Brands can transform a nation, even change the world, says expert

JEDDAH: Top directors of some of the well-known brands in the region came together on one platform yesterday to discuss how brands conceptualized and developed in the region could be made known worldwide.

Merely creating a brand is not enough, but there ought to be a sustained effort to protect it by not compromising on the product quality that it represents and also guarding against its copying or piracy. The speakers gave this message through their presentations at a panel discussion on “Brand Arabia: Globalizing Regional Value Creation” at the opening session of the final day of the three-day 12th Jeddah Economic Forum. Naïf A. Al-Mutawa, chairman and CEO of TESHKEEL conducted the session.

“Quality, investment, innovation and authenticity were among the key factors that helped a brand to thrive,” a presenter said. “Brands could be developed through a culture of innovation and its appeal promoted through global competitiveness,” said another.

Giving a glaring example of how a regional brand had its appeal internationally, Ata Atmar, managing director of Bateel, said: “Bateel is truly a local brand that has gone international. Just not on paper, but it is known worldwide as a brand of quality dates and certain other food products.

He recalled how the concept of the Bateel brand was developed way back in a small place north of Riyadh. Its first outlet opened in the capital and later in Jeddah, and today it is present in 15 countries including the UK, Dubai and Mumbai.

Explaining how Bateel had protected its brand image over the years, Atmar said: “50 percent of our date production that is of premium quality is marketed under the Bateel brand name, while the remaining 50 percent, which falls short of the high quality standards due to production reasons, is marketed under another brand name.”

The company, with its R&D wing taking care of the brand management, has 15,000 date farms kingdomwide, which produce 20 varieties of dates. The company’s brand image also helped it to produce and market other food and food products, as well as a range of confectionary items over the years. It has emerged as the largest chocolate producer in the Kingdom and the Middle East. What is more, the company also ventured into cafeteria business and now prides itself with its first flagship “Bateel Cafe” that opened in Dubai three years ago. It has followed up with its first Saudi cafe in Riyadh.

Rafi-uddin Shikoh, CEO and managing director of DinarStandard that is dedicated to growth strategies for emerging Muslim markets, said that a brand in the region should have universal Islamic values enshrined in it. “Islam is an important part of the Arab DNA and so its products and services should have a universal appeal as they represent Islamic values, whether food, finance, education, fashion or recreation,” he said.

According to him, Islamic finance is growing in all Islamic countries at the rate of 15 to 20 percent annually, with their Muslim lifestyle market exceeding $2 trillion. It includes food, travel, education, recreation and health. He stressed the importance of social networking sites on the Internet as they are important for communication. “It’s much more important in Saudi Arabia where they lead the world among Facebook users.

” Shikoh also gave the examples of Abdul Latif Jameel whose brand image had become much more popular through its community initiatives. Likewise, Al-Rajhi Bank had popularized its brand image through Islamic finance. However, Shikoh added: “We need an increasing number of Islamic brands to have their presence across the Muslim world, from Turkey to Indonesia and from Malaysia to Morocco. We also need to have brands in service industries like travel and hospitality, although Haj and Umrah do have their presence.”

Referring to some of the countries known for brands, Shikoh gave the example of Germany whose famous brands include BMW, Mercedes and Siemens. “How they came about is interesting; in Germany they enjoy strong government support through the continuous upgrading of infrastructure,” he said.

Hussam R. Abdulqader, head of communication and public relations at Almarai Company, Riyadh, gave a statistical presentation to justify the company’s growing brand image. Since its inception 35 years ago, the company has been vertically integrated, he said, adding that the milk that it produces and distributes comes from 135,000 cows. “If all the cows are lined up one behind the other, they could cover the distance between Riyadh and Dammam. The company, which started with 3,700 employees, today has a 22,500 strong workforce. Another 4,500 workers will be added during the year.

The company boasts seven farms. The company has 1,000 reefers (refrigerated trucks) that distribute dairy products to 70 depots across the GCC. It also has 3,000 trucks that distribute products to 48,000 retail outlets every single day. The company brand has received accolades from Forbes magazine and Financial Times for having gone international. “We communicate with our customers and get regular feedbacks from our satisfied customers. That is how we enjoy our brand loyalty.”

Interbrand’s Regional Director Michael Benson explained what it takes to be a global brand and emphasized that brands are important for every industry. “If you have a strong brand, it will drive choices and generate resources. “Your brand is much more than your logo.

As a consultant, we have built brand images and created some,” he said, adding that the company considered a pioneer in brand evaluation. He gave the examples of BMW, InterContinental hotels, Audi, Qatar Airways, Jumeirah, Google, Nike Aljazeera, Coca Cola, Starbucks, Burj Al Arab and McDonald’s and said they have strengthened their images through innovations.

Replying to a question, Benson hinted that brands are trying to promote themselves on Internet sites or digital platforms. The best option at present is to continue to advertise in the traditional media.

His advice as a consultant: “Concentrate on building your brand and protect it through a legal framework. In fact, brands can transform a nation and even change the world.”

http://arabnews.com/economy/article584189.ece

Islamic banks 'need mergers to fill in West gap'

Small and medium-sized Islamic banks may need to merge if they want to become bigger regional players capable of filling the funding hole left by shrinking Western banks, the head of Islamic finance at Deutsche Bank, told Reuters.

‘There are mismatch challenges,’ Salah Jaidah said on the sidelines of the Euromoney Islamic finance summit in London.

‘Their size, their appetite for long term funding, their ability to finance at competitive pricing. I see this as a big challenge and not happening already now,’ he added.

Most Islamic banks in the Middle East and North African region hold less than $13 billion in assets. Conventional banks, by comparison, hold an average of $38 billion in assets, a report by Ernst and Young estimated.

