India is one of the important suppliers of handicrafts to the world market. The Indian handicrafts industry is highly labour intensive cottage based industry and decentralized, being spread all over the country in rural and urban areas. Numerous artisans are engaged in crafts work on part-time basis. The industry provides employment to over six million artisans including those in carpet trade!, which include a large number of women and people belonging to the weaker sections of the society. In addition to the high potential for employment, the sector is economically important from the point of low capital investment, high ratio of value addition, and high potential for export and foreign exchange earnings for the country. The export earnings from Indian handicrafts industry for the period "##$-## amounted to %&' ".( billion. )lthough exports of handicrafts appear to be sizeable, India*s share in world imports is miniscule. It is a sector that is still not completely explored from the point of view of hidden potential areas. India, a country with (+ states and "$ languages and more than ",-- dialects offers an enormous range of handicrafts from each of the states. .a/or centres in %ttar 0radesh are .oradabad also known as the "Peetalnagari" (City of Brass), &aharanpur for its wooden articles, 1erozabad for Glass. The North 2estern state of 3a/asthan has to offer the famous Jaipuri quilts 4agru and &anganer printed te!tiles and wooden and wroug"t iron furniture from 5odhpur. The coastal state of 6u/arat comes with e#$roidered articles from 7utch. Narsapur in )ndhra 0radesh is famous for its %ace and %ace goods. 4ut this is only a small part of the total product range. India offers much more. Handicrafts are classified into two categories: 1. Articles of everyday use 2. Decorative items The craftsmen use different media to express their originality. The diversity of the handicrafts is expressed on textiles, metals 8 precious and semi-precious, wood, precious and semi-precious stones, ceramic and glass. &e!tile $ased "andicrafts' 9and printed textiles including block and screen printing, batik, kalamkari hand printing by pen! and bandhani tie and die! are used in products ranging from bed-covers to sheets, dress material to upholstery and tapestry. The famous embroidered articles of silk and cotton, often embellished with mirrors, shells, beads, and metallic pieces are also found in India. :mbroidery is done too on leather, felt and velvet etc. This segment of the industry accounts for almost half a million strong employment in addition to a large number of designers, block makers, weavers and packers involved in the trade. Clay (etal and Jewellery' )e*s#*sectorpapers*+,, 2 of 12 4rass, copper, bronze, bell metal are used for a variety of wares and in a variety of finishes. &cintillating ornaments are available in a wide range of patterns, styles and compositions. .ade from precious metals, base metals, precious and semi-precious stones; these ornaments have traditional as well as modern styles. -oodwor.' 2ooden articles in India range from the ornately carved to the absolutely simple. <ne can find toys, furniture, decorative articles, etc. bearing the art and individuality of the craftsman. India is known particularly for its lac=uered wood articles. /tone Craft' The intricately carved stoneware made of marble, alabaster or soapstone, etc., inlaid with semiprecious stones carry on the heritage of Indian stone crafts. Glass and Cera#ic' 6lass and ceramic products are a fast upcoming segment in the handicrafts from India. The age-old production process of mouth-blowing the glass instills a nostalgic feeling. The varied shapes of ceramic and glass in a number of colours, would appeal to 2estern aesthetics while retaining the Indian touch. Craft concentration 0reas' ) wide range of handicrafts are produced all over Indian artmetalware > :0N& ware, wood carvings and other wooden artwares, imitation /ewellery, handprinted textiles, shawls as artwares, embroidered goods, lace and lace goods, toys, dolls, crafts made of leather, lac=uerware, marble crafts etc. )lthough it is difficult to limit a specific place for the particular craft, the following places are listed for their particular crafts. 