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Analysis of the halal industry

2355 words (9 pages) Essay in Marketing

5/12/16 Marketing Reference this

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The world Muslim population is growing to a total of 1.6 billion people. By 2025, Muslims are expected to account for 30% of the world’s population.

As for halal products, there are about 1.5 billion consumers, This means that one out of every four human beings consumes halal products. At present, Southeast Asia and the Middle East are the two strong markets for halal products (Riaz, 1998).

As at 2008, the Halal Industry has amounted to USD2.1 trillion. This is certainly an important market to tap into. The Halal industry which also includes Islamic finance is estimated to be worth between USD200 billion to USD500 billion annually, with an annual growth rate forecast of 12% to 15% for the next 10 years.

Marketing efforts to supply certified halal products throughout the world are gaining momentum. Demands for Halal-certified products have increased exponentially not only because the Muslim consumer base is growing but also due to the fact that Halal products now appeal to a broader spectrum. Halal has become the new benchmark for safety and quality assurance. The growing appeal and benefits of this niche market is significant. Major non-Muslim countries like Australia, New Zealand, South Africa, Canada and the U.S. have already established their local production for the Halal market.

The key driving factors for the projected growth of the Halal market are as follow:

Growth in the Muslim population, the primary market for Halal food

Rising incomes in primary markets for Halal food

Increasing demand for safe, high quality food in primary markets

Increasing demand for greater variety in primary markets

Incidents of food marketed as Halal but failing to meet Halal requirements

Development of the Asian Halal Market

Asia has the largest Muslim population of any given region, but the population has modest per capita incomes, and hence lower total food consumption than other areas. For example, high population countries like India and Pakistan have relatively low consumer incomes and consequently exhibit lower per capita protein consumption. Despite lower income levels, this region has been at the forefront of capitalizing on the growing Halal market.

Malaysia, Thailand, Singapore, the Philippines, Brunei, China and India have all taken steps to tap into the global Halal market. For instance, the Singapore food industry has also taken a number of steps towards becoming a Halal hub, including an advertising campaign in the Middle East. Malaysia has also designs on becoming an international Halal hub and its government has taken a number of measures to support that objective including the establishment of the Halal Development Corporation. Thailand has moved to become a recognized Halal centre of excellence in science and testing.

Brunei is currently co-operating with Australian companies in order to combine its role in the Muslim world with Australia’s track record in safe, high quality food production. The Chinese Halal industry is growing and is expected to expand its role in the global market. At the moment, the key advantage of the Chinese Halal industry is access to cheap labor. China recently signed a Memorandum of Understanding with the European Commission (EC) and already has several EC-approved companies ready to export Halal products to European markets. Indian exporters are attempting to gain recognition through the achievement of HACCP, ISO and Halal certification.

Halal Market in Singapore and the internationalization of Singapore’s Halal Services

Majils Ugama Islam Singapura (Muis), which is also known as the Islamic Religious Council of Singapore, is the Islamic authority in-charge of Muslim affairs in Singapore. Muis was established as a statutory board in 1968, when the Administration of Muslim Law Act (AMLA) came into effect. Muis is to advise the President of Singapore on all matters relating to Islam in Singapore. Among other things, Muis provides Halal Certification services.

Muis is vested with the powers to act as the sole authority to administer and regulate Halal certification in Singapore. This is clearly stipulated in AMLA.

By 2009, Muis certified more than 2,600 premises and has played an important role as the custodian of Halal food assurance for Singapore’s 15% Muslim population. Furthermore, the promising Halal food industry with the availability of many Halal-certified eating establishments has helped to foster social interaction between individuals from diverse racial, cultural and religious backgrounds.

