Page 1

ISSUE 24 | January 2014

BUSINESS INTELLIGENCE FOR INTERNATIONAL TRADE

www.tradeandexportme.com

Connecting the dots In an exclusive interview Nabil Sultan, Divisional Senior Vice President, Emirates SkyCargo, spoke about his vision for the organisation, the tie up with Qantas and the challenges the industry faces.

PUBLICATION LICENSED BY IMPZ


EDITOR’S LETTER

Chairman Dominic De Sousa CEO Nadeem Hood Managing Director Richard Judd richard.judd@cpimediagroup.com +971 4 440 9126

Editor’s note… To begin with, allow me to take this opportunity to wish you all a very Happy New Year!!! I hope that this year brings you peace, happiness and success.

EDITORIAL Group Director of Editorial Paul Godfrey paul.godfrey@cpimediagroup.com +971 4 440 9105 Group Managing Editors Melanie Mingas melanie.mingas@cpimediagroup.com 971 4 440 9152 Georgina Wilson-Powell georgina.powell@cpimediagroup.com 971 4 440 9105 Senior Editor Aparna Shivpuri Arya aparna.arya@cpimediagroup.com +971 4 440 9133 Business Assistant Adelle Louise Geronimo adelle.geronimo@cpimediagroup.com +971 4 440 9160 ADVERTISING Group Sales Director Carol Owen carol.owen@cpimediagroup.com +971 4 440 9110 Media Sales Executive Vanessa Linney vanessa.linney@cpimediagroup.com +971 4 440 9137 PRODUCTION AND DESIGN Production Manager James P Tharian james.tharian@cpimediagroup.com +971 4 440 9146 Database and Circulation Manager Rajeesh M rajeesh.nair@cpimediagroup.com +971 4 440 9147 Head of Design Fahed Sabbagh fahed.sabbagh@cpimediagroup.com +971 4 440 9107 Designer Froilan A. Cosgafa IV froilan.cosgafa@cpimediagroup.com +971 4 440 9107

As we usher in the New Year, there is a feeling of optimism and renewed enthusiasm to bring forth more interesting and varied stories. Our first issue of the year has Nabil Sultan, Senior Divisional VP, Emirates SkyCargo on the cover. In an exclusive interview to us, he spoke about the impact of Expo 2020 on the cargo industry, the future of the logistics sector and their tie up with Qantas. There is no denying that the UAE is abuzz with developments which will lead to the Expo 2020, and there couldn’t be a better time to be here. There are so many opportunities for trade and investment, which are waiting to be explored. It is only a matter of time now! Another big development in December was the agreement reached by the 159 member countries at the 9th WTO Ministerial in Bali. India’s food security plan was a cause of concern but an interim solution was agreed upon. While there are some concerns in India about how this agreement will impact its domestic economy, we will have to wait and watch how this cooperation works out. To know more about this agreement, please turn to page 14. Moving forward, we have done some extensive coverage of New South Wales, with features on bilateral trade, business regulations and much more. With Qantas’s tie up with Emirates, accessibility to the Australian market has increased by leaps and bound. So don’t forget to read all about it from page 32 onwards. So it’s all good news so far and we hope the rest of the year will be no different. We are gearing up for our Annual Trade Excellence Awards, which will be held on the 25th of February 2014 at the Ritz Carlton. If you haven’t nominated your organisation yet, please visit our website and all the details are available there. Best wishes once again for 2014!

Photographer Jay Colina Abdul Kader Pattambi DIGITAL SERVICES www.tradeandexportme.com Digital Services Manager Tristan Troy Maagma Web Developer Abey Mascreen online@cpimediagroup.com +971 4 440 9100

Aparna Shivpuri Arya, Senior Editor, Trade and Export Middle East

Published by

Talk to us: E-mail: aparna.arya@cpimediagroup.com Registered at IMPZ PO Box 13700, Dubai, UAE Tel: +971 4 440 9100 Fax: +971 4 447 2409 Printed by Printwell Printing Press

Twitter: @TradeNExportME

Facebook: www.facebook.com/tradeandexportme

LinkedIn group: tradeandexportme

If you’d like to receive a free copy of Trade and Export Middle East every month, e-mail rajeesh.nair@cpimediagroup.com requesting a subscription.

© Copyright 2013 CPI All rights reserved While the publishers have made every effort to ensure the accuracy of all information in this magazine, they will not be held responsible for any errors therein.

JANUARY 2014

3


14 16 JANUARY 2014

updates

ISSUE 24

trade talk

44 50

4

JANUARY 2013

10

38

06

News: International news and trends with domestic trading relevance.

09

EVENTS CALENDAR: A listing of the exhibitions and conferences in the region, to help you spend less time planning and more time attending.

FINANCE Regional Banking Commission: Lakshmanan Sankaran, Deputy General Manager, Head of Operations and Trade Finance, Commercial Bank of Dubai, and Chair, Regional Banking Commission, MENA Region, ICC Paris, spoke to Aparna Shivpuri Arya about the RBC.

12

LEGAL Dubai Expo: Jonathan Silver, Partner and Ben Smith, Associate, Clyde & Co, highlight the impact of the Dubai Expo 2020 on the economy.

14

INTERNATIONAL TRADE WTO: Aparna Shivpuri Arya looks at the deliberations that took place at the 9th WTO Ministerial in Bali.

16

INTERVIEW Emirates SkyCargo: Aparna Shivpuri Arya spoke to Nabil Sultan, Divisional Senior VP, Emirates SkyCargo, about his take on the cargo industry and his plans for the organisation.


CONTENTS

28

32

trade talk

20

22

State of Maryland: Mr. Rajan Natarajan, Deputy Secretary of State, Policy and External Affairs, State of Maryland, USA, spoke to us about his journey as the first Indian-American to hold such a prestigious post. STRATEGY How to keep employees happy? Evidence suggests that about a quarter of SMEs do not make it to their first birthday and worse still by the time of their fifth anniversary the figure can rise to 60%. So how can a company avoid failure and grow? Dr. Ashraf Mahate, Head, Market Intelligence, DED, gives us the answer.

24

LOGISTICS State of play: We spoke to Raman Kumar, Acting Managing Director, Al-Futtaim Logistics, to know more about the operations and his take on the logistics sector.

26

Supply chain blind spots: Dr. Dale Rogers, Professor, Logistics and Supply Chain Management, and Tad Kelly, Manager, Transportation Services, Legacy Supply Chain Services, explain in detail how to deal with the unknowns in the supply chain.

focus

32

Technology: Aparna Shivpuri Arya chatted with Ronald Totton, Vice President, Global Logistics, British Telecom Global Services, about the technological advancements in the supply chain and the logistics sector in the GCC.

COUNTRY FOCUS Bilateral trade: We take a look at New South Wale’s trade relations with the Middle East, with a special focus on opportunities in the food sector.

36

Virtual office: Laudy Lahdo, General Manager, Servcorp Middle East, tells us how virtual offices are the solution to doing business, in a cost and time effective way.

38

Education: Belinda Howell, General Manager, Market Development and Jalal El Nasar, Regional Manager, Middle East, UTS: INSEARCH, speak about how education is a pathway to prosperity and cooperation.

42

Technology: Mobillytics highlights how business intelligence solutions are the way to go.

44

Financial planning: Suren Pather, Director, Sumo International, speaks about his multifaceted venture that offers an array of services to enrich its clients in holistic and positive ways.

46

Business set up: Australia has low barriers to trade and investment and welcomes foreign investment. David Yates, Partner, Corrs Chambers Westgarth, gives us a synopsis of the rules and regulations.

48

50

FOOD Pies: Former NRL superstar Sean ‘Garlo’ Garlick turned his once fledgling retail pie business into a wholesale empire. We bring you the details of their operation in the Middle East. Coffee: Aparna Shivpuri Arya spoke to Nabi Saleh, Executive Chairman, Gloria Jean’s Coffees, about their business in the Middle East.

JANUARY 2013

5


Updates Regional news

Doha set to host GCC Digital Security Forum 2014

Doha has started their preparations for the GCC Digital Security Forum which will be held between 4 th-5 th February 2014. The city will be hosting the event, under the patronage of the Qatari Minister of Information and Communications Technology

Dr. Hessa Al Jaber. The Forum is being organised by MEEZA in cooperation with Al-Iktissad WalAamal Group. The Forum aims to confirm that digital crimes continue to be a growing global concern, as it is estimated that as much as USD 1 trillion was

lost globally last year as a result of cybercrimes (ITU Report). This forum comes at a time when digital defense strategies have reached the forefront of priorities of governments, and public and private institutions. It will be focusing on the issues on digital security and its impact on various economic sectors and the government’s role in the development of digital security. The event will feature prominent speakers, including ministers, top professionals and experts from international organisations and regulatory entities and unions, leaders from the public and private sectors and digital security officials from vital sectors such as the infrastructure, telecommunications, and banking and financial markets, in addition to solutions and services providers in the field of digital security. Overall, it is expected to attract more than 400 participants from 15 countries.

Syrian turmoil opens new trade routes The conflict in Syria is opening new trade routes across the Middle East. More goods are now being transported through northern Israel to Jordan, and from there throughout the Arab world. These vehicles used to travel by land through Syria to Jordan, but that route is impassable now. “The crisis in Syria has opened up this new route for us,” said Joseph Tarabani of Israeli private transportation firm Tiran Shipping, which organises the Israeli stage of the journey. “Now the Turkish drivers can still bring their goods from Turkey to Jordan.” The conflict in Syria led Israel to open its roads to the trucks. Their official destination is Jordan, but everyone knows that the goods will be taken on to Arab countries that have no diplomatic relations with

6

JANUARY 2014

Israel. But Israeli businessmen hope to take advantage of the new trade routes nevertheless. “Of course this is a commercial enterprise more than anything,” said David Behrisch, co-owner of Tiran Shipping.

