Indian competition is expected to increase in Sri Lankan markets with permanent peace. Sri Lankan companies are advised to invest in Intellectual Property Rights (IPR) like brands/trade marks, copyrights and patents, to defend domestic market share and also to expand into India.
“You will not continue to have this environment of benign competition in Sri Lanka. Over the next one to two years, there will be a serious entry of Indian brands into Sri Lanka, and also from other countries. The peace dividend will bring this challenge of increased competition for Sri Lankan companies,” the Managing Director of Brand Finance, India, Unni Krishnan, told the Sunday Times FT, at a breakfast meeting organised by the Institute of Chartered Accountants of Sri Lanka this week. Brand Finance is a company providing specialised, brand building services in 22 countries including Sri Lanka.
“Tourism will boom with peace in Sri Lanka. So Indian hotel and tourism brands are interested in entering. Others, like telecommunications companies, banks, insurance companies and retail sector companies will also be interested in Sri Lanka,” said Mr Krishnan.
Investing in intellectual properties (IPs), are seen as one of the most effective ways for Sri Lankan companies to defend their local turf.
“Because many Sri Lankan companies may not have the size and lower-cost advantages compared to Indian companies, one of the best defences is to use IPs,” said Mr Krishnan.
For instance, investing in branding, is expected to help retain consumers even when competition increases. Trade marks/brands and other IPs, like patents, says Brand Finance, protect market share and will also allow companies to negotiate better deals with banks and potential corporate partners. These IPs are in fact considered intangible assets, that can be leveraged to increase the market value of a company.
At this point banks are seen as the best at brand building in Sri Lanka. State banks, Bank of Ceylon and People’s Bank, came out as number 1 and 2 in a ranking of ‘Top 100 Sri Lankan Brands in 2009,’ by Brand Finance.
Local telecommunications companies are also heavily using branding to hang on to market share in the face of increasing competition. Dialog Telekom for instance, was ranked as the number 3 brand in Sri Lanka in 2009.
Brand Finance says some Sri Lankan sectors can also take the competition into Indian markets, with good brand support. “Sri Lankan tableware for instance, are of very high standard. India does not offer this quality or designs. So there is very little competition inside India.
But India has a large and growing middle class population that will be interested.
About 40 new hotels will also be entering India over the next year. They will also need these products. So the Sri Lankan tableware sector should look into entering India,” said Mr Krishnan.
With India also slowly opening up to foreign competition, many Indian companies themselves are backing up their physical assets with intangibles like branding, says Brand Finance. |
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