Halal Certification provides assurance to all Muslim consumers because it fulfills the Syariah law, which is a must for Muslims. To the non-Muslims, Halal products are quality products, simply due to the concept of halalan thoyyiban (Halal and wholesome)

Introduction of Warees Halal

As the Singapore Halal certification is well regarded and globally recognised, it has generated strong interests from companies, both in Singapore and beyond, planning to embark on the MUIS’ Halal Certification scheme and adopt the Singapore MUIS’ Halal Quality Management (HalMQ) system. Warees Halal, a division of MUIS’ subsidiary Warees Investments Pte Ltd, has been given the task of helping companies to attain certification.

At the present moment, being the subsidiary of Muis, Warees Halal leverages on the existing Muis eHalal System to manage all aspects of the Halal Certification Process . Apart from this system Muis has engaged a third-party vendor Marshall Cavendish Business Information Pte Ltd, to manage its directory portal http:www.singaporehalaldirectory.com.

Warees Halal is currently exploring new ways to improve and streamline their work processes and expand their reach to the global halal market. And one of initiatives is

Current Business Model for Halal Global Market

Currently, the major marketing channel for the Halal commodity suppliers and retailers is the commodity wholesale market. However, when the retailers make purchases in the wholesale market, the dominant suppliers may offer products that are not Halal certified. Besides, the retailers may be inconvenient to collect information on the price and other details of the Halal products. The current business model is the directory and business portal.

The average online halal directory and business portal like the Singapore Halal Directory acts as a mere introductory service. Once the Buyers have identified products and suppliers of interest, both parties will have to move offline and continue using emails, faxes and myriads of spreadsheets that result in complexities, errors and added costs.

According to the World Trade Organization the average international trade transaction involves: 20-30 different parties, 40 documents, 200 data elements (30 of which are repeated at least 30 times).

The complexities of import-export add as much 15% administrative overhead to the actual cost of goods.

In today’s highly competitive global markets, Suppliers and their clients need to reduce and even eliminate inefficiencies that result in higher costs and possible loss of market share.

Technological Challenges faced in this current model

Standardisation and communication management between Warees Halal Staff and their clients

Another challenge is the global outreach restriction due to geographical factors and limitation due to the current information technology infrastructure

Emerging Business Models

Economists said that the growth of Global Halal market is definitely depending on the participation of E-commerce and Halal E-marketplace.

In fact, the regional Muslim countries like Malaysia, Brunei Darussalam, and Singapore are currently speeding up the promotion of Halal concept, which aims to integrate the Halal producers and marketers. Thus, the development of Halal E-marketplace is facing huge challenge, in the perspective of having qualified Halal certified food producers to join in the Halal E-marketplace as to ensure the safety, hygiene and fairness of the commodity trading.

Some of the Halal E-marketplaces includes the daganghalal site from Malaysia, zabihah.com a site with an directory which is a Halal business yellow pages in UK.

Besides these sites, some of the Government Halal E-marketplace which are only include the Australian Halal Food Directory and Singapore Halal Directory.

Halal E-Commerce Leaders in the industry

Zabihah.com (http://www.zabihah.com)

Zabihah.com is the largest database of Halal restaurants and markets.Based in the USA, it was created in July of 1999. And till to this date, zabihah.com has become an indispensable resource for Muslim communities worldwide.

DagangHalal.com (http://www.DagangHalal.com)

DagangHalal.com, based in Malaysia is one of the B2B e-marketplaces featuring Halal products and services. It provides an online platform as well as other business sourcing channels for our merchants to reach out to a potential worldwide Muslim market of 1.8 billion consumers (estimated worth US$500bil to US$2 trillion global Halal trade value).

HalalBusinessDirectory.com (http://HalalBusinessDirectory.com)

The Halal Business Directory, a UK Based Website provides a free service to Halal Businesses enabling them to publicise their online presence, and a free service to the public to help locate local businesses. Both user friendly and search engine friendly, the Halal Business Directory also provides a business listing with contact details, products and services, and a link to selected businesses websites.

Halalexchange (http://www.halalexchange.com)

Halal Exchangeâ„¢ is a joint venture project in UAE between Halal Exchange Inc. and RAK Investment Authority under the patronage of His Highness Prince Saud bin Saqr Al Qasimi Crown Prince and Deputy Ruler of Ras Al Khaimah.

