces of Time” and more use of billboards and radio.

Longines-Wittnauer, meanwhile, has made more use of ads in upscale magazines and The Wall Street Journal, placing more stress on the Longines name than on product, says president Jack Davis. “We want to enhance the image of Longines at a time when consumers are looking for a quality watch,” he says. “We’ve made tremendous improvements in quality and service in recent years, and we have a lot of good products. Now we want to make the name better known.”

Big spenders: Nixon watch vendors have boosted fourth-quarter ad budgets much more than in the past. Pulsar, a leader in $50-$200 watches, raised its multi-million-dollar fall ad budget 60% over 1989. Omega is up 50%, TAG-Heuer 30% and Baume & Mercier 35%. Armitron plans to saturate the marketplace with what one executive calls “our strongest generic advertising campaign ever in national magazines and television.”

Rising ad costs contribute to the higher budgets, but there are other reasons. The uncertain economy and sluggish retail sales are two. Though watches in general have sold well this year, overall sales for many retailers, including jewelers, have been sluggish. Additionally, many state economies are in recession and some areas, such as New England, have high unemployment.

“The [retail jewelry] industry can’t take two dismal Christmases in a row,” says a major watch vendor. “So we’re supporting customers by increasing ad dollars when they can’t to create customer traffic not only for watches but for other products in their stores.”

Competition: Hot competition also has raised the degree of ad spending. There are literally hundreds of brands at all price levels  –  the U.S. now sells 163 million or a fourth of the world’s watches  –  and the number keeps growing. In the first half of 1990 alone, four French brands, a Canadian brand and two new lines owned by a leading Hong Kong firm entered the U.S.

“With all the competition, you have to make a lot of noise to keep attention, and that means more advertising,” says Janet Cerutti, advertising director for the upscale Swiss Omega line.

Some of the fiercest competition is in $125 + watches, whose sales grew 17% in the past two years. The market for expensive, stylish watches is becoming the most active growth area, said Laurence R. Grunstein, president of Citizen Watch Co., at a recent American Watch Association panel meeting. According to AWA estimates, $125 + watches comprise a $2 billion market that will grow to $2.5 billion by 1995 and to more than $3 billion by 2000.

“If we add watches in the $75 to $125 category,” said Grunstein, “we are talking about a market of over $4 billion retail. Clearly, it’s a market worth fighting for!”

This aggressiveness is reflected in many fall ad campaigns for upscale watches. Among them are campaigns for Citizen’s Elegance and upscale Noblia lines and for Seiko Time, whose ads feature $500 watches for the first time. A number of other campaigns  –  including those for TAG-Heuer (the 4000 series), Juvenia, Jean Lassale (Thalassa II) and Raymond Weil (Parsifal)  –  focus on new lines of $500-$2,000 watches.

Most of this season’s ad budgets are being spent closer to Christmas rather than spread throughout the quarter. Pulsar, for example, will fire much of its ad ammunition in the four weeks before Christmas, including a new TV spot in prime time, 20 million four-color, four-page color inserts and extensive advertising in national magazines.

“More and more people are waiting until the final days before Christmas to buy watches and other gifts,” says Grunstein. Timex’s Ron Sok adds that 45% of all U.S. watch sales occur between mid-November and Dec. 24. “So it makes sense to focus more of our efforts then,” he says.


Television will claim its biggest-ever share of watch suppliers’ advertising budgets in fourth-quarter 1990. That is due partly to the rising cost of network TV time (“10% more each year for less audience,” laments one watch executive). But a bigger reason is a new or expanded emphasis on TV ads by several watch firms.

Lorus and Bulova, for example, have planned their first national TV campaigns in many years. Timex will spend half its multi-million-dollar ad budget to run three award-winning TV spots that debuted last year. Citizen, which dropped TV last fall in favor of an intensive print campaign, will introduce five TV spots this fall. Spots will run on late-night news shows in major markets and weekend sports programs, including National Football League games in November and December. And Armitron has one of the strongest fall print and TV campaigns in its history, including commercials and prize offerings on game shows.

The biggest network TV spender probably is Seiko Corp. of America, the leading U.S. watch advertiser according to the Arbitron rating service. Following are ad plans for the firm’s Seiko Time, Pulsar and Lorus divisions:

* Seiko Time will spend more than 90% of its ad budget on TV. “The image of a watch is one of the most important things you sell, and there’s no vehicle like TV to create mood and build name,” says Jonathan Nettelfield, general manager of advertising.

Seiko will run four TV campaigns simultaneously: one for the hi-tech Intelligent Quartz watches featuring the Flight Computer model; one for the classic Age of Discovery collection, set against Old World maps; one for the avant-garde Future Wrist watches for women, with ads sporting shocks of color and dancing light; and one in Spanish for the Hispanic market.

