Interview with Wajih Bizri, President of International Chamber of Commerce Lebanon, President of Sipes Group
As the President of the International Chamber of Commerce Lebanon we shall start with the overall picture. Security and political stability are indispensable pillars of driving investment climate in any country and Lebanon is no exception. Given the current situation in the country and surrounding region, how would you evaluate doing business in Lebanon in 2015?
We have to be transparent and very realistic at the same time; to say that we are expecting some foreign investments to come in at this time would be exaggeration. If we want to be realistic, looking at the present atmosphere in the area in general and in Lebanon right now, there are political and security problems all over the area. We believe Lebanon is much better off than the surrounding region because at least security-wise it is safe, there are no worries in that sense but in terms of political stability, it will take more time, especially with what is going on in the area.
Foreign investors will not come if the whole area’s situation is not solved or if Lebanon’s situation is not solved; we have to wait on that. The only thing we might see in terms of foreign investment is Lebanese businessmen who are living in the diaspora outside Lebanon, whether in Africa or in the Gulf area, coming back and investing some of their money in Lebanon.
How is the current status quo impacting Sipes Paints in particular?
The market is not bad, the markets are stable. The current economic situation is acceptable. We could have been in a much better situation if we had some political stability but in general not all sectors are affected. The major sectors that are being affected by the instability are firstly tourism and then trade and industry. Tourism is affected because for the past few years we have not been seeing the Gulf tourism that we used to. If you look at hotels, their vacancies are very high. Trade is also connected; there has been a decrease in trade levels especially in high quality trade. This is also related to the fact that the Gulf tourism is not here. Industry has been affected only recently when the roads between Syria and Jordan were closed so industries were not able to export anymore. If they did continue to export, they had to do so via the sea which is much more expensive than the usual ways they used to export to the Gulf area and the Arab countries which are the normal market for the Lebanese industries.
We have to be transparent and very realistic at the same time; to say that we are expecting some foreign investments to come in at this time would be exaggeration.
In fact most sectors are now being affected. That is why you see all of the indications that the economy is not doing as well as it used to. We still have some strong points in our economy, particularly the remittances that are coming from our Lebanese diaspora all over the world. This has been a basic pillar for the Lebanese economy for the past ten or fifteen years. We hope things will get better in the area because the situation in Lebanon as you know is related to the whole area. At least as long as we have security we think we are better off than many other places in the area.
Before we move onto talking about the company, could you speak a bit about the Chamber itself and its current activities? What is your strategy?
At the International Chamber of Commerce we try to function as much as we can in a normal way. We have three basic things that we stress. Firstly, the International Chamber of Commerce in Lebanon is rebated directly through the International Chamber of Commerce of Paris that means we are very much involved in arbitration problems in the area. So far the Lebanese International Chamber of Commerce is the number one chamber of commerce in the area that can nominate arbitrators for problems that are taking place in the Middle East, whether it is problems between the contractors and the developers or whatever it may be. The International Chamber of Commerce in Lebanon is the number one chamber of commerce in nominating arbitrators. Secondly, we try to do as much work as we can to relay all of the updates in the terms created in the International Chamber of Commerce of Paris to the banking sector in Lebanon. Thirdly, we have bilateral agreements between business councils, for example Lebanese and Greek business councils that are related with many other companies. We try to encourage Lebanese business people and foreign business people to inter-relate, not only to do business in Lebanon but also to do business in the areas that we have Lebanese diaspora, namely Africa and the Middle East. That is why we focus a lot at the International Chamber of Commerce on these councils in order to reach our objective. So far we have been very successful; we have seen many joint ventures being created with Lebanese companies and foreign companies to create new projects, not only in Lebanon but also in the Middle East and in Africa.
So you help in the interconnection between businesses? So let’s say an African company with a Lebanese owner in say Ivory Coast would be linked to a Lebanese...?
No. For example we have a Lebanese Turkish business council and we have a Lebanese Greek business council, so we bring together Turkish businesses with Lebanese businesses whether they are living in Lebanon or in the diaspora. If it is in Lebanon we create a joint venture in Lebanon, if they are in the diaspora we create a joint venture between a Lebanese business in let’s say Nigeria and a Turkish business or a Greek business. These business councils are the platforms we use to inter-relate these businesses together.
How do you get your revenue?
Membership. We only invite members.
So the biggest revenue comes from the membership or from the arbitration?
No. The income related to arbitration goes to ICC Paris, we don’t touch it. It is like a club, we provide services and these services are only provided to our members.
