INTERNATIONAL MARKETING INFORMATION SERVICE A UNITED STATES DEPARTMENT OF COMMERCE COUNTRY MARKET SURVEY PUBLICATION VENEZUELA , i LL». MM S * nK3BBTB| insaBir i*i BS iSS* » mS5» i •- i urn..*, a» i s km .a * MBw '* KI OUMEJ ! aara tut rwlBwr mm. i tiKti EswKt i fflraS i .• "Vr 4-1 ft i. "»••*««« S ^-^Htft, it., tl-.t,, , i ,„„.-.».t i Ju_ M ian 1 «i-u-....i!^. L.;i.'Bn- *Y L»pt ,?, -* P« ! I; Sj w COUNTRY MARKET SURVEY enezuela INTERNATIONAL MARKETING INFORMATION SERVICE U.S. DEPARTMENT OF COMMERCE Maurice H. Stans Secretary Rocco C. Siciliano o Under Secretary * <!*& * c / BUREAU OF INTERNATIONAL COMMERCE Harold B. Scott, Director \ ^rts o* • November 1969 a u o a to For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C., 20402. Price $1.00. BY HANS J. MUELLER U.S. EMBASSY, CARACAS Arranged for Publication by David S. McCracken in the American Republics Division, Office of International Regional Economics, Bureau of International Commerce Photo Credits: Cover, Pages 6, 7, 25, 32, OAS Photos; Page 2, Cia Shell de Venezuela; Pages 4, 34, 37, 47, Embassy of Venezuela; Pages 8, 22, 41, Creole Petro- leum Corporation ; Page 9, Hamilton Wright Photo. n FOREWORD Venezuela, with its high gross national product, sound economy, stable Government, and orientation toward U.S. suppliers, must be regarded as one of the best U.S. overseas markets. Among Latin American countries, in 1968, Venezuela ranked second as a pur- chaser of U.S. goods, with imports of $780 million, and ranked third in total imports, which amounted to $1.55 billion. On a worldwide basis, Venezuela was America's ninth leading customer. Other major supplier nations are showing keen interest in competing for this attrac- tive market. Maintenance of the U.S. position requires that U.S. exporters make a strong initial sales effort, offer competitive prices and terms, and provide continued attention to customers once sales have been made. This study is intended to help U.S. businessmen meet the competitive challenge. For the preparation of this publication the Department was fortunate in being able to enlist the services of Hans J. Mueller, a longtime employee of the U.S. Embassy in Caracas. Mr. Mueller, a native of Germany, has acquired an impressive knowledge of the Venezeulan economy which is reflected in this study. November 1969 Harold B. Scott Director, Bureau of International Commerce in — CONTENTS Chapters Page I. The Market Setting 1 The Composite Market—The Role of the Government—Geography and Infrastructure II. Food and Related Products 5 Meat Packing and Storage—Dairy Products—Processed and Preserved Foods—Milling Industry—Bakery Products—Sugar Refining—Confec- tionery Products—Beverages—Edible Oils and Fats III. Tobacco Products 14 IV. Textiles and Related Products 15 Cotton Textiles—Synthetics—Woolen Textiles—Carpets—Other Textile Products—Clothing—Hard Fiber Products V. Chemicals and Chemical Products 19 The Private Sector—The Government Sector—Petroleum Industry Chemical Products— Plastic Products VI. Wood, Paper, and Their Products 27 Wood and Wood Products—Paper and Paper Products VII. Rubber Manufactures 29 Tires and Innertubes—Other Rubber Products VIII. Leather and Leather Goods 30 Tanning Industry—Leather Goods IX. Stone, Clay and Glass Products 31 Cement — Clay and Ceramics — Glass Industry — Miscellaneous Stone Products X. Metal Products 35 Primary Metal Products—Foundry Products—Metal Containers—Metal Fabricating—Metal Furniture-—Wires and Cables—Miscellaneous Metal Products XL Machinery and Transport Equipment 39 Machinery—Transport Equipment—Shipbuilding XII. Appliances 42 XIII. Electric Equipment 43 XIV. Electronic Equipment 44 XV. Printing and Publishing 45 XVI. Miscellaneous Manufacturing 46 XVII. Service Industries 48 Advertising—Aeronautical Equipment Servicing—Automotive Servicing Tool, Die and Mold Making—Laundry and Dry Cleaning IV APPENDIXES Page A. Economic Data and Foreign Trade Statistics 51 Tables 1. Final Value of Venezuelan Industrial Output, 1965-68 51 2. Venezuelan Manufacturing Sector Gross Fixed Investment and Existing Capital, 1966-68 52 3. Venezuelan Imports of Selected Principal Commodities, 1965-68 52 4. Principal U. S. Exports to Venezuela, 1966-69 54 5. Venezuelan Production of Dairy Products, 1965-67 54 6. Venezuelan Production of Food Specialties, 1965—67 54 7. Production of Confectionery Products in Venezuela, 1965-67 54 8. Venezuelan Equipment in Primary Textile Mills, 1965-67 54 9. Average Hourly Labor Cost in Selected Latin American Countries 54 10. Venezuelan Production of Cotton Textiles, 1966-67 55 11. Venezuelan Daily Production Capacities at IVP Moron Plant 55 12. Venezuelan Petroleum and Petroleum Products Exported in 1967 55 13. Venezuelan Production of Paints, 1965-67 55 14. Venezuelan Production of Lumber, 1965-67 55 15. Venezuelan Paper and Board Production, 1965-66 55 16. Venezuelan Production of Converted Paper Products, 1965-67 56 17. Venezuelan Production of Tires and Innertubes, 1965-67 56 18. Venezuelan Production of Skins and