New book ‘Marketing Halal’ to help entrepreneurs in the Halal industry

Authored by Liow Ren Jan

KUALA LUMPUR, The global halal market will once again look to Malaysia as a key mover of the halal industry with the publication of Marketing Halal: Creating New Economy, New Wealth, an informative book by Liow Ren Jan, which is fully endorsed by the Halal Industry Development Corporation (HDC). The book which is a publication of MPH Group Publishing was launched by the CEO of HDC, Dato’ Seri Jamil Bidin at the MPH Carnival 2011 in Mid Valley Exhibition Centre.

In his foreword, Dato’ Seri Jamil Bidin said that the book will once again serve to position Malaysia as a thought leader in the global halal arena. This would be an excellent read for entrepreneurs or academics who are interested in halal marketing. It was noted in the book that halal authorities such as the HDC are more than encouraging for entrepreneurs venturing into the halal business.

The author, Liow has always envisioned writing a book of international interest that would form as a reference point for companies and individuals around the world to understand the essence of Halal, and ways to marketing halal products and services in order to generate wealth for countries and individuals.

Marketing Halal documents what the author has learned through real-world, practical experiences and his journey in starting up, running and marketing a halal food business. The author hopes this book will inspire others to write as well, creating literature that will assist the development of the halal industry into a driving force that creates new wealth and a new economy.

“I truly believe in the promise of Halal and I want to bring this forward to Muslims and non-Muslims alike. It is the promise of quality, food safety, hygiene and fair trade in Halal that I believe will help the industry cut across a wider spectrum of consumers of various ethnicities globally. This book will help the entrepreneur navigate through this complex industry, and aims to inspire through its various case studies and success stories” said Liow.

In his speech, the author Liow said when he first started, he often wondered whether a non-Muslim going into the halal business would be accepted. Venturing into a complex industry driven by a religious need was an eye-opener and he has learned much from his peers in the industry as well as through his own experience in marketing a Halal ready-to-eat meal brand, Sri Kulai.

Liow Ren Jan, is the founder and CEO of AYS Sdn Bhd, the manufacturer of Sri Kulai ready-to-eat meals, which are available in major supermarkets throughout the country as well as in airlines, private hospitals, restaurant chains and tourist destination operators. Since the company was founded in 2008, it has won numerous awards, including “Industry Excellence Awards 2010: Product Excellence” from the Malaysian government and “Best Halal Product Award” presented at the World Halal Forum in 2009. Liow himself was awarded “Outstanding Chinese Business Leader” at a ceremony held in Beijing in 2010 to honour top Chinese business leaders from all over the world.

Marketing Halal is now available at all major bookstores in Malaysia and is retailed at RM32.90

ABOUT THE BOOK

Title: Marketing Halal: Creating New Economy, New Wealth
Author: Liow Ren Jan
Publisher: MPH Group Publishing
ISBN: 978-967-415-002-0
Price: RM32.90

Book highlights:
a. fundamental rules to marketing Halal successfully
b. The bigger concept of “Halal Toyyibban” – permissible & wholesome
c. Global market size for Halal products & services

d. The “Do’s” and “Don’t” by successful industry players

Islam-centric branding and marketing essential for global businesses, says University of Greenwich expert

Jon Wilson will chair Total Marketing, a conference of marketing professionals in Dubai next week, followed by a workshop on Islamic Marketing and Muslim Consumer Behaviour. He is Senior Lecturer and Course Leader in Advertising & Marketing Communications Management in the university Business School; the new editor of the international Journal of Islamic Marketing; and co-author of award-winning research on shaping Halal into a brand. Jon has recently completed a tour of Indonesia, the world’s most populous Muslim nation, speaking at an international conference, universities and businesses. He also hails Dubai, Kuala Lumpur and London as being hubs offering benchmarks and the potential for further development.

“Muslims are an often neglected and misunderstood group of consumers,” Jon says. “Businesses have not yet thought through in sufficient depth their marketing, branding and PR for this section of the market.” He argues that businesses need to develop a greater understanding of different Muslim markets, providing a broader range of products that move beyond the traditional focus on “meat and money” such as Halal foods and shariah finance.