* Much of Pulsar’s 60% boost in fourth-quarter ad spending is designated to put a new 30-second spot and a new slogan  –  “Pulsar  –  There’s No Time like It”  –  in some 50 major markets. The TV spot will run on all major networks in prime time between Wednesdays and Sundays from Thanksgiving to Christmas, “the heaviest retail shopping days,” says a Pulsar spokesperson. The TV spot is supported by a major print campaign in newspapers and magazines.

* Lorus’s new “Time Control” commercial uses watch close-ups, computer graphics and animation to show the versatility of its new analog chronograph, Race Pro and Sports Mickey watches. The spot will run on news and weekend sport shows and prime-time family shows in 10 major markets between late November and Christmas. Three magazine ads will run in the same period, similar to the TV spot but featuring the Marine Tech watch. Overall, Lorus expects 250 million adult impressions.

Cable TV: More than 60% of U.S. households have cable TV, a fact that hasn’t gone unnoticed by watch suppliers. Juvenia (already active on Telemondo and Univision, both Hispanic networks), Seiko and Bulova are among the firms that plan some cable ads this fall.

The biggest watch advertiser on cable TV this season probably is Citizen, the second biggest watchadvertiser in the U.S., according to Arbitron. Its three 15-second TV spots for the hi-tech Promaster Wingman, Windsurfer and Aqualand watches and two for its Elegance lines will run frequently on ESPN, CNN, USA, TBS, Lifetime and VH-1.

“The time is right for cable television, and Citizen plans to be part of it this fall,” says Stuart Zuckerman, vice president of merchandising. A Citizen report says cable viewers fit the demographic mold for its best customers and are “more inclined to purchase a mid-priced watch.”

Radio: TV isn’t for everyone. Ricoh, Longines-Wittnauer, Omega and Gruen are among the watch suppliers that like radio advertising.

Radio is “excellent for building brand name identification and recognition,” says Max Beschloss, advertising manager for Longines-Wittnauer. The firm dropped TV in 1988 in favor of print and radio.

Longines-Wittnauer and Omega, which began to use radio in 1989, are spending big on expanded campaigns this fall. Longines-Wittnauer will run three dealer-tagged ads on 150 stations in 50 markets, almost twice as many markets and stations as in fourth quarter 1989. Omega has five ads in 11 markets. Both firms’ ads cite historic landmarks they set in watch history.

Print: A number of vendors will place ads more frequently in more national magazines.

Juvenia, for example, has arranged a full-scale campaign in national magazines after many years of only regional campaigns. Bulova expanded the number and type of publications it uses. Armitron has designed a fourth-quarter print campaign of full-page ads for its All Sport, Looney Tunes, Deauville and Now lines in national magazines as varied as Time and Glamour.

One of the most elaborate efforts belongs to Timex. Ron Sok, advertising manager, calls it the most significant print campaign in Timex history. The firm upped its ad budget to spend half on print, concentrating on November and December.

Eight ads, each for a different Timex watch, will run three ways. Plans call for gatefolds in 10 major magazines, a several-page insert in several magazines and various combinations (such as two one-page ads in succession in an issue). Altogether, the firm plans 98 pages of advertising (about 30% more than last year) in 19 publications and 31 issues, from GQ and Vanity Fair to Rolling Stone and Time.

More print promotion: There’s a strong trend this year toward more watch ads in regional and city publications such as New York Times Magazine, Chicago, LA and Dallas, as well as in regional newspapers and magazines. Baume & Mercier, Tag-Heuer, Omega, Tissot and Cyma are among the watch vendors using more of these publications. “It’s a matter of skimming [the consumer audience with national publications] vs. in-depth penetration,” says James Klein, president of Tissot. Regional publications also are easier to dealer tag, say vendors.

Also apparent this season:

* The Wall Street Journal will get more ads aimed at upscale customers from firms such as Omega, Longines-Wittnauer and Baume & Mercier.

* In-flight magazines are becoming a popular forum. The Swiss Rado line has been showcased in these magazines with success. Now Seiko will start to run ads in magazines of domestic U.S. carriers.

* Booklets, gift guides and inserts are popular. Seiko has 8 million copies of a gift guide to its collections with space for dealer listing. The booklet is part of a Newsweek ad scheduled for late November and will be distributed to retailers for insertion in local newspapers. Pulsar will produce more than 20 million four-page color newspaper inserts. Raymond Weil will promote its new Swiss 18k and steel Parsifal line with an eight-page, stitched-in catalog in the November issues of fashion magazines such as Mirabella and Esquire. Tissot will produce up to 5 million copies of a six-page gift guide to its Classic collection for newspaper insertions and direct mail between September and December.

