Is it the stereotype or the reality, that the Palestinian products does not match the standards of the required quality ?

Done by : Laith Masoud 

Date :  ‎January ‎18, ‎2013

Abstract

This study focused on how to overcome the competition of the Israeli detergent products which have a bad effect on the sales volume of the Palestinian producers in Palestinians territories (west bank 1967 boarders ), which effects the Palestinian economic as all. Also this study shows the barriers that stands in front of the Palestinian producers and how to deal with it.In this study a group of consumers, merchants and producers were questioned and their opinions were analyzed also an interview with the ministry of economy office were conducted to have a clear view of how does the Government support the local pruducers. For the purpose of this study, the following research questions were asked. These questions guided the research and eventually became the major coding categories.

1)      Does the exist of the Israeli products in the Palestinian small market affect the Palestinian producers in a harmful way ?

2)      Is there is any Governmental law protects or help the Palestinian producers to face the competition of the Israeli products?

3)      What is the limits that makes many Palestinian producers unable to stand in the market and face the competition of the Israeli products?

4)      Is it the stereotype or the reality, that the Palestinian products does not match the standards of the required quality ?

A qualitative research methodology was used for this study. Consumers and merchants gave their opinion throw a prepared questionnaires, but the producers were interviewed personally. The data were analyzed using the content analysis of the questionnaires and the interviews.

This study indicates that the stereotype of  the local productsis that it has a bad quality compared with the Israeli productsand that has a big effect on the psychological  side of the consumers. on the otherhand it indicates that the Palestinian producersdo not get any support from the government, and they don't have the capability of enhancing the quality of their products to compete with the Israeli and the nationalproducts because the row materials the producers need comes from Israel or throw the ports inside there and the Israeli government puts very high taxes on these materials that rises its price on the producers and finally the final consumers.

Hypothesis
After reviewing many studies about the problems that Palestinian producers face in their industries ,and the interviews with the producers themselves, many problems that limits the development of the Palestinian productslike the high taxes ,the lack of financing and the lack of quality assurance which can be solved by adjusting the tax laws and the laws of encouraging the investments , adjusting the loan laws ,activate the protection of consumers department and the ministry of economy.

Many previous nations experiences in this field could be very helpful,to learn how they boiled there economy by giving a lot of facilities for the small business which represents 99% of the economicinstitutions in Palestinians territories(Mas Economic Policy Research Institute,2009). Many countries like Japan, India, Italy and Tunisia implemented an encouraging laws and helpful ones, this laws contained direct and indirect exemption from taxes and a bankruptcy protection policies, also implementing a law that force the Government to buy products with a high cost from those producers if it necessary, Japan built a lending institutions which works under the supervision of the Government, also a supporting centers were built to afford a logistic, technical support for them.( Mas Economic Policy Research Institute,2009).

If this previous experiences were used with some adjustments on the existed laws it would help the Palestinian producers stand in the market and have the ability to compete the Israeli products. Some laws of taxes are insufficient so it doesn't help or encourage entrepreneurs to start their business, but it have a bad effect on the business, this is a sample of this laws :

Tax law No.(17).2004, And law No.(1).2008. it allows reducing some expenses on the income tax like : Research and Development, markets research's, expenses by 1% of the total expenses or 100th $. The most of small business doesn't take any benefit of it because it's for the large businesses which is very few in the industry side. The law of "Encouraging Investments",1995 adjusted in 1998, and adjusted again in 2004, It gives the businesses that had the needed licenses, the exemptions needed assuming that its capital must be more than 100th $. This law gives it an exemption of the income taxes for 5 years from the date of starting the business. Also it can has an exemptions for exporting assuming that it should give 30% of the total production and this exemptions can be afforded for just 3 years.( Mas Economic Policy Research Institute,2009).

Previously the Government is suggested to inter the "World Trade Organization", in due to help the producers to exporting their products, but the WTO has a 19 agreements which can be more harmful for producers and it needs the recognition of the WTO on the Palestinian standard  specifications, it can be harmful because one of the agreements "TBN agreement" obliges the member of the WTO, to erase the barriers that stands in front of the imported products and give this product's the priority on the local products.( Mas Economic Policy Research Institute,2009). 

