Pashmina Trademark Registration In-Brief

Page 1

Note 2 | june 2012

in brief Chyangra Pashmina- Revitalizing the Pashmina Industry in Nepal Registration of International Trademark for Chyangra Pashmina Boosts Nepal’s Pashmina Industry Pashmina is a key export industry for Nepal, drawing in significant revenues and worldwide interest. In the face of declining sales due to a multitude of factors including the emergence of low grade Pashmina, the industry called for better quality control and monitoring of Pashmina. Addressing this need, the Export Promotion and Trade Facilitation Working Group of Nepal Business Forum agreed to implement the registration of a collective trademark for Nepali Pashmina in January 2011. Since then, the trademark has been registered in 41 countries and export of Pashmina products have increased by 50%.

Pashmina- A Key Industry for Nepal Nepal has become known internationally for its exquisite hand woven Pashmina. Pashmina is one of Nepal’s core export products. It is the second largest exportoriented industry in Nepal, carpets being the largest. At its peak in the late1990s and early 2000s, it drew revenues of up to $ 112.7 million. The government has included Pashmina products in the list of 19 products with a high comparative advantage in international trade. Therefore it is evident that this is an industry with significant potential for Nepal in terms of generating revenues from export. In the international market, there is significant demand for high quality cashmere and Nepalese Pashmina is considered one of the finest in the world. The largest consumers of Nepalese Pashmina are the United States, Germany, Canada, UK, Japan, France, Italy, China, Denmark and Switzerland.1

When Pashmina exports

started to go down, we carried out a study to find out possible reasons for this deterioration. The study found out that in the name of Nepali Pashmina low quality Pashmina items made from synthetic yarn and viscose were being exported from other countries with the ‘Made in Nepal’ tag. To solve the problem of authenticity and quality guarantee we went for the collective trademark as one of the tools for boosting the export of this product.

- Mr. Vijay Kumar Dugar Secretary General of Nepal Pashmina Industries Association

Why Do We Need This Trademark? Aptly named Chyangra after the mountain goat (Capra Hircus), Nepalese Pashmina is extracted from the inner coat of the mountain goats which live above the altitude of 3000 meters in the Himalayas of Nepal. The outer, coarser coat is discarded and only the finest fiber, also known as ‘Diamond Fiber’ for its preciousness and luxurious quality, is used.2 This has made Nepalese Pashmina an internationally renowned and coveted luxury item.

Contributors: - Mr. Krishna Babu Joshi, Monitoring & Evaluation Consultant - Mr. Gopal Tiwari, NBF Secretariat Coordinator - Ms. Akira Dhakwa, Consultant, NBF Secretariat


in brief

| June 2012 | 2

However, over the past decade, this once-thriving industry has experienced a dip in sales and reputation in the international market. The emergence of low quality and imitation Pashmina with the ‘Made in Nepal’ tag has damaged the credibility of Nepalese Pashmina as a high quality luxury item and has reduced its value in the international market. The industry is facing the crippling effects of competition from inexpensive mass-produced imitations made from synthetic fabrics and cheaper wool which have flooded the international markets. This has become a serious barrier to the success of Nepalese Pashmina in both domestic and international markets. Export of sub- standard Pashmina in the absence of trademark and quality control, as well as labor issues and lack of industry-friendly policies has had a cumulative adverse impact on this industry. Concerned by this trend, which was heavily eroding the credibility of Nepalese Pashmina, Nepal Pashmina Industries Association3 raised the issue of a trademark registration process with great urgency in Nepal Business Forum’s Export

The NBF Export Promotion and Trade Facilitation Working Group is one of seven working groups of Nepal Business Forum, Nepal’s first public-private dialogue platform. NBF brings the government and private sector together to jointly identify constraints to private sector growth and develop solutions to address these challenges. NBF is facilitated by the Nepal Investment Climate Reform Program, which is managed by IFC, in partnership with Norad and DFID. The Working Group has proposed 10 recommendations to date, of which five have been implemented. The Working Group comprises: Co-Chairs Mr. Lal Mani Joshi, Secretary Ministry of Commerce and Supplies Mr. Suresh Kumar Basnyat, President Nepal Chamber of Commerce Members Mr. Fulgen Pradhan, Joint Secretary Ministry of Agriculture & Cooperative

They stressed that a well-established international trademark

Mr. Lok Darshan Regmi, Joint Secretary Ministry of Finance

is needed to identify and separate real Nepalese Pashmina

Mr. Anil Thakur, Joint Secretary, Ministry of Industry

from cheaper and poor quality imitations. With this objective,

Mr. Surendra Bir Malakar, Immediate Past President Nepal Chamber of Commerce

Promotion and Trade Facilitation Working Group meetings.

Nepal Pashmina Industries Association suggested a unique hologram and logo that could be stamped on every genuine Nepal-made Pashmina product, identifying its origin and production process. The Working Group decision to address the issues of this industry through a trademark registration was finalized on September 30, 2010.

