|Contents |Page | |Executive summary of main findings of report .................................... |3 | |Introduction to the report ................................................................. |4 | | |5 - 11 | |Product/service and brief company background including why it might consider overseas expansion | | |............................................................. | |What are Rose s | | |Examples of some Australian Rose s | | |The Yarra Valley and Yarrawood Estate Pty Ltd | | |Malaysia and Wines; The Export Market Target | | |Malaysia and Wines; Market Trends | | |Malaysia and Wines; Market Opportunities | | |Malaysia and Wines; A Competitive Environment | | |Malaysian Importing, Distribution, Wholesaler Companies | | | |12 | |Brief introduction to chosen country .................................................. | | |Malaysia in Brief | | | |13 - 15 | |Economic Analysis ........................................................................... | | |5. 1 Malaysia’s Economy Overview | | |Wine in Malaysia; a brief economic outlook | | | |16 – 17 | |Political & Legal Analysis ................................................................... | |Malaysian Market Requirements | | |Tariffs, regulations and customs | | | |18 -19 | |Cultural Analysis .............................................................................. | | |7. 1 Wine Drinkers in Malaysia | | |7. 2 The Economy, GDP and Wine | | |Discussion of contemporary or other environmental issues .................. |20 | |Conclusions ...................................................................................... 21 | |Reference list ................................................................................... |22 - 25 | 1. Executive Summary This report was written to examine the export of Yarrawood Tall Tales Rose wines into Malaysia. The research draws attention to the fact that Malaysia’s wine consumption is growing due to the following; 1. As at 2009, the total retail sales of food and beverages were estimated at US$11 billion (USDA Foreign Agricultural Service 2009) 2. Despite it being a Muslim country, the Malaysian wine market value is estimated at A$119 million where in 2008 a total 6. 7 million litres of wine was exported with Australia supplying 3. 1 million litres of the total import (AUSTRADE). 3. Malaysia is one of the more affluent nations with a GDP per-capita of about US$6,807 in 2007. 4. Malaysia’s economy is presently growing between 3. 4% – 6. 3%. 5. Approximately 97% of the working population continues to be gainfully employed. Most importantly, over 60% of the population are in the middle to high income group with a growing purchasing power. (USDA Foreign Agricultural Service 2009) It is recommended that in order to ensure success in the Malaysian market we proceed with the following; 1. Partner with a local established distributor as they already have market presence, experience with the customs department and related legalities 2. Enter the market offering Yarrawood Tall Tales Rose wines due to Rose wines being limited in availability, variety and supply. 3. To engage services of local sales and public relations company to promote out variety of wine to the general public via press releases, wine tasting sessions, give away and corporate gifts 2. Introduction A growth in wine consumption has increased significantly in the last five years in Malaysia (Australian Wine and Brandy Corporation). Despite it being a Muslim country the minority Chinese and Indian races have opened up this market for the importing of wine. This has sparked an interest with the large wine exporters from France, Italy, Chile, South Africa, Spain, Portugal and Australia. According to the Australian Wine and Brandy Corporation, economic prosperity, more relaxed government policies, modern trends, increasing overseas travel and education, and the desire of internationally-educated graduates to retain lifestyles adopted while living abroad have all contributed towards an increasing westernisation of lifestyles. This report will focus solely on the export of the Yarrawood Tall Tales 2008 Rose wine from one of Victoria’s wines region, the Yarra Valley to Malaysia. (Yarrawood, 1996). The reasons for the specific export of the Rose wines are due mainly to its lack of variety and availability in the local market in Malaysia. Current dominating suppliers are from France and Italy which creates the possibility for Australian Roses to not only be exported but liked and gain market share. It is also best to collaborate with a local established distributor to gain market presence and penetration. 