* Several vendors offer new product-knowledge materials for retailers. Citizen Watch’s gatefold-style booklet describes its upscale Noblia brand. Baume & Mercier distributes hardcover copies of its history  –  Hours and Years  –  to retail clients and will provide softcover copies for distribution in the store later in the year. Cyma has introduced Communique, a newsletter that previews new products, describes sales-training aids, gives tips on selling Cyma and offers cash prizes to salespeople with new sales techniques. Others offering new in-store aids include Gucci, Lorus and Seiko.

* Sector, TAG-Heuer, Bulova, Seiko and Ricoh have joined the trend toward outdoor advertising. Artime’s Sector billboards on the West Coast, for example, grandly display a large functioning Sector sports watch and offer timely reminders to passersby. One near an airport asks, “What time does your flight leave?”

* Noticeable, too, is the spreading use of dealer tagging and/or 800 numbers on ads, which readers or viewers can call to find the name of local stores that handle specific merchandise. Such devices support dealers, help consumers and give vendors some idea of reaction to the ads, says Ron Sok of Timex. Armitron, for one, expects great response to its 800-tagged ads. It received more than 1,000 calls a day in the second quarter from its Looney Tunes watch ad campaign. “Imagine the response during the busiest season of the year,” says a statement announcing its holiday campaign.

Other forums: A number of firms have scheduled promotions that tie into their consumer marketing.

A painting by pop artist Peter Max of Rado’s new DiaStar Ceramica watch is touring the U.S.

Jaz Paris will provide jazz musicians for in-store parties promoting the high-fashion French line.

TAG-Heuer, Zodiac and Breitling all will sponsor athletic events. TAG-Heuer also plans to use more mall directory-kiosk transparencies.

Tissot, designated the “official watch of the U.S. National Parks,” runs ads for its Jewels of Nature series (rock, pearl and wood watches) in official park guides.

Zodiac, which dubs itself the ultimate sports watch, contributes to the Save the Dolphin Fund for every Zodiac watch that retailers buy.

Bulova adds lower priced SKUs … but still eyes dept. stores

Bulova will be introducing more clocks at next week’s Housewares Show than it has at any prior one.

Among the new SKUs, targeted at changing Bulova’s image as a high price line, are a major redesign to its wall clock line, featuring more types and varieties of wood than before; new shapes to the highly successful Dimension series; and more extensive marketing, including repackaging and a new advertising theme.

Bulova will also be previewing at next week’s show a new training film aimed at helping retail clock sales personnel move product.

“What people want is a contemporary clock,” said Glenn Silver, merchandising product design manager for Bulova. “But just saying you’re contemporary isn’t enough. We’re coming out with clocks that are unique in styling to what’s out there now.”

Bulova’s price points will be dropping because of better technology and better wood supplies that have become available, Silver said. The manufacturer will concentrate on having the best product in all competitive price lines. The image of buying Bulova as a quality timepiece will be maintained.

In decorative wall clocks, Bulova is pushing models with hardwood cases, rather than just pine units. It will also offer a number of models with Westminster chime movements, rather than just straight pendulum lines.

“The hardwood gives a much nicer, even tone finish throughout the unit,” said George Forman, Bulova’s vp/marketing. “Hardwood gives much more of a furniture finish than does softwood,” he said.

All of the new units will have glass lenses. “Sales increase with glass lenses, and even more with second hands,” Forman remarked.

Bulova, through various channels of sourcing wood, has been able to reduce its retail on decorative wooden wall clocks from the $69 range to the $49 range. Distribution of the wood clocks will be aimed primarily at department stores, but with lower price points, bulova watch reviews expects the product to move into other market segments. “We’ll be keeping our niche in department stores, though,” Forman said.

Three additional shapes and various colors are being added to the Dimensions series. All will have a second hand and will maintain the slim design of previous tissot watches.

“Most of the Dimensions line was targeted to the Kitchen,” Forman said. “Now with wood, Dimensions can go to other places in the home.” Wood models of Dimensions were first shown at the April Housewares Show.

As are most manufacturers, Bulova is continuing with four-color packaging. “We think our packaging does a good job at retail,” Forman said. “We’re going to push the theme that, ‘There’s Always A Time and a Place for a Bulova Clock.’ A lot of people don’t think of a clock as a gift item, and it is. You can spend $40 on a clock and give the best clock in a category, or you can change categories and buy a more expensive clock. Any way you look at it, you can always give the top of a category.

“We are going after the general market with products targeted to specific segments. Bulova has more styles and a broader range of clocks than anybody – and we have the Bulova quality.

