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PROCTER & GAMBLE IN PAKISTAN
SYED M ASLAM
Sep 02 - 08, 2002
"Though Pakistan is a relatively small consumer goods market for us in the context of our global operations, we are investing in it for future. That explains the reason for making investment in our plant, brands and people here despite hardly making any profit." This was stated by the Director External Relations of Procter & Gamble for Central and Eastern Europe, Middle East and Africa, Lawrence J. Goetz, during an exclusive interview with PAGE.
Lawrence, who leads a team of external relations managers in 28 countries and looks after the needs of the company in 64 national markets from his office in Geneva, Switzerland, expressed optimism that with the broadening of the product range P&G would become more viable to achieve its goal 'to be the finest global local consumer goods company operating in Pakistan.'
Procter & Gamble started its operations in the country in 1991 is marketing a range of consumer goods products including 13 brands comprising shampoos, detergents, soaps, baby care, feminine protection, Vicks and snacks products. The company, which serves over 5 billion consumers in 140 countries worldwide and markets more than 250 brands, produces bar soaps and repacks bulk shampoos and Pampers brand of diapers into sachets and smaller packs respectively at its Hub plant near Karachi.
Compared to its global operations, which employ over 106,000 persons worldwide and annual global sales of $ 40 million, P&G's Pakistan operation is relatively small and yet it has been successful to improve the lives of consumers here in Pakistan, like elsewhere in the world. It has served over 140 million consumers in Pakistan, which equals the entire population of the country since its operations 11 years ago.
The company has made an investment of $ 6 million to triple the production capacity of its plant at Hub. "This is aimed at increasing the volume of the exports of our products, the quantity of which at present remains small from our plant in Pakistan." The company is exporting bar soaps manufactured here in Pakistan to Saudi Arabia, Yemen, Syria and Afghanistan where it is in great demand due to its high quality and competitive price.
Though P&G make over 250 brands worldwide not all the products are available in any one single market due primarily to strategic positioning of a product depending on the realities of a particular market. "For instance," Lawrence said, "Pakistani bar soap market is much bigger than Germany as people there prefer to use shower gel instead of bar soaps."
P&G spend around $ 2 billion annually on research and its over 106,000 strong worldwide workforce include some 8,600 scientists including 1,200 PhDs. In addition it has some 27,000 patents which can be developed if and when necessitated by demand at any point in time. This dedication to R&D since its inception in 1937 in Cincinatti, Ohio, USA has helped P&G to develop products which make every day life of the people better all across the world. It helped it develop Tide, the world's first heavy-duty synthetic detergent, and also helped create the disposable diaper business when it introduced Pampers.
Almost all the products marketed by P&G here in Pakistan have been successful to become a household name: Head & Shoulder and Pantene shampoo, Ariel detergent, Pampers diapers, Flex hair conditioner, Vicks menthol drops and Vaporub, Always feminine protection napkins, Oil of Ole, Clairol skin care, Safeguard and Camay bar soaps. P&G's stress on R&D has helped it develop products which enjoy inherent edge over the competitors.
"For instance, Ariel, the market leader in Pakistan which is specially designed to prove what a detergent can do, contain between 30-40 ingredients half of whom are carefully developed to clean the clothes without destroying the fabric. Similarly, P&G uses patented ingredients in the manufacture of Pantene while Head and Shoulder contain patented anti-dandruff ingredients. Our ability to invent the right product for the right person for the right job gives us that edge. Our another edge is that we feel that we work for the consumers, particularly the housewives who comprise the majority of our consumers."
Lawrence whose responsibilities interfacing with governments, regulatory authorities, NGOs, professional societies and various other stakeholders, however, expressed concerns about the tax structure in Pakistan hindering the growth of business in Pakistan. "It is imperative to ensure that the tax structure in Pakistan should become more transparent. At present the tax system is complicated to inflate the price of a product by as much as 100 per cent the ultimate cost of which is borne by the end user. For instance, the combined impact of taxes and duty on the import of Pamper from Saudi Arabia adds up to 50 per cent forcing us to market it at a price which makes the product kind of unaffordable in the local market. It is imperative that the presumptive tax should either be abolished altogether or at least be significantly reduced. This is necessary for the growth of business and trade by creating economies of scale due to increased turnover made possible by reduction in prices at the retail level."