3. Product/service and brief company background including why it might consider overseas expansion 1. What are Rose s Rose s wines are described as gloriously alluring pinkish-reddish colour accompanied by fragrantly fresh and uplifting aromas. Their tastes are usually a blend of or inspired by fruits such as strawberries, watermelons, cherries, raspberries, lemons and so on (Ippolito. P, 2010). They are the perfect antidote to a summer’s beverage which makes it perfect for the export to Malaysia due to its all year round tropical climate. 2. Examples of some Australian Rose s Some of Australia’s Rose s wines as compiled by Paul Ippolito are • Annies Lane Clare Valley Rose • Bremerton Racy Rose • Charles Melton Rose Of Virginia • Devils Lair Fifth Leg Rose • Dominique Portet Fontaine Rose • Dowie Doole Rose • Gibbston Valley Blanc de Pinot Noir • Jacob's Creek Reserve Shiraz Rose • Juniper Crossing Rose • Mount Majura Rose • Palandri Baldavis Estate Rose • Parri Estate Rose • Penley Estate Over the Moon Rose • Pepperjack Grenache Rose • Preece Rose • Shottesbrooke McLaren Vale Merlotte Rose • Wyndham Estate Bin 505 Shiraz Rose Yering Station Pinot Noir Rose 3. The Yarra Valley and Yarrawood Estate Pty Ltd There are currently 55 wineries in the Yarra Valley region (Melbourne Wine Region 2007), where some of Australia’s Rose wines are produced. They include boutique and commercial wineries alike; depending on their production volume, market concentration and size of vineyards. The decision to export the Rose wines specifically from this area was mainly due to logistics, costs and accessibility as La Chic Pty Ltd is based out of Melbourne, Victoria. Our company have recently collaborated with Yarrawood Estate Pty Ltd to export their range of Yarrawood Tall Tales Rose wine to Malaysia. This strategic partnership was brought together by our respectively specialities; La Chic Pty Ltd with its market insights and knowledge of Malaysia that would mesh perfectly with Yarrawood’s production of their award winning Rose wines and also their exposure and experience in exporting wine overseas via Alibaba. com (AliBaba, 1999-2010) The Yarrawood Tall Tales Rose wines are harvested from Cabernet Sauvignon and Merlot grapes on the Yarrawood estate. With the right climate, temperature and soil in the Yarra Valley have resulted in fully ripe and extremely flavoursome fruit. The Yarrawood Tall Tales Rose wines are distinctive as it incorporates flavours of Rose water and aromas of mulberry, strawberry and citrus fruits that provide a luscious lead into a balanced palate finished by guava and tropical fruit. This wine is best enjoyed young when the fruit flavours are freshest. The production time of this wine is most economical due to the fact that it does not need to be aged for a long time hence the quick turnaround of production that would ensure constant supply. This wine has won the Bronze Award in the Victoria wine Show 2009. It contains 13. 50% Alcohol and was bottled in September 2009 (Yarrawood, 1996). 4. Malaysia and Wines; The Export Market Target As mentioned earlier, the lack of supply and variety of the Rose wines had led to our desire to export them to Malaysia. Currently, red wine dominates the Malaysian market with almost 80% of volume sales. They include Cabernet at 28% which is the most popular red variety followed by Shiraz at 18%, which is largely attributed to the popularity of Australian wines. Based on the Australian Wine and Brandy Corporation, the female drinking population in Malaysia prefer white wines which include Chardonnay at 36% and Sauvignon Blanc 21% as the most popular white varietals. Australia, possibly due to its geographical location has been the number one wine exporter to Malaysia since overtaking France in 2001 with an estimated market share of 45-50% (Australian Wine and Brandy Corporation). Currently, sales of wines are limited and availability are via a selected few retail outlets such as supermarkets, hypermarkets and several specialist wine stores which are both on and off line. Direct wine sales have also been increasing in volume especially with these specialist wine stores operating online businesses. Besides these channels, many restaurants and hotels are host wine tasting sessions, which are leading to increased awareness and appreciation of wines. (Australian Wine and Brandy Corporation) 5. Malaysia and Wines; Market Trends Before the emergence of wine as a lifestyle choice drink, brandy and whisky were the most popular alcoholic beverage in Malaysia. Despite it being a Muslim country, the Malaysian wine market value is estimated at A$119 million where in 2008 a total 6. 