Thursday, January 8, 2009

Learning Experience Dubai 1 - 2

In Learning Experience Dubai 1 - 1, I wrote about getting into Dubai and UAE. In Learning Experience Dubai 1 - 2, I will share with you about staying in business in Dubai and UAE.

2. Working with expatriates
I realise that if you take out all the expatriate in Dubai, the whole economy will collapse literally overnight :)

From the top management in PWC, Oracle, Microsoft, Nakeel, Dubai Holding etc. are supported by expatriates. I believe Dubai 20 % are local and 80% are foreigners, hence working with these expatriate is necessity. It is something that every foreigner coming to do business in Dubai have to learn to accept. Sound very ironical - foreign working and expatriate :)

I realized that if you are a sales person coming to sell something and want to see the company Big Boss who is a local, there are several "gantries" to overcome. Telephone appointment seldom work unless you have something that he really need. The other alternative is come direct to the company and wait. The first gantry is in most cases the Filipino reception, who is very non committal. Even if you convinced her (yes it is always a her) that you need to see the Big Boss, she will put you through a manager and in most instance it is an Indian and in most instance comes from Kerala and speaks Malayanan. If you convince the manager from Kerala that you need to see the big Boss, you get to see the general manager who is either from Europe (I have met Finnish, Swedish, Irish and even a Cornish from Cornwall in UK) or US of A. Many a time he is not the Big Boss....... If eventually you meet the Big Boss, he will do business if you speak Arabic.So my conclusion is that to be very successful in sales in Dubai, you need to find a Indian salesman from Kerala who speaks Tagalog, English and fluent Arabic :)

Joke aside, I just describe to you the business structure of a typical multi national corporation in Dubai ......

3. Business cost in Dubai
The cost of doing business in Dubai has escalated in the last few years. Rental has gone up tremendously and so have wages of employee. I remember once upon a time where you can get a good manager for US$700 per month now it is over US$3000 pm. Just yesterday, the lease cost of a plot of land in a free trade zone shot up from 6 Dir to 7 Dir in over one month and it was only asking 4 Dir about a year ago. Is it speculative ?????

Taking about free trade zone. It is a very common feature of the middle east country. Whether to base in a FTZ when you first start up a business will depend on where your customers are. I know of an engineering company that is based in Jabel Ali FTZ for the last 20 years and doing very well as all its customers are within the FTZ area. Know your customers. I also know of a furniture company who started up business outside the FTZ for the last eight years. The only issue this company faced and I have spoken to the owner many time is the 51% local ownership. He pays the local owner US$X every year, for doing nothing and for the last eight years this amount has been increasing exponentially irregardless of the profit growth. The owner wanted to change the local sponsor unfortunately the asking price is set by the benchmark set by the previous local sponsor. This is one issue that you must be careful. In the enthusiasm to start up a business, you have to take into consideration this cost and also you are not even the owner of your own business........

To be continued......

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