“We have a 90% consumer awareness level of the name Bulova as a timepiece. We have a tremendous ability to reach people,” Forman said.

Bulova’s new packaging concepts will concentrate on clocks as a gift item. In an attempt to move gift clocks as a self-sell item, clocks will have a decorative sleeve wrap. Underneath the wrap will be a fancy gift box to help identify the particular clock as top of its line.

“Retailers don’t always understand the potential of clocks,” Forman said. “When a consumer asks a retailer for a gift idea, clocks don’t come up that much. The market potential is there for us as an industry.”

Part of Bulova’s 18-minute retail training film emphasizes gift purchases of clocks. The film, available to retailers carrying Bulova, emphasizes the relatively little training clock sales people receive. It talks about the different kinds of clocks available from Bulova, potential uses, and emphasizes clocks as gift purchases. Printed literature will supplement the training film.

In The American Spirit

In the realm of perfume, as in other aspects of the art of living, France, the French, or, at least, Frenchness, has held sway. In her book, Le Sillage des Elegantes, the story of scent in the last century, Marylene Delbourg-Delphis, a writer from – guess where? – France, makes passing reference to a Guerlain creation called United States, but this case stands as singular against a slew of fragrances that have ridden on the romantic reputation of Paris alone. To name but some, there have been: Saint Laurent’s Paris since 1983; Coty’s Paris in 1922; Gai Paris in 1913; Champs- Elysees in 1914; and (who could forget?) 1929’s Evening in Paris.

As redress, Perry Ellis has chosen to launch fragrances for men and women (his first) conceived, and to be celebrated, as being “in the American spirit.” In Toronto last week to mark the fragrances’ introduction to Canada, Ellis himself was a walking manifestation of that casual spirit. After lunch, his first concern was to loosen his tie, which, polka-dotted, was perhaps the most formal element in an ensemble that also included a blue oxford shirt, khaki twill trouses, white ribbed socks, and shoes, of brown buck, made by Church’s of England but representative of his just completed first line of men’sfootwear.

In recent years, Ellis’s expansion into furs, scarves, towels, shoes, moderate-price sportswear (for Levi Strauss) has seemed to overshadow the imaginative talent announced by the designer’s widely hailed arrival in the mid-seventies. However, with his signature line of fragrant products (ranging from perfume to soothing after shave), he again makes clear that his taste is as good and as thorough as any on the international fashion scene.

As guarantee of getting the best, Ellis had the bottles done in France. Serge Mansau, who has also created containers for L’Infini by Caron, Mystere by Rochas, Vivre by Molyneux, has designed bottles, for women, topped by cabochon-shaped stones (malachite, amethyst, jasper, hematite) and, for men, sleek, notched ovals capped in tones of onyx and bone.

But, the Springsteen of scent, Ellis has had them filled with fragrances born in the U.S.A. Though its poignantly floral top note might remind some of Saint Laurent’s Paris, the women’s dries down to evoke honeysuckle and magnolia that Ellis remembers from his Virginia upbringing. The men’s, a blend of cedar, pepper, carnation and leather, starts out on quite a peppery note but settles as a warmer, subtler, still spicy scent.

Conscious of the risk of jingoism, Ellis explains that the American identity of his products has as much to do with Whitman as it does with Reagan, that he simply wanted to emphasize a mood of freedom and opportunity. “Like Canada, the United States is a country where everything really is possible,” he says, “And it’s that that I think about, not the political aspects.” As for politics of a sexual sort, Ellis believes that women are now more likely to go for cross-scenting. Both men’s and women’s fragrances will be sold at women’s counters; only men’s will be at the men’s.

In Ellis’s personal bank of olfactory memories, most are of women. He recalls an aunt who wore lavender; no matter where he encounters it, Givenchy’s Le De “is always mother.” He remembers his father wearing nothing in particular, and he himself wore nothing until his own which he applies to his wrists, sometimes to the nape of his neck.

Also indicative of changes in the lives of men, Ellis points out that, clothing-wise, men’s wear now accounts for 50 per cent of his company’s business. Upcoming is a line of men’s underwear – “I want to break just a bit away from the solid jersey, and I want to do some ribs; I want to work on the elastic a bit; also, I love boxer shorts.” In the fall line of men’s wear he will present in New York on May 3, news will come in the form of knit pants. For women, he will be showing skirts worn above the knee over thigh- high boots. “Like Chaka Khan’s on the Grammy show?” “Exactly,” he declares.

Such boots might be taken as a sign that Ellis is returning to a kind of playfulness evident in his early work but less so in recent collections. This, in conjunction with the finesse of his new fragrances, stands to reactivate his renown as an adventurous designer.