USD 6.9 billion value of earmarked infrastructure projects for Dubai Expo 2020


Updates Regional news

Chinese companies eye Dubai as regional hub During their meetings with Mr. Ibrahim Mohamed Al Janahi, the Deputy CEO and Chief Commercial Officer, Jafza and Economic Zones World a number of Chinese companies have strongly expressed their interest in setting up their base in Dubai, particularly in Jafza and Technopark. The meetings took place as a Jafza delegation headed by Mr. Al Janahi participated in Automechanika, Shanghai 2013, the Jafza delegation also included Khalid Ahmed Al Marzooqi, Senior Manager – Asia Pacific Region, Saood Al Khloofi, Manager – MEA Region and Jeffery Xl Yu, Executive – Asia Pacific Region, Jafza Sales. The Jafza team also visited a number of major Chinese industrial units, and met the officials at the Shanghai Free Zone and held successful talks on mutual cooperation and investment opportunities. During their visit Al Janahi also briefed Chinese investors on the investment opportunities and the facilities available in Technopark, as well as its value proposition. According to him, China is a key trading partner of Dubai, and is Jafza’s largest trading partner.

Dubai wins Expo 2020 With the tally of 116 out of 163 votes Dubai has emerged the winner city for the World Expo 2020. Dubai is the first city in the Middle East and North Africa (MENA) region to host the World Expo, the highly celebrated international exhibition, which is the third largest global non-commercial event, following the Olympic Games and the FIFA World Cup. Dubai and the UAE would benefit from an estimated USD 6.9 billion (AED 25.3 billion) earmarked for infrastructure projects around the event. The centrepiece of development is a 438-hectare site at

the southwestern end of Dubai next to the Dubai World Central close to Jebel Ali port. Dubai’s construction market would benefit from the influx of new activity, but other sectors including travel, tourism and retail would also benefit. Expos are widely expected to work as economic catalysts as they generate economic benefits for the host country in the form of increased tourism, job opportunities, and hospitality revenues. They also provide financial benefits, both during the run up to the event and after, in terms of large construction activity, and investments from outside the country, among others.

Construction sector in the Middle East on the roll With the third edition of INTERMAT Middle East approaching, participating exhibitors – Diego Bertati, Service and Field Manager – Gulf Area, CIFA, and York Liang, President, LiuGong Machinery Middle East (FZE) – discussed the future of the construction industry in the Middle East and their participation at the event. According to a report published by Standard Chartered, Dubai is expected to spend around USD 9 billion to fund its growth plans for the event. Furthermore, according to an EC Harris study, the UAE is projected to spend USD 329 billion on major construction projects by 2030, boosting the UAE’s recessionhit construction sector through additional investments in infrastructure development. Big construction projects, which cost over USD 1 billion, are due to peak in the UAE by 2016, and projects worth USD 40 billion are due for delivery in 2016. When asked about the countries and the sectors in the Middle East that CIFA expects to see most growth in terms of construction, Diego Bertati Service and Field Manager – Gulf Area, CIFA mentioned that in KSA,there are very big projects to build new cities, indicating that perspectives are good. For the UAE, after the boom in 2007-2008, the market is seen as stable for the coming years especially with the upcoming Expo 2020 in Dubai. Oman is also a very interesting market for construction, even more than Qatar. In terms of sectors, surely big infrastructure projects and underground works are the ones that show most growth potential at present.

JANUARY 2014

7


Updates Global Watch

ICC calls for scaling up energy investments

In a session entitled The key to scaling-up energy efficiency investments, panellists agreed that without large-scale demand for energy efficiency, all other elements of the ‘puzzle’ – including financing, technology and skills – were less effective. The workshop highlighted that barriers to energy efficiency investments are various. They include high upfront and transaction costs, low delivery capabilities and lack of awareness and understanding of structural problems such as the principal-agent challenge. In addition, recent research has shown companies’ greatest concern is overall lack of confidence in the viability of energy-efficient investments over time. Panellists and participants discussed a wide range of issues as well as considerations that policymakers should bear in mind when developing policy and designing market frameworks and instruments to promote investments in energy efficiency. Participating companies and organisations included Danfoss, Great Eastern Energy Corporation, Siemens and 3M, as well as Climate Policy Initiative (CPI), International Finance Corporation (IFC) and World Energy Council (WEC). During the workshop, ICC shared business experiences and expertise to help shape the SIF agenda and outcomes, and drew attention to the imminent publication of an ICC policy statement on ‘Enabling frameworks to scale up investments in energy efficiency’, drafted by a group of experts on the ICC Environment and Energy Commission. 8

JANUARY 2014

EU leaders back Eurozone banking reform deal EU leaders have given their approval for a common set of rules for managing the closure of failing Eurozone banks. Under the banking union plan, a new European resolution authority will be created, to decide when and how insolvent banks are to be closed. The deal is aimed at building an EU banking union that should minimise the need for taxpayerfunded bailouts. This agreement would boost chances of an overall deal on the blueprint on dealing with failing lenders. It is also expected to boost investor confidence in the Eurozone. Under the agreement, banks will provide the cash to pay for the closure of failed lenders, giving roughly EUR 55 billion (USD 76 billion) over 10 years accumulated in a Single

Resolution Fund. However, if there is not enough money from the fees, governments will be able to impose more levies on banks. If that does not suffice, they would help with public money. If a government would not have enough money, it could borrow from the Eurozone bailout fund ESM, like the Spanish government did to recapitalise its banks in 2012, according to the deal reached by Eurozone finance ministers. In a draft statement issued by the Eurozone finance ministers, in the transitional period, bridge financing will be available either from national sources, backed by bank levies, or from the ESM, in line with agreed procedures. The UK and 10 other nonEurozone economies are not part of the deal.

IMF: US economy to improve in 2014 The International Monetary Fund predicts the US economy would expand at a faster pace next year, given positive economic data and some signs of compromise in Congress, said the head of the Washington-based lender. IMF Managing Director Christine Lagarde also praised the US Federal Reserve’s communication of its decision to start scaling back its massive monetary stimulus. “Growth is picking up and unemployment is going down. So all of that gives us a much stronger outlook for 2014, which brings us to raising our forecast”, said Lagarde. The IMF forecast in October that the US economy would expand 2.6% in 2014 after growing 1.6% this year. At the time, Lagarde warned that Congressional failure to raise the US debt ceiling could damage not only the United States, but the rest of the global economy. AUS Congress, deeply divided along party lines, did manage to pass a limited, two-year budget deal to trim some planned spending cuts and reduce the risk of a government shutdown. “The budget deal that was cut at year-end is a very good sign of responsibility, accountability and realism,” Lagarde said.


Updates Global Watch

WTO delivers! The WTO’s Bali Ministerial Conference concluded a day later than scheduled on 7th December 2013 with agreement on a package of issues designed to streamline trade, allow developing countries more options for providing food security, boost least developed countries’ trade and help promote development. In addition to the Bali Package, Ministers formally adopted a number of more routine decisions at the end of a five-day meeting opened by Indonesia’s President Susilo Bambang Yudhoyono, which also saw Yemen accepted as a new member. “We did it!” said Indonesia’s Trade Minister Gita Wirjawan, who chaired the conference. “We achieved what many said could not be done. President

Susilo Bambang Yudhoyono told us that the mystique of Bali would have a positive effect on our negotiations. This is the place where deals get done. I am delighted that Bali has not let us down.” “For the first time in our history the WTO has truly delivered,” said WTO Director-General Roberto Azevêdo.

“I challenged you all, here in Bali, to show the political will we needed to take us across the finish line. You did that. And I thank you for it.” The Bali Package is a selection of issues from the broader Doha Round negotiations. Echoing calls from many delegations, Mr Azevêdo, said members’ attention should now turn the rest of the round, known semi-officially as the Doha Development Agenda. “With the Bali package you have reaffirmed not just your commitment to the WTO — but also to the delivery of the Doha Development Agenda,” Mr Azevêdo said. “The decisions we have taken here are an important stepping stone towards the completion of the Doha round.

Save the date!

We know that you are a busy trader with a demanding events diary. Therefore, we are providing you with a snapshot of exhibitions and conferences in the region, so you spend less time planning and more time attending. Date

Event

Location

January 11 - 12

ShowFx Dubai Exhibition

Dubai, UAE (TBA)

14 - 16

World ecoConstruct

Abu Dhabi International Exhibition Centre

15 - 18

Jeddah International Trade Fair

Jeddah International Exhibition & Convention Centre

16 - 19

Saudi Infrastructure

Jeddah International Exhibition & Convention Centre

18 - 24

Abu Dhabi Sustainability Week

Abu Dhabi, UAE (TBA)

19 - 21

Intersec

Dubai International Convention & Exhibition Centre

19 - 22

Index KSA

Jeddah Center for Forum and Events

19 - 22

International Petroleum Technology Conference

Qatar National Convention Centre

20 - 22

INTERMAT Middle East

Abu Dhabi International Exhibition Centre

20 - 22

World Future Energy Summit

Abu Dhabi National Exhibition Centre

20 - 22

International Water Summit

Abu Dhabi National Exhibition Centre

20 - 22

EcoWaste International Exhibition

Abu Dhabi National Exhibition Centre

20 - 23

Steel Fab

Sharjah Expo Centre

21 - 29

Autumn Fair Bahrain

Bahrain International Exhibition & Convention Centre (BIECC)

24 - 28

SIMS - Saudi International Motor Show

Jeddah International Exhibition & Convention Centre

26 - 29

Middle East Luxury Travel Show

UAE Pavillion

JANUARY 2014

9


TRADE TALK Finance

Assessing the financial landscape

Lakshmanan Sankaran, Deputy General Manager, Head of Operations and Trade Finance, Commercial Bank of Dubai, and Chair, Regional Banking Commission, MENA Region, ICC Paris, spoke to Aparna Shivpuri Arya about the RBC and the trade and investment scenario in the MENA region.