7 million litres of wine was exported with Australia supplying 3. million litres of the total import (AUSTRADE). This goes to show that Malaysia is and would be a profitably market to penetrate especially if we are able to gain and sustain our market share with our Yarrawood Tall Tales Rose wines. There are several factors that contribute to this growing market; • A majority of Malaysians due to overseas education and exposure are now more affluent, sophisticated and well-travelled consumers. • As the British colonial days, once again wine is and has become a symbol of cultural refinement in Malaysia • Malaysia has attracted a sizeable expatriate community • There is a steady flow of tourists Once again due to overseas education and exposure, there are now a large number of younger wine drinkers who regard the consumption of wine as being modern and upmarket • Wine has become the “healthier” choice compared to hard liquor like brandy and whisky (AUSTRADE) 6. Malaysia and Wines; Market Opportunities As discussed, Malaysia is a growing market for the exporting of wines and especially Rose wines due to its lack and limited array of variety and availability. The numbers of wine drinkers will increase with the aid of direct and indirect exposures via; • Regular showcasing and promotions of food-producing countries by five-star hotels in which wines are often one of the main items featured. • Wine tasting events that incorporate lessons or with cooking classes. • Feature articles in the local media. (AUSTRADE) Social media sites such as Facebook, Twitter and YouTube that offer streamed online wine tutorials such as the excellent case of Wine Actually. 7. Malaysia and Wines; A Competitive Environment Despite the imposed taxes and tariffs there are affordable wine ranges especially from the “New World” countries such as Australia, Argentina, Chile and South Africa. These wines are in the range of RM35. 00 – RM50. 00 approximately A$12. 50 – A$17. 85 (using the exchange rate of RM2. 80 to A$1. 00) per bottle which is cheap considering as mentioned tariffs and taxes (AUSTRADE). The target markets for this price range are the fresh graduates and new entrants into the workforce mainly due to income levels. Moving on to the next level which is the mid-price wines which would range between RM60. 00–RM110. 00 approximately A$21. 40 – A$39. 00 per bottle. These ranges of wines are mainly dominated by the Australian and Chilean wines. However, the South African wines are now offered in more variety and good value which is becoming a growing segment and a competitor to be reckoned with (AUSTRADE). The target markets for this price range are the young professionals also sometimes dubbed as the “yuppies”, returning home Malaysians from overseas and some expatriates. The premium priced wines range anywhere from RM110. 00 and above which are mainly dominated by Old World producers and few selected wines from Australia and Chile. These are the French, Italian, Spanish and American producers which have made a presence in the local market. Unfortunately, Australian exporters have been facing difficulty penetrating this segment as it is a segment mainly dominated by mature drinkers. Mature drinkers tend to shift towards Old World wines once they have acquired the taste of New World wines (AUSTRADE). These mature drinkers comprise of the more affluent, high income, possibly middle to old aged, and the expatriates. 8. Malaysian Importing, Distribution, Wholesaler Companies Our major competition, possible business partners and distributors in Malaysia; Luen Heng; • Do not distribute Rose wines. Australia Wine Brands; Yering Station, Miranda, Tim Gramp, Goundrey, Lazy Lizard, Brokenwood, Parker Coonawarra. • New Zealand Brands – Kim Crawford (only Sav Blanc) Asiaeuro • Carry red and white wines. • Also have 2 Sparkling wines; 1 of which is a Brut Rose . • 1 dessert wine. Casa Vino • Sells 5 types of Rose s from Italy, France and South Africa • Large selection of red and white wines • Own retail outlets along with franchising opportunities Wine Malaysia • Very limited number of wines • Unattractive web design • Low costs set up Wine Actually • Very interesting set up. • Owned and run by 2 overseas educated wine enthusiasts • Excellent use of social media such as Facebook by incorporated wine tutorials on their Wine TV. They sell online without a retail store with pick-ups are welcomed • They run wine appreciation classes. • Sell affordable wines with ratings. • Offer 4 types of Rose s from Italy and France. Denise Wines • Reds, whites & sparkling – no Rose • One of the better established & modern wine distributors • Operating since 2001 • Many retail outlets and possibly the biggest wine retailer in Malaysia. The Wine Club • Rose s from France & Italy only • Provides membership similar to Wine Selectors in Australia. E Guide • A similar website like Yellow Pages providing a list of businesses and shops selling alcohol which would have procured their supply from the companies listed here. | | |Nam Lee | |Only 1 Australian wine brand | 4. Brief Introduction to Chosen country 4. 