Shaping Local Compliance Codes
Bringing an international manufacturer together with local standards regulators helped to reform a compliance code ending damaging interruptions to the client’s exports to Iraq.
Compliance, market entry strategy, business strategy
When international businesses successfully enter and establish themselves in emerging markets, knowledge needs to flow both ways.
An FMCG company; part of a large and well established major regional group was suffering from interruptions in the supply chain of the export operation of their beverage products into Iraq due to noncompliance.
Iraq is the highest growth market for the beverage manufacturer and any prolonged interruption to its trade could have a significant effect on the top line.
In the first instance, the only remedy was to become compliant with local regulations and standards as per the Central Organization for Standardization and Quality Control (COSQC) which is a member of the International Organization for Standardization (ISO) to ensure smooth flow of goods to their local channel partners.
This involved a carefully prepared plan of action that included organising and carrying out a one-day workshop at the offices of COSQC in Baghdad to which insight to modern manufacturing and production techniques was provided by subject matter experts who travelled to the workshop from the company’s main production facility.
The result was that COSQC revised one of its codes relating to a specific standard of a particular type of beverage. The company’s product became compliant, and interruptions ceased.
Over the long-term, the company recognised the potential for investing in a production facility inside Iraq. Vzir helped conduct and prepare a fully comprehensive SWOT and PESTLE analysis to determine the best route to achieve this, followed by a feasibility study, including thorough market research.
Upon the board’s approval of the business plan, an application was submitted for an investment license within the national investment commission, and a local company was set up as a special purpose vehicle.
As a result of our support, the beverage manufacturer was able to mitigate export disruption and protect its top line.
We helped the company set up a local entity – owned by the Group. In the process, the company built an essential relationship with the National Investment Commission which paved the way for providing an investment license.
Currently, a factory for local production is underway with commissioning expected in the first half of 2020. Once production starts locally, the company will benefit from a 10-year tax holiday.