Facing the brunt of globalisation

Local industrialists claim they are not on equal footing with global ones. Not only in terms of size. But also, in terms market conditions. The local market being so small, they are unable to benefit from economies of scale. Moreover, the zero-duty policy on imports with market opening does not help either as they face dumping of cheap products from major manufacturing hot-spots.

[[{"type":"media","view_mode":"media_large","fid":"17736","attributes":{"class":"media-image wp-image-30145 alignleft","typeof":"foaf:Image","style":"","width":"210","height":"272","alt":"Saheed-Thupsee"}}]]Saheed Thupsee: “Quality and price are not the same”

Saheed Thupsee from the Aaleemee Society reveals that very little local products are being able to make a place in the local market. He believes that it is a bit difficult for local products to survive in the domestic market for various reasons. Firstly, the quality. “At international level, there is mass production and they use the latest technology unlike us. So, the quality and price are not the same. Textile products can be produced at the best quality and price as we have the latest technology and machinery needed. But this is not the same for other products. For example, furniture, cookies, biscuits and pickles.” Another obstacle is the presentation and packaging of products. “The packaging and design are not the same as imported ones. For example locally made pickles are not well presented as compared to those of Pakistan and India. So consumers will eventually choose to buy things which are better designed. Local biscuit manufacturer Subana had to close its doors, the same happened to furniture making SMEs. They are unable to compete with countries like China when it comes to design and price.” According to Saheed Thupsee, it is time for Mauritius to be inspired by technological advances of China, Singapore and Malaysia. “Today, many snacks are imported from Indonesia while they could have been produced here. SMEDA should try to set a research centre to help SMEs work on the packaging. Many SMEs have ideas but they do not know which door to knock for help.”

[[{"type":"media","view_mode":"media_large","fid":"17734","attributes":{"class":"media-image wp-image-30143 alignleft","typeof":"foaf:Image","style":"","width":"212","height":"288","alt":"Amar--Deerpalsing"}}]]Amar Deerpalsing: Local production is decreasing

The President of the Association of the Small Medium Enterprises, Amar Deerpalsing, argues that Mauritius can make quality products of international standards but local conditions do not allow so. Facilities, conditions and environment are limiting factors. “Mauritius is one of the rare countries where there are too many rules and regulations for local business. The labour cost and working conditions is not similar to international standards. Local businesses find it difficult to survive as there are limited credit and loan facilities. Besides, there is always an unfair competition with international products,” he says. Amar Deerpalsing reveals that there is no control for imported foodstuffs. “Local manufacturers must adhere to the Food Act. But this is not the case for imported products.” According to him, Mauritius is already a small market and we are the first to sign various convention and treaties at our detriment. “Local production is already decreasing and less people are interested in local products. They prefer imported ones.” We are already in a globalised marketplace and we have no safety net. “The government must adopt global practise when it comes to protecting its domestic market.”

[[{"type":"media","view_mode":"media_large","fid":"17738","attributes":{"class":"media-image wp-image-30147 alignleft","typeof":"foaf:Image","style":"","width":"210","height":"244","alt":"Sonny-Wong"}}]]Innodis Ltd – Sonny Wong: “Some local products can easily compete”

The General Manager – Commercial of Innodis explains that some local products can easily compete with similar imported ones. “Products like chicken, yoghurt and ice-cream, local manufacturers can easily compete with similar imported products both in terms of price and quality. Local manufactured products (example yoghurt: 30 days or chilled chicken: 5 days) have an advantage on imported ones due to their shelf life.” However, Sonny Wong explains that at Innodis, they note that “when demand is low for certain categories of products, very often locally manufactured products are unable to compete with imported ones as local manufacturers do not have enough economy of scale resulting in uncompetitive prices.” What do local industries need to compete with imports? “In Mauritius, there is currently a fair and strong competition among different existing brands on the local market in almost every category of products. Very often, the local brands are competing with imported ones and if the locals do not have enough economy of scale, they will not be competitive enough to occupy an important market share.” Sonny Wong underlines that “the success of a product lies firstly in the right positioning of its brand. This process is part of the brand strategic marketing. This will in turn reflect the right mix – quality and price.”

[[{"type":"media","view_mode":"media_large","fid":"17737","attributes":{"class":"media-image wp-image-30146 alignleft","typeof":"foaf:Image","style":"","width":"202","height":"241","alt":"Salim-Sulliman"}}]]Salim Sulliman, General Manager – Margarine Industries: “Need to search for export markets”

The General Manager of Margarine Industries Ltd trusts that certain products can be definitely produced locally at the same price and quality as imported ones. “In fact, we are already producing margarine, spreads, butter & Ghee which are in not inferior to imported ones,” he says. But what limits local industries? “Economies of scale and dependence on imported raw materials for production,” explains Salim Sulliman. He believes that local industries need to search for export markets in order to become more competitive.

[[{"type":"media","view_mode":"media_large","fid":"17735","attributes":{"class":"media-image wp-image-30144 alignleft","typeof":"foaf:Image","style":"","width":"210","height":"286","alt":"G\u00e9rard-Boull\u00e9"}}]]Food and Allied Group – Gérard Boullé: “Limited by market size and remoteness”

Gérard Boullé, Chief Operating Officer of the Food & Allied Group, explains that the domestic industry has been developed on an import substitution model. “Companies started to manufacture products including food, chemicals and personal hygiene items among others. But some of these have become less competitive since 2006 with the gradual removal of custom duties on imported goods. Some industries have even disappeared with the zero duty policy,” he says. Fortunately, according to him, some sectors have remained resilient. “For example, the availability of local raw materials or the chilled products that have a short lifespan that can’t be exported. Companies that resist despite global competition were able to prove to Mauritian customers local products are worth just as much as imported ones – and much better than some cheap imports from China. ‘Made in Moris’ has certainly played an important role to make Mauritians more aware of the quality of local products.” According to Gérard Boullé, local industries are limited by two main factors: market size and remote location. “The first aspect does not allow for economies of scale, the smallest production equipments at world level are often too big for the local market. Hence, it becomes difficult to amortise fixed costs while large multinationals can easily do so on their local markets and export any production excess at marginal costs. Dumping can be a major issue in small economies like ours. Moreover, nowadays, local manufacturers need to cater for more and more sophisticated products required by customers and this makes the market even smaller.” He adds that as we are not playing under the same rules and, as a small island economy, we need support. “Local manufacturers need to become sharper and more professional, and find ways to increase their market base, even considering exports. However, competing against giants like China, Europe or South Africa on a non-level playing field is simply not possible. The zero-duty model is for us a non-level playing field. Local manufacturers, who bring more value-added to the country, are not compensated for their contribution and risk-taking when facing competition on a zero duty model.”