Please tell us a bit about the history of setting up the ICC RBC MENA here in Dubai?

Over the last years, the ICC Banking Commission’s mandates and functions have evolved and expanded. Responding to and influenced by the development of the Commission, the various cooperation arrangements with the Banking Commission have intensified. The ICC Banking Commission needs to be able to meet increasing demands at regional level for more effective and “cutting edge” information, policy and market intelligence in trade finance. At the same time, the ICC Banking Commission is seeking to reinforce its presence in some of its new areas of intervention, such as supply chain finance or trade asset management, thus requesting the appropriate level of membership and expertise. As a result of this expansion, the ICC Banking Commission, Paris has created Regional Banking Commissions (RBCs) to improve its regional outreach. The RBCs on trade finance will consist of a group of members organising and managing information that is worth paying attention to. The first RBC has now been created for the MENA region in partnership with the Dubai Chamber of Commerce. 10

JANUARY 2014

What is the function and profile of the RBC?

To begin with, the RBC, MENA will focus on improving the Banking Commission’s regional outreach with regional policy makers and associations. Secondly, it will strive to disseminate policy information and market intelligence in trade finance to regional industry leaders, regulators and government officials. It will also seek to work actively with National Committees in the MENA region on all matters of mutual interest. Further, it will organise regional conferences and workshops on areas such as trade finance, supply chain financing, regulatory environment in banking, dispute resolution frame-work in trade finance.

As an expert, how do you see trade and investment in the MENA region?

The Arab Spring has had a profound impact on the region in view of the suddenness and the speed with which it spread. Fortunately some of the countries that are the leading engines of growth such as KSA, UAE and Qatar haven’t been impacted at all. Petro Dollar savings flows over the coming year are expected to hit USD 70 billion

per month. Much of this money will be spent at home. KSA alone is spending USD 130 billion, a staggering 30% of its GDP according to sources. The prospect of export growth in UAE is quite an exciting story. Dubai’s foreign trade surged 16% year-on-year to AED 679 billion in the first half of 2013 and has reached the AED 1 trillion mark in September 2013. Exports jumped by 22% to AED 84 billion from AED 69 billion and was the key growth driver. Since the year 2010 the reemergence of traditional growth sectors like logistics, retail, trade and tourism has been quite evident. According to one report, UAE was the world’s 13th largest exporter with USD 235 billion or 2% of the world’s total merchandise exports in 2010, surpassing major exporting countries such as India, Australia, Brazil and Russia.

How do you see the trade finance scenario changing in the coming years? Is there something that exporters and importers need to be aware of?

Trade finance products that are going to be in demand are those that improve the cash flow cycles both on the buying and the selling side. For some time now, banks have been focusing


on promoting ‘SCF’ (supply chain finance) products aggressively to clients, because supply chain finance directly targets open account clients and helps to bring them into the bank’s fold. Usage of structured products like credit insurance and factoring or receivable financing or invoice discounting – this helps mitigate risk and makes financing more attractive to both the bank and the customer. Automation of trade processes with the objective to achieve some amount of paperless environment and STP – Trade departments are labour intensive and maintaining a large team of staff, multiple legacy systems that have little or no vendor support – all this come with significant fixed costs to the bank. Global banks are setting up processing hubs at low cost locations leveraging technology and skilled manpower thus establishing a trend that looks more and more irreversible.

How do you see the global trends in trade finance? Has the situation changed because of the crisis in Europe and the US?

Post crisis, global trade slowed down – fast. WTO reported that following the record breaking 14.5% surge in volumes in 2010, world trade growth slowed down to a more modest 5% in 2011. WTO economists now predict a growth of 2.5% in 2013 and 4.5% in 2014. Eurozone induced crisis significantly contributed to the slowdown of demand for trade finance globally in 2012. The withdrawal of European banks, especially the French and the Spanish, has resulted in a funding shortage. Regulatory concerns flowing from Basel II/III provisions coupled with deleveraging by European and US banks have been sucking capital out of the market. According to a study, trade finance contraction impacts economic growth and job creation. A mere 5% trade finance increase could result in 2% production and jobs increase. As of 2011 end, there was a gap of USD 1.6 trillion unmet demand for trade finance, USD 425 billion of which was in developing Asia.

ABOUT Laxmanan Sankaran is the Deputy General Manager & Head of Operations, Trade Finance, Commercial Bank of Dubai, H.O Laxman’s responsibilities include managing Corporate Trade Sales & Advisory, Operations, and Products. Lakshmanan previously was Head of Operations for National Bank of Fujairah in Dubai and Head of Trade Finance at BNP Paribas, New Delhi. Lakshmanan Sankaran is a B.Com, 1st class, CAIIB and CDCS. He has PG Diploma in Export and Marketing Management. He has spent over three decades in Trade Finance. He can be contacted at laxman@cbd.ae

Notwithstanding the current slowdown, global trade flows are expected to represent 36% of global GDP by 2020. Global trade is expected to accelerate from 2014, according to a recent HSBC study. Over the next 15 years, trade in Asia and globally is expected to grow 120% and 86%, respectively. Asia-Pacific’s annual trade growth will consistently outperform the global average, with the gap widening further over the next 15 years, the forecast says, while China is expected to overtake the US as the world’s largest trading nation by 2016.

Which countries, according to you, are doing better than the others and why, when it comes to trade?

The risks remain particularly acute for many Asian economies that are still heavily reliant on exports to the European Union and the United States. China could be highly exposed through trade linkages. Europe and the United States together account for nearly half of China’s total exports. Asia managed to ride out the 2008/9 global financial crisis, boosting intra-regional trade in the process. But today’s global economic slump is more severe than before, threatening the solvency of developed nations and their financial sectors – a fact that makes the scarcity of funds for trade all the more alarming. Emerging markets, South – South trade has been growing at a CAGR of 11% and expected to continue in the same rate for a few more years at least. Countries in Asia, Middle East and Africa have strong growth prospects and expected to lead the global trade surge.

How will Bank Payment Obligation change trade finance? Is this instrument for everyone? BPO positions itself somewhere between Open Account and LC. BPO is meant not to replace LCs but to target open account trade. By providing a hybrid solution between OA and LC, BPO is able to add value and mitigate some of the risks associated with the Open Account especially. for the Sellers. By facilitating pre, post shipment financing, it is able to release some of the cash flow that was otherwise locked in the supply chain for the sellers. BPO will not be triggered unless there is a perfect data match by the TMA –similar to 100% compliance of documents under LC. On the other hand, BPO is also able to do away with some of the operational inefficiencies associated with documentary LCs. BPO can significantly cut down the order to cash cycle for sellers as compared to LCs. It replaces paper documents with electronic data and eliminates the subjectivity in document examination – the data either matches or not. Last but not the least, the open account trade currently functions without banks intermediation except for the final result, which is a payment. BPO provides an opportunity for the banks to claim more of the Open Account space. However the road ahead for BPO is long and tough. We have the product, we have written the rules and now looking for customers. Keeping BPO as a bank to bank only even to start with will be big challenge to sell to corporates. What each Bank is going to charge is unknown at this point in time. JANUARY 2014

11


TRADE TALK

It’s all about Expo 2020! Jonathan Silver, Partner and Ben Smith, Associate, Clyde & Co, highlight the impact of the Expo 2020 on the economy.

E

conomic growth in the Arabian Gulf Cooperation Council countries has been positive across many sectors in 2013 and despite continuing challenges, the regional economic outlook over the short to medium term looks positive. The recent announcement that Dubai has been selected as the host city for Expo 2020 will, over time, undoubtedly further secure Dubai’s economic prospects and result in new opportunities for investment into, and within, the region. An increase in trade into and through Dubai is likely to be a consequence of these opportunities. While the recent Expo 2020 announcement may not result in an initial surge in investment, we anticipate that investment will continue to increase substantially in the years leading up to Expo 2020. The main impacts of investment stemming from Dubai’s hosting of Expo 2020 are widely expected to be felt in the infrastructure, real estate and hospitality sectors, each of which should have a positive impact on regional trade. 12

JANUARY 2014

The modern Expo is a large scale public exhibition that, in recent years, has been held every five years in different locations around the world. The purpose of an Expo is to act as a platform for the global community to share innovations and engage in debate about the key issues facing the world. Organised and overseen by the Bureau International des Expositions (BIE), Expos are considered by many to be events of global significance, in the same order and magnitude as the Olympic Games or football World Cups. The developments The Dubai Expo will run for a six month period between October 2020 and April 2021, and is expected to attract 25 million visitors. Approximately 70% of visitors to the Expo are anticipated to be from outside the region. A dedicated 438 hectare site that is strategically located between the major city centres of Dubai and Abu Dhabi has been set

aside for the event. The site will house the Expo head quarters and approximately 180 purpose built pavilions. Proposals are in place for the site to be serviced by zero emission vehicles and it is proposed that 50% of the site’s power needs will be met through on-site solar power generation. The Expo 2020 site is intended to be linked to the new Al Maktoum International Airport by a dedicated metro system. The proximity of the Expo site to the world’s third busiest port (Jebel Ali Port) will provide exhibitors with easy logistical access to build their pavilions. The master plan for the development of the Expo site in Dubai is scheduled to be approved in 2015. Construction on the site is likely to start shortly after the approval of the master plan and delivery is scheduled for 2019. The development of the Expo site alone will require significant investment from the UAE Government and will, almost certainly, give rise to opportunities for private sector investment.

