Cover-Feature

"Consumerism" is likely to be more pronounced in the Nepalese market in the days ahead thanks to the economic reforms ushered in and the media invasion. The transition will be from a predominantly "sellers market" to a "buyers market" where the choice exercised by the consumer will be influenced by the level of consumer awareness achieved.

By "consumerism" we mean the process of realising the rights of the consumer and ensuring right standards for the goods and services for which one makes a payment. This objective can be achieved in a reasonable time frame only when all concerned act together and play their role. The players are the consumers represented by different voluntary non-government consumer organisations, the government, the regulatory authorities for goods and services in a competitive economy, consumer courts, organisations representing trade, industry and service providers, the law-makers and those in charge of implementation of the laws and rules.

The issues relating to consumer welfare affects the entire people since everyone is a consumer in one way or the other. Ensuring consumer welfare is the responsibility of the government. Consumer is one who purchases goods and services for his/her use. The user of such goods and service with the permission of the buyer is also a consumer. However, a person is not a consumer if he purchases goods and services for resale purpose.

Now look at the Nepalese consumer habits - particularly of the middle class. They save over 20-25 - per cent of their income even though they spend 70 per cent of it on food and housing. In contrast, the Americans who spend only seven per cent on food, save nothing. In fact they live on their next year’s income, courtesy credit cards. The western economy is powered by consumption and more consumption on expenditure and credit cards. The Nepalese consumer mind is the very reverse of it. It is structured on austerity and, consequently, the economy is powered by savings. The first victim of free market of Nepal would be the austerity and savings of the Nepalese consumer. Consumerism will enslave the Nepalese middle class and erode their values. Remember, the communists in Russia and elsewhere lost out not to capitalism but to consumerism.

An average Nepali consumer is noted for his patience and tolerance. Perhaps because of these two traditional traits and due to the influence of Hindu and Buddhist religion he considers the receipt of defective goods and services as an act of fate or unfavourable planetary position in his horoscope. When a new television or refrigerator purchased by him turns out to be defective from day one, he takes it reticently, blaming it on his fate or as the consequence of the wrongs committed by him in his previous birth. Very often he is exploited, put to avoidable inconveniences and suffers financial loss. It is rather paradoxical that the customer is advertised as the "king" by the seller and service provider; but in actual practice treated as a slave or servant. Goods are purchased by him along with the label "Items once sold by us will not be received back under any circumstances whatsoever."

This unethical, illegal and unilateral declaration has to be viewed in the light of the practice in developed countries where the seller declares, "In case you are not fully satisfied with our product, you can bring the same to us within a month for either replacement or return of your money." This clearly indicates the level of consumer consciousness. However, things are changing – very slowly but steadily - and the momentum has increased due to the efforts of consumer organisations and the media. The coming years will surely witness a high degree of consumer awareness and the concepts of "comparative costs", "consumer preference/ resistance/ abstinence" and "consumer choice" is bound to become vital aspects of the economy.

In the field of telecom, power, transport and water supply, the Nepalese consumers today are going through a number of problems not knowing how to get their grievances redressed. It is high time for the government to take steps to see that the areas of grievances are identified and remedial steps taken through proper systematisation of procedure and working style.

Similarly in the area of "investor protection" the case of exploitation of consumers is increasing. This is an area of grave concern and requires concerted action by the regulators, government and the consumer organisations. We must also find a way out to save the consumers from the unscrupulous functioning of Non-banking finance companies.

Yet another category is the protection of consumers from the private sector dealing with goods and services.

However, it is not to be construed that the entire business sector is keen on exploiting the consumers. Indeed there are established business firms which really care for consumer satisfaction, their own reputation and goodwill.

The consumer has to be aware of his rights and play a key role. The success of "consumerism" is a strong function of consumer awareness and the assistance the movement gets from the government. The consumer movement got a boost and moral support from the late U.S. President John F. Kennedy in the historic declaration in Congress on March 15, 1962, declaring four basic consumer rights (choice, information, safety and the right to be heard). Subsequently, March 15 every year is celebrated as World Consumer Rights Day. However this annual ritual observation does not appear to have produced any desired results in Nepal. Consumers in the urban as well as rural areas are not at all aware of the consumer movement and the rights of the consumers. It is in this context that it is considered relevant to quote the objectives adopted by the General Assembly of United Nations in 1985 (See Box).

Every consumer in his own interest has to realise his role and importance in the right perspective. Each citizen in a democracy derives his power at the time of elections and exercises it through the ballot. In a competitive economic environment the consumer has to exercise his choice either in favour of or against the goods and services. His choice is going to be vital and final. He should realise his importance and prepare himself to exercise his rights with responsibility. It is very often stated "Customer is sovereign and consumer is the King." After all the dictum in democracy is, the citizens get a government they deserve.

