Mohammed Mesbah Uddin

Chief Marketing Officer

Fair Distribution Limited

As the Chief Marketing Officer of Fair Distribution Limited, Mr Mohammed Mesbah Uddin plays multidimensional roles including strategic planning, new business development, and stakeholder management. His core deliverables comprises of implementing sales, marketing, and product development programs, both short and long range, targeted toward existing and new markets. Team MBR was in a conversation with Mr Mohammed Mesbah Uddin and was fortunate enough to receive his take on the consumer electronics industry in Bangladesh.

Raiyan Rabbani: Bangladesh’s consumer electronics market has proliferated in recent years. Would you please share with us the underlying reasons for this accelerating growth?

Mohammed Mesbah Uddin: Thanks to the government initiatives that encouraged domestic production and sparked a market boom as soon as businesses invested billions of taka in seizing the opportunities of localization and lower costs of production for a sizable local market with a rapidly growing middle and affluent class. In other words, the market expanded as a result of widespread electrification, increased income, changing demographics and lifestyles, rising affordability, and simpler consumer financing. Along with people’s growing financial stability, socioeconomic shifts are emerging as significant advantages for the electronics and appliance sector, which is evident as the number of working women grows.

Raiyan Rabbani: Despite the fact that our local consumer electronics market has historically been dominated by foreign brands, over the last few decades, we’ve observed the rise of several local companies in this very competitive industry. In your opinion, what factors are behind the success of our local brands and companies?

Mohammed Mesbah Uddin: Indeed, local brands have expanded in terms of size, which is evident in Walton’s exporting to foreign markets. In my opinion, local brands focus on the rural segment of the population by catering to their needs for products that come up with minimum price tags with minimum features. It is easy to observe that Bangladeshi electronics manufacturers are now able to fulfil a large portion of the country’s demand for consumer electronics as the rural population is far larger in comparison to the urban population. Also, after-sales service in rural areas has also helped boost the confidence of the customers. It is also important to note that the government’s support for domestic companies that make consumer electronics has also helped local brands and companies grow.

Raiyan Rabbani: Customers are now demanding more convenience than at any other time before, an example of which would be online delivery right at the doorsteps of the customer or free installation. How can consumer electronics companies create more convenience for customers to attract and retain them?

Mohammed Mesbah Uddin: Customers now demand more convenience and ease of purchase than ever before. To respond to these changes, most companies are offering home delivery, free installation, and satisfaction reviews. In doing so, the customers of local and international brands are catered to differently. Definitely, international brands are offering more features and quality. On the other hand, local brands are offering value for money and affordability with minimum features. International brands are dominating in major cities (divisional towns and major district towns), whereas local brands are dominating in small towns and upazilla markets by targeting the market segment that demands affordability.

Raiyan Rabbani: Innovation is a must in the consumer electronics industry. How innovative are our local companies in product and service offerings compared to international brands and companies?

Mohammed Mesbah Uddin: Consumer needs are changing due to lifestyle changes. To cater to their needs, much innovation is required. For example, smart TV production and sales in the last two years have dramatically increased. Bigger TVs with user-friendly UI and better pixel quality (4K resolution) are at the top of the priority list of consumers. These changes in demand are compelling local brands to invest in R&D, therefore, competing with the international brands in terms of features and quality.This, however, will be the biggest challenge for local brands’ survival in the days to come. We have seen asimilar scenario in India where all the local brands are disappearing in the course of time due to a lack of focus on R&D.

Raiyan Rabbani: Brand equity is a major factor that leads the consumer to consider an electronics brand as a preferred selection. How can a new and emerging company create brand equity and preference among its consumers?

Mohammed Mesbah Uddin: To build brand equity for a new and emerging company, branding needs to be given enough attention from the start. In order to build brand awareness and reputation, belowthe-line marketing must be supplemented with some above-the-line marketing. Below-the-line marketing is best suited for addressing lower-end consumers. But, this must also be backed by a quality-oriented approach from the start to build consumers’ confidence in the local companies. Since local companies are now exporting abroad, consumers’ trust in local brands has increased from before.

Raiyan Rabbani: The rising dollar exchange rate is a burning issue right now. Since most of the parts are imported from abroad, this puts pressure on manufacturing costs for the local companies, which is affecting their profitability. How are they responding to this in terms of cutting costs or passing on the increased price to the customers?

Mohammed Mesbah Uddin: There are many challenges in the current market scenario, and the rising dollar price is one of them. The inflation rate, cost of transportation, and the hike in the price of raw materials in the international market are also impacting the price of foreign imports. To tackle this issue of rising costs, companies are trying to optimize their cost structures to minimize the impact of such costs on profitability. Initiatives being taken are

• Less spending on advertisements.
• Restructuring channel costs and emphasizing the online sales channel
• Lower buffer stocks to minimize inventory costs.
• Optimized production processes to reduce overhead expenses.

Raiyan Rabbani: The export of consumer electronics products from Bangladesh jumped 8.5 times in the first nine months of FY2020–21 despite the pandemic. What are the factors that drove this export growth?

Mohammed Mesbah Uddin: Though I am not certain of the stated statistic, I assume that some supply chain disruptions in China might have enhanced Bangladeshi exports despite the pandemic. But, in short, Bangladesh’s export-led growth has been fueled by a lot of cheap labour and duty-free access to markets in the EU and US thanks to new international agreements signed by the government.

Raiyan Rabbani: Do you think that there is adequate policy support for the local consumer electronics companies to thrive and sustain in the long run?

Mohammed Mesbah Uddin: Any particular industry to survive in the long run, policy support is a must. It is impossible to have constant value addition without creating connections with local businesses and having a structured tax policy to assure the sector’s viability. Frequently changing policies is a big issue in this sector. Policies should remain consistent to ensure the sector’s stability.

We have observed significant changes in fiscal policy. VAT waiver has been withdrawn from refrigerators and mobile phones, which has impacted sales on top of other challenges. The government has imposed a new trade VAT on mobile phone manufacturing and we observed a 23% decline in sales in the months of June and July compared to last year. An additional 5% VAT has been imposed on the manufacturing of refrigerators. However, we believe this will not impact sales much.