1 Malaysia in Brief Malaysia gained its independence from Britain on 31 August 1957 and was formed in 1963 when the former British colonies of Singapore and the East Malaysian states of Sabah and Sarawak. However in 1965 it was Singapore’s secession from the Federation. During the 22-year term of Prime Minister Mahatir Mohamad (1981-2003), Malaysia experienced growth and was successful in diversifying its economy from dependence on exports of raw materials to expansion in manufacturing, services, and tourism. The population of Malaysia as at July 2010 was at 25,715,819 with an urban rate of 70% of the total population. You can say that it’s an urbanised nation due to this percentage. The major races in Malaysia are the Malays at 50. 4% followed by the Chinese at 23. 7%. The indigenous population are at 11% mainly in and from East Malaysia. Finally we have the Indian at 7. 1%, and other races at 7. 8%. Malaysia is a Muslim country as the Malay race prescribes to Islam at 60. 4%. The other religions are Buddhism at 19. 2% and with a Christians at 9. 1% and lastly Hinduism at 6. 3% (CIA World Fact Book, 2010). 5. Economic Analysis 5. 1 Malaysia’s Economy Overview Malaysia transformed from a producer of raw materials into an emerging multi-sector economy (CIA World Fact Book, 2010). The government have successfully attracted foreign investment into the country mainly due to its stable political climate and reasonable costs of labour and materials. Its geographic location is also strategic business as its neighbours Singapore and Thailand are stable, its on the shipping route and has good climate all year round. According to the CIA World Fact Book (2010), the Gross Domestic Product (GDP) in relation to the Purchasing Power Parity (PPP) was at $383. 6 billion in 2009 and ranked 30th in the world. Despite the government’s efforts to wean off exports, the wine market would still have it place as Malaysia is not a wine producer nor are its neighbours. Because of this the market will only continue to grow. As at 2009, the total retail sales of food and beverages were estimated at US$11 billion. According to the USDA Foreign Agricultural Service (2009), the forecast for this sector is likely to grow by around 10 percent per annum over the next three to five years. In 2007, Malaysia imported a total of US$ 5. 1 billion of food and beverage products. Food imports have been positively growing on an average of over 20 percent per annum over the past few years and are expected likely to grow at similar rates over the next five years (USDA Foreign Agricultural Service 2009). 5. 2 Wine in Malaysia; a brief economic outlook Competition in the sector (USDA Foreign Agricultural Service 2009 page 20) |Product |Major Supply Sources |Strengths of key |Strengths of key | | | |supply countries |supply countries | |Wine Import: |1. Australia - 46% |Australia has developed |Malaysia does not | |7 million liters |2. France – 13% |a higher presence in the |produce any grape | |US$ 42. 5 million |3. USA - 11% |market because of its |wine. | |(CIF value) | |price competitive New | | | | |World grape wines and | | | | |strong brand presence. | | | | | | | | |France dominates the | | | | |food service market and | | | | |competes on quality and | | | | |price. | | | | | | | | |USA supplies well known | | | | |brands of New | | | | |World wines to both the | | | | |retail and food | | Category A: Products Present in the Market That Have Good Sales Potential (USDA Foreign Agricultural Service 2009 page 26) Product |2003 |2007 |5 year |Import |Import |Market | |category |Imports |Imports |Average |Tariff Rate |Tariff Rate |attractiveness | | | | |Annual | | |for USA | | | | |Import | | | | | | | |Growth | | | | | | | |Rate | | | | |Wine |4 million |7 million |15 % |Import duty |Wine is |Category A. | | |litres |litres |growth per |of RM23 |increasingly |Opportunities | | |US$ 20 |US$ |annum. |per liter for |being |continue to | | |million |42. 