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Saturday, 11 July 2009

Halal business: Closer partnerships between importers and producers will benefit Thai entrepreneurs, while China's Muslim market offers rich potential


Thai entrepreneurs are encouraged to move beyond being merely suppliers and to form partnerships with investors from the Gulf Co-operation Council (GCC) states and other Muslim nations to cash in on the growth of the global halal market.

Importers from these countries have shifted from a basic import model in which they simply order products and are now looking at finding the right business partners.

"The point here is that this marks an important development for Thai businesses because it would make halal importing companies partner up with global suppliers, thus helping them establish a presence there and giving the local businesses knowhow about the exact procedures for processing, packaging and labelling. They will emerge as more than importers and become producers working together with global facilities," said Dr Yusuf Reilly, a consultant to the Thai Halal Manufacturers & Exporters Association for the Europe and USA zones.

Al Islami, for example, is setting up a meat-processing plant in the UK. Mekkafood in Germany is setting up its own production facilities, Dr Reilly told participants at the Expanding the Global Halal Markets Conference 2009 held in Bangkok recently.

This trend is also being witnessed in countries in Asia where foreign investors, including those from GCC states are seeking local partners, especially food and farm product processors to tap abundant supply sources.

The GCC, which has a population of 36 million and includes Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, has put large investments into agriculture in Indonesia this year.

In Thailand, Bahrain-based Islamic bank Al Salam Bank recently signed a memorandum of understanding with Thailand's largest agro-industry group, CP Group, for the possibility of jointly investing in food and farm businesses.

According to Dr Reilly, the global halal market is huge and it is expected to be worth US$650 billion by end of 2010, thanks to the developments and the growth of some virgin markets including Turkey and China.

With about 30 million Muslims, China is a major potential market as both a producer and consumer of halal products. "The market is underserved and very eager to find halal products that meet their needs," he said.

Adisak Asmimana, president of the Thai Halal Manufacturers & Exporters Association, said at the conference that Muslims in China were a huge consumer market that Thai halal companies should tap into.

Ningxia, the autonomous region near the border with Mongolia, is home to a large Muslim population, as is Xinjiang, the Uyghur autonomous region tucked between Mongolia and Kazakhstan in the northwest .

Dr Adisak, the first president of the new association, said he had worked hard over the past year on more aggressive strategies under D2D or "Direct to the Keyman's Door" to strengthen and build relationships with halal business partners around the globe including China.

He has played a key role in the establishment of the World Halal Business Association with businessmen from China. With a representative office in Hong Kong, the association will help support the expansion of halal market to China and acts as a springboard for Thai products to expand worldwide.

Chan Hing Tze, president of China Halal Manufacturers and Exporters Association, believes a strong halal business is essential to help the world economy get through the current crisis.

"The fact that I'm not a Muslim does not prevent me from linking trade and business with Muslims in China, Asia and the Arab world," he said.

"The difference is not a problem for there are no boundaries in the global economy and you can be sure that we could help boost the global halal business substantially in the near future."

There are plenty of halal-food restaurants in China, particularly Beijing, which is home to 200,000 Muslims.

The Thai Commerce Ministry has encouraged small and medium-sized entrepreneurs to explore the halal market by joining its trade trips abroad. The ministry also advises manufacturers to make products and run businesses in strict conformity to Islamic rules.

In Thailand, halal products are processed in accordance with regulations of the Central Islamic Committee of Thailand for Halal Food Standard B.E. 2544, which covers production plants, food products, raw materials, employees, transport and storage, distribution and services.

The Halal Science Centre at Chulalongkorn University says the world's Muslim population in 148 countries is now 1.9 billion or 29% of the total world's population.

The world's Muslim consumers include 8 million in North America with a market value of $1.75 billion per year, 18 million in Europe ($2.63 billion), and 200 million in Indonesia ($2.19 billion). Thailand's share in halal products market is estimated at $330 million or 0.057%.

Dr Reilly suggests Thai companies catch up the market trends of halal products to enlarge its market share.

His study shows that the market of the younger generation is getting bigger and products that fit into their new lifestyle with appealing packaging and labelling are in high demand.

These consumers work longer hours and do not go to markets or cook very often. Therefore, frozen meals, packaged food and microwave dinners are in high demand.

"Open your mind to this possibility, look for partnerships and think about halal-based beverages that appeal to the massive untapped youth market of teens and young Muslim professionals," he said, offering tips on a market where great potential still exists.

(Bangkok Post)

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Alfalah Consulting - KL: www.alfalahconsulting.com 
Islamic finance consultant: www.ahmad-sanusi-husain.com 
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

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