October 25, 2003

WHEN it comes to computers, Pakistan is a burgeoning market. Since the 1997, the country has been experiencing unprecedented growth in the personal computer market. Though reliable data is scarce, industry insiders comprehend that the country is a no less than 300,000 PCs a year market. It is this enthusiasm among computer users that has created a fast growing locally assembled branded PC market.

Pakistani branded PCs are fast establishing themselves as the machines to have, despite competition with imported foreign brands and their locally assembled, unbranded cousins. Despite the initial tough going, Pakistan now boasts of at least four companies engaged in assembly and sale of branded computers.
 

How is the branded computer market in Pakistan?

Ghias Khan, CEO of Inbox, a local enterprise engaged in the branded computer business, answers to this question, “Right now the local market is divided into 15 to 20 per cent foreign brands and the rest comprises local computers. Pakistan is a 300,000 to 350,000 computers a year market. Of this market, the local branded PCs enjoy a very small market, minute at best.”
 

What’s so special about branded PCs?

“Product reliability! The kind of processes a branded PC goes through, the quality control and checks it undergoes, the consistent quality that a brand maintains and the relaible after-sale service and support that you get from a branded computer are some of the reasons why a branded PC is a preferred buy.

“Computer branding consists of two elements — product reliability and after sales service and support. Product reliability is assured by quality of the components, and the method of integration.

“Generally speaking, computer integration does not appear to be a big deal — take a bunch of components and put them together. But consistency in achieving 100 per cent success is what makes a company stand out among its competitors.

“Foreign brands are a good example. You get a consistent quality in all of their products whether you buy it in Pakistan or get it from the Unitred States. If in Pakistan you work with the same consistency and use quality products, there is no reason why a Pakistan-assembled PC should not be as good as an international brand.

“After-sale service and support is something completely dependent on the culture of the organization concerned. It depends on whether the company is aware that this is a service-driven industry; and that we have to give good service to our clients and take good care of their needs. If you put these two things together, you come up with something that may be called a ‘computer brand’.”

Commenting on the future of the computer market, Ghias says that in the coming three to five years, the local computer industry will become service oriented.

“Ten years ago there were the same number of components in a computer as there are now. The technology is getting smarter and the number of integrable components is decreasing steadily. That is why the price difference between a foreign branded PC and a local unbranded PC is reducing by the day. The expertise required in assembling a PC is decreasing,” says a confident Ghias Khan.

However, it is the government that hasn’t lived up to expectations of the locally manufactured branded computers.

“The branded computer industry should get recognition from the government. In government tenders we should be given a special place and not made to compete with foreign brands. Sadly, we are not getting this kind of recognition. Most of the companies sporting foreign brands in Pakistan don’t even have proper after-sale service setup.

“The government and the semi-government sectors are the biggest buyers in the country. But the sad part is that they are inclined towards the foreign brands. Government tenders still get ask for foreign brands only! It is very discouraging.”

Director Operations of the Raffles Systems, Ibrahim Qureshi, too thinks that the government and its functionaries could have done more to support the up-and-coming IT sector.

“The role of the government, specially the IT ministry has been very poor. We need protection, from the federal government as well as the provincial IT departments.”

Mr Qureshi says that the government, at both federal and provincial levels, should set certain parameters that will determine what is a brand. He believes that in the absence of such parameters, unbranded computer assemblers are getting away with selling substandard machines.

“A computer company should be at least ISO-9000 certified, should have at least 50 employees and have offices in all the major cities of Pakistan, to fulfil the criterion of being recognized as a brand manufacturing company” Mr Qureshi thinks.

Another major player in the computer assembling industry has the same qualms about the much needed government support. Ziaul Haq, General Manager of Jaffer Business Systems complains that there is no government appreciation for the local brands.

“It’s a matter of perception. They [government circles] doubt our sincerity. We obtained ISO-9000 certification so that government departments may have confidence in us and our products. And yet, there is no government support for our products. We have all the genuine ingredients in our brands that are present in the imported foreign brands,” concludes Mr Haq.

About government support to the local computer industry, Raffles’ Ibrahim Qureshi says, “With a little government support, Pakistan can become a major player in the region.

“We can put Pakistan on the IT map. Indian companies are willing to buy our products. But for that to happen, we need government support with a consistent policy. Pakistan can make great products that will be globally viable, especially in the region from the Middle East extending right up to south-east Asia.”

Lack of government support in the form of tariffs, regulations, and laws is the biggest obstacle. There are other minor headaches as well. For example, the brain-drain coupled with the absence of the right business climate has put a question mark on the available manpower.

Ghias Khan says, “People are reluctant to join this sector because of the low pay as well as the fact that the computer assembly business is not looked on as a reputed and hard working business. This is also an industry, where, I am sad to say, you can get a computer engineer for a mere 3000 to 4000 rupees a month.”
 

Does that mean having a “Made in Pakistan” computer is still a bridge too far?

Ghias Khan cautiously replies: “Ours is a market that is no bigger than 300,000 PCs. Compared to this, in China, Legend alone sells 600,000 computers in a month. In India, HCL sells 20,000 a month. Dell, Compaq and IBM are in a different league. Component manufacturers produce millions of casings a year.”

With such high volume based competition, do you think a company in Pakistan will be able to match their costing and pricing? And that too without any protection from the government? How can you expect the local manufacturers to flourish when your market size is so little? The existing giants became giants with protection. Chinese government has a sizable share in Legend. This is one way they support their industry.

“Pakistan is surrounded by giants like China and India and you are expect to go into manufacturing, mass scale assembling? That too without protection? Here, in Pakistan, the government is buying foreign brands. They are not even supporting the local industry and not buying their ware.”

Ghias Khan concludes, “It is an extremely volume-based business with low margins. It is also a very competitive market that caters to an educated consumer. However, the tough part comes when we ask the customer to pay that little bit extra for the quality that we promise to give them.

“At the same time, it is an attractive business because the market is expanding. And any market whose product is becoming consumer-oriented in nature (meaning it is becoming a household item) it automatically becomes a high potential industry. You can judge from the fact that this is a market in which no one company that dominates even five to 10 per cent of the market share. There is a lot of potential here. There are still a lot of people who are buying computer.

The writer is sub editor, Dawn Magazine

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