5 |Fast |sparkling |consumed by |exist for US | | |(CIF |million |growing |wine. the younger |exporters to | | |value) |(CIF |market, |Import duty |generation of |expand this | | | |value) |particularly |of RM7 per |adult urban |market for | | | | |demanded |liter for |Malaysian |their new | | | | |at weddings |other |Chinese and |world wines as | | | | |and other |wines. |Indians, |increasing | | | | |major |Excise Duty |particularly |number of | | | | |celebration |of 15% and |those educated |young | | | | |as more |RM34/Ltr |abroad and/or |Malaysians | | | | |purchasers |for |are well travelled. acquire a taste | | | | |switch to |sparkling | |for wines as | | | | |wine |wine or | |opposed to | | | | |(sparkling |15% and | |whiskey and | | | | |and non-sparkling) |RM 12/Ltr | |brandy. | | | | |from |for other | | | | | | |spirits. |grape | | | | | | | |wines. | | | 6. Political & Legal Analysis 6. 1 Malaysian Market Requirements First, the trading environment for wine is not difficult to negotiate in Malaysia. The main thing to ensure is that a company strictly follows the labelling regulations. One of the main things with labelling is that it clearly states that it is an alcoholic beverage for the protection of Malaysia’s Muslim consumers. The Government also imposes three taxes on wine imports. (Australian Wine and Brandy Corporation 2008) 6. 2 Tariffs, regulations and customs Should we engage in a local distributor they would need to obtain an import licence from the Royal Customs and Excise Department of Malaysia. All relevant shipping and negotiable documents, including the pro-forma invoice, bills of lading and packing lists should be forwarded to the importer immediately after shipment (AUSTRADE). According to AUSTRADE, there are no import quotas or restrictions imposed by the Malaysian Government on wine and brandy presently. However, all liquor shipments entering the country are subject to customs clearance and duties. Its is customary for the Customs and Excise Department of Malaysia to remove one bottle from each case to assess the alcohol content, invariably affecting landed prices. Current import duty for still wines in containers holding two litres or less is RM7. 00 per litre and a 15 per cent Valorem Tax on the CIF + import duty value. Additionally, there is an excise duty of RM12. 00 per litre. At the end there is an additional five per cent sales tax on the total value. AUSTRADE) As mentioned earlier, labelling is a important element to the alcohol beverages industry in Malaysia. The detailed guidelines are obtainable from the Department of Public Health Malaysia where it legislates that the label must include the following information: • The specific description of the product • The alcohol content stating the words ‘ARAK MENGANDUNGI - % ALKOHOL’ • The primary ingredients used in production • A font size of 12 points must be used to inform Muslims, as non-alcoholic sparkling grape juice and other fruit juices are packaged in similar bottles. (AUSTRADE) 7. Cultural Analysis 7. 1 Wine Drinkers in Malaysia Historically, Malaysians have not been great wine drinkers but consumption has increased significantly in the past five years as hard liquor was more popular. However, economic prosperity, more relaxed government policies, modern trends, increasing overseas travel and education, and the desire of internationally-educated graduates to retain lifestyles adopted while living abroad have all contributed towards an increasing westernisation of lifestyles. Muslim Malaysians do not drink alcohol, leaving the market for wine principally made up of Chinese, Indians, foreign expatriates and tourists (Australian Wine and Brandy Corporation) 7. 2 The Economy, GDP and Wine In Asia, Malaysia is one of the more affluent nations with a GDP per-capita of about US$6,807 in 2007. It is regarded as an upper middle income country with its rank of being the 8th wealthiest nation in East Asia. Due to its mixed economy strongly comprising mainly of agricultural, services and manufacturing industries it has now a firm foundation. Its economy is presently growing between 3. 4% – 6. 3%. With its multi-racial population, it is a nation of multilinguals speaking at least two languages fluently including English which is widely used in the business environment. Malaysia has a young population comprising of 32% aged 15 years and below and 63. 5% in the 15 year to 64 year age range. Approximately 97% of the working population continues to be gainfully employed. Most importantly, over 60% of the population are in the middle to high income group with a growing purchasing power. (USDA Foreign Agricultural Service 2009) Its neighbour Singapore is by far more modernised mainly due to its high expatriate population. However, Malaysia is improving in becoming more sophisticated and modern by western standards. Today, Malaysia provides a significant pool of active consumers who will continue to modernise their eating habits, leading to increasing consumption of imported food and beverages including the consumption of wine (USDA Foreign Agricultural Service 2009). 