Shutterstock/ S-F

Legal


The vision for Expo 2020 is grand. It requires the implementation of many significant new projects and the acceleration of other, previously planned projects which will see development in the already impressive physical infrastructure of Dubai. Major investments are already planned in Dubai’s light rail and heavy rail infrastructure, and it is likely that some of these plans will be accelerated to accommodate the millions of individuals who are expected to visit Dubai to attend Expo 2020. An extension to the Dubai Metro, linking it to the new Al Maktoum International Airport and the Expo site is likely to go ahead. Other regional and domestic rail infrastructure projects, including Etihad Rail (the 1,200km pan AGCC rail network) may also be accelerated or expanded. Significant road infrastructure development will also be required to connect the Expo 2020 site to the UAE’s existing road network and to ensure the efficient movement of goods and people to and within Dubai in the run-up to, and during, Expo 2020. Developments in transport infrastructure will have a medium-term impact on trade and investment as the design, construction, integration and operational phases of road and rail projects gets underway. Perhaps more importantly though is the lasting impact that these developments will have on the UAE’s transport infrastructure, which, in the long term, will bolster Dubai’s position as a leading regional and international trade hub. The Middle East is leading global investment in aviation and Dubai’s airlines and airports are central to that growth. Over five million passengers currently pass through Dubai International Airport each month, making it the second busiest global hub for international passengers in the world. Terminal 3, Concourse A opened at Dubai International Airport in January 2013 as a purpose built facility for the Airbus A380. A fourth concourse and the expansion of Terminal 2 are planned as part of Dubai Airports’ current development programme, which aims to increase capacity for airline passenger traffic through Dubai to 90 million passengers a year by 2018. Dubai World Central, or Al Maktoum International Airport, has been billed as the world’s first “aerotropolis”. Al Maktoum

ABOUT Jonathan has over 32 years of experience working in the Middle East in the areas of international mergers & acquisitions, private equity, banking and finance, restructuring and foreign direct investment. He has led numerous transaction teams; assisting clients navigate the regulatory complexities of multi-jurisdictional transactions across the Middle East and North Africa.

ABOUT Ben represents a number of clients, primarily in the technology, media, telecommunications, pharmaceutical, retail and hospitality sectors, in relation to various aspects of their regional operations. Ben splits his time between the firm’s corporate and commercial practice groups.

International Airport opened for passenger flights on 27th October 2013. Once completed, Al Maktoum International Airport will be the world’s largest airport. Following the announcement that Dubai will host the event, development of Al Maktoum International Airport is expected to be accelerated to meet increased passenger demands during the Expo. The development of Al Maktoum International Airport includes the creation of an integrated sea and air freight facility that is linked with Jebel Ali Port. This facility will be an important component of the region’s transport infrastructure and should enhance Dubai’s position as a global trade hub both prior to Expo 2020 and beyond. Expo 2020 will, undoubtedly, have a positive impact on Dubai’s booming hospitality and leisure industry. It is anticipated that up to 45,000 additional hotel rooms will be required in Dubai for this event and that over 100,000 new jobs will be created in the tourism and hospitality sectors alone. This development will naturally require investment into the region both from within the hospitality and leisure industry and from the many other sectors that will benefit from the anticipated growth in local population

and the increase in the number of visitors to the UAE. Dubai’s real estate and retail sectors are currently experiencing strong growth. Announcements of major real estate and retail projects are, once again, becoming more commonplace. Perhaps the most significant real estate and retail development is Mohammed Bin Rashid City. The master plan for this development, located adjacent to the existing Meydan racecourse, includes plans for the world’s largest shopping mall, over 100 hotels, a Universal Studios franchise and a large public park. Whilst not directly related to Expo 2020, these developments and projects will form a part of the wider Expo 2020 experience and we anticipate announcements of further real estate and retail projects in the run-up to Expo 2020. Expo 2020 will be a major global and regional event. Significant investment will be required for the event to happen and with this investment will come opportunity for growth in trade both within and through Dubai. Equally important will be the legacy of this event – the improved transport infrastructure and the reinforcement of Dubai’s position as a global transport, leisure, retail and trade hub. JANUARY 2014

13


TRADE TALK International trade

Is it WTO’s moment of glory? We don’t need to second guess how relived the World Trade Organisation (WTO), Director General, Roberto Azevedo must be feeling. The agreement at the 9th WTO Ministerial in Bali has revived the role of this multilateral organisation and given fresh hope to the global trade agenda. Aparna Shivpuri Arya brings forth an analysis of this historic event to understand its full impact, along with some comments from our experts.

impacted by erroneous bureaucratic border procedures which in many instances prevent SMEs from participating in global trade.

A

fter closely following the ongoing debates by the various member countries before the 9th WTO Ministerial, it was clear that the apprehensions about division between the developing and developed countries were not going to go away. Therefore, it came as a pleasant surprise when the member countries reached a consensus and gave a mighty nudge to an almost dying institution. This agreement will not only restore confidence in the multilateral trading system but also generate a much needed stimulus of USD 1 trillion and 21 million jobs to the world economy. The approval came after Cuba backed off from a threat to veto the package of measures. Speaking about the impact of this agreement on global trade, Raed Safadi from OECD remarked, “First and foremost, the Bali deal was a victory for multilateralism. A total of 159 countries came together as one and reached 14

JANUARY 2014

a milestone agreement that reasserted the role of the WTO as the premier institution for regulating international trade, and opening markets. And this is a critical achievement– the WTO can now confidently turn its attention to the remaining issues in the Doha Development Agenda (DDA), most importantly opening domestic services markets to international competition, and finish the job that it started 12 years ago in Doha.” He further added that the Bali package is also a victory for global trade that received a shot in the arm in the form of an agreement on trade facilitation, agriculture and cotton, and also, importantly, in granting least developed countries duty-free and quota-free access to richer countries’ markets under preferential rules of origin. The Trade Facilitation Agreement is especially important to SMEs that are disproportionately

Background In the history of the WTO, it is not the first time that developing countries have raised their voices to champion their collective interests. But in most of the previous occasions, such as the Seattle Ministerial in 1999, Cancun in 2003 and more lately in December 2008, talks collapsed once developing countries stood solidly for their collective cause. The Bali Ministerial too could have met a similar fate had WTO members not realised the cost of the failure of this meeting. In many ways, the agenda for the Bali Ministerial was simplified much in advance and purposely made more balanced by including issues of interest to all three constituents — developed, developing and LDCs It has been more than a decade since the Doha Round was initiated in Qatar and since then it has been a continuous struggle to find a common ground. And all this while, regional trade agreements have grown, developing countries have become more economically advanced and dominant and the EU and the US have witnessed dire financial situation. Elaborating on this, Raed spoke about the pessimistic feeling before the Ministerial. “The general sentiment of the majority of participants arriving in Bali was that failure would push the DDA from a comatose state to a terminal state, and would also accelerate the already fast moving world of regional trade agreements. In other words, the institution risked marginalisation and loss of its negotiating arm. In addition, failure would


also have risked exploding the load of the WTO dispute settlement body as countries would seek to “redress” their perceptions of “unfair” rules or practices. Fortunately, for all countries, and most importantly the developing ones, reason prevailed. What further added to this turmoil was the recent stand of India on food security. India’s Food Security Act entitles 82 crore people to 5 kg of food grains per person a month at INR 1-3 per kg. The country needs 62 million tonnes food grains a year to implement the law. The other member countries were apprehensive that this would breach its 10% farm subsidy cap, if fully implemented. India on its part had insisted it would not compromise on a policy of subsidising food for hundreds of millions of poor, putting it at odds with the US and other developed countries. However, an agreement was reached with an interim mechanism which will not penalise India for its food security programme. The way forward According to Dr. Biswajit Nag, Associate Professor, IIFT, India has played an important role in the “Deal”which in general is supported by the developing world as most of us have common issues such as food security and trade facilitation. It may be worth noting that this is the first such agreement since the very inception of WTO in 1995. Food security issues at this moment is not only important for political reason ( as national election is just at the corner) but also to make sure that large number of poor who have just moved above the poverty line (due to higher economic growth) do not fall back again due to global volatility. Even the forecast on Indian economy is not showing any rosy picture and this is all the more pushing government to continue with a robust public distribution system. He further added, “The Bali Package on food subsidy requires its member countries to develop a permanent solution to the public stockholding issue in four years. In the process, countries will open up its agricultural subsidy regime for scrutiny and they will commit that these subsidies are entirely for livelihood issues and not to distort agricultural trade through exports. In return countries like India will not be challenged on its agricultural subsidies through WTO Dispute Settlement Mechanism for the next four years.

Raed Safadi is the Deputy Director of the Trade and Agriculture Directorate of the OECD.

