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To be served and protected

To be served and protected

In emerging economies, the consumer is surrounded by hazards: shoddy goods, counterfeit products, inflated prices. Governments are slowly beginning to address the lack of protection afforded to the average shopper.

June 15, 2010 5:06 by

Killing time last night before a late evening engagement, I waited for my dinner companion to meet me at the upscale shopping mall next to my office. The capitalist consumer that I am, I looked for stuff to buy. A bagful of makeup later, my friend arrived and we tore off down the highway.

“What did you get?’ he asked.

“Some makeup,” I replied.

“Where was it made?” he asked

Let me stop here and say that, ten years ago, that question would have confused me. Today it doesn’t.

“Germany,” I said.

Not quite satisfied yet, he asked, “Are you sure, how much was it?”

“Pretty, sure,” I promised. “It was expensive.”

He nodded, pleased. “Mabrook,” he said, congratulating me on my purchase.

So, where’s the business end in all this? Let me explain by way of contrast, that growing up in the US, I don’t remember giving much thought to where my purchases were manufactured. I bought things, and they were generally safe, operable, and offered a value commensurate with their purchase price. When purchases failed to meet these basic expectations, they were returned to merchants or manufacturers for replacement or refund. Simple enough.

In emerging economies, too often consumers are duped, cheated, or disappointed by products that don’t work, goods that don’t deliver, services that are not guaranteed. The regulatory oversight of companies is often weak or absent, so that inferior products and deceptive practices easily make their way into the market place. Witness the counterfeit goods industry in the region, which offers everything from fake bags, movies and music, to fake medicine and adulterated toiletries.

When buyers do get stung by shoddy goods, they may find themselves without protections. In other words, consumers who do buy an inferior product often find they have no recourse.

While all this may seem pretty self-evident, analysts have identified these two factors as critically absent or underweighted in the region at present. Moody’s Investors Service is in the business of rating companies, nations, and financial entities. Their ratings help investors better understand the credit worthiness of a company or government to better evaluate how much risk they are embracing with a given investment opportunity. Moody’s analysts see a “wall of maturing debt,” coming into view for GCC corporations and their shareholders within the next two years, posing a challenging credit environment for business. Their suggestions for improving business sentiment focus on the essentials, and included among these are suggestions to address investor confidence and improve the regulatory framework currently in place – both are crucial to bolstering business, and both ultimately serve consumers.

While there are miles to go on these two fronts, regional governments are sounding the call to beef up oversight, and provide better recourse for consumers. Consumer protection laws were introduced in the UAE in 2006. Since then, a consumer website and hotline have been established, and a number of initiatives have looked to ensure greater consumer protections from defective, dangerous, or adulterated products.

Thousands of counterfeit goods were seized and destroyed by Abu Dhabi authorities last month, as officials look to dismantle an industry they say endangers consumer safety and investor confidence. And last month, Sheikh Mohammed bin Rashid al Maktoum amended standards for dozens of consumer products, including household electrical appliances, foods, and drinks.

More recently, responding to consumer complaints of price gouging on the Al Jazeera Sport viewing cards needed to view the World Cup, consumer protection officials this week asked the station to publish notices reminding consumers of the official cost of the card, in order to avoid price gouging, the National reported. And the ministry urged customers who suspect food and beverage price rises during the tournament to register complaints against retailers by calling a telephone hotline.

It seems policy makers are acting on what consumers have known for a long time:  if there’s no confidence and protection in local goods and services, shoppers will spend their dirhams where they have come to expect these safeguards.

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