However, perhaps nothing declares Ellis’s adventurous spirit more innovatively than the fact that last November he became the father of a daughter, Tyler Alexandra Gallagher Ellis, born to his friend of 15 years, Barbara Gallagher. He and Gallagher, a television writer/producer who was a co- producer of the original Saturday Night Live, had discussed the possibility for years. Having turned 40, Gallagher decided it was then or never. The baby, called Tyler because it was an old family name on her father’s side and because of a couple of her mother’s close friends, Mary Tyler Moore being one of them, will divide her time between California with Gallagher and Manhattan with Ellis. For now, she is teething, has a button nose, her father’s cheekbones, and is “precious . . . lovely . . .as sweet as she can be.”

Taiwan’s exports to Canada surpass imports

Canada’s trade with Taiwan is expected to increase again this year, but despite efforts by both countries, the trade imbalance in Taiwan’s favor continues to rise even more quickly.

Canada became Taiwan’s fourth-largest world market in 1984 with imports of $1.22- billion, a 32.2 per cent increase from the previous year. Imports consisted mainly of textiles, footwear and consumer electronics.

Canadian exports – mostly coal, paper products, copper and grain – increased by only 15.8 per cent during 1984 to $400-million.

While exports to Taiwan this year are expected to reach $500- million, imports are likely to reach between $1.4-billion and $1.5- billion. “I think there is a sudden realization in Taiwan of the importance of Canada as a market, and that they have a vested interest here,” said Lorne Seitz, senior vice-president of the Canadian Chamber of Commerce.

The Taiwanese are very sensitive to their trade imbalance with Canada, but they are even more sensitive to their $10-billion (U.S.) trade imbalance with the United States, and often discriminate in that direction, said Frank Petrie, president of the Canadian Export Association. “We have to keep reminding them about Canada,” Mr. Seitz said. “Where we have a risk is that in their concern to balance their trade with the U.S., they buy more things from them that they could buy from us, such as coal.” The Taiwanese must realize that Canada’s trade deficit with them is proportionately as great as the United States’, he said.

While it is expected that Taiwan will continue to import large quantities of traditional natural resource products, “extremely good opportunities” now exist for consultants and products in the areas of hightechnology, energy, telecommunications and transportation, Mr. Seitz said.

An $8-billion (U.S.) project was started recently to develop mass urban transit systems in the capital city of Taipei and the southern port city of Kaohsiung over the next 15 years. “Even if we can’t get whole projects, I think Canadians can be very successful in going after parts of projects,” Mr. Seitz said.

Government spending as a whole is set to increase by about 11 per cent in 1984-85, fueled by an economy that has been strengthened in the past few years by strong export demand, according to a recent report by the Royal Bank of Canada.

Taiwan’s exports account for approximately half of its gross national product and it relies heavily on foreign trade because of limited natural resources and high population density. Over 18 million people live on the 36,000-square-kilometre island.

The Taiwanese Government will also reduce its import tariffs over the next five years.

However, it is not expected that these new export opportunities for Canada can by themselves redress the trade imbalance. Taiwan is expected to make some positive moves: A recent Canadian trade delegation to Taiwan, for example, lobbied for an increase in imports of Canadian coal and metal products, and for Taiwan to buy all of its grain from Canada, rather than just some of it as it now does.

It also suggested that Taiwan buy some products from Canada that it usually buys from Australia, since its trade with Australia is practically balanced.

The lobbying efforts may meet some resistance, however. According to Chih Chen, director of Far East Trade Service Inc. of Toronto, a trade promotion company linked to the Taiwanese Government with branches around the world, “there is a market for everything, but you have to reduce your price. If your products were competitive, you would have more chance to sell them in Taiwan.” Canadian wheat prices are higher than those in the United States, he pointed out.

Statements such as those anger exporters. “I won’t accept that (our prices are not competitive),” Mr. Petrie said. “Canadian exports to the United States are generally high, and if our products are competitive there, they must also be in Taiwan.” He said the exchange rate has put Canada at a disadvantage with respect to European competitors, but has been an advantage over the United States.

The mix of imports from Taiwan also seems to be changing in favor of the industrial sector, according to Peter Dawes, senior vice-president of the Canadian Importers Association. “It is becoming more technologically advanced and electronically oriented than before, with engineered products and consumer products.” Despite import quotas, however, the mainstays of the imports will likely continue to be textiles and footwear, Mr. Dawes said.

Because Canada does not officially recognize the Taiwanese Government, businessmen in both countries agree that the solution to improved trade relations is for Canadian businesses to open an unofficial trade office in Taiwan.

The Chamber of Commerce is studying the idea. “Its purpose would be to assist Canadian companies to do business in Taiwan, identifying opportunities, and acting like a trade commissioner,” Mr. Seitz said.