Jon says that non-Muslim consumers could also feel a strong affinity with Islamic-focussed products, if marketed properly. He believes this can open up new areas for product development and help to bring insight into other areas of marketing where there is a high degree of emotional connection between consumers and brands beyond conventional interpretations of faith and religion, for example areas such as sports and music.

“Islamic consumerism will throw up new issues and paradoxes,” says Jon.  “Can a super-expensive designer hijab with Swarovski crystals be consistent with the idea of ‘modest fashion’? Or, can there be such a thing as a ‘luxury’ Hajj pilgrimage?”

He has particular interests in the rapid growth of the vibrant Islamic youth market; over a half of all Muslims are under 24. “Increasingly, their consumption, religious views and opinions are decided through empowered consensus, using social media and the internet. This approach is drawing Muslim behaviour towards conspicuous consumption, rebellion and leaderless collective individualism.”

He predicts that products targeted at Islamic consumers will come to appeal to wider markets across increasingly blurred ethnic divides, in the same way that food, fashion, music and other commodities were once targeted at Afro-American and Caribbean communities and have now been adopted by the mainstream.

For more information:

Total Marketing conference: www.iirme.com/totalmarketing<http://www.iirme.com/totalmarketing>

Workshop on Islamic Marketing and Muslim Consumer Behaviour: www.iirme.com/totalmarketing/agenda/post-summit-workshops<http://www.iirme.com/totalmarketing/agenda/post-summit-workshops>

“MASS media is the medium that carries the message to the masses and is responsible for controlling our conclusions.”

I’d like to dissect the above quote and see how the “transmission of message” is being coded and decoded by the Western media with respect to the halal industry and Islamic finance.

Neither the halal industry nor Islamic finance is time sensitive, hence, western/conventional media business editors often “bump” halal/Islamic stories for another day, regard them as insignificant or used only during “dry” periods – as they call it.

“Where is the Beef?” is the first question editors ask and the onus is on the author to convince them that there is indeed a story to be told and shared.

Halal/Islamic have been positioning themselves as not just for Muslims, but also an alternative to conventional, hence, the industry players must understand that they are benchmarked to developments in the conventional capital markets. While the merger of “faith and finance” and “food and faith” are intellectually interesting, it’s about business and real economy, as Tun Dr Mahathir Mohamad explained during a recent trip to South Korea, where certain evangelists were linking terrorist financing to Islamic finance.

Thus, as halal/Islamic are positioning themselves as “user agnostic”, business proposition and solution, yet the industry developments are not aligned, may be still embryonic even after four decades.

For business editors, here is a sample why halal/Islamic finance stories often don’t make it:

* M&A deals are commonplace in all the 10 economic sectors of an economy, many are cross border, and sizes of deals, cash/stock, are into billions of dollars. But, where is M&A in halal/Islamic finance? For example, consolidation among Islamic banks, in over banked markets like the UAE and Malaysia, is encouraged to achieve size, yet, consolidation seems like the extremely sensitive national security issue.

* The world is concerned about “real time data” that provide a pulse on how markets are performing in the US (S&P 500), World (MSCI World), technology (Nasdaq), Europe (STOXX), UK (FTSE), etc. Do the present syariah-compliant equity indexes provide a similar pulse to Islamic equity capital market(s)? No, for the above counterpart Islamic indexes, the dominating compliant compa-nies are western based, like Apple, Pfizer, ExxonMobil and not syariah-based (or by-law companies) like Al Rajhi, KFH, Bank Asya, Bank Islam, Dubai Islamic Bank, Mee-zan Bank, etc, as the former companies have no link to Islamic equity markets.

* The world has economic indicators, inflation, unemployment, trade numbers, etc, what and where are the Islamic economic indicators, as espoused by our Islamic economists for the last 40 years? Some/many will be same as “conventional”, however, there must be some that are different and meaningful! For example, as a guest speaker at IIUM (International Islamic University Malaysia) and INCEIF (International Centre for Education in Islamic Finance), I’ve been encouraging applied over academic research, as we need to have data that exhibits pulse of halal/Islamic.