Biswajit Nag is an Associate Professor at the Indian Institute of Foreign Trade (IIFT), New Delhi. According to Dr. Biswajt, this move by India might prove detrimental, “Though it is a relief to India at least for next four years, this throws a serious challenge to the country in the long run. Monumental negligence towards agriculture since the inception of liberalisation policy, proliferation of middle men and incomplete information driven market mechanism coupled with low productivity and high food demand has put India at the crossroad and food security issue may be a serious cause concern by the end of the decade as many reports claim.” Besides this breakthrough, the other major achievement was the agreement on trade facilitation, which will help save time and cut costs and streamline the supply chain and customs. Trade facilitation has been a sore issue for the developing countries because of the costs involved in implementing the various measures—especially when that money could be used for more developmental issues. According to Raed, “Trade facilitation is about streamlining the logistics-related and border-management aspects of trade. Getting grapes from Lebanon to a supermarket in the

UAE is not just a question of good roads. The grapes can spoil en route because of inefficient border management and lengthy procedures. And these bottlenecks hurt the poor farmers in Lebanon, and also deny consumers in the UAE choice. OECD analysis actually shows that reforming developing countries’ customs administration would cut trade costs by as much as 15%. Inefficient border management also hurts industrialisation efforts of developing countries as it hinders their ability to attract supply chains investments. Seamless border procedures are a critical factor in determining the ability of firms in any one country to participate in the global supply chains which now characterise world trade.” Dr. Biswajit however has a few concerns when it comes to trade facilitation and developing countries. “Using international standards as a basis for trade procedures, establishing a single window for meeting documentation requirements and implementing risk management systems for customs control are some of the obligations that are not binding. Instead, countries are expected to implement these obligations on a ‘best-endeavour’ basis. These ‘fine prints’ may take away the benefits of trade facilitation agreement,” he remarked. Adding to it he said that India as a country has made substantial effort unilaterally to improve its trade facilitation process but ground reality is still far from satisfactory. The projected gains from trade facilitation agreement may further go down if developing countries find major challenges to arrange funds to meet the obligation. It is interesting to point that while financial support for developing countries has been considered a core element since the commencement of the trade facilitation negotiations, the ultimate benefits from the agreement depends on how developed economies and multilateral agencies help developing and least developed economies by providing financial support and training to manage complicated issues, such as trade facilitation.” To conclude, the Bali Package covers only a selection of issues from the much broader and ambitious Doha Development Agenda. All eyes would now turn towards the remaining unresolved issues of the Doha agenda, which includes Non-Agricultural Market Access (NAMA), and services. Both these issues are extremely important for the member countries. JANUARY 2014

15


TRADE TALK Interview

The beacon of

Emirates SkyCargo Nabil Sultan, Divisional Senior VP, Emirates SkyCargo, whose career spans more than 20 years, took over this exciting and challenging role about seven months ago. In a conversation with Aparna Shivpuri Arya, he gives his take on the future of this leading air cargo arm of Emirates.

A

fter a quick round of photoshoot, I sat down to begin my interview with Nabil. I started our conversation by asking him how this year has been for Emirates SkyCargo, to which he said, “From a global market perspective, there has been a bit of instability. It has been like that for a few years now, but what’s interesting is that in the last two quarters we’ve seen some improvements. Particularly across Europe, wherein volumes of exports is again going up. With the economy reviving in Europe I suspect the consumer demand will improve, therefor the exports into most of the European countries will also improve by late 2014 to early 2015.” Speaking about UAE’s neighbours in West Asia, Nabil was of the opinion that India in particular, and West Asia in general, has been a roller coaster ride - some months have been good and some not so good. But these markets have started to pick up. According to Nabil, Bangladesh for instance has witnessed massive growth in terms of production, mainly because a lot of Chinese manufacturers have started to move to Bangladesh, especially in the clothing industry. Moving on to other trade routes, Nabil pointed out that the main contributors to future growth are the American and Chinese markets. “What’s interesting 16

JANUARY 2014

is that by 2017 the largest markets that would be producing the biggest volume [of exports] are USA, China, Germany and Hong Kong and also UAE would be added to that list.” Nabil also highlighted that, Dubai in particular, and UAE in general, has grown substantially over the previous years. Dubai of course has become a major international hub for cargo. And surprisingly in terms of exports UAE is the largest market for the UK surpassing the USA, China and Hong Kong. Speaking about their operations, Nabil remarked, “At Emirates SkyCargo we handle about 1.9 million tonnes annually out of the Dubai hub. Recently we have expanded the facilities that we have in Dubai. And there’s a plan of adding almost a 100% capacity increase on what we have. There’s also a major development that is on-going at the Dubai World Central. We are building a new facility there which we are hoping to be ready by May 2014,” he further added. Most of our significant operations from Dubai International Airport will be moved into that, giving us a huge leverage in the new facility. And it will also ease the congestion here in Dubai International Airport. The most critical part of that move is the virtual corridor between the two airports DWC and


JANUARY 2014

17


TRADE TALK Interview

Dubai International Airport. All of this is based on His Highness Sheikh Mohammed bin Rashid Al Maktoum’ s instructions to make these virtual corridors functional. There is a lot of work being done to ensure the seamless cargo movement between both airports, using the current infrastructure and perhaps building additional ones.” Building on this, I asked him about his opinion on the impact that the Expo 2020 will have on Emirates SkyCargo. To which he said, “Well I think the Expo 2020 is a huge leap forward, there’s no doubt that it will add a huge volume in terms of the movement in and out Dubai. With Dubai being a well-recognised hub in the world for cargo movement, there’s going to be a massive amount of shipments in and out of the country.” “And for us it is critical that we ensure that there is sufficient logistics infrastructure in position before that period. The expansion we have at DWC is just the first phase of what we intend to do. The facility that we are currently building could accommodate almost 700,000 tonnes annually and we will build six more that’s similar to that one in DWC. Therefore the capacity that we have now will literally be doubled,” Nabil opined. In Nabil’s opinion from a trade perspective there will be a massive impact on various industries, as a lot of countries will come to exhibit their product lines, cultural aspects of their countries and various other key areas, which will create a huge influx of traffic in and out of the Emirate. I then mentioned to him that in our January issue, we are doing a major focus on New South Wales and the opportunities the region offers to the Middle East businesses. I wanted to know his opinion about the partnership with Qantas and how that has worked for them. “Australia in general has been a big market for us, with the capacity that we deploy there. It is a very important market for us. And with the cooperation that we have with Qantas, it has given us access to a lot of domestic areas in Australia , allowing us to reach a lot of markets there. Not only from Dubai but also using the 18

JANUARY 2014

Emirates network from all over Europe and the Americas, it is a seamless movement now. I’m sure NSW’s government will benefit from all of this, and I think connecting our whole European, Asian, West Asia, and Indian Subcontinent networks is a great opportunity for a lot of industries in Australia. So for us it is important to create that link and once the link has been established and there is sufficient capacity for both cargo and passenger we will automatically see different opportunities rising,” Nabil remarked. As we moved towards wrapping up the interview, I was keen on knowing what challenges plague the logistics or cargo sector. To this, Nabil smiled and pointed out that their biggest challenge is that the other countries haven’t been able to develop

markets are also growing. For example the air freight industry only carries 2% of the total global movement of goods. There is room for development and I think today the nature of business has evolved. For example, companies like Zara and Apple expect their products to be on the shelf on the day of the product launch.” According to Nabil, it is all about integrated supply chain, and unless you understand the business of your partners and become an integral part of their supply chain you can’t function well. We came to the end of our discussion on an optimistic note, with Nabil pointing out that 2014 looks better than what they have seen in the previous years and that they are well positioned for market growth. Emirates

If you look around the airports today the biggest challenge is whether you’d be able to get slots in a few years’ time if you are required to expand your capacity.

their infrastructure as fast as Dubai. “If you look around the airports today the biggest challenge is whether you’d be able to get slots in a few years’ time if you are required to expand your capacity. Infrastructure and airport development in other countries has been extremely slow, unlike here in Dubai where we have made very bold steps to make sure that the future growth doesn’t remain stagnant. So the biggest challenge that we face as an airline is the infrastructure that will help us to manage our growth in a lot of these countries,” was Nabil’s observation. He also pointed out that, contrary to perception, there is no competition between the other regional carriers, as there is enough capacity out there for passenger and cargo for all airlines. “Of course the airlines are growing but the

SkyCargo already caters to 40 destinations excluding the belly of the passengers’ aircrafts. “I think what really helped us is that we continued to have a young fleet. All of our Boeing 777 give us efficiency in fuel consumption and an edge over our competition. There are a lot of interesting destinations coming up but for us identifying new routes has always been our key to success. And what our customers appreciate is that we have a vast network, aircraft capacity, infrastructure and the quality of service.” As I said my goodbye to Nabil, I couldn’t help but wonder, that his knowledge about the industry and Emirates SkyCargo far exceeds someone who has been around for less than a year. Rest assured, Emirates SkyCargo is in safe hands and its future looks nothing, but bright!


SEE TOMORROW’S PROJECT OPPORTUNITIES TODAY Zawya Projects delivers comprehensive, multi-dimensional views of Middle East projects and tenders, empowering your organization with timely, accurate, and insightful intelligence when it matters most Track thousands of Projects with full life-cycle coverage and details of the people and companies behind them. zawya.com/projects


TRADE TALK Interview

The Diplomat

Meeting Mr. Rajan Natarajan, Deputy Secretary of State for Policy & External Affairs, Maryland, USA, was a humbling experience, as I got to know his story as the first Indian-American who has held such an important government position in Maryland’s history.

W

e started the conversation with Mr. Rajan telling me about his role in the government of Maryland. “First of all, I’m very proud of my public service role as a Deputy Secretary of State of Maryland. My key role is promoting Maryland in the global state. It involves a few steps – first is government to government, because this relationship brings the real action. Then through that channel we promote economics, trade, education and technology along with cultural exchange 20

JANUARY 2014

(sports, healthcare and so on) and the people to people relationship.” Going back in time, he told me, “I was still a scientist when I left India and came to the USA in 1989. I told my colleagues that I want to invent something that would make an impact in developing countries. I ended up in industrial biotechnology (pharmaceutical). To me it has always been important to make a product and is unique that would have a positive impact to people. That was really my motivation- how my actions can have

some impact to the society? After I invented my product, I felt that I had an obligation to take it to the market, and therefore I went to a business school and started my own company. Moving forward, I was appointed to this position two and a half years ago and it was another turning point for me. I have been a scientist turned businessman and now I am a policymaker. Some people call me a politician but I would prefer to be called a diplomat.” He strongly believes that the USA is a land of opportunities and that if you are doing the right thing, you will be rewarded. Moving on to the UAE, Mr. Rajan said that the USA and UAE have very good bilateral relations and Maryland should work that to its advantage. They will be working towards building a strategic partnership with the UAE. “I have been thinking of how I can incorporate Maryland and Dubai for a long-term strategic global vision. Maryland being a gateway for international trade in the USA can offer a lot of business opportunities,” he remarked. As we moved to the end of the discussion, I had to ask him that as a successful entrepreneur, what advice he would give to other budding entrepreneurs. He smiled and said, “Anything that you would like to do, think outside of the box. You have to have self-confidence and trust yourself. Because if you don’t trust yourself no one will. Entrepreneurship requires creativity, innovation and also perseverance. You also have to have a lot of passion and not just chase money. And any problem you face there is always a solution. So when there is a problem and you come up with a solutionthat is entrepreneurship.”


