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Emerging brands must take up culture of success

Over the past 10 years, a little over a dozen Pakistani brands were launched in the global marketplace. Inspired by their success, many more are now aspiring to explore new possibilities overseas. If the trend picks up, it can help push up exports of the value-added, high priced quality products. While securing a place in a crowded global marketplace is difficult, the lack of respect for intellectual property rights (IPR) in the country makes the task more daunting. Pakistan’s perception as a violator of IPR does not help local firms amid not so conducive international environment.

Some food and beverage companies, engineering firms, drug makers, textile and garment producers, and leather product makers have opened shops or occupy shelves in super stores in Middle East, Far East, Africa, North America and Europe.The visibility of local brands in the global market, therefore, appears to be more of an outcome of initiatives undertaken by the more experienced entrepreneurs in the business community. But it does not necessarily indicate that the economy is entering the next stage of development. The stark reality is reflected in the relevant data. Hardly 10 percent of the business entities are trademarked. The government or the trade and professional bodies are preoccupied with more pressing problems to focus on the IPR issue.

It is a fact that the awareness to conform to international standards and to invest in intangible assets to build businesses is low in Pakistan. The legal groundwork has been done under WTO tutelage, but the institutional framework is weak. Instead of complying with international norms of trade and manufacturing practices, the natural process of development of businesses is obstructed.

To comply with the requirements of the trade-related intellectual property rights (TRIPS) agreement, the Intellectual Property Organization (IPO) was created in 2005 to bring trademark, patent and copyright offices under one umbrella. However, so far IPO has failed to evolve into a vibrant entity to measure up to the challenges it faces in corruption-prone environment. Only companies that have gathered critical mass and aspire to gain a footprint in the global market engage law firms to handle IPR affairs. Others get their work done through agents at the trademark registry to save time.

Pakistan did achieve some success in this area when it managed to move from the ‘priority watch list’ of IPR violators issued by the US Trade Representative (USTR) office to the ‘watch list,’ which marked an improvement in the compliance with the IPR conditions. Foreign investors are showing keen interest in Pakistan as a number of major global brands have approached the Intellectual Property Organization (IPO) for the registration of their trademarks. A majority of trademark registration applications from the local market related to the pharmaceutical, food, cosmetics and clothing sectors.

The business environment in Pakistan improved during the last three years, which is reflected in the increased number of trademark registration applications in 2016. The number of such applications went up 24 percent year-on-year in 2016. There has also been a 23 percent rise in trademark registry certificates, which stood at 9,759 in 2016 against 7,914 in the preceding year. Pakistan is also going to sign the Madrid Protocol of Intellectual Property Rights, which will bring the country into the mainstream of international trade and business.

Applications for registering trademarks in Pakistan can be filed at the World Intellectual Property Organization (WIPO) head office in Geneva, which forwards the same to the trademark office in Pakistan. Local trademark, copyright and patent laws are being revised to meet the requirements of the Madrid Protocol and entire record of trademarks has been digitized. A regional trademark office is now functional in Lahore to facilitate the business community in Punjab and Northern Areas.

THE OTHER SIDE OF THE PICTURE…

Pakistan’s economy is consumption-driven where people continue to spend beyond their means, mostly through credit cards – accumulating more debt than ever before in times of financial distress. Meanwhile, a globalizing media continuously influences how we think about and manage our buying and spending. Mainstream brands with a worldwide presence are making tons of money in the developing countries, due to an ever-growing demand for expensive western jewellery, consumer goods and fancy fashion brands. Some of these brands have done what others have not: successfully used social media like Twitter and Facebook to woo buyers from across the world. This speaks volumes of their sales and revenues in countries like Pakistan, where unaccounted for wealth and excessive spending results in higher profits for these companies than ever before.

As a result, second tier brands – which are not exactly ranked very highly in global indices – are being sold in our markets at first-tier prices. Subsequently, local brands have to repeatedly slash prices in order to ensure that their products reach a larger market. Merchant outlets of foreign brands, however, do not cut prices as easily. They have to meet higher retail costs and operating expenses, and all expenses have to be paid for in local currency. They have entered our markets to make profits, not distribute charity: therefore, they continue charging staggering premiums from their buyers.

A significant factor helps these brands: Pakistanis love to emulate the west by buying and importing western brands. Western brands love to exploit this trend to their advantage. They skip the effects of a recession, as their sales in our markets rely on niche not affected by it. They are lured into our markets with promises of higher tax benefits, rely on the locals accumulating debt to pay for their products, and then repatriate profits out of the country.

Brands in Pakistan seem only to be painting in green, focusing on patriotism, religion or other tried-and-tested formulas. Respect for culture is a sure way for marketers to create empathy and a sense of belonging. By being culturally savvy, brands will be able to break through the clutter, communicate better and create ownership. When everyone is searching for an unfair advantage, Pakistani brands should embrace culture for success.

The writer is a Karachi based freelance columnist and is a banker by profession. He could be reached on Twitter @ReluctantAhsan

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