11 of October 2010 / Report by Malte Oberschelp/ interview with Nasyr Birkholz

About one thing everyone agrees who knows the country well: As far as consumer goods are concerned, almost everything is lacking. The Embargo, the War and the following years of instability have diminished the range of products.

Iraq`s own production of products of daily use is recovering only slowly as well as exports from foreign countries.

Germany has exported in 2009 goods worth 580 million € to Iraq, it used to be goods worth 4 Billion € in the 1980ies. During the Embargo especially the Chinese took advantage of the market gap that was created due to the withdrawal of European and American competitors.

Also now there are plenty of Chinese inexpensive products on the market, but since the Iraqi wage level gradually increases and a small but affluent middle class has formed, also higher priced quality products are demanded. From this development the big international consumer product enterprises are benefiting from. Some of them already maintain production and distribution centers in neighboring Arabic countries, which gives them cost advantages against European exporters.

As a center for trade with Iraq the free trade zone Jebel Ali in Dubai plays a main role here. Also Turkey is a strong competitor, profiting from short distances and regional know how especially in the Federal Region of Kurdistan.

The Turkish Imports to Iraq with 5 billion € are already higher than the German imports of the fat past years .Building a production facility within Iraq for most manufacturers is not an issue. The exceptions are the big Cola enterprises, which operate their own bottling plants in the country.

German middle sized companies currently are hardly producing any consumer goods for the Iraqi market. The risks and costs are much higher than with exports of water and oil engineering, Construction Material or mechanical parts. While a few public authorities or trade partners are reliable in this field, in the consumer product market the notoriously unpredictable end consumer plays the main role.

All this in a country with a different language, a different culture and different mentality. To reach the final customer, it therefore needs a strong inside knowledge of the market, a reliable distribution network and targeted marketing. That costs money and requires an Iraq partner, who can reduce numerous risks for the Exporter. “For a manufacturer, especially from the consumer goods industry, it is very difficult with only the controlling from Germany, without the organization on site, to get the goods to the customer “, says Nasyr Birkholz. He lives in Germany since 1988 and is the CEO of Birkholz International, which is specialized for Iraq. He also founded the Distribution and Marketing Company in Iraq Somerland.

“Previously companies went straight into the Iraqi market and failed, because they underestimated the situation there, said Gelan Khulusi .Born in Bagdad, with a German passport, he is presiding the German Iraqi medium sized business association Midan and is the General agent for Bitburger in Iraq since 2004.

Without a partner in the country it is not working, in spite of the difficulties finding one and that there are not many marketing companies yet. “This is still all in progress, until one can find a marketing company meeting German understanding and standards, it will take some time,” says Nasyr Birkholz, who is the exclusive distributor for Schwarzkopf & Henkel products in Iraq.

Usually the Iraqi Partner companies are taking care of marketing and Distribution at the same time, while the main target is on the Distribution. Concerning marketing, the presence before a selected audience on exhibitions and for presentations is very important.

Apart from companies like adidas, Bitburger or Schwarzkopf & Henkel, German consumer goods manufacturers are still under-represented in the country.

However those examples show, that despite the existing uncertainties , as the security , the infrastructure , language and the culture , one can do very good business in Iraq. “German products still have a very good reputation in Iraq, one associate them with Quality and high technology, says Nasyr Birkholz Those, who analyze the market and delivers good quality, can achieve higher prices than the competitors from China or Turkey. Or define a niche that is not occupied by any other competitor. There are tremendous opportunities in Iraq for sales and profit, “he says. Or as Gelan Khulusi expresses: “Iraq is a huge market – and it is lacking everything”.

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