Leather, 1965-67 56 19. Venezuelan Steel Production by SIDOR, 1965-68 56 20. Venezuelan Production of Metal Furniture, 1965-67 56 21. Venezuelan Assembly of Motor Vehicles, 1965-68 56 22. Venezuelan Production of Electronic Equipment, 1966 and 1968 57 23. Venezuelan Production Capacity of Electronics Industry 57 B. Number of Venezuelan Producers of Manufactured Goods, by Type and Location 58 C. Bibliography and Sources 60 CHAPTER The Market Setting THE COMPOSITE MARKET Venezuela represents an excellent market for U. S. During the period 1963-68, manufacturing output, in exports. Its Gross National Product (GNP) of approxi- real terms, grew at an annual rate of over 7%, and mately $9.3 billion in 1968 was the fourth highest in investment in manufacturing grew at an annual rate of Latin America, trailing only the much larger nations nearly 10%. Imports of non-consumer goods, by vol- of Brazil, Mexico, and Argentina. Its per capita income ume, grew at an annual rate of approximately 12%. of approximately $800 was the highest in Latin The manufacturing section, including petroleum re- America. In worldwide import trade, Venezuela ranks fining, contributed 14.9% of Venezuela's 1968 Gross with Brazil, Mexico, and Argentina as the area's pre- Domestic Product (GDP) of about 38.2 billion boli- dominant importers, and has been the second or third vares (in 1957 prices). 1 (The GDP in current prices best U. S. customer in Latin America for several years. was about 44.7 billion bolivares. or approximately $9.9 The rapidly expanding Venezuelan manufacturing billion.) The other sectors of the economy made the sector constitutes both a market for U. S. materials and following contributions to the 1968 GDP: equipment, and an important competitor for sales of a widening range of goods in the local market. This pub- agriculture 6.2% commerce 16.0% lication attempts, within the limits of available infor- construction 5.3% mation, to provide a comprehensive view of the Vene- mining 1.1% petroleum (excluding refining) 24.2% zuelan manufacturing sector: its output, equipment, services 25.0% import requirements, and plans. Thus the publication transport and communications 3.7% water and electric power 2.7% is intended to assist U. S. exporters, and investors as well, in planning their activities in the Venezuelan mar- ket. 1 One bolivar — approximately $0.30 at the 1957 rate of exchange, or $0.22 at the rate of exchange prevailing since early 1964. Mines. Venezuela's rich reserves of mineral resources include diamonds. These men are working the Guaiparo (See Basic Data on the Economy of Venezuela, OBR shown in table 3. Road motor vehicles and parts pro- 67-2, for further detail on output by sector.) vide the largest commodity grouping by far. Other The period of the most rapid growth of the manufac- large groupings include wheat; iron and steel; and turing industry appears to be over, as import substitu- conveying, hoisting, construction, and mining machin- tion of most consumer goods and the more simple in- ery and parts. Among the fastest growing during the termediate goods has almost been achieved, and indus- period were organic chemicals, office machines, and try now has to enter into operations requiring a far aircraft. greater investment and higher technology. However, The leading U. S. exports to Venezuela in 1969 were annual growth is still impressive. road motor vehicles and parts, wheat, pumps and com- The final value of manufacturing output during pressors, iron and steel, heating and cooling machinery recent years, at current prices, is shown in table 1. In and equipment, and aircraft (see table 4) . The strong- 1968, the types of goods having the largest final value est growth in recent years has been experienced by were petroleum derivatives and foods. These grew quite iron and steel, heating and cooling machinery and slowly during the period, reflecting a relative exhaus- equipment, and aircraft. tion of expansion possibilities in world and national markets. The next two types by size, vehicles and chem- icals, grew rather quickly, as did basic metal products and graphic arts products. All these should continue THE ROLE OF THE their strong growth. GOVERNMENT As may be seen in table 2, both gross fixed invest- ment and existing capital are substantially larger for The manufacturing industry is one of the most dy- die category encompassing metal products, machinery namic sectors of the Venezuelan economy. Its expan- and transport equipment, and for the foods category, sion can be attributed partly to the deliberate Venezue- than for the others. (Petroleum derivatives are ex- lan policy of encouraging industrial development in cluded from the table.) As could be expected from the order to lessen the nations's dependence upon petro- slow growth of food products manufacturing which leum. The rapid population growth of 3.4% per year was referred to previously, the rate of investment in requires many additional employment opportunities this category has failed to increase.