People are not the only need of a consumer market. Consumption is certainly not the only key to unlock the riches of a marketing man’s Pandora’s box. Money somehow seems to be the real key. More money in these many hands, more the consumption. But then, is the money around?

While the pessimists’ answer to the question will say that men without money or the means to make the money are of no use to marketing and its future, the fact remains that there is a value in the market that has a huge potential. A potential that can well break open huge values in the times to come.

Let’s just remember one thing. Nepal has been a poor country for long. Folks below the poverty line are sizeable. And despite it all, the population has grown, survived and continues to thrive. People have found a way to survive. The fittest have survived on high value brands, the less fit have thrived on brands of a lesser calibre in the country. Those even lower in the hierarchy have survived on the fringe of the commodity in every category of want and need. Therefore, consumption needs have always found answers.

There is, therefore a pyramid of consumption that lies all over the slopes of the hierarchy of needs. But then, everybody, rich or poor, has fallen within the confines of this pyramid. And just as long as they do, there is indeed potential for a good market for commodities, quasi-brands, brands, super-brands and of course at the ultimate level of the self-actualizing folk, no brands at all!

In a competitive free economic market, as many an industry faces an impending closure, the best will indeed survive. The fittest will survive and the rest will vanish into the limbo of the have-beens. As all this happens and as social turmoil seizes the ‘have-beens’ by the jugular, there is ahead of us a moment that will truly be the defining moment when the entire bureaucracy that runs the Nepalese industry and enterprise will wake up all of a sudden, with a jolt. A nightmare that is bound to seize the policy-maker, the implementer and indeed the key participant of the economy, the man in industry, all together by the short hair.

And this defining moment is the one that will turn the paradigm of Nepalese competitiveness, upside down. This will be the moment of rethink. A point of time when the truly important will replace the truly insignificant.

Asian Consumers are Getting Ad Tired

Asian consumers are becoming less receptive to mass-marketing campaigns, according to a new study that found ‘ad avoidance’ could threaten Asia’s advertising industry. The study conducted by Millward Brown & Associates is the fourth in series of regional surveys correlation advertising content with its effectiveness. It predicts that within the next 12 to 18 months the level of ad avoidance, or ignoring ads will escalate.

The level of ad avoidance has reached 54 percent in the US. In Europe, the level is even higher, with France at 56 percent, Italy at 62 percent and Germany at 68 percent. Since 1991, when the first survey was conducted, there has been an overall 10 percent increase in ad avoidance. This is the first survey devoted to Asia.

Survey respondents cited ads’ irrelevance to local culture and ‘annoying’ content as among the most common reasons for ignoring them. Few ads in Shanghai, for example, have cultural impact because they fail to reflect to local situation. Programming customs also contribute to ad avoidance: In Vietnam and Indonesia, viewers are expected to watch as many as 30 ads before the next program.

If we look around the nations of the world and correlate models in current use, there are four distinct patterns that emerge. Four clusters that have whole sets of nations congregating in models that seems to work for each of them differently and with different levels of efficacy. Needless to say, the peculiarities of each nation in question dictate the distinct choice they have made for themselves. Let’s visit the clusters. And let’s call them all kinds of animal names.

The Earthworm model: The passive model of competitive reaction. The invitation theory that is best practiced by the earthworm. A rich worm really. It knows the basics best. It is in constant touch with the earth that it seeks nourishment from and nourishes back simultaneously. A fundamentally strong being.

There are several problems in this model though. It is passive for one. Non-reactive. A model in the self-fulfilling prophecy mode. The best example of the fatalistic theory in practice. When faced with danger, all it can do is continue its humble journey in the earth. Competition kills this model with ease. There is no reaction. The fatalistic model of competition at its best!

The Snail model: The common competitive model practiced by a whole host of nations. This model is reactively pro-active. A clear cocoon orientation. When faced with competition and danger, there is a regression into the shell. The withdrawn marketer at play. The philosopher marketer even! The marketer who revels in the safety-static nexus. Waiting for the competition to just go away, so that normal life may resume again!

The Porcupine model: This model tells the competitor clearly of the array of weapons that are available for retributive action. There is a clear emphasis on the display of the arsenal. It believes in overt display. A clear detente model of competition. Avoids speculative action and is ready for the real battle.

The Everyone Else model: This is the model of the real-time player in competitive markets of the present and certainly the future. This is the real-time marketer. Reactive when necessary. Pro-active when necessary. Guerilla in tactics when necessary as well!

