From Matangi Tonga Magazine, Vol. 16, no. 1, June 2001.

The importation of consumer goods remains a profitable business in Tonga with stiff competition for a share of a market that has risen from over $115 million worth of imported consumer goods in 2000 to over $121 million in 2001.

Predictions are that imports will continue to grow as Tonga becomes more and more part of the so-called global economy. Tonga is expected to become a member of the World Trade Organisation at the end of the year, and as soon as September, a signatory to a Pacific Forum countries Regional Free Trade Zone. By becoming a member of the WTO and a Forum Free Trade Zone Tonga is required to lower and eventually eliminate its tariffs on imported consumer goods.

These developments in trade and tariffs are driving changes in the wholesaling and retailing businesses in Tonga.

Competition

Tevita Niulata, who is responsible for the issuing of licences for wholesale and retail outlets said that there are 83 wholesalers in Tonga, and because there are newcomers some existing wholesalers are expanding their businesses to meet the competition.

Sepa Mafi, the General Manager of Sitani Mafi and Sons, one of the well-established wholesaling and retailing business in Tonga is very concerned about what he sees as a move by foreign distributors, who are no longer letting local wholesalers distribute their products for them, and “are setting up new companies here and distributing their own products.”

New Company

Sepa gave an example of the Nestle products, which Sitani Mafi and Sons have been distributing for years, but recently the distribution was taken over by Pactrade, a new company with a local shareholder.  He said that this local company was affiliated with a larger Fijian distribution company. “We are supposed to be co-venturing with Pactrade, but it does not really make much sense because we have to buy from them. So the truth of the matter is that we locals can’t compete with them. I have had to close down our Nestle warehouse and 50 workers have been laid off, and possibly another 50 will be laid off again next month,” said Sepa

Pranil Singh, the Manager of Pactrade Tonga, said that Pactrade was established in Tonga in 1995 as an independent company, and an agent for multi-national brands like New Zealand’s Kimberly Clark whose products include Snugglers diapers. “We at Pactrade are not solely a wholesale company, but also a distributer so we sell to both wholesalers and retailers. We are not taking anything from the locals, but we are here to help and to work together with local companies to supply some of these products.”

Sione Puloka, the Tongan partner in Pactrade objected to the opposition by local business people over the intrusion of foreign business into Tonga. “Our government borrows from foreign banks and brings in expatriates for the benefit of the whole country so why can’t we in the private sector do the same?

“In today’s business world it is no longer enough knowing what to do, but we should do what we know and do it quickly.” Sione said that he had deep respect for local businesses, “but in business it’s all about serving the need of the consumers. Competition benefits the consumers, because we have to lower the price, offer better service, and better quality products.”

New warehouse

The Tonga Co-operative Federation is another wholesale operator that has been given the nudge by the new wholesalers. Paula Taufa of TCF said that for a number of years they were the sole distributor of Panamex products in Tonga, but very recently a new company Fernwood was set up here to distribute solely Panamex products.

Fernwood however is introducing a new dimension to wholesaling in Tonga. Sifa Lovo, who is looking after the Fernwood warehouse at the Small Industries Centre said that Fernwood is fully owned by a Tongan, Bruce Manson. The company was established in February as the sole distributor of Panamex products in Tonga.

Sifa said that Fernwood is different in the sense that it has hired Pacific Finance and Investments to manage its operation, and Sifa an employee of Pacific Finance and Investments looks after the warehouse for Fernwood. “All we do here is to stock up the warehouse with Panamex products, and wholesalers like MC International and others buy them from us and distribute them as they see fit,” he said.

While there is an upheaval in wholesaling the real battle is in the retail marketplace because a wholesaler who wins the most retail or fale koloa outlets in the villages will be on the road to success. At the same time competition is heating up between Tongan and Chinese shopkeepers who are upgrading their shops. According to statistics there are 814 retail outlets on Tongatapu, and of these only 69 are Chinese-owned and 29 are run by Chinese for Tongan sponsors.