The business editors are interested in Islamic M&A deals (Aston Martin), western entity issuing a sukuk (GE or IFC), syariah-based indexes, and relevant Islamic indicators, yet these are still work in progress. Obviously, if there are controversies, that are material, everyone is interested to break the news. It seems the news media are, for the most part, the bringers of bad news as bad news gets higher ratings and sells papers.

The same editors are simply not interested in another Islamic bank branch opening, or another fast food franchise with halal menu certified by a one-man shop, Islamic fund launched (unless very large), entity winning an award, etc. The above halal/Islamic finance news is competing with comments from central bank on inflation, growth, hostile acquisitions, stock exchange making a friendly bid for another exchange, the IMF news, and so on. The latter is what news audience want to read as it impacts their business or provides opportunities.

PR Firm

A possible way forward to address the message to the masses is to establish a well capitalised, dedicated and professionally staffed Islamic finance/halal communications/public relations firm with own offices (not rep offices) in the major Islamic finance/halal hubs of Malaysia, Dubai and London.

Its potential clients are the 500 plus Islamic financial institutions, banks, Takaful, iREITs, leasing companies, etc, plus government wanting to be a hub, industry bodies (IILM, IFSB, AAOIFI), major Islamic conferences (GIFF), etc. Surely, a trillion dollar industry (Islamic finance) and US$640 billion (RM1.92 trillion) industry (halal) need to have or hire a dedicated communications company to get the right corporate messaging out, build their brand awareness and loyalty, personality profiling, gain publicity, undertake crisis communications, train executives for media interviews, etc.

First Halal Suggestion

Since Islamic finance is miles ahead of halal industry in many areas, from global industry bodies to dedicated Islamic windows/units of large law firms, banks, consulting and accounting firms, index providers, etc, it is only natural for Islamic finance to take the the lead. For example, an Islamic finance/halal industry body needs to be established with government and private sector founding shareholders. Its mandate would be to coordinate and facilitate the convergence between the two interrelated sectors.

Conclusion

In order to capture the attention of the Western media editors, the IF/halal messages must carry the following sound bites:

* News is not repeating what is already known, Islamic banking is about prohibition against interest and pork or 500 Islamic institutions in 75 countries and growing at 15 per cent per annum, its wasted real space.

For halal industry, news about ingredients, certification, stunning, etc, is not as important as, say, large companies from Brazilian, Australian, and New Zealand, that sell billions of dollars worth of halal foods to the GCC are setting up operations in Abu Dhabi, Qatar or Saudi Arabia or issuing a Sukuk for construction of a factory for halal products.

* News is a business opportunity, job/wealth creation and improvement of lives for their readers

* News is about transparency of operations, access to senior executives, and timely submission of financial statements.

These type of stories would definitely provide “hook” to the (halal) beef !

The writer is global head of Islamic finance for ThomsonReuters based in New York

But, how best to describe innovation in Islamic finance? Famous quotes often capture succinctly the essence of the issue, and, for innovation in Islamic finance, the below quotes are a good beginning.

“Sometimes when you innovate, you make mistakes. It is best to admit them quickly, and get on with improving your other innovations.” – Steve Jobs.

“Innovators are inevitably controversial.” – Eva Le Galliene.

“Innovation is the ability to see change as an opportunity – not a threat.” – Unknown.

So, from the three quotes, come three questions: Are Islamic hedge funds a mistake? Is sitting on 80 syariah boards controversial? Are Islamic derivatives an opportunity to bring meaningful risk management tools to bring “authenticity of change”‘ to Islamic finance?

It took the murabaha-centric Islamic finance nearly 40 years to reach US$1 trillion (RM3 trillion) benchmark, and projections are that it will cross the US$2 trillion threshold by 2015.

Obviously, innovation will play a large part, but I would hope that its “outside the box” thinking on innovation that results in inclusion of the financially disenfranchised, funding and financing non-traditional areas, and human asset capacity building to build knowledge based economies in the economically established Muslim countries like Malaysia, Indonesia, Turkey, Saudi Arabia and UAE.