This is a constant-change oriented model that believes in watching the scenario carefully and reacting accordingly. Making forays into pro-active territory on a speculative basis. Life in the fast track of competitive marketing is pretty unpredictable and speculative. Change here is absolutely discontinuous. Making a decision on a point of competitive strategy based on happenings of the past and the present could be disastrous. The future never ever happens the way the past decided.

A change is in progress in Nepal. Villagers who used to crack open peanut, eat the nut and throw away the shell are now demanding chocolate candies that will melt in their mouths, not in their hands. Charcoal-cleaned teeth are now a rare sight; so is the case with twigs of tree. Today, the ultra bright shine of Colgate or some other international brand of toothpaste holds more appeal than the traditional methods of cleaning teeth. Even the native expressions of cleaning teeth, such as daatun Garnu are endangered to being replaced by new expressions such as brush Garyau ? ‘to brush teeth with paste’.

These villages and small towns throughout our nation, which were once inconsequential dots on maps, are now getting the attention of marketing giants and media planners.

Rural Nepal represents the heart of Nepal. Approximately 80% of Nepal lives in villages generating half of the national income. There is a formidable challenge of reaching this magnitude of the rural masses where many rural dialects are spoken.

Most of the economists who once were part of the socialist chorus, say again in one voice that there is no alternative to modern large industry. But the facts point to the reverse. There seems to be no near alternative to the traditional economy. The issue does not seem to be an alternative to the western approach - it is really the search for a western alternative to the traditional economy of Nepal. The western alternative we sought after 1950 appears to have failed. What we considered a burden, a deadweight and a sign of backwardness is still the backbone of the country. This is despite decades of ceaseless attempts to scuttle the traditional economy and promote the western. Any rational debate will lead to this answer.

The indigenous economy exists. That alone carries the country. But it is a spiritless sector. That is the result of the propaganda the socialists, communists and the capitalists so systematically engaged in to characterize rural Nepal as a sign of backwardness.

The consumers in society get a position in the market depending upon what they do or do not do. It is agreed on all hands that "consumer empowerment" in Nepal has a long way to go. This is the right time to act. Let us prepare and usher in a new era of "Consumerism". When we cross the winter, spring cannot be far behind.

The U.N. guidelines for consumer protection are meant to achieve the following objectives:

(a) To assist countries in achieving or maintaining adequate protection for their population as consumers;

(b) To facilitate production and distribution patterns responsive to the needs and desires of consumers;

(c) To encourage high levels of ethical conduct for those engaged in the production and distribution of goods and services to consumers;

(d) To assist countries in curbing abusive business practices by all enterprises at the national and international levels which adversely affect consumers;

(g) To encourage the development of market conditions which provide consumers with greater choice at lower prices.

From Ason Bazar to Bishal Bazar

The Ason Bazar in the capital is a place where Nepalese shop the way they always have. There are no fast food joints. Visitors are not drawn by advertisements. Sometimes they are here just to buy the ingredients that go into making a meal at home.

Just a kilometres away stands the New Road. It boasts of fast food joints, and a one-stop shopping arcade called Bisal Bazar where you get everything from clothes to cosmetics.

Ason Bazar is a permanent residence for confusion. The parking lot in the basement of Bisal Bazar is a neat arrangement of cars that have made inroads into the Nepalese market.

Bisal Bazar and the Ason Bazar reflect the transformation occurring in Nepal; a transformation that young people have joyously given themselves over to.

Priyanka, 21, a 10+2 student steered her gleaming new Santro into the Bishal Bazar parking lot as her friend Jay, 23, bought burgers and French fries. He had also bought a bottle of beer.

Sabina and Yana both work at a multinational firm in Kathmandu and earn about Rs 8000 a month each. Saturday is their day off. "We came here (Bishal Bazar) to check out the sales."

"I bought a pair of Lee jeans for just 400 bucks (rupees)," Yana said with glee as Sabina got them both two egg and cheese rolls from one of the several eateries in New Road which is bursting with men, women and children.

New Road is a picture in miniature of Kathmandu itself where everyone seems to be wound up by an invisible key to earn and spend and live life to the full.

Kathmandu youth aged 15 to 18 clearly indicate that advertising and television today mould their tastes in food, clothes and even entertainment.

You can see it in the 10+2 classrooms. They come in cars, bring in cell phones, wear western clothes and eat junk food; they have lots of spending power.

Most of the food items promoted by TV advertisements are junk food. They are all lapped up by youth who seem to have a lot of money. The influence of western wear and food has been so tremendous on Kathmandu youth that the salwar kameez has taken a beating with most girls switching to wrinkle-free trousers and short-tops."