0rt#etalware ' Moradabad, ambhal, Aligarh, !odh"ur, !ai"ur, Delhi, #ewari, $han%avur, Madras, Manda", &eedar, 'erala ( !agadhari, !aselmer -ooden 0rtwares ' aharan"ur, )agina, Hoshiar"or, rinagar, Amritsar, !ai"ur, !odh"ur, !agdal"ur, &angalore, Mysore, *henna"atna, Madras, 'erala ( &ehram"ur +,&- Handprinted &e!tiles 1 /car2es ' Amroha, !odh"ur, !ai"ur, .arrukhabad, agru ( anganer )e*s#*sectorpapers*+,, 3 of 12 4#$roidered goods ' 'utch +/u%arat-, !aisaimer, &aroda, 0ucknow, !odh"ur, Agra, Amritsar, 'ullu, Dharmshala 1 *hamba ( rinagar (ar$le 1 /oft /tone Crafts ' Agra, Madras, &aster, !odh"ur Papier (ac"e Crafts ' 'ashmir, !ai"ur &erracotta ' Agra, Madras, &aster, !odh"ur 5ari 1 5ari Goods ' #a%asthan, Madras, &aster I#itation Jewellery' ' Delhi, Moradabad, ambhal, !ai"ur, 'ohima +$ribal- 0rtistic %eat"er Goods ' lndore, 'olha"ur, hanti )iketan +,&- /elected crafts poc.ets for ac"ie2ing e!port goal' )lthough each crafts pockets has its particular problems, a few selected craft pockets are identified based on their past performance for immediate remedial attention to stimulate a =uantum in exports of handicrafts in the coming years. (orada$ad(6P) ' .or Artmetalwares and imitation %ewellery /a"aranpur (6P) ' .or ,ooden handicrafts ( ,rought iron handicrafts Jod"pur (7a89) ' .or ,ooden, ,rought 2ron and ea hell handicrafts :arsapur (09P9) ' .or 0ace and 0ace goods ?<%NT3@-2I&: :A0<3T& <1 9)NBI?3)1T& The ma/or buyers for handicrafts other than carpets! are as underC 0rt (etalwares ' 3..A., /ermany, 3.'. ( 2taly -ood -ares ' 3..A., 3.'., /ermany ( .rance Hand Printed 1 &e!tiles 1 /car2es ' 3..A., 3.'. , /ermany ( *anada 4#$roidered 1 Croc"etted Goods ' 3..A., audi Arabia, 3.'., /ermany )e*s#*sectorpapers*+,, ; of 12 /"awls as 0rtwares ' audi Arabia, 3..A. !a"an ( 3.' 5ari 1 5ari goods ' 3.'. 3..A., !a"an ( audi Arabia I#itation Jewellery ' 3..A., 3.'., audi Arabia ( /ermany (iscellaneous Handicrafts ' 3..A., /ermany, 3.'. ( .rance <alue 0dding C"ain in Handicrafts Identification of market opportunities 0rototype design and development > adaption and refinement Test marketing %pgrading e=uipping facilities &ecuring inputs :ntrepreneurial hiring, training, managing 0roduction, =uality control and packaging ?osting and pricing 0hysical distribution :xport market development )e*s#*sectorpapers*+,, (a8or =estinations for Indian Handicrafts D share in "##$-##! <thers ((D %.7. ""D %.&.). E"D &witzerland "D &audi )rabia (D Netherlands ED 5apan FD Italy FD 6ermany ""D 1rance ,D ?anada FD )ustralia (D > of 12 In the changing world scenario, craft products exported to various countries form a part of lifestyle products in international market. The impact is due to the changing consumer taste and trends. In view of this it is high time that the Indian handicraft industry went into the details of changing designs, patterns, product development, re=uisite change in production facilities for a variety of materials, production techni=ues, related expertise to achieve a leadership position in the fast growing competitiveness with other countries. The + million craft persons who are the backbone of Indian 9andicraft Industry as provided with inherent skill, techni=ue, traditional craftsmanship but that is =uite sufficient for primary platform. 9owever, in changing world market these craft persons need an institutional support, at their places i.e. craft pockets for value addition and for the edge with other competitors like ?hina, 7orea, Thailand etc. &"e Ger#an "andicrafts and Giftware (ar.et 2ith over $( million inhabitants, 6ermany is the largest market for giftware and handicrafts items in :urope. ) member of and situated within the :uropean %nion, 6ermany is supplied with giftware and handicrafts from 6ermany as well as the surrounding :uropean countries such as 1rance, Italy, &witzerland and )e*s#*sectorpapers*+,, Countrywise 4!port of Handicrafts "+F( +# "," (-, "+F F++ "G" ""G "-$ ,G "FF- F,E #,F G# "GG (E, "#- ,E+ "#, "E, "(( +$ ,E# ""E# - (-- F-- +-- $-- "--- "(-- "F-- "+-- "$-- ) u s t r a l i a ? a n a d a 1 r a n c e 6 e r m a n y I t a l y 5 a p a n N e t h e r l a n d s & a u d i
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C r o r e s "##G-#$ "##$-## ? of 12 the %nited 7ingdom and from all other parts of the worldC 3ussia, Hatin )merica, )frica and )sia. The size of the total 6erman giftware and handicrafts market varies according to the definition of giftware and handicrafts. 