TRADE TALK Strategy

Happy employees = higher profits Establishing a business is perhaps one of the most high risk activities that an individual can carry out. Evidence suggests that about a quarter of SMEs do not make it to their first birthday and worse still, by the fifth anniversary the figure can rise to 60%. So how can a company avoid failure and grow? Dr. Ashraf Mahate, Head, Market Intelligence, DED, gives us the answers.

T

he answer to this question lies in ensuring customer satisfaction which plays a pivotal role in the growth and the success of a firm. Satisfied customers are important as they become regular and also act as ambassadors for the company through influencing their family and friends. Most entrepreneurs think that paying attention to customers and meeting their every need is the only way to achieve customer satisfaction and loyalty. However, this is far from the truth – the best way to become customer-centric is to boast employee satisfaction. There is considerable academic evidence to show a direct relationship between employee and customer satisfaction. In other words happy employees lead to satisfied customers. Therefore any firm that neglects its employees and their satisfaction does so at its own peril. Study after study has shown that employees that are satisfied with their overall work experience, which is challenging yet provides a sense of ownership in the business tends to have a considerable positive impact on the level of customer satisfaction and loyalty. The opposite is also true whereby employees that are dissatisfied with their jobs have a higher 22

JANUARY 2014

probability of not meeting the needs of their customers. Therefore, the answer for any firm wishing to grow its business and avoid failure is to ensure that they have satisfied employees. So the question that arises is how can a resource - constrained SME ensure that its employees are satisfied?

The solution Although, SMEs may be resource constrained there are a number of simple actions they can take which do not cost a lot of money, yet have an incredible impact on customer satisfaction. • First, employees want empowerment. Empowerment is a very important tool to increase employee satisfaction yet seldom applied in the workplace. Employee empowerment is essentially the process of enabling an employee to think, behave, act, react, and control their work environment in more self-supporting manner so as to be in control of its purpose. Entrepreneurs and managers perceive empowerment with loss of control and a threat to the future of the firm. However, this not is the case and empowerment can actually have a significant and positive impact on the firm if implemented correctly.

One of the simplest and most effective ways of empowering staff is to provide them with more information that is relevant and honest. As such it requires the entrepreneur or manager to share a larger amount of information with employees and hence allows them a better understanding of the current organisational situation. Empowerment builds trust throughout the organisation and breaks down traditional hierarchical thinking. The larger amount of information makes employees more responsible. In the process employees make more informed decisions and have much better understanding of the goals and objectives of the firm. Employee empowerment also implies that staff needs to have appropriate training and decision making tools. An SME need not spend large sums of money on training through external providers. Instead, an SME owner can conduct the training by them self so as to ensure that their employees are able to make decisions that are beneficial for the firm and for each individual customer. Similarly, hiring managers or supervisors that are well taught to carry out their function will serve to be role models as well as mentoring employees.


• In reality the working atmosphere is very wide and encompasses many different aspects which include the physical work environment, management’s attitude toward employees, relationship with colleagues, and working conditions. There is considerable academic evidence to show that the physical space significantly impacts employee behavior and performance. • Also, the attitude of management towards the well-being of their staff is important. Employees positively value management that show respect, empathy, and strive to provide a hostile free work environment for their employees. An SME can take simple but constructive steps to improve the work environment through design of the workspace so as to promote team work and support collaboration. The physical environment also needs to make employees feel comfortable, accessible to both management and colleagues but at the same time allows them the ability to carry out individual tasks. In addition to the physical aspects of the work environment, there are other important factors such as flexibility, a hostile free work environment, and more that impact employee satisfaction. An entrepreneur has to be aware of any tense behaviour between employees through creating a positive environment that supports success. Management needs to intervene in a fair and honest manner in order to deal with any toxic relationships between employees. Also, regular teambuilding activities play an important role in creating a positive tense free relationship between employees. • It was not so long ago that employees were considered to be just another input in the production process that created goods and services. Today most organisations have moved on to realise that employees are much more than just an input in their business process. As such employees require motivation as well as recognition in order to increase their performance levels. The traditional view on employee motivation has been to use the ‘carrot and stick’ approach. In order words, employees receive the promise of a reward for good performance or the threat of penalty for bad work. However, research shows that employees are seldom motivated by such an approach and the ‘stick’

ABOUT Dr. Mahate received his doctorate from Cass City University Business School in London (UK). He read Economics at University College London, followed by a Masters in International Economics and Banking at the University of Wales in Cardiff. Dr. Mahate is a professional educator and received his training at the Institute of Education (University of London). He is a member of the Chartered Institute of Managers (UK) and a Member of the Institute of Commercial Management (UK). He is also a member of the Association of Certified Anti-Money Laundering Specialists (ACAMS). He can be reached at ashraf.mahate@dedc.gov.ae.

simply creates resentment and dislike for the manager or company. The real key to employee motivation is financial and non-financial recognition. In other words employees who receive bonuses tend to work even harder, increasing productivity and potentially bolstering profits. It’s not just financial rewards that are important and the SME needs to develop an effective award and recognition programme that creates a positive working environment that encourages employees to thrive. Various surveys have shown that employee recognition makes them feel valued and appreciated and hence leads to higher employee morale, and performance. Most entrepreneurs overlook the obvious and seek elaborate and expensive solutions to an important issue problem of employee satisfaction. More often than not, all that employees want is effective and transparent engagement with managers. It is important to bear in mind that the single most important aspect in the workplace is communication without which nothing can be accomplished. At the most basic level communication allows for workplace planning, organising, staffing, leading, and controlling. In the modern business world communication is no longer limited to face-to-face meetings but includes a telephone conversations, newsletters, bulletin boards, e-mail, intranets, video chats such as Skype and so on. • Communication is a very powerful tool that the entrepreneur can harness to increase the level of employee satisfaction. The key goals of communication are that it needs to be honest and addresses the issues at hand in a substantive manner. Also, communication

should be bilateral so that employees are able to pass information to managers and hence increase their commitment to the company’s goals and objectives. It is important for managers to be open to feedback from employees and thus giving them a voice in the company and that their input is taken seriously. It is important to bear in mind that communication is a process that is based on respect, dignity, trust, and honestly.

Conclusion Recent studies have shown that there is a greater understanding and appreciation for the environment and as such employees are more likely to be satisfied if they are working for a company that is environmentally friendly. Academic research does not generally find that firms that are ‘green’ significantly increase their profits. However, various surveys show that employees positively perceive such a company and it impacts factors such as loyalty, the ease of recruiting new and talented staff. Associated with environmental concern is the issue of corporate social responsibility (CSR). Again the impact on profitability may be low but it has been shown to positively impact employee satisfaction. At the end of the day an entrepreneur needs to appreciate that the only differentiating factor between them and their competitors is their employees. Investing in employee satisfaction is one of the most important and effective ways to grow a company. The age old formula of happy employees equals’ higher profits is true now as it has always been. Companies that want to survive and grow need to take note of this formula. JANUARY 2014

23


TRADE TALK Logistics

Your trusted

logistics partner

Established in the 1930s, Al-Futtaim Group operates through more than 100 companies and encompasses sectors such as commerce, industry and services across many countries. We spoke to Raman Kumar, Acting Managing Director, Al-Futtaim Logistics to know more about its operations and his take on the logistics sector. As a leader in the logistics sector, how do you see the Dubai Expo 2020 impacting this sector? The Expo 2020 will fuel tremendous economic and social prosperity. This event is expected to attract more business to the already well known gateway. Dubai is the gateway to Africa and Asia and as such the aviation and logistics industry is expected to benefit from the economic growth along with all other major industries. It is projected that in the medium term, Dubai and the UAE would benefit from an estimated USD 6.9 billion earmarked for infrastructure projects around the event.

How do you see the trends in the logistics sector in 2014?

For Al-Futtaim Logistics, next year looks very bright. We have taken several strategic decision in the latter part of this year that will accommodate the expected growth for the coming years. The UAE logistics industry is expected to be worth AED 37 billion by 2015, according to estimates by 24

JANUARY 2014

Frost & Sullivan. Overall, the GCC logistics sector is estimated at around USD 35 billion and KSA, the UAE and Oman contribute 85% of the share. Around 14% of UAE’s GDP is being contributed by the supply chain and logistics sector which has become an integral part of the country’s economy.

For companies looking at using the services of a logistics firm, what are the points they should always keep in mind?

For any logistics provider, the competitive edge depends on how we can help our customers benefit from the efficiencies of their partner. At Al-Futtaim Logistics, our vision is to be the partner of choice, which we achieve by being the best in service, quality and efficiencies. Being part of the Al-Futtaim Group, we are able to captialise on the economies of scale and financial stability that in turn provides our customer the benefit of working with a UAE based company with world class supply chain solutions. Each customer is unique

and this is where Al-Futtaim Logistics is able to offer a competitive edge due to our agile business approach. We ensure that the customers’ requirements are well understood and provide customised solutions to suite the business needs of the customer, hence our motto “Solutions Delivered.”

Please give us some details about Al-Futtaim Logistics’ operations in the UAE and the Middle East.