The youth ate out for fun but prefer home-cooked food. Besides, for every fast food outlet, there are 50 roadside restaurants.

What is emerging in the new consumer economy is a convergence of tastes. The recent Bollywood (India’s Hollywood) movie "Dil Chahta Hai" provides a striking reflection of this cultural homogenization in our part of the world. It’s a story about three friends and the women in their lives. Everyone in the movie has money and owns a Mercedes. The movie was a hit with youth. Symbolizing the spirit of new consumerism in the movie: a gas tank. Fill it, shut it and forget it.

Consumers falling prey to low-grade goods

If you regularly throng into the mushrooming departmental stores and clothing outlets in the Capital with the high hope that they offer quality goods, you must think twice for many of such outlets are flushed with the low quality goods these days.

Earlier these goods holding major items in cheap shops, mainly in the "Hong Kong market" (the market known for cheap and low quality goods, especially from Northern neighbor) have turned the hunt for majority people these days.

Your visit to any departmental stores searching for the internationally acclaimed brands like CK, Crocodile, Guess Club, Levi’s and others might be pleasing, at least for time being. These shops are full of goods with fake brand names; thus the disappointment will come only after few months- if your luck happens to make wrong choice, you are left to task the bitter experience of it within few days. Anil Jha has already tasted it bitter.

Jha, a foreign-educated employee affiliated with a joint venture bank, bought a Bossini T-shirt from a leading store paying Rs. 650. The T-shirt faded in the first washing as if it was dyed with ink. "I was completely stunned to discover that I ended up buying such a low quality T-shirt at the departmental store." Frustrated, Jha immediately rushed to the store and demanded his money back. The store manager apologized and offered him a replacement.

Some of the incident of deception, surfaced lately, have shocked high-class consumers creating serious doubts over the repeated pledges of such stores of dealing only with original goods. In addition, such cases have also put crack on the common belief of the people that big stores serve with only genuine goods.

Although such fake goods have penetrated the market in almost all the sectors of consumers’ goods, the problem has turned acute in the imported ready-made garments. Labeled with famous brand names and packed perfectly, without a reliable information on these garments, anyone can fall into prey. Today this is a problem not only in the mushrooming departmental stores but also in the ones that claim to sell only the authentic clothing.

Jha says he would now think twice before going to such fixed-priced shopping centers. "Rather, now I prefer going to traditional shops where, at least, I can get clothing of various quality at my bargain," says he.

Another young customer from Thapathali, who bought a pair of beautifully packed shocks from a leading clothing store became disillusioned when the sucks worn out in few days.

The problem of cheating is much more severe in the low price items such as socks, vests and other under garments. It is easier to deceive the consumers in the low-priced items since they hardly come to complain even if the low quality goods humbug them.

This gap of close interaction between the consumers and storekeepers, according to experts, has given a fertile land for fake goods. "In our consumption culture, consumers hardly come to express their complains over the goods due to which we became unaware of such problems," Dipak Shakya, Managing Director of Namaste Supermarket says. He reassures that they are always ready to extend maximum possible cooperation to consumers if they come with genuine problems related with fake goods.

Since most of the stores lack their own imports and depend upon the foreign suppliers, some suspect that it might be their mischief. Sabin Jonchha, Manager of newly opened Theme Fashion accepts that, in general, 5-10 per cent of the goods supplied contains low graded items.

He further says that no big stores deliberately keep low quality products as such practice could devastate the business of millions of rupees. However, he claimed that his store is ready to give guarantee in the branded goods.

Rajendra Sthapit, Purchase Manager of the Blue Bird Departmental Stores blames the mounting unhealthy competition among the huge stores for such emerging problems. He claims that the store has not yet received any such complain.

However, he accepts that the suppliers sometimes mix low quality goods, particularly garment products, with high quality items. "Since we have fabric experts, we simply recognize such goods and return them", he said. He reiterated that consumer awareness and their cooperation is the best way to eliminate such malpractices.

By Business Age Reporter

Side Effects of Consumerism

French economist Bernard Toupin, immediately after his second arrival to Kathmandu after some 12 years, remarked about the sea change in the consumption pattern of the Nepalese people. Nepalese are also gripped by the so called market dynamics of ‘consumerism’, he said.

It is true that with the growing concerns of economic liberalization and modern marketing practices of almost every economy, consumption behavior of the people unprecedentely increased resulting in both lucrative and disastrous economic side effects. Over the last ten years or so, consumerism provided the lure to Nepalese business sector too, contributing rapid spread of marketing techniques with indiscriminate flow of foreign products into the Nepalese economy. And this competition ultimately set the compulsion to consume, even for the poor groups who have little access to such commodities if compared with their purchasing power.

