This is the third and final installment of the learning experience in Dubai. The focus is on making money in Dubai and UAE.
4.Relationship
There is one word to making money in the middle east and that is Relationship. It is not how much you know but in many instances it is who you know. In the many years I have running around in the middle east, I have met with people who would come and propose project to either raise fund or find the know how and every time they will highlight that this project is linked to this princes and that princes. There must be a lot of princes in middle east and it is true there are many princes in Middle East :)
Question is which is the right prince to network with?
I have a mathematical correlation for relationship. Relationship is a function of time and event.
Relationship = fn {event, time}
What it means is that for you to succeed in this market, you need to invest time in building your connection and also create events like calling them or visiting them etc to improve on the relationship. In this market you will eventually see the results
5.Repatriation
Making money is one thing but the more important thing is the repatriation of money home. This is common sense and yet over the years of traveling, I realized that even big companies have not consider this aspect. For Dubai and Abu Dhabi this is not an issue but countries like China and India, it can be a very painful experience. There are many ways in repatriation of funds, unfortunately it cannot be shared in this learning experience. It is not illegal, it is just ........
Think about how you want to take your money out of the market before developing the market.
I hope you have enjoyed the sharing experience.
Showing posts with label Dubai. Show all posts
Showing posts with label Dubai. Show all posts
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......
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......
Learning Experience Dubai 1 - 1
As promised I will share the experience of Dubai with you.
The Dubai assignment was started 6 months ago. I have a very good client who is always talking about the Middle East market and how his product can penetrate the market. They manufacture carton boxes packaging. At the same time, SPJ was looking for IIP project for their students. I spoke to Prof Dalvi to have the student to do a market study.
I just arrived in Dubai this morning and in the course of the next 4 days (I leave on Thursday), I will share the various meetings and understanding I had with you on Dubai.
The learning experience will be focused on the cultural aspect of entering the Middle east market, I will not talk about the project specific as it is an IIP project which the students are still working on, you lot will understand.
1.Hard market to penetrate
Entering the middle east market is very difficult meaning making money in this environment is not easy. It is true Dubai and the rest of the UAE is booming with double digit growth in the last few years and there are many projects up for grab. As a foreign company coming into this market, you need to be very patient.
My first consultancy assignment here was with a Malaysian electrical installation contractor, who have heard of the many construction projects in Dubai and Abu Dhabi. I have been to the Middle East since the 1980's but this is the first assignment to set up a business in Dubai. Our first visit was tough. You need to understand the concept of Arabian time. You can come for a pre agreed 1 pm appointment and end up waiting for 2-3 hours and when you finally meet with the person, he does not feel bad about keeping your guest waiting :) In Singapore, the person would have walk out. Even during the meeting, the pace of conversation is very slow, there will be silence in a conversation....... You come to appreciate that you have to give allowance for your meeting and appointment :)
It was after six trips to Dubai to have finally landed with a project and after that things are alot easier. You need that first project to get you started. The total cost before we got our first project was about S$50,000 or 100,000 Dir. Imagine a small company wanting to start up oversea business and the kind of investment you have to put in. This exclude the manhour cost and cost of lost opportunity if we did not secure a project after six visits. Thankfully we did. Have we got our returns, the answer was Yes. The company is still operating in Dubai and have expanded to Doha as well. Expansion has its problem. That will be something we talk about next time.
There are several things I learn negotiating in middle east.
1. Never confrontation, reduce the eye to eye contact as much as possible. Arab client do not like to be cornered.
2. Have contingency option A,B, C.... even if you like option A and it give you the best return, give the Arab client what they want and eventually the follow-up work will come back to option A....
3. Never Hard Sell, I come to realize it never work. At the meeting we were proposing and hard selling a cheaper material and yet the client wants the most expensive. It is waste of money and we conceded.
4. Build relationship. Do not try selling all the time, get to know the client and more important the family..
To be continued.....
The Dubai assignment was started 6 months ago. I have a very good client who is always talking about the Middle East market and how his product can penetrate the market. They manufacture carton boxes packaging. At the same time, SPJ was looking for IIP project for their students. I spoke to Prof Dalvi to have the student to do a market study.
I just arrived in Dubai this morning and in the course of the next 4 days (I leave on Thursday), I will share the various meetings and understanding I had with you on Dubai.
The learning experience will be focused on the cultural aspect of entering the Middle east market, I will not talk about the project specific as it is an IIP project which the students are still working on, you lot will understand.
1.Hard market to penetrate
Entering the middle east market is very difficult meaning making money in this environment is not easy. It is true Dubai and the rest of the UAE is booming with double digit growth in the last few years and there are many projects up for grab. As a foreign company coming into this market, you need to be very patient.
My first consultancy assignment here was with a Malaysian electrical installation contractor, who have heard of the many construction projects in Dubai and Abu Dhabi. I have been to the Middle East since the 1980's but this is the first assignment to set up a business in Dubai. Our first visit was tough. You need to understand the concept of Arabian time. You can come for a pre agreed 1 pm appointment and end up waiting for 2-3 hours and when you finally meet with the person, he does not feel bad about keeping your guest waiting :) In Singapore, the person would have walk out. Even during the meeting, the pace of conversation is very slow, there will be silence in a conversation....... You come to appreciate that you have to give allowance for your meeting and appointment :)
It was after six trips to Dubai to have finally landed with a project and after that things are alot easier. You need that first project to get you started. The total cost before we got our first project was about S$50,000 or 100,000 Dir. Imagine a small company wanting to start up oversea business and the kind of investment you have to put in. This exclude the manhour cost and cost of lost opportunity if we did not secure a project after six visits. Thankfully we did. Have we got our returns, the answer was Yes. The company is still operating in Dubai and have expanded to Doha as well. Expansion has its problem. That will be something we talk about next time.
There are several things I learn negotiating in middle east.
1. Never confrontation, reduce the eye to eye contact as much as possible. Arab client do not like to be cornered.
2. Have contingency option A,B, C.... even if you like option A and it give you the best return, give the Arab client what they want and eventually the follow-up work will come back to option A....
3. Never Hard Sell, I come to realize it never work. At the meeting we were proposing and hard selling a cheaper material and yet the client wants the most expensive. It is waste of money and we conceded.
4. Build relationship. Do not try selling all the time, get to know the client and more important the family..
To be continued.....
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