Al-Futtaim Logistics is a leading supply chain management company based in Jebel Ali, UAE. Established in the 1980s, Al-Futtaim Logistics is one of the region’s largest and most respected logistics service providers in the UAE with global


reach through its strategic alliance. The company has many years of specialised experience in several key sectors, and has a comprehensive understanding of the complexities involved in providing solutions for: Automotive, Retail & Fashion, FMCG, Electronics, Engineering & High-Tech, Humanitarian, Project Cargo, Heavy Lift and Break Bulk and Industrial. Our service capabilities extend to freight forwarding & customs clearance, warehousing & contract logistics, good transportation & distribution, corporate transportation, relocations and international moving. The company manages over 200,000 m2 warehousing and 1,000,000 m2 open storage space with its own fleet and 14 operational centers located in major air and sea hubs in the UAE. Through its network of strategic alliance, Al-Futtaim Logistics provides global reach to over 100 countries. Our corporate transportation division transports over 25,000 people a day covering 40,000 kilometers, which is equivalent to going around the world in a day!

Can you give us some details about your warehousing and contract logistics services?

Al-Futtaim Logistics’ team of experienced professionals consults with each customer to agree the best dedicated or shared wa re h o u s i n g s o l u t i o n , c u s to m i s e d according to the scale of the individual business requirement, location and operational model. O u r ex te n s ive wa re h o u s i n g a n d redistribution capacity currently caters for over a quarter of a million line items in multiple locations. Catering to diverse sectors the company’s complex operational capabilities encompass the handling of bulk items as large as sofas, to piece-picking minute hardware commodities! With facilities comprising over 200,000 m2 of ambient and temperature controlled storage, Al-Futtaim Logistics caters to the requirements of large and small businesses alike. The latest technology of web-enabled inventory visibility provides reassurance

ABOUT Raman Kumar is a highly experienced accounting professional with more than 25 years in the logistics industry. Raman is a qualified MBA in Finance, CMA, Risk Analyst, Post-Graduation in Financial Accounting, Post-Graduation in Management and Graduate in Commerce and Accounting. Before joining Al-Futtaim, Raman was working with Inchcape Shipping Group in Abu Dhabi and Muscat. He is a member of professional accounting bodies like Management Accountant in USA and Australia.

for customers, and also features end-to-end scanning functionality and best practice operational processes for products stored, including for standard pallet, shelved, bins, hanging garment and bulk commodities. Al-Futtaim Logistics’ value added services (VAS) provides customers with a complete one stop, cost effective logistics proposition through a comprehensive range VAS, which includes repackaging, barcoding, product labeling, tagging and promotional packaging for retail sales periods. Home delivery and assembly services are recent developments to provide integrated customer solutions.

What are the future expansion plans of Al-Futtaim Logistics?

We are more focused to strategically expand our non-group customer base than last year. The way we’re growing is phenomenal! The main thing which hinders our growing faster is limitation of facilities, but we are in the process now of making sure that it does not become a problem next year. Going forward, we will deliver more customer solutions to our existing portfolio, solutions, such as the expansion of our fashion logistics and new solutions like Container Freight Station (CFS) in Jebel Ali Free Zone. We are working with our major customers for value-added service in Levant and other emerging markets alike. Our rapid expansion into home delivery services for our retail clients is a recent milestone, in addition to the exploration of Afghanistan and Northern African market, where we operate charter flights,

providing solutions for the humanitarian and military industry sectors. Early next year, Al-Futtaim Logistics is expecting ISO 14001 and OHSAS 18001 certification to achieve the IMS quality standards. We’ve also added a suite of valueadded services, notably the relocations of vintage and classic cars from the US and UK. We have taken on new facilities for warehousing and an open yard in Jebel Ali Free Zone and Dubai Industrial City, which increase our current warehousing and open yard facilities beyond 1 million m 2, and introduced new trade lanes for airfreight and contract logistics from Asian countries. We have an industry specialised management team to take the business beyond 2014. We can confidently state that Al-Futtaim Logistics is well positioned in the coming year to be the strategic partner of choice growing footprint from North Africa to China, especially with the focus placed in the latter part of this year on infrastructure and geographic expansions. JANUARY 2014

25


TRADE TALK Logistics

Watch out for the blind spots In order to maintain an efficient supply chain, it is very important to know the unknowns. Dr. Dale Rogers, Professor, Logistics and Supply Chain Management, Rutgers University and Tad Kelly, Manager, Transportation Services, Legacy Supply Chain Services, explain in detail how to deal with these unknowns.

W

hen describing the Gulf conflict, former Secretary of Defense Donald Rumsfeld famously said that the biggest problems decision makers had to face were “unknown unknowns”. That is, what you don’t know could kill you. A key role of an effective manager is to eliminate as many “unknowns” as possible. Some may be impossible to eliminate. However, it is the responsibility of the firm to be diligently aware of potential “blind spots” that may be lurking in their supply chains. A strategic plan to identify and manage possible blind spots may allow a firm to successfully circumvent a potential supply chain land mine. In the last few years, firms have developed new strategies for managing risk. At the same time we have seen the number and severity of risk increase. Firms have to deal with much more pressure than they did a few short years ago. Companies used to be concerned primarily about satisfying their customers and shareholders, and a few enlightened firms cared about their employees. A disgruntled consumer with access to the Internet and a blog may cause a company a lot of heartache. Today, companies experience pressure from a myriad of sources such as suppliers, intrafirm organisations, service firms, employees, NGOs, government regulation, shareholders, competitors, media, bloggers and customers Firms have to take into consideration many more sources of pressure and risk than they had to previously. As a supply chain matures it almost always becomes more 26

JANUARY 2014

complex. This means that the firm has to take on more complexity while at the same time outsourcing more to different kinds of suppliers. Supply chain complexity is problematic in many industries. Areas of concern could include serious issues such as hazardous materials or potential regulatory problems such as those emanating from legislation such as Dodd-Frank. Section 1502 of the Dodd-Frank legislation specifies several rules regarding products such as “conflict minerals” which impact many supply chains around the world. These rules apply to publicly traded companies and their suppliers. At this point, it is difficult for most firms to clearly understand how to comply with these new rules in part because they have limited visibility upstream through their various supply chains. It is clear that a company’s responsibility for compliance extends well beyond firm borders. It doesn’t matter if the firm itself is clean – independent suppliers from anywhere in the world have to comply with the requirement. Conflict minerals are metals mined in places where there is armed conflict and human rights abuse such as forced labour. While there are many more elements a firm has to manage, and higher risks that emanate from a multitude of sources, there are some things a company can do to decrease the likelihood of catastrophic events. One strategy for managing supply chain risk and improving sustainability throughout the supply chain is to create maps of supplier

relationships. These maps may include several elements beyond the simple physical movement of product and enable transparency in the supply chain.

Transparency is critical A key enabler of sustainable supply chains is transparency. Transparency is also a key element in eliminating supply chain blind spots. Purchasing managers are building transparency requirements into their RFPs. Consumers from around the world are demanding that the companies they purchase from embrace sustainability. As pressure increases from consumers and other stakeholders such as suppliers, customers, downstream channel partners, NGOs, governmental bodies, and trade associations, firms have had to open up their operations to greater public scrutiny. Increasingly, stakeholders demand that corporate practices up and down the supply chain be transparent and easily visible. Transparency into supply operations can help managers up and down the supply chain to avoid wrongdoing that thrives in dark corners of the supply chain. Illuminating blind spots in the supply chain can reduce risk and smooth out bottlenecks. Maintaining the secrecy of corporate wrongdoings has become very difficult and extremely risky. Plus, transparency typically reduces costs. In the long run, it is simpler and less costly for a company to operate transparently. A supply chain where information moves transparently up and down the supply chain


facilitates coordination and management of manufacturing and logistical activities. Blind spots are diagnosed and eliminated. Greater transparency allows stakeholders to see further along an organisation’s supply chain. In the automobile industry this past year several manufacturers were surprised when they discovered they had a “diamond-shaped supply chain”. Many of the auto manufacturers were sourcing products from multiple Tier 1 suppliers that were, in turn, sourcing raw materials and components from firms that were using a plastic resin – PA-12 – that was being fabricated at one specific plant in Western Germany. When that plant was damaged by an explosion that killed workers and had to halt operations, automobile manufacturers were unpleasantly surprised that they could not get parts made from this plastic resin because all of their suppliers were getting the resin from the same non-working source. Automobile production was vulnerable to events that should have transparent but were not. In the pharmaceutical industry firms are being faced with serialisation requirements. Reducing blind spots via serialisation will likely result in a healthier, more legitimate pharmaceutical supply chain. A recent example of eliminating blind spots is with the electronics firm Audiovox and one of their third party logistics companies. Kenco, a 3PL, helped Audiovox remove blind spots in customs handoff between the freight forwarders and the ocean carriers. Kenco

ABOUT Dale Rogers is a Professor of Logistics and Supply Chain Management, Co-Director of the Center for Supply Chain Management, and the Director of the Supply Chain Finance Lab at Rutgers University. Dr. Rogers is the Leader in Sustainability and Reverse Logistics Practices for ILOS - Instituto de Logística e Supply Chain in Rio de Janeiro, Brazil. In 2012 he became the first academic to receive the International Warehouse and Logistics Association Distinguished Service Award in its 120-year history. He also serves on the Board of the Reverse Logistics Association.