In the past, said Jaidah, it was the international banks which led oil and gas development and infrastructure projects in the region because they had the balance sheet, pricing mechanisms and appetite for long term funding.

Whilst Islamic banks might not immediately be able to face the challenge, Jaidah believes that within time they will be able to reposition themselves.

‘They might raise capital, might have more competitive prices and ultimately there might be some mergers between small-to-medium sized banks who want to become bigger players regionally.’

The GCC region has over 100 Islamic banks, ranging from Al Rajhi Bank of Saudi Arabia with a $25 billion market cap to small unlisted lenders, a Deutsche Bank report published in November said.

Deutsche Bank selected a list of potential winners which included Al Rajhi – the world’s largest Islamic bank – and Alinma bank in Saudia Arabia, AMMB Holdings in Malaysia and Bank Mandiri in Indonesia.

The idea of a so-called Islamic ‘mega-bank’ has already been touted in the region by Bahrain-based Al Baraka banking group .

Islamic finance prohibits the lending of money for interest and other activities such as speculation that violate religious principles.

Deutsche Bank, which first established a presence in the UAE in 1999, says that despite the current global economic turmoil there are still opportunities within the industry.

‘With the changes taking place in Mena region and our eagerness to reposition ourselves as a lead player within the industry, I expect that the portion of profit and earnings will be lucrative and will grow year after year,’ said Jaidah.

He sees encouraging signs from Oman, home to around 3 million Muslims, where the central bank last year reversed its secular stance on finance, allowing Islamic banks and subsidiaries to establish themselves in the country.

There might also be new geographic openings in North Africa, following the upheaval in the region and countries such as Turkey where the government plans its first-ever issue of Islamic bonds this year.

Globally, Islamic bond issuance rose to $23.3 billion last year from $13.9 billion in 2010, according to Thomson Reuters data.

On the corporate front, Deutsche Bank, which has advised on deals including Saudi Aramco Total Refining and Petrochemical Company’s (Satorp) $1 billion sukuk also sees more non-Islamic corporates tapping Islamic finance.

 

http://www.gulfbase.com/News/islamic-banks-need-mergers-to-fill-in-west-gap-/200578

Jakarta Becomes Magnet of Shari`ah Assets

Taking a share of the booming Islamic finance industry, Indonesia is becoming a magnet of Shari`ah-compliant assets from all around the globe.

“We are on the lookout for any good Indonesian acquisition, if the price is right,” Mohamed Azahari Kamil, the Kuala Lumpur-based chief executive of Asian Finance Bank Bhd, the Malaysian unit of Qatar Islamic Bank, told the Gulf Times on Thursday, February 9.

“We have to be quick as the Indonesian market is becoming more competitive.”

Several banks from the Middle East and Europe are seeking to open branches in Indonesia, the world’s most populous Muslim country.

For instance, Al Rajhi Bank, Saudi Arabia’s largest, is mulling opening new branches in the country.

“The Indonesian market is certainly on our radar,” said Mudassir Amray, the bank’s head of wholesale banking in Kuala Lumpur.

“The size of the Muslim population, the country’s economic growth and investment-grade rating will help in attracting more diversified investors, particularly from the Middle East.”

Several Gulf banks as Qatar Islamic Bank, Kuwait Finance House and Standard Chartered Saadiq also have operations in the country.

Indonesia, the largest economy in South-east Asia, has been trying to develop its Islamic finance industry to catch up with neighboring Malaysia, the world’s biggest sukuk market.

Islamic finance in Indonesia has grown an average 38 percent annually over the past five years.

However, Islamic financial assets still account for less than 4 percent of total banking holdings in the country.

To help lure more Shari`ah-compliant assets, Bank Indonesia has proposed tax breaks to boost the Islamic finance industry in the country.

In 2010, the Indonesian government unveiled plans to issue billions of dollars of Islamic bonds (sukuk).

Sukuk, which conforms to Islam’s prohibition of usury, typically work as profit-sharing vehicles.

Firms that issue Sukuk make payments to investors using profits from the underlying business, instead of paying interest.

The money, however, can’t be invested in alcohol, gambling, tobacco, weapons or pork.

The sukuk market has reached $111.9 billion in the eight years to 2008, according to the International Islamic Financial Market.

Global sales of sukuk have reached $6.6bn in 2012, from $2bn a year earlier, according to data compiled by Bloomberg.

Boom

Indonesian officials expect a boom in the Islamic finance industry in the country.

“We expect a Middle East bank to buy a big Islamic bank in Indonesia,” said Riawan Amin, chairman of the Indonesia Shari`ah Bank Association in Jakarta.

“This will change the face of Shari`ah-compliant banking in Indonesia.”

Dubai-based Standard Chartered Saadiq, an Islamic bank set up by the London-based lender in 2008, plans to add to the 11 branches offering Islamic services at PT Bank Permata, the Indonesian lender in which it owns a 44.5% stake.

“We have seen growth momentum in the Indonesia Islamic industry over the last two to three years,” said Wasim Saifi, the Singapore-based global head of Islamic and consumer banking.

“Along with capital, foreign banks can bring in expertise as Indonesia provides a very good opportunity looking at its population and growth.”

Starting almost three decades ago, the Islamic banking industry has made substantial growth and attracted the attention of investors and bankers across the world.

A long list of international institutions, including Citigroup, HSBC and Deutsche Bank, are going into the Islamic banking business.

Currently, there are nearly 300 Islamic banks and financial institutions worldwide whose assets are predicted to grow to $1 trillion by 2013.

http://www.onislam.net/english/news/asia-pacific/455748-indonesia-becomes-magnet-of-shariah-assets.html