BRAND BUILDING in Nepal  

Success of a company under WTO regime will depend on its own competitiveness rather than on the state support as such supports are not allowed under WTO. Though least developed countries like Nepal are allowed some period to prepare before implementing the WTO compatible rules that is only a breathing space. The businesses in those countries will not be able to face the eventual international competition if they do not start attuning themselves right now to the environment that is bound to be created within years.  

One area where such preparation has to be made is branding. Competitive market does not mean that there will be a situation of “perfect competition” as is described in the textbooks of economics. Even under WTO, there are opportunities to gain monopolistic authority through various means permitted by the WTO rules. Branding, which creates a distinguishing feature in the product, is one such method of gaining and sustaining monopolistic power. Also the consumers are happy to buy branded products as branding gives an assurance regarding the quality of the product.

But the Nepali products still do not have brand identities strong enough to command any monopolistic power in the marketplace. Even those brands regarded strong at present in the domestic market may not stand the trail that they may have to face when the tariff barriers on the import of their substitutes are lowered as per the country’s commitment made while obtaining WTO membership. Though Nepal exports a large quantity of carpets, readymade garments and smaller quantities of many other items to various countries of the world, they are all exported like commodities, i.e. without any brand name. While the acceptance of these products in the foreign markets indicates to the quality standards of these products, the lack of efforts on the part of the manufacturers/exporters of these products to brand them is surprising.

However, the situation is a bit different in the case of products sold in the domestic market. Particularly in the recent years, one can notice that some companies are trying meticulously to develop their own brands. However, brand mortality is also very high. Many once successful brands have now disappeared (e.g. Star beer) or have become very weak in the face of substitutes from multinationals (e.g. Puja laundry soap).

Still, the situation is not that gloomy. There still exist some very promising brands with good image in the domestic field. Some of them are so promising that they can be developed into international brands.

One group of promising brands are related with the business house that produces or deals in the respective goods. For example, Hulas (Golchha Organisation), Chaudhary’s (Chaudhary Group), Dugar (Dugar Group), Panchakanya (Panchakanya Group). These brands are being used by the respective business house for their particular range of products. This can be likened with the practices of such multinationals as Konica, GE, Phillips, LG, Samsung, Honda, Tata, UB and the like.  Having an established umbrella brand makes it easy for these companies to introduce any new product under that particular range or even beyond.

The other group of such promising brands are related to particular products. For example, Soaltee for premium hotels, Nanglo for bakery cafes, Nebico for biscuits, Buddha for airline service, Yeti for travel trade etc. The companies that own these brand names have already invested considerably in these brands so that some of them have become generic names for that respective category. And they are quite capable to compete with international brands that may enter Nepal. Nanglo is still beating the competition from such foreign brands as Wimpy in the domestic market and it is spreading across the borders into Tibet. Thus, it is poised to become an international brand from Nepal in fast food chain.

But as the real strength of the brand will be tested when they are exposed to international competition, it is advisable for the owners of these brands to invest more to further nurture them. However, due to the complacency of the brand owners not much efforts are noticeable in this regard. Just one look at the different communication media will give a lot of ideas. Most of the advertisements (print, electronic and outdoors) are for MNC brands.

One reason for this may be the myopic vision of Nepali companies reinforced by the frequently changing economic policy of the government and poor legal infrastructure for brand protection (see next article in this section).

The authorities have a practice to permit the use of the same brand by different companies for different products and this is posing hurdles in the brand development efforts. The examples of such brands are Himal (oxygen, iron rods, cooking gas, cement, passenger bus service etc.), Everest (nursing home, bank, hotel, cooking gas), Kantipur (media, financial services), Khukri (Khukri rum and Khukuri cigarettes). This confuses the consumer. As Himal oxygen and Himal iron rods are produced by Jyoti Group, the consumer may think that also Himal cooking gas is produced by the same business house. If the consumer has high confidence on Jyoti Group, he may decide to buy Himal cooking gas with the same confidence. If by any reason, the consumer loses confidence on the Himal cooking gas, the adverse effect may extend also to the iron rods of the same brand. 

Grey Imports

One frequently raised issue on branding is from the Nepali subsidiaries of world renowned MNCs. Surya Nepal (P) Ltd., the Nepali subsidiary of British American Tobacco (BAT) that owns the brand 555, has stopped importing 555 on its own. The reason is the liberal attitude of revenue-oriented Nepali customs administration that allows import of 555 cigarettes by anyone as long as the importer is paying the duty applicable on the product. In the process, a lot of counterfeit 555 cigarettes are being imported into Nepal, complain Surya Nepal sources.