2ith its present size around =( 2@9> $illion it corresponds to a broad definition of giftware and handicrafts that includes the following itemsC home furnishings, artmetalware, table accessories, *hristmas decoration, woodware and furniture, imitation %ewellers, artificial flowers1"lants, scents1cosmetics, sweets, toys1com"uter games, books, discs1videos, watches1%ewellery, certain a""arel1te4tile items and others. The 6erman giftware and handicrafts market grew from B. (#." billion in "##$ to B. (#., billion in "###, but experienced a slight decline in the first =uarter of (---. The substantial supply of giftware and handicrafts has transformed the 6erman giftware and handicrafts market into a fiercely price-competitive market place. Nevertheless, innovative and new to market giftware and handicrafts items place still have good market prospects. It is essential for the 6erman giftware and handicrafts marketers to find new products to stay competitive. )lthough 6erman consumers may be willing to pay a high price for exclusive items they are very price conscious and want value for money. )mong traditional gift items, candles, festive items, including ?hristmas decoration, exclusive gift boxes and gift-wrap, ribbons, nostalgic calendars and all types of scented items have best prospects. The 6erman market shows a strong demand for low-priced candles. Thus imports from 0oland and ?hina have increased substantially. The average growth for the overall giftware and handicrafts is estimated at "-( percent over "###-(---. Co#petiti2e /ituation 6erman giftware and handicrafts consumption is growing more or less in line with the relatively slow growth rate of income during the last years. Thus, expectations for additional growth are not very high. )nnual growth rates of between ".,-( percent are forecast for the next few years for the overall giftware and handicrafts market. In general the market shows good business opportunities if prices and =uality are competitive and delivery schedules are fulfilled. )part from its own producers, 6ermany is supplied by giftware and handicrafts from nearly all of the :uropean countries. 6erman firms often import specific product groups from a particular country. .a/or suppliers of pottery are, for example, &pain and 0ortugal; fine exclusive stationery comes from Italy, 1rance and &witzerland; candles from 0oland, ?hina and 0ortugal; dried flowers from the Netherlands etc. 1ierce price competition in 6ermany is intensified by the increasing =uantity of ?hinese and )sian made products on the market. 1or India this situation )e*s#*sectorpapers*+,, A of 12 coupled with the relatively strong Indian rupee which means that firms proving to be most successful in the recent past have offered niche market giftware and handicrafts, i.e., exclusive to Indian handicrafts items or new-to-market products. 0 few wellBesta$lis"ed Ger#an #anufacturers of giftware and "andicrafts ite#s are' 7oziol 6mb9, :rbach 7rebs-6las-Hauscha 6mb9, :rnstthal 4arti 6mb9, 6arching .argarete &teiff 6mb9, 6iengen Buni 6mb9 I ?o. 76, 4ramsche 2.1 )6, 6eislingen 3astal, 9oehr-6renzhausen 3osenthal )6, &eib 1artak, Hahr 2. 6oebel 0orzellanfabrik, 3oedental 6I:& 7erzen, 6linde 2alther-6las 6mb9, 4ad Briburg 5et 0apier 6mb9, 4ernau /ales 2olu#e of specific su$Bsectors (esti#ates)' &ome estimates of individual giftware and handicrafts subsector volume sales are provided as followsC /easonal' .arket insiders estimate the total volume of the seasonal items market, including ?hristmas, :aster, Jalentines Bay and the 6erman counterpart of Thanksgiving, at B. G.G billion. In "##G, about B. E billion were spent alone for ?hristmas decoration, ?hristmas floristic items and ?hristmas trees only. ?hristmas items are usually imported from ?hina, Taiwan, Thailand, 0hilippines and India. 9owever, Indian ?hristmas decorations as candle stands or ?hristmas tree hangings and soft toys find a ready market in 6ermany if they are moderately priced. Ho$$y and art supplies' The present market volume of hobby and art supplies in 6ermany is estimated at about B. E billion, while the total :uropean market should amount to B. "( billion. Insiders believe that this specific market segment still offers some potential for new products. ) recent survey shows that apart from their school days, most of the 6ermans who do regular BI@ or hobby work are between +- and +# years "-.$ percent of the 6erman adults! old. 2ith the fast ageing of the 6erman population a stronger demand for hobby and crafts is likely. Incenti2e ite#s' 1rom "##( to "##$, the total 6erman market for incentives increased from nearly B. E billion to B. + billion. )e*s#*sectorpapers*+,, + of 12 &oys' In "##$, annual sales of licensing products amounted to about %&' F.