Need for Iranian Producers to Form Consortiums

EghtesadOnline: The added value of working as a consortium rather than as separate companies would help Iranian producers grasp economic and growth opportunities, make more profit, minimize losses and maintain their market share, the secretary of Khorasan Razavi Industries, Mining and Trade House said.

News ID: ۷۸۲۸۱۵

03 June 2018

"Iranian producers have been stymied by their own lack of group work and participation culture whereas economically developed countries have acknowledged the significance of consortiums and started working as alliances in different manufacturing fields for years now," IRNA also quoted Firouz Ebrahimi as saying.

Ebrahimi lamented that a toxic competition exists among Iranian exporters.

"According to Russian traders, there is always great demand for all Iranian products in Russia, but Iranian exporters have robbed themselves of ample opportunities, leaving the field clear for exporters of other countries due to their lack of collaboration," Financial Tribune quoted him as saying.

“At present, Mashhad, the capital of Khorasan Razavi in northeastern Iran, produces 70% of tomato paste consumed in the country, but instead of setting up a consortium and working together to make more profit, producers only concentrate on how to get the better of each other.”

Giving the example of Turkish companies that get into every market as a consortium, Ebrahimi said, “We need to think globally and set up consortiums at all levels of production, supply and marketing in order to have a dynamic economy.”

"Iran’s Trade Code has not defined the mechanism of operating a consortium," said the head of Khorasan Razavi Exporters and Importers Union, Mohammad Hossein Roshanak.

The official noted that currently, economic growth of production, mining and trade sectors hinges on individuals, as no one wants to lead a consortium, if they are already capable of making oodles of money on their own.

“To form a consortium, we need to draft its legal codes, foster a collaborative culture among companies and encourage producers to cooperate with each other,” he said.

A consortium is a group made up of two or more individuals, companies or governments that work together for achieving an objective. Entities participating in a consortium will pool resources but otherwise are only responsible to the group in respect to the obligations set out in the consortium’s agreement.

Therefore, every entity in the consortium remains independent with regard to their normal business operations and has no say over another member's operations that are not related to the consortium.