But economists say consumerism ensures economic growth. It demands more and more production in a competitive atmosphere which provides employment and adds value to the national economy. Rapid circulation of economic activities thus imparts economic dynamics which again is the product of consumerism. Again, they claim consumerism ensures consumers’ sovereignty.

It seems, therefore, right what Mr. Toupin remarked in his last visit. He found some 15 airline companies in his recent visit while he had known only one name, Royal Nepal Airlines Corporation, in Nepalese airline industry in his last visit. A single instant noodles brand of those days is now facing a stiff competition from 21 other new brands. Banking sector has set an unprecedented growth record in the Nepalese history. Growth of FM stations in a very short time is another example. Eating habit is tr3-nsforming to café culture. The same developments can be seen in the film industry, media and other service sectors. And that can be taken as the impact of consumerism.

But the most serious matter is that consumerism made Nepalese market overwhelmingly ruled and displaced by imported goods and services that have flown into every nook and corner of the nation’s boundary within this period.

Economists say the indiscriminate flow of foreign goods and services boosted from the liberalization wave as a result of consumerism, is just an iceberg in the path of the nation’s economic growth. Nepal’s import dominated economy, which has perennially been running in deficit trade account, is still prone to disaster. Because liberalization with lower tariff wall has let easy access to foreign products into the Nepalese economy posing an adverse effect on the growth of local industries.

Prof. Guna Nidhi Sharma opines that the Nepalese economy, which is already in dire straits inherently showing high trade deficit, will further be affected by the recent practice of consumerism. High import of manufactured goods as against the export of primary and raw materials has been constantly reducing Nepal’s income employment multiplier. That means Nepalese have to remain only to trade margin which does not significantly contribute the overall value add in the economy even in the situation of high demand. Ultimately it hampers the economic growth of the country, he says.

The large size of imports induced by consumerism has another drawback – it dismantles local economy killing local initiatives. In this respect, both urban industrial and rural products are displaced by foreign products. For example; Indian vegetables have been dominating the Nepalese rural market. A substantial income of the urban as well as rural people have been spent on foreign cosmetics. To sum up, Nepalese existing consumerism practice has addressed import liberalization, Prof. Sharma explains.

However, consumerism per se is not the root of the total headache. Its always the government policy that matters. And this is vastly lacking in the Nepalese policy lexicon both in the days gone by and today. National leaders and policy makers are now in urgent need of coaching class which, irrespective of any conditional matters, teaches that national policy should focus on the nation’s interest rather than mere availability of goods and services at a cheap price, as noticed by Prof. Sharma. Otherwise, high domestic demand boosted by increasing consumption pattern contributes very small amount of trade margin in the place of total value addition in the domestic production. Reduction of value addition in the domestic economy due to import domination reduces production resulting in the declination of employment which ultimately affects the economic growth rate that is already one of the lowest –average 3.7 – in the last 35 years of Nepalese history.

What is now needed is a prudent policy that focuses on poverty, unemployment and squeezing national economy.

Another serious setback for our ailing economy induced by consumerism is that it has broken the Nepalese people into two groups- high-mass consuming and deprived groups. Nepal’s dependent economy on the one hand is unable to sufficiently subsidize the poor and on the other, high income groups are controlling almost all resources to irrational spending that has been constantly widening the gap between these two sections. Both pattern of consumption is not conducive for the growth of the nation’s gross domestic production.

The impact of haphazard production to meet the high demand of the people due to the increasing consumerism results in the overexploitation of the resources. But who has the answer about the availability of these resources for the upcoming generations? And this is still a big question in the case of non-renewal resources.

But these drawbacks apart, the recent trend of consumerism uniquely granted the ‘choice’ to the present generation. Therefore, Mr. Toupin has an easy access to Chinese food and the French cosmetics in the Nepalese market.

Notwithstanding a remarkable revolution that consumerism folded all market activities in its pocket, it has equally made the whole economic structure vulnerable to disaster. Even in the US economy after the latest terror attacks of 11th September, economists anticipate the loss of some 35 hundred thousand jobs while the actual realization fairly crossed over 55 hundred thousand within this very short period of time. And that effect has been remarkably seen in the Nepalese economy, especially in the service sector.

What is economically justifiable, sometimes, may not practically be justifiable. Consumerism, of course, is an effective wheel to ply the socio-economic growth. But it is equally important to think of its side effects before applying it in practice.

Thinking ? Before Buying

Asian Consumers are Getting Ad Tired

From Ason Bazar to Bishal Bazar

Consumers falling prey to low-grade goods

By Business Age Reporter

Side Effects of Consumerism