KARACHI, Oct 18: Multinationals say that their principal assets are powerful brands with strong consumer loyalty. These branded items in the category of food, beverage, pharmaceuticals, paints, lubricants, cigarettes, etc., have huge sales and quick turnover that fetch handsome profits.

Since a lot of research, innovation, design and technology are used in developing brands and include inventions and trade secrets, MNCs see brands as an outcome of intellectual creativity whose value is assessed at an annual brand ranking by the financial world.

Some of the annual brand ranking, including on items sold in Pakistan, were given by speakers at a seminar organized by the Management Association of Pakistan recently. These are as follows in billion dollars: Coca-Cola (48), Marlboro (47.6), McDonald’s (19.9), Walt Disney (17.1), Sony (14.7), Kodak (14.4), Intel (13.3) Gillette (12) and Pepsi (9.3).

In developed economies, the financial value of these brands is also reflected in the balance-sheet of the companies, Ali Raza, president of National Bank of Pakistan, told this scribe recently.

So, the company assets comprise of physical and financial assets and a brand value or intellectual property. The balance-sheet is a vital factor in assessing the credit worthiness of borrowers.

Aware of the benefits of powerful brands supported by consumer loyalty, a textile group is stated to be looking at acquiring franchise of a global brand. And awash with liquidity, Habib Bank president Zakir Mahmood says if such a deal was truck and finances were sought, he could consider the proposal. Of course, the risk would be minimal because it would be financing a leading textile group with track record.

Quite a few local goods are produced and sold under foreign labels abroad. The global brands have gained in the consumer markets as industrialization by independent nations in the last century brought broad-based prosperity. In Pakistan, multinationals prefer to invest in consumer business rather than undertake capital-intensive investment in basic or heavy industry. It is consumer market that offers the most lucrative and immediate gains with not much of capital spending.

Many of the 20 listed firms, including joint ventures with foreign investors and highest returns on equity, are firms dealing in food, cosmetic, cigarettes, pharma and cars, according to a report compiled by a security house as on September 30, 2003. These include Unilever, Nestle Milk Pack, Lackson Tobacco, Gillette Pakistan, Rafhan Maize Products, Atlas Honda, Pak-Suzuki Motors, Colgate Palmolive and Clariant Pakistan.

The prosperous markets of the US, Japan and Europe have created chain stores that earn huge profits. According to BusinessWeek, the world’s largest company is Wal-Mart Stores Inc with revenues at $245 billion in 2002 and a global work force of 1.4 million.

Every week, 138 million shoppers visit Wal-Mart’s 4,750 stores; last year, 82 per cent of the American household made at least one purchase at Wal-Mart, which accounts for $12 billion or 10 per cent of the total US imports from China. Wal-Mart is full of cheaper foreign goods.

It is estimated that one-eighth productivity gains in 1990s came from Wal-Mart’s drive for efficiency and its discount sales have been partly responsible for low inflation rate in recent years.

In Pakistan, there are very few, rather 2-3 outlets, of each chain store confined to one city. There is no consumer protection against cartels, monopolies and oligopolies. The anti-monopoly laws are outdated and the regulatory authorities are weak. There is no consumer protection.