Let’s now focus on the paint sector. What are the trends for this year?
From our experience being present in around 7 or 8 of the countries in the Middle East, with investments and facilities in those countries we can see that the whole area is experiencing problems, especially because all of the places that we are present in are places where the Arab Spring passed by and has hit these areas hard. Like in any other sector at this time in the Middle East, people are trying to solve the problems rather than putting in new investments. Nobody is even thinking about new investments. They are all trying to work out whatever problems they have. The business is there, although it is a bit lower every year. We have seen a decrease ever since the Arab Spring started and so now we are looking at a continuous decrease each year. Nonetheless, taking into consideration what is happening in the Middle East it is acceptable. The whole sector is moving in an acceptable way.
How does Sipes Paints fit into the market? Where do you stand?
The first Sipes Paint production company was the first paint manufacturing company in the Middle East. It started manufacturing in 1956, so for what we know as paint today, Sipes was the first regional company to start in Lebanon. Then we started having plants outside of Lebanon but before Sipes Paint in Lebanon, the paint we know today didn’t exist, there was something else called paint but it was completely different to what we call paint today.
Are you currently the market leader?
We are the market leader in Lebanon and we have different facilities in different countries all over the Middle East.
How do you compete in the market? What do you do to keep your position as leader?
We try to keep up to date in our technology especially and also in our quality. This is what the consumer wants; they want high quality at reasonable prices. This is what we try to offer to our customers all the time. We feel we have been successful in that for the past sixty years in Lebanon. Each company we have tries to see what the customer wants in that country and tries to produce according to the norms and to the tastes the consumers have and really tries to provide what the consumer wants. The important thing is to feel that you have a tailor made product or service for the customer, not just to produce a standard thing and tell the customer ‘this is what I have, you have to take it’. You have to understand each country because tastes are different; products consumers want are different so you have to tailor make the quality for the customers’ tastes and needs.
Who are your consumers?
Each market is completely different. So you may ask, why do we have so many factories in a very small geographic area? It is because each market is different. In Lebanon it is one thing, but in Syria for example the consumer is different. For example in Lebanon the final consumer and the most important factor are ladies. They are very important in choosing the product. While in Syria, where we hope the war will be over and things will get back to normal, the important person in choosing the paint is the painter. They are more important in choosing than the user. So really you cannot just set a standard and say ‘I want to produce and this is the product I have, come and take it’. That is why our philosophy and strategy is to have production facilities in each country to cater for the needs of the consumer in that country.
What about the distribution of your products?
It varies from one country to another. In Lebanon we have representatives of the company in each village or city and dealers who are selling our products. We don’t open our own shops because we have the philosophy that we don’t want to compete with our dealers. We are a production facility. Each place is played differently.
Let’s now talk about the strategy for the group. Is it towards expansion? Where are you heading?
We are trying to expand in two ways; firstly we are trying to expand geographically in the Middle East and Africa in manufacturing our products. At the same time, in some countries we are trying to expand into industries that are related to what we do. For example in Egypt we want to cover carpet paint, furniture paint, industrial paint etc. It won’t be manufactured all in the same factory, you have to create different facilities to manufacture, especially because of the construction chemicals it is a completely different thing. We try to have the same philosophy everywhere. First we try to expand as much as we can in what we do in decorative paint, and then if we see we have reached the limit there, we try to expand in the related industries that I mentioned earlier.
Does that mean that you are still looking for partners?
No, normally other companies try to approach us, so if we don’t exist in one country normally we have people approaching us asking us to come as a joint venture. As long as we don’t want to move very fast into many places, we try to take one project at a time. So far it is fine.
What is the next country for your expansion?
Now we have started in Nigeria. It is a big project for us.
You work in the head office so you have a more global vision, what makes you lose sleep?
Since the Arab Spring started we haven’t slept! We haven’t been accustomed to it. We used to wake up every morning and think about what we want to do next, now we don’t want to think about it, we have to think about how we can solve the existing problems in all of these countries because it is unbelievable the problems that we face every day. It is a nightmare.
What are the challenges you face in Lebanon?
As long as we have security, things are fine. We are happy with things the way they are today. We don’t want to expand; we don’t think we should expand in quantity. As long as quality-wise we are the market leader we believe that is what is important.
To conclude, what is your vision for the next two years?
As I told you, with what has been happening in the area over the last few years, we are trying to consolidate what we have and trying to solve the existing problems. We feel that if this Spring finished and we had everything in place, that would be good enough for us. We are not looking for more than that.