Today, innovation in Islamic finance seems to mean better product structuring. A recent email shot campaign from the respected UK’s IIBI, Institute of Islamic Banking & Insurance, about a workshop stated: Innovation in product structuring is far more important to Islamic financial institutions than their conventional counterparts to keep the momentum of growth and development, and to effectively meet the needs of their clients with diverse risk/reward profiles.

Islamic finance should not be mainly about product pushing, even if it means more efficiently priced products.

Innovation in Islamic finance should also be about inclusion of the non-bankable, Muslims and non-Muslims. To date, Islamic finance has reached, at best, 2-3 per cent of 1.6 billion or 48 million Muslims, while the halal industry has not only great reach, including non-Muslim countries, but deeper penetration.

Query: what can Islamic finance learn from halal industry?

There are many areas in Islamic finance requiring innovation, and the emphasis will be on the following five: One, Islamic micro-financing and, my preference, micro-funding, are important part of impact investing. The “man on the street” financing/funding needs to be prioritised at a policy level for those (Muslim) countries that have declared themselves Islamic finance hubs. Yes, there are challenging initiating, implementing and monitoring costs, but this would start to address the (1) moral and justice (public good) argument for Islamic finance, (2) build bridges to the non-Islamic entities involved and (3) establish the foundation for future Islamic finance customers.

Two, Innovation in Islamic finance is about financing areas that contribute to building a knowledge based economy based upon and linked to real tangible and intangible/usufruct assets. For example, in a number of Muslim majority countries there are the 2020 and 2030 Visions Plans, which entails pushing for higher per capital income, migration towards service based economies, and focus in areas like food security, alternative energy, healthcare, and so on.

Obviously, these are all syariah-compliant/friendly areas and some, like food security, are ideal opportunity for the US$640 billion (RM1.9 trillion) halal industry to contribute, if not lead, the development. In Abu Dhabi, the world’s first zero-carbon, zero-waste city, Masdar, is being built, one wonders how much, if any, is done via sukuk or Islamic syndicate loans. Yes, it’s a real estate project, but the technology is world class, and it will have a spill-over effect locally.

Islamic private equity and venture capital needs to become a priority amongst the thought leaders of Malaysian Islamic banking. It’s about providing meaningful patient seed capital that is professionally managed for selected sectors resulting in technology acquisition/transfer, incubated in the tech parks or the work in progress halal parks and eventual IPO on Bursa Malaysia. One success story will have the Islamic banks in the GCC, presently sitting on mountain of liquidity, knocking on the Malaysian corridors.

Third, Islamic finance needs its own innovative financial indicators that establish blueprints for understanding the pulse of the industry and starts the de-linking from conventional finance. For example, from syariah-compliant equity indexes to syariah-based, from using Libor as a reference rate in pricing credit to a Syariah-Compliant Inter-Bank Offering Rate (Scibor) based on murabaha/wakala, and so on. The Islamic cost of capital may be different, but it needs to be confirmed.

Fourth, consolidation is innovation as it would bring economies of scale efficiencies and reach to better compete with conventional banks, not just their Islamic windows/subsidiaries. It is well acknowledged that Malaysia, like UAE, is Islamically overbanked, and it may result in destructive competition. For example, Malaysian bank holding companies need to be encouraged to spinoff the Islamic subsidiaries and list them on Bursa Malaysia, as it will entice international Islamic investors, start process of syariah-based index, and possibly result in market led consolidation.

Finally, human skill development in the Islamic finance chain from the bank to scholars to intermediaries to customers is probably the most important innovation-cum-authenticity. It begins the process of focusing on the merits of the offering that would satisfy a “conventional” financial user, i.e., the cross sell, rather than the continued emphasis on its “Islamicity.” Thus, in removing the “premium” from Islamic offering, it will make it conventionally efficient.

To quote Steve Jobs again, “Innovation distinguishes between a leader and a follower.” Innovation implies taking a holistic and inclusive approach that focuses on shifting the paradigm to a new level, now, will Malaysia innovate or product push towards Islamic finance 2.0?