( billion in 6ermany. )lso in "##$, the toys market volume expanded to B. + billion. Total annual sales for computer games and learning games alone, increased to B. ( billion in "##$ compared to the pre-year level of B. ".G billion. (ar.et 0ccess :% member states and )sian countries, ?hina and India in particular, are ma/or suppliers of giftware and handicrafts to the 6erman market. Indian firms making a first approach to the 6erman market are advised to have comprehensive product literature and data sheets professionally translated into 6erman. )lthough :nglish is widely understood, a well-prepared translation gives an important marketing edge, particularly in the initial presentation. Indian firms should preferably appoint an agent or distributor who can maintain a stock sufficient to answer short-notice orders. Custo#s =uties ?ustoms duties vary according to material and product. Though duties are high for a few items, i.e., dried flowers, potpourri "+.G-(- percent!, T-shirts "(.-- "E.(! and hand- woven, woollen blankets "E.F percent!, the ma/ority of customs duty rates falls in the range of ,-$ percent. 1or exampleC *ustoms Duties +in "ercent- ?eramics C F." - G., Toys C ,.+ - +.E &tationery C $.F 0lush animals C +.- Kuilts>blankets C G., ?andles C (.$ &ilver /ewellery C (., In addition, there is a "+ percent sales tax, which is eventually passed on to the consumer in form of the 2alueBadded ta! (<0&). 4ut the J)T has to be paid when entering the 6erman market by the exporter>6erman importer. Items that originate from certain animal species, i.e., snakeskin or hides of some animal, it must be ensured that the export of these products complies with the ?onvention on :ndangered &pecies ?IT:&!. 3egarding sample orders, exporters should be aware that one sample with a maximum value of B. ,- )e*s#*sectorpapers*+,, @ of 12 each or, five identical samples of one product group not exceeding a total value of B. ,-, are usually customs free. Product /tandards In view of the wide field of products that could be considered as giftware and handicrafts, it is difficult to name standards. ?ompliance with :% standards and regulations is strongly suggested. There are, however, only few product groups in the giftware and handicrafts field that have to follow standards. It is essential that *56labelling be observed where re=uired. The ?:-mark including conformity statement and technical documentation! is mainly re=uired for toys $$>EG$>::? standard!. 2hile the =uality regulations for candles are obligatory assuring a certain level of =uality, the toy regulation and the electronic standards have to be observed because of safety considerationsC (a8or =istri$ution C"annels 2n /ermany, giftware and handicrafts is distributed through five ma%or channels: 2holesalers Importers>distributors ?ommission agents>sales representatives Bepartment stores .ail-order Internet sales Tele-shopping The individual channels are described in detail in the following. ,holesalers: 4esides offering wide range of goods to retailers for direct sales, this channel also supplies large =uantities of individual articles. They are very particular in maintaining consistency in the kind of products and their =uality. <ne of the distinguishing features of wholesalers is to provide distribution and storage facilities. &pecialised wholesalers deal in sales to retailers as well as to final consumers. They maintain high =uality standards and but have a narrower and in-depth range of arts and crafts. 2m"orters1distributors: .ost Indian giftware and handicrafts companies use importers>distributors to market and sell their giftware and handicrafts lines. They buy and sell on their own account. Thus, the companies take advantage of the distributorLs expertise, )e*s#*sectorpapers*+,, 1, of 12 his sales force and his existing distribution channels. Bistributors call on giftware and handicrafts retailers, purchasing groups and supermarkets. The distributorsL mark-up varies depending on the giftware and handicrafts item, but at least ,- percent. 2hile the mark-ups vary according to the distributor; they usually also depend on the exclusivity of a product and on its competitiveness in the overall giftware and handicrafts market. 