Interview with Mirza Asif Baig, CEO Saffran Group:
BR Research recently sat down with Mirza Asif Baig, CEO of Saffran Group, which is a prominent exporter of automobiles from Japan. The group also has presence in the health & beauty segment as well as providing IT solutions to international clients from Pakistan. Asif also plans to start importing consumer electronics from Japan soon. We discuss the dynamics of car imports, improving economic ties between Japan and Pakistan as well as the importance of learning languages for aspiring entrepreneurs.
Below are edited excerpts from the interview
BR Research: Let’s start with your background and how you came to start Saffran Group.
Mirza Asif Baig: I started Saffran eleven years ago in Japan with a small setup employing a couple of people. Initially, it was tilted towards domestic trade. We picked up a business domain in Japan, which is a big economy. The first challenge for me was to pick the right sector. Due to the communication gap and different culture, it was very important for me to learn not only the Japanese language but also their culture.
It took me hardly one year to become conversationally fluent. As with any language, it certainly takes time and effort. I can speak almost six languages now including Russian, Japanese and Malaysian. One reason for the success in my entrepreneurship is being multi-lingual.
After learning about the repute of Japanese players globally, I decided to visit Japan on holiday. Then having completed my master’s degree from Russia, I returned with the aim to start a business in Japan. After operating as a sole proprietor for a year, I incorporated Saffran International Co. Ltd, which later became the Saffran Group.
Initially, the company exported cars to Pakistan, Australia, Mozambique and Kenya and Aruba. From there on we kept expanding. We built up good grounds in Mozambique, and we have two companies there and one in Kenya. We’re also exporting cars to New Zealand now.
In Pakistan, we have an office in Lahore and are looking to set one up in Karachi as well. We have also been operating out of Philippines’ Subic Bay Freeport Zone for the past four years. Our employee count stands at more than 200 people and is expanding.
BRR: Which sectors does Saffran Group operate in currently?
MAB: We are present in four domains which include car exports, and off-shore IT business, which is also undergoing expansion. We are also in health and beauty, which we currently export to Russia and are planning to export to Pakistan as well. In the future we also plan to start importing electronics from Japan to Pakistan and have signed an agreement with a Japanese electronics manufacturer.
BRR: How do you see the role of imported cars in Pakistan’s automotive sector?
MAB: Imported cars will allow local players to learn more about the new technology being used in other countries. Of course, imported cars will always remain a minority and the bulk will be supplied by local manufacturers, but there will be pressure on local players to produce better quality cars at cheaper prices.
BRR: Can you elaborate on the process of importing cars from Japan?
MAB: Currently, Saffran Group is providing services for importing cars from Japan, for people who have an international passport. We charge a services fee and ensure processing of customs and delivery.
BRR: How many cars do you export to Pakistan? Also, what’s your top destination for exporting cars from Japan?
MAB: Last year we exported more than 6000 cars from Japan out of which less than a thousand were to Pakistan. The majority were imported by New Zealand.
BRR: Being a car exporter to Pakistan, how do you think the procedure can be simplified to enable smooth and reliable transactions?
MAB: The rule that is working in many countries is to have a few licensed dealers and have a quota specified for each dealer by the government. This will ensure legitimisation as well as proper revenue records, which will enable the government to collect GST as well as other applicable duties.
On the other hand, if anyone can meet the pre-specified measures set by the government that can include tax paid, income level and other factors, they should be allowed to import cars without hassle. Many countries are using this methodology as well.
Currently, the end user only has the option of buying cars from local automakers, which involve paying additional “own” money as well as sacrificing on quality and price.
BRR: How is your approach different when it comes to importing cars from Japan?
MAB: We enable our customers to come to our office and choose their car directly from Japan through our portal, which will be formally launched on 27 January, 2018. Saffran only charges a service fee, and the customer can buy the car at the same price as in Japan through the auction and pay the relevant duties.
BRR: How much of your revenue comes from car exports?
MAB: More than 55 percent comes from auto exports, whereas the remaining is equally shared between IT services and health & beauty.
BRR: Please tell us a bit about the health and beauty segment and your plans in this segment.
MAB: We started working on it three years ago when we saw inbound South East Asian travellers to Japan having problems in getting halal products. Countries like Thailand and Malaysia have grown leaps and bounds. With that growth comes rising consumer awareness about products including the halal requirement. There has been a boom for halal manufacturing in Korea and Japan.
There are two suppliers in Japan, and we are one of them selling organic halal shampoos and other products. We have since received orders from Russia, Indonesia and Malaysia as well. We are also in talks with major Japanese retailers to put our products on their shelves. Our eventual goal is to make people healthy and beautiful.
Our price point in Pakistan will be in the range of lower-end income groups for our health and beauty products imported from Japan. We plan to spend $2 million initially on marketing and import of products in this segment.
BRR: Out of all the segments that you operate in, which do you see as the most promising in the next five years?
MAB: Diversification in business is not a choice anymore. It has become a need. Each sector is evolving so rapidly that it’s hard to say which one’s going to be a star-performer in the next couple of years. So, the best bet is to diversify across a range of businesses and bring innovation in your products.
BRR: Given your exposure to the Japanese market, what needs to be done to improve economic ties between Pakistan and Japan?
MAB: There is a lack of awareness between these two markets. Japanese are not aware of the kind of potential that we have in terms of human resource and a rising middle class. Pakistanis also knows only the major Japanese brands limited to consumer electronics and automobiles such as Sharp and Toyota. The misconceptions between the two nations need to be removed.
After achieving financial consolidation, I moved towards improving business ties between Japan and Pakistan. Saffran Group, with the collaboration of the Pakistan Embassy in Japan, holds annual business seminars in Japan that invite prominent personalities from Pakistan as speakers. We also invite Japanese CEOs to the events held in the embassy and manage to get an attendance from more than a hundred CEOs.
I also arrange business delegation visits from Japan to connect with the Pakistani community. We have a lot of talent here in Pakistan, but as a nation we prefer to stick with English as a language and the West as an eventual destination in mind. There is a lot of opportunity in places like Japan, Hong Kong, Singapore and the rest of South East Asia.
The other thing is the lack of communication, which will only be removed if we make an effort to learn Japanese. Saffran Group is partnering with universities to start Japanese language programs in order to encourage young entrepreneurs and students to learn other languages apart from English as well.