CAIRO: “Are these bad times? The obvious answer is yes. So what do we do? Mohamed Sultan, general manager of Procter and Gamble Egypt, asked.
“We focus on fundamentals that . will take us through bad times, he told an American Chamber of Commerce conference Wednesday. “Fundamentals that minimize losses and ensure a strong comeback when these tough times are over, he added.
When the financial turmoil first erupted in the US, several policymakers, business leaders and bankers in Egypt argued that the echoes were drumbeats from a far away land.
Now that the domino effect is knocking down doors, financial gurus are saying that no country – including Egypt – is immune from the crisis.
As the talking heads continue debating the ripple effects of what is deemed the worst financial crisis since the Great Depression, experts at Wednesday’s conference provided some time-tested strategies to help businesses weather the financial storm.
One way a company can thrive while others are fighting for survival is to invest in product innovation, Sultan said.
“Consumers are becoming more quality conscious, he explained. “So, when you offer consumers better quality products, you will sell more and increase your market share because you continue to innovate products in good times and bad.
As the deepening global economic crisis tests the survival of the fittest theory, investing in equity building is another strategy for a business to remain at the top of the financial food chain.
“Strong equity is the shield that protects us during bad times. My advice is keep investing in communication and advertising through bad times, Sultan argued.
“Time has proven that companies that continued to invest in advertising during previous recessions made much bigger sales after the recession was gone.
Because of advertising, companies sales continued to outperform inflation, he pointed out.
Consumers spend on products that give bigger bang for the buck, so a powerful marketing tool would be to give them more value for their money, Sultan added.
“Value is not necessarily prices. You can [contemplate] an interesting way to let consumers realize that they are getting better value for their money.
That way, you’ll be significantly ahead of inflation, he clarified.
“For example, you can introduce value by telling your consumer; if you buy this washing machine soap, you will save on electricity.
Trade Minister Rachid Mohamed Rachid recently trimmed forecasts for economic growth to below an annualized 5.2 percent in the first six months of 2009 after 7.2 percent growth in the 2007/8 financial year.
Tourism and the Suez Canal revenues were the first to feel the pinch.
“The reality is that every sector will be affected by this crisis, said Galal El Zorba, chairman of the Federation of Egyptian Industries.
“What we need to do now is to create a very investment-friendly environment that will stimulate growth and create jobs, he added.
“Do we have an environment supporting investment today? No.
He pointed to high lending rates and lack of credit to businesses. “Countries worldwide have been lowering interest rates to mitigate risk and stimulate investment. Our country today has very high interest rates and very low access to credit. That doesn’t support or help investment.
The central bank raised interest rates six times last year to combat inflation that shot up to a 16-year high of 23.6 percent in the year to August. Its rates currently stand at 11.5 percent for deposits and 13.5 percent for lending.
Several analysts expect the bank to cut interest rates this year as inflation starts cooling off (dipping to 18.8 percent in December) in a bid to stimulate growth.
“Our only solution to survive this turmoil is to [enhance] competitiveness, stated Zorba.
“Our biggest challenge will be in human resources. In Egypt, companies are [still] suffering to recruit the right people to do the job.