Halal Exchange is a web-based enterprise solution for the challenges of Global Sourcing. Founded in January 2002, the mission focused exclusively on developing the standard template for the complex, costly and convoluted import – export process. The proprietary eCatalogue-Transaction Engineâ„¢ delivers immediate results in increase of business volume and higher profit margins.

Halal Exchange is headquartered in Vancouver with offices in Kuala Lumpur, Shanghai, Dubai and San Francisco.

Australian Halal Food Directory (http://www.halal.com.au/)

Halal.com.au is Australia’s first comprehensive Halal dining guide. Our aim in launching this site is to give Muslim people around Australia a handy resource to find Halal restaurants, cafes and other eateries. Of course, we hope that this site can be of use to non-Muslims as well!

Singapore Halal Directory (http://www.singaporehalaldirectory.com)

(Waiting for info from Razali)

Present Information Technology Infrastructure

Future or Proposed Information Technology Infrastructure

E-commerce and online business portal had been proved to be one of the best e-business solutions to penetrate the emerging market. However, not much e-commerce portal either by government or private sector that focuses on the Halal market has being seen in the Halal trade market.

B2B Model, B2C Model

E-marketplace is an electronic exchange marketplace where companies register as sellers or buyers to communicate and conduct business over the Internet. The E-marketplace has become an important electronic shopping environment that may evolve into a dominant force in Internet marketing. Most of the E-marketplaces with online stores are offering competing products. Featuring is associated with a price premium and it serves as a mechanism to mitigate competition among online stores. In essence, featuring facilitates a convenience-price trade-off. Those consumers who find that the cost of searching outweighs the benefit of a lower expected price shop at the featured store where the price is higher on average.

The E-Commerce mechanism of the Halal E-marketplace can improve trading efficiency and lower the cost of collecting information as well as the purchase price. The E-marketplace can use “a combination of pictures, literal description, and regulated classification” to introduce the quality and details of the traded commodities.

Hence, Halal E-marketplace is found to be an emerging e-marketplace for the global Halal industries since the early years. Contradicted to the conventional E-marketplace, one of the unique features of Halal E-Marketplace is that it requires all the Halal businesses and services to be provided and transacted online according to the Halal principles and Muslim values. This is to ensure the benefits of the Halal consumers from around the world.

The unique features of the Halal E-Marketplace include:

Only the Halal certified products and services can be exhibited and traded online

Operated according to the Halal principles and Muslim values

Cultivate the Islamic values of Hygiene, Sincerity, Fairness and Trustworthiness

Promotes the right way of doing trading activities

Economic Benefits of the Halal E-marketplace

Halal industry businesses and services providers can be benefit from the Halal E-Marketplace. For example, Halal food producers representing each section in a supply-chain could join Halal e-marketplace to transfer information and purchase products. They may operate on a cost-recovery basis by an independent third party (such as an industry association) or be set up as a business offering, with a middle-person providing a value-added function such as transaction services. Services offered by Halal E-marketplaces include the business directory listings, electronic catalogues for online purchasing of goods and services and trading or transaction services. Halal E-marketplaces that are worth considering are those that interconnect with other marketplaces and allow low-cost connection to a firm’s financial accounting systems.

The economic benefits of the Halal E-marketplace may include:

Greater opportunities for the Halal suppliers and buyers to make new trading partnerships, either within their supply-chain or across supply-chains

The potential to lower the costs of negotiating and making transactions with automation of standard business procedures

The potential for more transparent pricing as Halal buyers and sellers take the opportunity to trade in a more open environment

The opportunity to access value-added services such as inventory control and management of dispatch and distribution processes using electronic systems

Product or Service & Customer Analysis

What are you selling?

Whom are you selling it to?

How do the products differ among competitors in the same business?

Who are your primary customers?

What do your customers think about your business’ strengths and weaknesses?

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