Mr. Bikash Ratna Dhakhwa, President Federation of Handicraft Association of Nepal Mr. R. B. Rauniar, Ex Committee Member SAARC Chamber of Commerce & Industries

Trademark Registration- the Process Nepal Business Forum, through its process of structured dialogue, provided a platform where these concerns could be voiced, and played a catalytic role in successfully obtaining the trademark. According to the Working Group decision, Nepal Pashmina Industries Association submitted a proposal to the Ministry of Commerce and Supplies seeking funding and support to register the trademark of Pashmina in other countries through the Trade and Export Promotion Center, a government entity. In response to this request, a Ministry of Commerce and Supplies Committee, comprising its Under Secretary, a Trade and Export Promotion Center representative and a Nepal Pashmina Industries Association representative committed to providing $121 thousand (Nepalese rupees 8.6 million) for the registration process in other countries, bearing 70 percent of the total cost of Nepalese rupees 12.4 million. Several organizations worked together to obtain the Chyangra Pashmina Trademark. Norwegian Agency for Development

Cooperation was the donor and United Nations International Development Organization was the executing agency. The Ministry of Commerce also played an important role in registering the trademark. In addition, a task force with representation from Nepal Pashmina Industries Association representative was formed for proper standardization and effective quality testing of Pashmina products. Through this initiative, the Chyangra Pashmina trademark was introduced to guarantee the quality of Pashmina products. Chyangra Pashmina is a collective trademark for Nepalese Pashmina products which are of the highest quality. This trademark came into effect after the sale of trademarktagged Pashmina started from January 20, 2011. So far, of the five hundred or so Pashmina producers in Nepal, one hundred companies have received the Group Trademark.


in brief Nepal’s authentic Pashmina products are now being exported with the registered trademark of “Chyangra Pashmina”. According to Pashmina traders who are labeling their products with the Chyangra Pashmina tag, the Trademark is not only an assurance of the quality of the raw materials used but also guarantees the manufacturing process, production environment, processing, and use of skilled manpower in production.

| June 2012 | 3

Members of the task force formed by Ministry of Commerce and Supplies to work on Pashmina Issues a. Joint Secretary, Ministry of Commerce and Supplies Chairperson b. Representative, Ministry of Industry - Member c. Chairman, Nepal Pashmina Industries Association - Member d. Executive Director, Trade & Export Promotion Centre Member

Pashmina products bearing the Nepali logo have been registered in 40 counties including 27 Western European countries of the European Union, United States, Canada, Australia, New Zealand, Japan, Switzerland, Norway, South Korea, Singapore, Hong Kong, and India- all major markets for Nepal’s indigenous product. Currently, the registration process is also in progress in Brazil, Russia, South Africa, United Arab Emirates and China.

e. Chairman, Central Carpet Industries Association - Member f. Chairman, Nepal Carpet Exporters Association - Member g. Chairman, Central Wool Yarn Industries Association Member

Impact of the Trademark This trademark is a collective trademark for Nepalese Pashmina products of the highest quality. It guarantees high standards in 6000 quality and manufacturing. 5000

“This collective trademark will increase Nepalese Pashmina’s competitive strength in the international market and it will 4000 solve the problem of quality discrepancy,” said Mr. Pratap 3000 Kumar Pathak, Former Secretary, Ministry of Industry.4 2000

Since the registration of this trademark, the industry has experienced an upward trend in the sale of Pashmina. 1000 According to the data collected by Nepal Rastra Bank, in 0 the fiscal year 2010/11, Nepal exported $ 37.95 million worth of Pashmina whereas in the previous fiscal year, the country exported only $ 25.83 million worth. “This is a remarkable pick up. We are very hopeful that Nepalese Pashmina will regain its glory and market soon,” said Mr. Puspa Man Shrestha, President of Nepal Pashmina Industries Association. According to Nepal Rastra Bank data, Pashmina ranks number five on the list of major exports from Nepal, after handicrafts, herbs, paper and nigerseed. Between 2009 and 2012 the Pashmina industry experienced a surge in exports, increasing from Nepalese rupees 1819 in 2009/2010 to Nepalese rupees 2352.2 in the year 2011/12. The year 2011/12 saw a 66.9 percent growth on the previous year’s exports as opposed to 19.2 percent experienced in the preceding year. Mr. Vijay Dugar affirmed, “We are attributing the growth seen in last two or three years totally to the Trademark. As the Changra Pashmina brand establishes itself in the international market as an authentic Nepal Pashmina product, so will the brand and market revive.”