The Palestinian product has a 25% of the total spending's but the Israeli and the national product's has an 75% of the total spending's.(Hantash,2012).

Data Collection

Data were collected by dividing the resources into four groups consumers, merchants, producers and the ministry of economy office, the consumers were questioned by aprepared questioners that they can give their opinion in it, which allows to have a good view on how the consumers think about the local products. The merchants also were questioned by prepared questioners, the merchants are the place where the consumer can find the products that is needed, the merchants can help producers by providing the Palestinian products instead of the Israeli ones also has apart of convince the consumer to by the local Palestinian product instead of the Israeli one, they also can indicate the sales volume, and many other things might be useful.

The producers and ministry of economy office were interviewed personally to take the full information from theme, producers can provide more information about their customers and consumers in order to evaluate it with the data collected from the consumers and merchants, and they can show how do they deal with the Israeli competition and what are the barriers that stands in front of them. The ministry of economy office can provide information on how the ministry support the producers and if they examine the products that inters the market.

Data analysis

The group of consumers contained 15 participant, most of them insisted that the local product needs improvement because its quality doesn't match the required standards and its poor in front of the Israeli products, and they recommended a supervision on the local producers. The other participants said that the local products are good but the Government should boycottthe Israeli products so the local product can take apart in the market. On the other hand the number of participants confirmed  that the price has an effect on choice between the two products they would buy the local product if the Israeli products has a very high cost.

The group of merchants contained 16 participant, most of theme provide the Israeli products in the shop but they said that they're usually try to convince the consumers to buy a local product instead of the Israeli one. In approximate way and depending on the answers the local product had a 51.8% of the sales volume and the Israeli had a 48.2% of sales volume, assuming that some of the participants didn't provide any Israeli product in there shop's. The participants opinion about the price effect and the ability of the Palestinian producers of satisfying the market needs were equal. But all of them pointed that the Palestinian products is missed the quality.

     The group of producers contained two participants the consisted that the problem is in the way that people thinks about their product Al-BareeqCo. said that they proofed that it's the psychology of the consumers affect their way of choosing the Israeli products, they labeled one of their products with labeled contained a Hebrew language only even the company name was in Hebrew language, but the quality is the same quality of the original product so people said that the product with Hebrew language was better and more efficient than the other one.

          About the support of the Government, both of the participants Al-Sharq Co.and Al-Bareeq Co. confirmed that they didn't see any support but just high taxes, and they asked about the role of the Government and the consumer protection organization from the Israeli products that is sold in the market with very low cost for the final consumer according to Al-Bareeq this cost can't even cover the cost of the transportation. Finally they are asking from the Government to take its place and support them in any possible way because they are suffering from the lack of raw materials the high prices of it and the lack of supervision on the raw materials, the lack of researches and labs that can develop the production .

Regarding the previous questions and problems the research required an interview with the ministry of economy office asking the same questions the producers asked, they said that they are doing their best in testing this products, and they said that it can be a fake products not Israeli ones. About supporting they have just one way to support throw direct them to the NGO's organizations that might help.

Conclusion

     There is a huge gap between what the Government must do and what is implemented in reality, the consumers does not support the local producers as required and the government also doesn't help in any way and that is a bad indicator because this business may not stand for a long time in this environment, and that means more losses for the Palestinian economy.

                   

List of References

Hantash,(2012) (Ways to increase the share of local products in the domestic and overseas markets. Ramallah, West Bank ) : Mas Economic Policy Research Institute.

Mas Economic Policy Research Institute(2009) laws of the institutions. Ramallah, West Bank, Mas Economic Policy Research Institute.

Mas Economic Policy Research Institute(2009) Specifications and standards of production.Ramallah, West Bank, Mas Economic Policy Research Institute.

Mas Economic Policy Research Institute(2009) Previous international experience with small enterprises.Ramallah, West Bank, Mas Economic Policy Research Institute.