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Pakistanis: striking out on our own

November 14, 2016


Asher Khurram, a second generation producer and exporter of knitwear, is one of the few young business persons in the country trying to ‘upgrade’ the value of their exports through branding, in order to increase their market share and fetch a higher price for their products.

In the space of last one year, the chief executive officer of Comfort Knitwear has acquired an American music lifestyle brand, Rocksmith, and created a new one, Iriochi, to sell washed denim jeans. Both the brands are focused on the American market for now.

“Branding your exports not only gets you a better price but also helps significantly increase market share and competitiveness,” Asher told Dawn at his factory last week. “However, it isn’t an easy job to create a new, or acquire an existing, brand for foreign markets.

It is generally held, and rightly so, that exporters can significantly boost their exports and fetch much higher prices for their products through the acquisition of an existing or a new brand

“You have to invest massive amounts of money on warehousing and marketing in the early years before you start earning some money. That is why most of Pakistani exporters prefer to work for global brands and stores rather than acquiring their own brands through purchase or creation.”

Most Pakistani exporters remain bulk suppliers of low-priced, low-end and semi-finished manufactured goods to their foreign customers as they lack economies of scale and the know-how and resources to establish and market their own brands.

“Acquiring a brand is a very costly affair,” argued Ijaz Khokhar, the managing director of Ashraf Industries in Sialkot. In spite of being the oldest and one of the largest exporters of martial arts uniforms, the thought of building his own brand has never crossed his mind.

“The cost of acquiring your own brand is prohibitive because it requires setting up your offices in foreign countries, hiring professionals, marketing your products, etc, for building an image of your company to compete with existing players in those markets. Returns do not match the investment on branding a product or two. More importantly, when you set up your own brand you risk losing your existing buyers as they start treating you as their competitors,” Ijaz contended.

He pointed out that Chinese, Indians, Bangladeshis and Vietnamese are all bulk suppliers, producing for existing American and European brands. “If it was so convenient to create your own brand, they wouldn’t be working for the existing global players.”

It is generally held, and rightly so, that exporters can significantly boost their exports and fetch much higher prices for their products through the acquisition of an existing or a new brand. Many Indian companies have already adopted this strategy, developed their brands and expanded into international markets to reap decent profits.

As Ijaz A Mumtaz, former president of the Lahore Chamber of Commerce and Industry, said: Pakistani entrepreneurs must focus on branding because it helps transform an ordinary product into a special one and promotes recognition of a company. “In view of tough competition in the global market, we need to promote the branding culture. This would earn us a huge amount in foreign exchange,” he added.

But Fazal Jilani, a major exporter of surgical instruments from Sialkot, does not agree. “We have been selling 30pc of our production under our own brand name — Surgicon — in Europe and elsewhere for many years now. It has won us recognition, but this strategy is yet to translate into higher prices and margins for us,” he argued. Yet, he admitted, the brand building had helped him get additional orders from foreign buyers.

Ijaz agreed that a lack of branding was hurting Pakistan and its exports. But, he said, the poor country image and higher cost of doing business was hurting exporters more. “Our image as an insecure country, rattled by militancy and terrorism, having an unstable relationship with our neighbours, has hurt us more than anything else. Buyers are not yet ready to overlook this. We have to travel a lot for marketing and product development because no foreign buyer is prepared to come to Pakistan. That adds to our cost of doing business.”

Asher agreed. “Creating an international brand for exporters is not simple. Besides huge investments required for promoting a brand in any market, you need to be cost effective and have economies of scale in order to be able to offer the end consumers a wide range of products under one roof.

“It takes years of hard work and investment before you are able to create a loyal following for your brand. And if your product’s country of origin is not looked upon favourably by customers, your hard-work and investment is doomed for good.”

Published in Dawn, Business & Finance weekly, November 14th, 2016