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Foreign brands attraction and confidence keep growing in Pakistan

International brands are making fine entry into the Pakistan’s lucrative market by opening their franchises in mega cities and towns. Currently, Xiaomi, a Chinese brand and the world’s third largest smartphone maker made entry into the Pakistani market, a booming market of mobile consumers worth 40 million. This China’s most popular smartphone brand has partnered with a Pakistani company Smart Link Technologies for distribution and after-sales service, according to officials of company. Xiaomi plans to launch popular smartphones Redmi Note 4 and the Redmi Note 4A, and bezel-less arge Mi Max in the Pakistani market.

Vivo, another Chinese brand, plans to enter Pakistan this year. The Chinese company manufactures and designs smartphones, mobile accessories, online services and software. The software development by Vivo include its App Store, proprietary Android-based operating system called Funtouch OS and iManager.

With the entry of new Smartphone players in the market, users will get huge variety of mobile phones. There are many other luxury and mass retail brands, which have made entry into the local market.

Ralph Lauren and Armani Collezioni have already entered the Pakistani market by launching retail group Sefam. Armani, which currently stocks for only men, keeps standards and prices abreast with those across the world. Armani’s entry into Pakistan shows they deemed it to be an inarguably viable front for sales. The entry of BHS and US Polo in the market is also expected. Other international brands Calvin Klein, On Top Barcelona and Silvian Heach are all set to arrive in the market.

Pakistani market currently has the presence of leading international fast food franchises and consumer brands, which are successfully doing their business in the country. This franchise model is actually transferring improved training, technology and business know-how to the local market. This generates world class professional knowhow.

Foreign brands also give Pakistan a good image. The fast food franchises have the presence of auxiliary industries like the home-delivery service. The presence of international franchises not only retains foreign exchange but also generates jobs. These international franchises provide the rich and affluent an opportunity to shop and spend money within the country.

The entrance of global brands and outlets is presently witnessing a thriving and attractive growth. The local retailers are expanding to compete with their larger foreign competitors. The retail market at around $50 billion is growing faster than its economy. The dramatic growth in retail sector is a good sign for the economic growth as the sector can create huge job opportunities and attract foreign investment.

Karachi and Lahore big shopping malls and small and medium scale outlets provides different categories of products under one roof. In Pakistan’s mega cities a majority of households with larger family sizes shop at general stores, while those with smaller family sizes shop at large supermarkets. A majority of consumers seek quality products in adequate quantities under one roof. The shopping malls have become very attractive to the consumers in Pakistan. A visit to modern retail and wholesale centers has become a congenial family outing.

The key decision by local professional working for national and multinational companies operating in the country will decide direction of the future growth of retailing industry. Some dynamic initiatives by the government and entrepreneurs need to be taken to meet the future challenges confronting retailing industry in Pakistan. Currently there is scarcity of malls major cities and there is not enough space for foreign brands for its operations in the local market. New malls with international standards must be constructed in major cities.

 

The entry of foreign retail franchises into Pakistan is a proof to the increased demand of foreign brands among local consumers. Clarks, the international shoe manufacturer and retailer, arrived in Pakistan. The store was first opened in Karachi and the other one was opened in Lahore. The brand has a unique heritage of almost 200 years in remarkable shoe design. It has been successful in becoming the leading shoe company in the UK and a global business in over 100 markets worldwide.

Moreover, the products of only one out of four international beverage brands available on the local market have been found to be in compliance with national and international standards of food quality. The samples taken were sent to the National Institute of Health (NIH), whose report revealed that only one company’s products met the prescribed standards. Water and other carbonated beverages being produced by one international brand were approved as per national and international standards of food and quality. Out of the four international brands examined, only one brand of bottled water – Aquafina – and carbonated beverages – Pepsico – was declared approved as per international and national standards.

Macroeconomic stability and the billions of dollars worth informal economy have encouraged global retail chains to visit Pakistan and assess the local potential. The economic turnaround in the last three years has encouraged famous foreign brands to come to Pakistan. Two of them are mega malls, one being built by a real estate tycoon and the other by Yunous Brothers, one of the largest business groups of the country. Lahore with half the population of Karachi lacks any real branded shopping mall like Dolmen in Karachi and Centauries in Islamabad.

Brand owners realize that consumer power is on the rise and they would have to keep them engaged through innovative designing and marketing. They are devising strategies that are in line with the local culture. Big international car manufacturers are making their way into the Pakistani automobile industry. The Automotive Development Policy (ADP) 2016-21 provides benefits for companies to come and invest in the country. French car manufacturer Renault will start assembling cars in Pakistan as early as 2018. This will mark the first time a European car manufacturer made its way to the Pakistani market.

Renault will be manufacturing both SUVs and sedan cars. This development will create around 10,000 direct and indirect job opportunities for Pakistanis. According to the Board of Investment (BOI) chief, the company will also make efforts to revive the manufacturing of Nissan vehicles in the same plant.

The South Korean car manufacturer KIA announced in December 2016 that it would start assembling vehicles in Pakistan. Lucky Cement will invest Rs12 billion to set up a new company to start manufacturing and assembling of Kia vehicles. Kia used to be manufactured in Pakistan, but due to disappointing and faltering sales, manufacturing was halted. Lucky Cement also announced that through this new venture they would also market and sell, besides import and export of, all types of Kia vehicles, parts and accessories. Hyundai Motors through its union with Nishat Mills will be assembling its vehicles in Pakistan. The two companies together will set up a Greenfield project for assembly and sales of HMC passenger and 1-ton range commercial vehicles in Pakistan.

Hyundai also used to manufacture its vehicles in Pakistan but left the country mainly owing to the to the liberal used car import policy in the Musharraf regime. Audi AG also has set its eyes on the Pakistani market. It has approached the Board of Investment through its local authorized dealer, Premier Systems Private Limited with a proposal to start an OEM (original equipment manufacturer) plant in Pakistan. Volkswagen Commercial Vehicles is in final talk with Premier Systems Private Limited to set up a manufacturing/assembly plant for its Amarok and T6 (Transporter range) models.

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