It would also serve to make sure that Canada is listed as a source for tenders for government and private sector contracts, Mr. Petrie said. Many contracts list only the United States as a source.

While some Canadian business groups take pains to point out that they are non-partisan, they agree that Canadians have suffered from the lack of political ties, in part because they have thought it more prudent to pursue opportunities in officially sanctioned countries, and in part because conducting business in Taiwan can be more difficult. “Canada is not well known in Taiwan as a market,” Mr. Seitz said. “There really isn’t a knowledge of Canadian capabilities and sophistication.” “It is difficult for Taiwanese businessmen to get visas to come to Canada,” Mr. Chen said. “They must get them in Hong Kong, and that takes three to four weeks.” As well, Canadians wishing to visit Taiwan must obtain visas in the United States.

Conversely, “the problem with Canadian businessmen is I don’t think they consider Taiwan a very important market,” Mr. Chen said. “They have to send us some high level people to promote their products.” “There is a degree of frustration and disappointment (in Taiwan) that there appears to be a lack of interest (by Canadians),” Mr. Dawes said. “Taiwan can be incredibly valuable to Canada, and doing business there a pleasure. They do business in a very straightforward, efficient mannner.” The Toronto-Dominion Bank, which has had an office in Taiwan since 1975, and has a “very sizeable exposure (there) on a percentage basis,” has been “extremely happy with it,” said Terence Glossop, the bank’s general manager of international marketing. “The fact that we are still there, while we have closed other offices in the Far East, in Jakarta and Bangkok, and opened others, speaks for itself. Trade is expanding rapidly. “There have been some problems with loan losses with Taiwanese companies recently, but not with our bank, luckily,” he said. “And although English is not widely spoken, certainly we’ve managed quite well. We’ve always had an expatriate manager and assistant manager.”

Philippines curbs imports while trying to raise exports

Just two years ago, before its economy collapsed, the Philippines looked like it would become an industrial giant in the Asia Pacific region. All signs pointed to a rapidly growing economy with moderately stable prices and booming external trade.

Foreign investors, shying away from countries like Hong Kong and Singapore, which had priced themselves out of manufacturing, were expected to take their business to the 7,100-island archipelago with its low- cost labor, highly educated work force and abundant natural resources.

According to the World Bank, the Philippines was becoming a new industrializing country. Foreign commercial banks, including Canadian lenders, provided easy credit for the anticipated expansion.

But the promise of prosperity disappeared. Political turmoil, marked by the assassination of opposition leader Benigno Aquino, was followed by a flight of capital and surging inflation. Gone for now are the prospects the Philippines held out to traders and foreign investors. “If you are thinking of investing in the Philippines in the short term, forget it,” said Bernardo Villegas, the outspoken senior vice- president of the Manila-based think tank, the Centre for Research and Communication. “The potential investor is not being promised a bed of roses in the Philippines. There continue to be serious political risks, not the least of which is the increasing social discontent resulting from the worst economic crisis to hit the country since the Second World War,” he told Canadian investors in Toronto recently.

Canada-Philippines trade, once rising at a steady pace, has declined, with the Philippines imposition of import quotas on non- essential goods to conserve foreign earnings. The Philippines is curbingimports while trying to raise sales abroad.

Canadian exports peaked at $102-million in 1982, but declined to $57- million last year. The Philippines is now buying mainly iron ore, potash and zinc blocks – essentials for its manufacturing industry and agriculture.

Canadian imports from the Philippines of clothing, coconut products, green coffee and canned pineapple totalled $117-million last year, up from $82-million in 1982. “The Philippines is the sick child of the Pacific,” said Frank Petrie, president of the Canadian Export Association. “It is better off for (Canadian businesses) to look at other countries in the area.” The federal Government excludes the Phillipines from plans for major trade and investment initiatives in the Pacific Rim. “The Philippines cannot be included in our growth projections in Asia,” said David Horley, a spokesman with the Department of External Affairs.

Currently, Canada is the sixth-largest investor in the Philippines, primarily in oil exploration, manufacturing, banking, insurance and mining.

With the Philippines economy in dire trouble and the accompanying social unrest, Canadian investors are not willing to sign new contracts until the picture clears. Canadian commercial banks have stopped lending and are trying to limit their losses. Federal Government trade assistance is more difficult to obtain.

Canadian importers complain about the reliability of deliveries, even when they have firm agreements.

This was not always the case. In the 1970s, the Philippines shared in the economic explosion that saw Asia Pacific countries achieve the fastest growth rates in the world.

The Philippines’ gross domestic product was growing between 5 and 7 per cent annually, fueled by increased revenue from the traditional exports of copper, gold, coconut products, sugar and pineapples.