8. Discussion of contemporary or other environmental issues As mentioned above, the main consumers of wine would include the Chinese, Indian, Expatriate population including the constant inflow of tourists. Due to its strong economic growth, working and overseas educated population; Malaysia is the ideal hub for wine export. Contributing factors include both a stable economic and political climate conducive to the wine consumption an industry. 9. Conclusion The main conclusion that can be drawn is that with the correct business plan considering the legalities, the export of the Yarrawood Tall Tales Rose wines from Australia would be a successful venture. It should also be noted that its best to collaborate with a local established distributor as they have already established their presence and market penetration would be far easier and stronger. The higher the number of overseas educated, frequent travellers and expatriates, the higher the wine consumption in Malaysia will grow. With that the demand for our Yarrawood Tall Tales Rose wines would increase if and when positioned strategically. 10. Reference List AUSTRADE. (2010, May 6). Export Markets, Wines to Malaysia. Retrieved August 7, 2010 from http://www. austrade. gov. au/Wine-to-Malaysia/default. aspx Australian Wine and Brandy Corporation. (2008). Malaysia. Retrieved August 7, 2010, from http://www. wineaustralia. com/australia/Default. aspx? tabid=1739 Australian Wine Sector Organisations. (2008). Retrieved August 10, 2010, from http://www. wineaustralia. com/australia/portals/2/pdf/wineorgflowchartNov2006. pdf Australian Wine and Brandy Corporation. (2008). Global Wine – Australia In Perspective. Retrieved August 7, 2010, from http://www. wineaustralia. com/australia/Portals/2/pdf/GlobalWineAustraliaInPer spective_CY_2008_updated. pdf CIA World Fact Book. (2010, August 19). Malaysia. Retrieved August 23, 2010 from https://www. cia. gov/library/publications/the-world-factbook/geos/my. html Department of Foreign Affairs and Trade. Australia/NZ - ASEAN Free Trade Agreement Negotiations. Retrieved August 21, 2010 from http://www. dfat. gov. au/trade/fta/asean/index. html Royal Malaysian Customs Department. Retrieved August 21, 2010 from http://www. customs. gov. my/index. php/en USDA Foreign Agricultural Service. (2009, May 1). Global Agriculture Information Network – Malaysia Retail Sector Report. Retrieved August 8, 2010 from http://www. calwinexport. com/files/Malaysia%20Retail%20Food%20Sector%202009. pdf Yarra Valley Wine Growers Association. (2010). Retrieved August 9, 2010 from http://www. wineyarravalley. com/wineries-main/w2/i1001873/ Wikipedia. 2010, July 17). Rose. Retrieved August 21, 2010 from http://en. wikipedia. org/wiki/Ros%C3%A9 Aussie Wines Online Wines and Liquors. Retrieved August 20, 2010 from http://www. aussiewines. com. au/AustralianWines_OnLine. php? wines=Rose Ippolito,P. (2010, February). Wine Talk, February 2007 - A Celebration of Rose Wines. Retrieved August 21, 2010 from http://www. femail. com. au/wine-talk-february07. htm Wine Industry Statistics. (2009) Wine Production. Retrieved August 22, 2010 from http://www. winebiz. com. au/statistics/wine_production. asp Silkwood Wines. (2010). Australian Wines. Retrieved August 22, 2010 from http://www. silkwoodwines. com. u/web/Australian-Wines/White-Wine/Rose-Wines/Sweet-Rose-Wine/ Melbourne Wine Region. (2007). Melbourne Yarra Valley. Retrieved August 22, 2010 from http://www. melbourne-wine-regions. com. au/melbourne-yarra-valley-wine-region. html AliBaba. (1999-2010) Rose wine Suppliers. Retrieved August 22, 2010 from http://www. alibaba. com/trade/search? SearchText=rose+wine=AU=2=product_en=y Yarrawood Estate Vineyard. (1996). Retrieved August 22, 2010 from http://www. yarrawood. com. au/rose. html Malaysian Exporting Companies Luen Heng F Sdn. Bhd. Wine Importing and Distribution Company Malaysia. Retrieved August 8, 2010 from http://www. luenheng. com/home. php Asia Euro Wines and Spirits Sdn. Bhd. Wine Importing and Distribution Company Malaysia. Retrieved August 8, 2010 from http://www. asiaeurowines. com. my/ourbrand. asp Casa Vino Sdn Bhd. Wine Distribution Company. Retrieved August 8, 2010 from http://www. casavino. com. my/wineries. asp Milawa Sdn Bhd. Wine Importing and Distribution Company Malaysia. Retrieved August 8, 2010 from http://www. milawa. com/f-main. html Nam Lee Cheong Sdn. Bhd. Wine Importing and Distribution Company Malaysia. Retrieved August 8, 2010 from http://www. namleecheong. com. my/company. php Wine Malaysia. Online Wine Wholesaler. Retrieved August 8, 2010 from http://www. winemalaysia. com/
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