The year 2020 is drawing to a close, at a time when the repercussions of the worst economic and financial collapse that Lebanon has known since the end of the civil war (1975-1990), and as is the case with thousands of Lebanese who knock on the doors of embassies in search of a way to migrate away from the tragedies of their country, it seems that 2021 will happen with the emigration of dozens of Major brands, in light of fears that the Lebanese market will be empty of international brands in the future.
Going back to the history of the existence of international brands in Beirut, we find that they have passed through 3 prominent stations, according to Yahya Qusaa, head of the Franchise Licensing Association in Lebanon. In the 1990s, a large segment of the Lebanese people were celebrating the entry of a new brand into the country, after most of them had left during the civil war. And between 2000 and 2005, Lebanon became a pioneer in the Middle East, in terms of including the most important international brands.
Later, several Gulf states took the lead in Lebanon’s pioneering role in this field without losing its polarizing advantage of these signs that strengthened the only sector on which the Lebanese economy was based, which is tourism and services.
However, since the end of 2019, a new phase of setback for the ailing Lebanese market has begun, and it continues to worsen, with the withdrawal of international companies reaching dangerous levels.
In recent months, a large group of the most famous brands announced the closure of their branches in Lebanon, among them the brands belonging to the Kuwaiti “Al-Shaya” company, which owns about 90 of the most famous international brands, and it included 25 brands on Lebanese territory, with dozens of branches, and employed Thousands of young Lebanese.
Although “Al-Shaya” did not exit the Lebanese market, it reduced its branches and permanently closed several brands, including “PinkBerry”, “American Eagle”, “Victoria`s Secret”, Claire`s and others.
Migration of 42 marks
Qasa indicates that there are 42 international brands that have closed their branches in Lebanon from November 2019 until today, ranging from brands of clothing, shoes, cosmetics, restaurants, etc., and describes their exit from the Lebanese market as a “great shock”, although this path was normal as a result of the accelerating decline of the situation At all levels.
Qasaa considers – in his statements to Al Jazeera Net – that the presence of international brands was previously a sign of economic health, and he regrets that some brands that immigrated from Lebanon had at least 12 branches distributed in various regions.
In the last 3 months, according to Qasaa, more than 2,100 Lebanese youths have lost their jobs in this sector, most of them are university students, and hundreds of others are threatened with losing their jobs, because even the brands that have not completely withdrawn from Lebanon have tended to reduce the number of their branches as well as their employees.
In 2012, the Franchise Licensing Association conducted a census in cooperation with the European Union on the number of international brands in Lebanon. It was found that there are 1100 brands on Lebanese territory, covering restaurants, fashion, jewelry, tools, etc., 50% of them are Lebanese brands with branches in Overseas, and 50% other foreign brands have branches in this country.
Starting at the end of 2019, Lebanon began counting foreign brands exiting its markets, without entering any other brand.
The Lebanese market began to shrink since 2012, according to Qasa, but the great collapse that befell it coincided with the movement of protests that swept the country in October 2019, and the ensuing outbreak of the Corona epidemic and economic collapse, and the existence of 3 prices of the pound against the dollar, which put the branches of brands The world faces complex and difficult challenges in Lebanon.
Qasaa points out that the losses suffered by the trademark sector in Lebanon during this year are equivalent to many times the losses that accumulated over the past 7 years, at a time when the purchasing power of the Lebanese has decreased due to its inferiority.
For his part, financial markets expert Dan Azzi believes that – after depleting the Central Bank of Lebanon’s hard currency reserves, which are threatened with depletion – it may be positive for international brands to close their branches in Lebanon in terms of limiting the paths of depleting the dollar abroad in the short term.
Azzi said that Lebanon, which is based on import, and the balance of payments therein, has become negative, and the crisis does not lie in the migration of brands that can be obtained from any country in the world, but rather with Lebanon drowning in debt and its inability to secure self-sufficiency in various sectors.
The explosion of the Beirut port was a blow to the heart of this sector, especially since about 70% of the franchise stores (franchise) are located in the area surrounding the port, at a time when work in the clothing and fashion sector decreased by more than 60%, and the luxury international brands suffered a decline of more than 70% In Lebanon, Qasaa said.
Reasons .. motives
It seems that the business of commercial malls in Lebanon will be the most affected by the migration of international brands, especially since a large percentage of their operation is based on the inclusion of the largest number of branches of foreign brands.
Michel Abeche, General Manager of “City Mall” (one of the malls in Lebanon), points out that the closure of international brands poses a great danger to malls in the country and the level of their work. The number of their visitors this year has decreased to 50%, and it threatens the long-term viability of some of them. Especially since the brands that emigrated will not return soon in light of the lack of any prospect for resolving the crises in Lebanon.
He summarizes the motives of the migration of international brands for several reasons, such as the decline in sales, because the deterioration of the lira has led to an increase in the prices of imported goods, and international brand administrations suffer from the crisis of access to the dollar, which has become scarce in the markets and its prices have varied.
All the funds that exist between the local importer and foreign companies are based on the banking sector, but this relationship was destroyed after banks seized deposits in hard currencies, and the condition of transferring funds in dollars to secure cash (cash) has become almost impossible.
Unlike the Lebanese merchants who can deal with the market and the fluctuations of the pound and buy dollars even illegally, international companies are unable to merge with this type of deal that is governed by volatility, fraud and instability.
Abeche says to Al-Jazeera Net that the collapse of the Lebanese market did not come suddenly, but rather as a result of the accumulation of years of mismanagement and the failure of the official authorities to make a real assessment of the repercussions of the economic and banking crisis, which led to the inability to find a solution, even if it was temporary.
And at a time when the volume of imports is shrinking, Lebanon does not have the basics of industry, according to Abeche, and it is expected that the migration of international brands and the closure of local brands will escalate at the same time, if the collapse continues in the coming months.