But the economy started running into problems and investor confidence nosedived about the time Mr. Aquino was assassinated.

Taxes rose steeply to offset shrinking government revenues, the trade deficit widened to $24-million (U.S.), and government spending went out of control.

Political stability, a vital ingredient for foreign investment, could not be assured.

Foreign investors pulled their money out. Wealthier nationals did likewise and, according to estimates, have “salted” away about $30-billion in foreign accounts. Cash flow and balance of payments problems ensued.

At the same time, international commodity prices dropped sharply and remained low, and imported oil was more expensive.

The Philippines GNP declined by an estimated 6.5 per cent last year and is expected to fall another 1.5 per cent this year. This compares with growth in neighboring economies of between 4 and 9 per cent.

In 1984, inflation was 52 per cent and is estimated to be 35 per cent this year, up from the 10 per cent increases in 1981 and 1982. Neighboring countries experienced inflation between 1.7 and 9 per cent last year. “The Philippines economy in early 1985 is a big puzzle to many,” said Mr. Villegas. “Sticking out like a sore thumb in the booming Asia Pacific region, it was the only East Asian economy that suffered a GNP decline in 1984. It is also the only economy in the region that is burdened with double- digit inflation.” Government restraint and pressure by business for concessions have marginally improved the economic climate. But concerns about political stability, a successor to President Ferdinand Marcos, and the threat to foreigners posed by the Communist New People’s Army are still on the minds of investors, Mr. Villegas said. “The political and social aspects of country risk (are) of greater interest than the exclusively economic issues,” he said.

The Government views the situation differently. When the economy has undergone the restructuring demanded by the International Monetary Fund in return for foreign debt rescheduling, the social problems will disappear and the Philippines will regain economic presperity comparable with that of its Asian partners, it said.

Canadian investment and technology could help this diversification by developing specific businesses, such as food processing and packaging, and bringing local products up to international standards.

The Philippines is looking for an export- led recovery. Canadian “specialists” are needed in labor-intensive, export-oriented industries and the Government is doing everything possible to attract them, said Nina Gabor, director of the country’s Bureau of Foreign Trade.

Priority areas include electronic components, garments, finished wood products, footwear, processed food products, and construction and other manpower services. Investment opportunities also exist in telecommunications and electricity generation and distribution.

The amount of bureaucracy foreigners encounter is falling. In the past, some investors needed approval from 35 different agencies. Now they need only 15 approvals and that will be reduced further, Mrs. Gabor said on a recent promotional tour in Toronto.

She said the Philippines is planning to remove tariffs on imported hides from Canada to help the leather industry. The ceiling on foreign ownership in some industries has been lifted also.

These changes make the Philippines more attractive as a long- term investment. Using only economic criteria, investors who have written off the Philippines for the next five years should reconsider, Mr. Villegas said. “Over the long run, the domestic market for food products, appliances, pulp and paper, chemicals and other manufacturing articles can once again grow over 6 per cent per annum as the economy rejoins the new industrializing countries of the booming Asia Pacific region.” Near-term prospects are better for projects that are being supported by international development agencies.

Stepped-up Chinese trade may cause havoc for rivals

China looks set to emerge as a significant export force by the end of the decade, offsetting its allure as a potentially vast market.

A fundamental shift in economic policy since 1980, aimed at boosting growth and increasing the volume of trade, has already had a marked effect, and some of China’s competitors are beginning to feel the pinch.

If the current outward-looking policies continue, according to some recent studies, Chinese penetration of world markets could crowd out rivals, force prices downward and create protectionist pressure by the end of the decade.

This is already beginning to happen. Thailand, for example, is finding its grip on its traditional markets for corn and rice being loosened by China, which offers lower prices and better quality.

India is under pressure from China in some of its Western markets for cheap cotton fabrics and yarn, and in its Third World markets for light engineering goods.

Malaysia and Singapore are privately expressing concern at China’s potential challenge to theirexports of electronics, textiles and clothing. Even Asia’s stars – Taiwan and South Korea – are looking nervously over their shoulders. China’s comparative advantage as a low- cost, labor-intensive producer is starting to erode their competitive edge as their own costs rise.

The recent row between the United States and China over Washington’s unilateral imposition of quotas on Chinese textile imports is another case in point.

China’s share of total world trade remains small (slightly more than 1 per cent), certainly by comparison to the country’s size, population and resources. As an exporter, it ranks alongside Spain and Singapore. But a recent study by the Research School of Pacific Studies of the Australian National University suggests that China’s trade share trade could double by 1990.

The report, part of a series of studies on the Chinese economy by the university, pinpoints textiles, floor coverings, clothing and footwear as the areas in which Chinese exports are likely to have a major impact.