Pashmina Exports as per Nepal Rastra Bank 6000 5000 4000 3000 2000 1000 0

Values in Nepalese rupees in millions

Industry members say consumers who have bought Pashmina with the Chyangra Pashmina Trademark have reported that they are happy with the product and that this will help them choose the right quality in the future. Although the long-term impact of trademark registration is yet to be measured, export of Nepalese Pashmina has increased after acquiring the collective trademark. After the trademark registration, Pashmina export has seen an increase of over 50 percent in the fiscal year 2010/11 compared to the last fiscal year. Many in the industry attribute this growth primarily to the impact of the trademark and the boost in tourism experienced over the past 2 years. This, industry insiders’ hope, is an enduring trend which will continue to show growth and regain its value as a thriving export-centric industry.


in brief | June 2012 | 4

What Next for Chyangra Pashmina To take this initiative further, and to enhance its impact on the industry, NPIA has expressed the need for a full fledged awareness, marketing and promotion campaign with the aim of informing buyers that Chyangra Pashmina is a collective trademark for the best quality Pashmina from Nepal and encouraging them to buy products which carry this tag. This issue was raised on June 23, 2011 in a meeting of the Industrial Investment Promotion Working Group. They have asked for government support in implementing this awareness campaign. NPIA has urged the government to grant Nepalese rupees 12.4 million for an international branding and marketing campaign. As of June 2011, NPIA has received Nepalese rupees 1.6 million ($ 22, 000) from the Ministry of Commerce and Supplies for this purpose. Industry members stress the need for international marketing campaigns which will reach the consumers. One Pashmina manufacturer and retailer said, “There needs to be awareness about the Trademark at the consumer’s end so they come and ask for Chyangra Pashmina and understand what it stands for. Otherwise it has no value.” The government is approaching the International Trade Council, Geneva, for funding through Nepal Trade Integration Strategy.

Industry members agree that the trademark registration was an important first step to reestablishing Nepalese Pashmina as a high quality luxury item, but that awareness building about Chyangra Pashmina in the international markets is critical to its success. They stress the fact that unless global consumers recognize the Trademark and look for it when buying a Pashmina product, there will continue to be low-value substitutes sold as Nepalese Pashmina, continuing the damaging trend of the past decade. In addition, NPIA has set up a fiber testing microscope to upgrade the current yarn testing laboratory at Nepal Bureau of Standard and Metrology which will provide more accurate results of the yarn tested to certify a product as Chyangra Pashmina and ensure that high quality yarn is used to manufacture Nepalese Pashmina. The need for a testing lab was highlighted in a meeting of the Export Promotion and Trade Facilitation Working Group on September 30, 2010. In the period since its implementation, the impact of trademark registration has been felt significantly by Pashmina traders in Nepal. Continued effort to produce even better quality products and inform buyers about the guaranteed quality of Chyangra Pashmina will support ongoing growth and competitiveness for Nepal’s pashmina industry.

About Nepal Investment Climate Reform Program The Nepal Investment Climate Reform Program of the SouthAsia Enterprise Development Facility aims to improve the business environment, supports sustainable business growth, and creates jobs in Nepal. SEDF is managed by IFC, in partnership with the U.K. Department for International Development and the Norwegian Agency for Development Co-operation.

About IFC IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, providing advisory services to businesses and governments, and mobilizing capital in the international financial markets. In Fiscal Year 2011, amid economic uncertainty across the globe, we helped our clients create jobs, strengthen environmental performance, and contribute to their local communities—all while driving our investments to an all-time high of nearly $ 19 billion. For more information, visit www.ifc.org.

About Nepal Business Forum Nepal Business Forum provides a platform for public-private dialogue which is aimed at accelerating and facilitating the reform process by providing the government and the private sector with a structured, transparent and result-oriented mechanism through which they can deliberate on investment climate issues, and jointly agree on reforms. Nepal Business Forum was created by an Executive Order of the Government

of Nepal in May 2010. The Nepal Investment Climate Reform Program supported the Government to design NBF based on recommendations and lessons learned from earlier IFC involved public-private dialogue initiatives in a number of other countries. The institutional framework of NBF consists of three committees and seven sectoral Working Groups, supported by a Secretariat. At the apex is the High Level Business Forum chaired by the Prime Minister, the Steering Committee is

chaired by the Industry Minister, the Private Sector Development Committee is chaired by the Chief Secretary, and the seven Working Groups are co-chaired by Secretaries of various ministries and Presidents of business membership organizations. For more details, contact Mr. Gopal Tiwari, NBF Secretariat Coordinator at GTiwari@ifc.org

1Nepal Pashmina Industries Association, The Himalayan Times, September 8, 2010 | 2Nepal Pashmina Industries Association Website http://www.pashminaassociation.org.np/npia/nepalese_pasmina.php?id=def#definition 3Nepal Pashmina Industries Association is an autonomous, non-governmental, non-profit making organization as well as representative body under which all Nepalese Pashmina entrepreneurs such as manufacturers, exporters, raw materials importers and dyers are brought together to strengthen themselves for sustainable development of entire Nepalese Pashmina sector. It was established in the year 2000 and has 157 members. | 4The Himalayan Times,

January 21, 2011