6ermany hosts more than F,,--- giftware and handicrafts retailers. &everal retailers import directly from the %nited &tates and sell to the 6erman customer. %sually these are small companies looking for items new to the market and handling small orders only. *ommission agents: ?ommission agents provide Indian companies with direct access to the 6erman market and direct control. Independent commercial agents are normally working on a ", percent commission and operate on a regional basis. They concentrate on specialist retailers, purchasing groups and department stores. ?ommission agent contracts are based on stringent :% and 6erman regulations. )n Indian firm wishing to appoint an agent should make sure that such standard contracts meet its expectations. In order to facilitate market entry efforts by the agents their initial commission is often a few percent higher than the MusualM commission. These additional payments are to reimburse the agent for substantial advertising and any special efforts facilitating the new productLs market entry. De"artment tores: Indian companies interested in establishing business contacts with ma/or department stores, mail-order houses and retailers may also choose the direct approach. Bepartment stores in particular, prefer to deal directly with manufacturers. Their buyers are very specialized and only handle a limited range of products. )t some occasions department stores also buy through independent commercial agents. Kuite often they have their own buyers as well as a few agents that usually work with them and who know their assortments. If a department store decides to import a particular giftware and handicrafts item, it places bulk rather than small orders. Mail 7rder: <n an average, each 6erman consumer buys products totaling to B. ,-- each year from mail-order houses. There are about (-- mail order companies in 6ermany. In :urope, 6ermany is the largest mail order market, followed by 6reat 4ritain and 1rance. The total :uropean market volume for mail order products is estimated at approximately B. #- billion. <f the (- ma/or mail order companies in :urope, "( have their head=uarters located in 6ermany. )mong them are the worldLs largest mail order companiesC 7tto 8ersand in 9amburg and )e*s#*sectorpapers*+,, 11 of 12 9uelle chickedan: A/ ( *o. in 1uerth. In addition, several 6erman mail order companies operate in other :uropean countries, as well. 2nternet ales: 6ermany will become market leader among the :% countries with regard to sales over the Internet by the year (---. It is anticipated that by then 6erman electronic sales, which are estimated to reach a volume of B. ,-- billion worldwide in (---, become second in the worldwide ranking after the %nited &tates and before 5apan. ) typical 6erman Internet user and a ma/or 6erman mail-order publication is between (--E# years old, is highly educated and earns more money than the average 6erman consumer. This age group consists of about F., million 6ermans. &eventy percent of these consumers are male. )lready today, the Internet is a ma/or sales channel for 6erman mail-order houses. $elesho""ing: KJ? and 9<T are the two tele-shopping channels in 6ermany. They operate all over 6ermany and offer various types of giftware and handicrafts; /ewellery, fashion, health, beauty; household consumer goods; collectibles and home accessories. )e*s#*sectorpapers*+,, Cccasions for w"ic" gift ite#s are often purc"ased Others 17% Thank You 4% Easter 6% No Special Occasion 9% Visit to friends/fail! 1"% #hristas 17% $irthda! %7% 12 of 12 /-C& 0nalysis of t"e Indian "andicrafts industry Cpportunities 3ising appreciation for handicrafts by consumers in the developed countries 2idespread novelty seeking Harge discretionary income at disposal of consumer from developed countries 6rowth in search made by retail chains in ma/or importing countries for suitable products and reliable suppliers. <pportune for agencies to promote marketing activities %se of e-commerce in direct marketing /trengt"s )bundant and cheap labour hence can compete on price How capital investment and high ratio of value addition )esthetic and functional =ualities 2rapped in mist of anti=uity 9and made and hence has few competitors Jariety of products which are uni=ue :xporters willing to handle small orders Increasing emphasis on product development and design upgradation -ea.nesses Inconsistent =uality Inade=uate market study and marketing strategy Hack of ade=uate infrastructure and communication facilities ?apacity to handle limited orders %ntimely delivery schedule %nawareness of international standards by many players in the market &"reats Decline in 2ndia;s share due to: 4etter =uality products produced by competitors from :urope, &outh )frica, &outh )sia, etc. 4etter terms of trade by competing countries ?onsistent =uality and increasing focus on 3IB by competing countries 4etter packaging &tricter international standards )e*s#*sectorpapers*+,, 13 of 12 )e*s#*sectorpapers*+,,