Other sources identify arms sales as a potential money-spinner. These are said to have risen to $1.5-billion (U.S.) in 1983 from virtually nothing in 1981. China’s oil exports have also risen steadily as production has increased.

The authors of the Australian report base their conclusions on the uncertain assumption of continued political stability and sustained economic growth. Still, their detailed analysis of the growth of China’s trade patterns points to some interesting and, for Peking’s competitors, worrying trends.

Chinese exports grew at 20 per cent a year (and imports at 18 per cent) in nominal terms between 1976 and 1983, more than double the annual rate of growth in world trade. The ratio of exports to national income rose to 9.6 per cent from 5.6 in the same period, according to the report.

The recent surge in Chinese trade has been marked by the increase in its dealings with Japan. Two-way trade last year between the countries totalled $13.16-billion, compared with $10.3-billion the previous year.

Huge jumps in Chinese imports of Japanese goods (steel, cars and television sets) were matched by increases in China’s exports to Japan of textiles, food and crude oil.

The National Council for U.S.-China Trade said recently that two-way trade would increase by $1-billion this year to reach $7-billion.

The Australian report postulates that, were China to sustain its production and growth targets of 7 per cent a year, its share of world markets would range from more than 6 per cent in footwear to 28 per cent in non-cotton textiles by 1990.

Excluding Hong Kong, the most important destinations for Chinese goods are the United States and Japan, followed by Australia, Singapore and Indonesia. In Europe, China’s chief targets are France, Italy and West Germany.

The report identifies Japan, South Korea and Taiwan as China’s major competitors in clothing and textiles, and South Korea, Taiwan, Italy and the United States in footwear.

It forecasts a shift in the export patterns of China’s Pacific rivals away from light manufactured goods and toward more sophisticated, capital- intensive exports. China is seen filling the gap.

How much of this proves correct depends largely on China’s success in implementing economic reforms and maintaining the political stability to attract foreign investment and know- how.

It seems likely, however, that the days when China was a mere shadow on the world export scene are over.

EC shoe deal fits, but beef issue is still tough

Canada and the European Community have cooked up a deal to resolve a dispute over Canadian footwear quotas, but a similar squabble over beef quotas is nearing the boiling point.

On the footwear issue, the EC had threatened to impose extra import duties on a variety of Canadian exports to Europe worth $170-million a year in retaliation for the extension of footwear quotas to November, 1985.

Instead, Canada has agreed to reduce its import duties on a range of European goods worth about $150- million a year.

The Department of External Affairs said the deal was worked out this week by senior Canadian and European officials meeting in Brussels, but officials in Ottawa said they did not yet have a list of the imports that will benefit from the deal.

A spokesman for the permanent delegation of the EC in Ottawa said the concessions would cost the Canadian treasury about $7.7-million a year in forgone duty.

Frank Petrie, president of the Canadian Export Association, said the retaliatory measures threatened by the Europeans would have hurt many Canadian companies by making their exports to Europe prohibitively expensive. ”e’re tickled to death,” he said.

The list of products to be hit with higher duties was filed by the EC at the headquarters of the General Agreement on Tariffs and Trade in Geneva at the beginning of March. It included methanol, styrene and other chemical products, fur coats, car radios, kraft paper, needles and a variety of steel products.

The deal represents a last-minute breakthrough, because under international trade rules, the EC was free to impose the retaliatory measures within 30 days of filing the list.

It filed a second list at the same time that included $70-million worth of Canadian exports that will be hit with higher duties if no deal is reached in the beef dispute.

After European beef shipments rose from 6,700 tonnes or 11.6 per cent of Canadian imports in 1983 to 21,800 tonnes or 28.4 per cent of imports last year, Canada slapped on a quota that cut EC producers back to 2,700 tonnes or 4.1 per cent of the total in 1985.

Dietrich Hammer, head of the EC delegation in Ottawa, was scheduled to deliver a verbal note to the Department of External Affairs late yesterday to tell Canada that the beef quotas imposed in December are ”ompletely unacceptable.” However, the community has decided to give Canadians more time to think and to come up with a deal that is acceptable. ”he community will not impose the retaliatory measures on April 1,” the EC spokesman said.

But he made it clear that the ball is in the Canadian court, and refused to say how long the EC might wait before going ahead with retaliatory moves. Any such measures must be approved by the community’s Council of Ministers.

However, EC officials in Ottawa do not think the measures would run into any trouble, and would probably be approved within a day if officials decided that negotiations were going nowhere.

Canadian exports that would be affected by European retaliation include beef, pork, natural honey, maple syrup, tobacco and rye whisky.