ABOUT Tad Kelly is the manager of transportation strategy for LEGACY Supply Chain Services, a third-party logistics provider based out of Reno, Nevada. He received a Bachelor’s of Science degree in supply chain management, as well as an MBA from the University of Nevada. Tad has worked for the Center for Logistics Management at the University of Nevada, College of Business, where he was a Kenco Sustainable Supply Chain Fellow.

created a simple Excel tool to consolidate information from freight forwarders, ocean carriers, and drayage companies for a clear overall picture of shipments. This type of technology-based solution is immensely powerful. The ability to visualise where and how product flows from the beginning of the supply chain to the ultimate consumer could have tremendous management impact for a firm. Mapping product and information flows is an important tool in supply chain management (Gardner and Cooper, Figure 1: 2003). It helps A diagram of the automotive industry’s diamondvisualise the network shaped supply chain structure and uncover potential threats that may impact the network of companies that make up a supply chain. In a firm where risk management is a critical goal for the leadership of the firm, mapping tools can be valuable. Mapping the supply chain links corporate strategy

to supply chain strategy because relevant information is displayed in an intuitive manner. Risks become easier to see and understand. In addition, it offers a basis for supply chain redesign and aids in making the supply chain more sustainable. A map of the supply chain can be used as a communication tool to show management, customers, and suppliers inefficiencies and dangerous risks that can sabotage businesses up and down the supply chain. Reducing blind spots has a clear, positive ROI. Recalls, problems due to counterfeit product, or plants blowing up cannot always be anticipated, but eliminating blind spots that get firms in trouble can minimize the immediate effects of these difficulties. As supply chains become more complex firms have to develop abilities to handle that increased complexity. One way of doing this is by utilising data stored in a firm’s enterprise system to create simple and transparent data models that can show the supply chain, rather than just describe it. Companies that can effectively do this can reduce their costs and improve service by working to illuminate the details of their supply chains. Because, what you don’t know CAN kill you. JANUARY 2014

27


TRADE TALK Logistics

Adapting to change Aparna Shivpuri Arya spoke to Ronald Totton, Vice President, Global Logistics, British Telecom Global Services, about the technological advancements in the supply chain and the logistics sector in the GCC. How has the global financial situation impacted the logistics industry? Despite the struggle that many developed economies are having, large parts of the world, like the Middle East, are currently experiencing an era of unprecedented opportunity. The prolonged impact of the global financial crisis, of fiscal austerity, and of the Eurozone impasse, has not stopped the growth of the world’s middle class, and by 2030 it will have grown from 1.8 billion to almost 5 billion. Almost all of that growth will come from developing economies. Where purchaser focus used to be exclusively oriented towards the 5-10% of the world’s population that live in mature markets, soon it will be looking for the next generation of the mass market – in Asia, the Middle East, and Africa. 28

JANUARY 2014

The impact of these changes on the logistics industry will be profound – not just because of the need for newly bolstered capacity, and routes that can handle increased traffic to developing markets, but also because of the challenges that they present to a global economy that is still focused on the lean, efficient transfer of goods. To keep costs manageable in the nascent recovery of European and North American economies, the logistics industry needs to be technologically adept, streamlined, and well-integrated with its customer companies.

What are the latest technological developments in the logistics industry?

Everything in logistics now depends on an easy flow of information. The smooth movement of

goods through the supply chain results from the ability to communicate. Logistics providers focus on enabling, securing and managing their information flows as a result. They need real-time visibility of supply chain information, and they need to communicate across complex commercial ecosystems without having to pause for organisational, geographic or systems boundaries. SmartPhones ease that ubiquitous access to information, and cloud technologies are an important tool as well. But one of the key technological solutions to logistics challenges actually lies in a more basic evolution of the industry. Changes to the relationship between third-party providers and their customer companies are increasing efficiencies – the more closely the logistics system is integrated with its client, the better


the supply chain will treat the source, the distributor, and the consumer of marketable goods. The IT gap between third-party logistics providers and customer companies especially appears to have stabilised over the last few years. Now 94% of customers agree that it is a necessary element of logistics capability – even as only 53% indicate they are currently satisfied with their providers’ capabilities.

Has the supply chain become more complicated or simplified with time?

You know, throughout most of human history the limitations of transporting goods and people have dictated the pace of global trade and exchange. Now, with digitisation, the speed limits are disappearing. Time zones don’t matter anymore – people can buy, sell, and work whenever and wherever they want. And to cope, partners across the entirety of a supply chain need to work much closer together, even when they’re thousands of miles apart. That makes logistics immensely complex. Here’s a good example: inventories are now synonymous with waste. With companies demanding just-in-time and just-in-synch manufacturing strategies, as well as lean business processes that meet consumer expectations for instant gratification, and zero tolerance for stock-outs, the importance of having things where they need to be when they are needed cannot be overstated. Extended supply chains, reduced inventories, and shortened product lifecycles are just some of the factors making disruption of supply chain operations more likely and more costly. Companies and third-party logisticians need to enable, secure and manage their information flows. A real-time visibility of their supply chain, having it communicate and collaborate across complex ecosystems? That’s the most important demand of customer companies. And it makes for a very powerful web of communications and activity in today’s supply chains, which, yes, can also be incredibly complex.

How are the developing countries doing when it comes to logistics? Which countries seem to stand out?

The emerging economies of the world are performing incredibly well as developing

ABOUT Ronald Totton was appointed Vice President, Global Logistics, BT Global Services in April 2013. In this role, he is responsible Global Logistics & Airline vertical including sales, business development, operations, marketing, strategy and finance. Ron joined BT in July 2010 as senior pursuit leader and was promoted in September 2011 to Client Partner. Ron continues to serve as a member of a number of customer Steering Committees. Before joining BT, Ron worked at Laurence Capital Corp. in Canada, a Canadian-based Merchant Bank, in the role as VP Corporate and Business development.

logistics powers, despite having had a challenging year in political and economic terms. There are countries in the Middle East that have struggled to recover economically from the political unrest, but generally the region is thriving. Growth and exports in Brazil have certainly felt the impact of the global slowdown, but they continue to outperform that of more developed economies. The BRIC countries – Brazil, Russia, India, and China, are still talked about as the dominant growing economic powers and they are being joined by an alluring field of smaller competitive markets that have the potential for rapid and vibrant expansion: UAE, KSA, Indonesia, Malaysia, Mexico, and Turkey. The United Arab Emirates, Oman, and Qatar are especially notable – they are countries with smaller economies, but also a high potential for growth and very easily accessible markets. It is by no mistake that the top two performing countries in the 2012 World Bank Logistics Performance Index, Singapore and Hong Kong, are in the developing world. That bodes very well for the logistics industry everywhere. Source: Agility Logistics and the World Bank

Please tell us your opinion on the logistics industry in the GCC? The GCC’s logistics sector is valued at around USD 35 billion, of which three major economies – KSA, the United Arab Emirates (UAE) and Oman - account for around 85%. Oil & gas, infrastructure and trading industry segments are the leading contributors. In the GCC, the domestic services segment, including

inland transportation and warehousing, is dominated by local players. That is not true of the international services segment. The geographical location of the region is invaluable, and logistics performance among the GCC countries is growing. In many ways, the region is pioneering best practices – such as in the Dubai Logistics Corridor, which has integrated information technology drivers to create a multimodal logistics platform. The United Arab Emirates is among the top 5 countries in the world for cross-border trading, partly as a result. *Statistics from the World Economic Forum

What challenges, do you think, the logistics industry faces globally and in this region? Opportunities are coming to the Middle East, and to the industry in general. The prospective growth that is in emerging consumer markets across the globe makes for a very exciting industry forecast. Lateral trade should rise massively over the next two decades. And technological advances that herald changes to supply chain execution are also developments that could make the next years the most dynamic we have seen. But those developments are themselves exceptional challenges. Streamlining and creating new efficiencies, implementing advanced and integrated communications, managing the prospective swell in capacity – these could be opportunities to grow that are facing the industry at a time when capital investment opportunities are limited, austerity measures are still in place, and global recovery is halting. Innovating will be as difficult as it is important. JANUARY 2014

29


TRADE TALK Logistics

In the Middle East, as more people and more goods pass through the region and imports to emerging consumer markets increase, control over efficient trading flows and passenger queue management have become paramount. Countries with developing economies trading to countries with developing markets, lateral trade – will be the new model business opportunity. The Middle East region is uniquely located geographically to capitalise on the generation of wealth that will come from that shift.

What issues do exporters and importers need to be aware of when it comes to supply chain management?

As outsourcing increases, companies become increasingly dependent on the logistics providers that they work with, and of course must pay careful attention to how it works with them. How embedded their operations are with their customers’, and what technical/infrastructure limitations they face together, may be the questions that define the industry in the coming years. For exporters and importers, standard challenges such as facilitating receiving, storage, staging and loading functions in port infrastructure, as well as customs clearance, are as ever paramount. But they are being joined by new concerns. A greater focus on supply chain risk and mitigation is required. How can partnerships, business continuity planning, supply chain visibility, and employee management help to support supply chain risk management practices? And as I’ve said before, communications integration through every stage of the logistics management process is going to become the norm in the future – it should be an issue for every exporter and importer now. The questions businesses have asked about their supply chains in the past should still be asked now. Is there room for more local customs collaboration in the GCC? What can be learnt from outside transit and transport models? How can we minimise in-airport passenger transit time while maximising high value customer touch points? According to the International Air Transport Authority 30

JANUARY 2014

(IATA), global airlines are likely to carry 3.6 billion passengers in 2016. It was just 2.8 billion in 2011. That growth will come primarily from the emerging economies of the Asia-Pacific, Latin American, African, and Middle Eastern economies. But they should add to their focus questions about applied communications technologies, integration with their logistics providers, and the risks and opportunities facing them in reaching out to growing markets.

How can Middle Eastern companies improve their storage and loading functions at the port?

Yet the smooth movement of goods through the supply chain is fully dependent upon the exchange of information. As I said before, inventory is synonymous with waste. Any interruption is quickly felt downstream. It is delays, added cost, broken promises and disappointed customers. Keeping communications active at every level of the chain is challenging, but goes a long way to streamlining movement to, and through, the ports. We are challenged to offer providers the means to enable, secure and manage their information flows, because it is the most important tool in minimising costs in both robust and healthy supply chains, and mitigating the damage caused by breakdowns. There is technological development that helps companies improve their storage and loading function – just cloud-connected smartphones enable individual professionals to better engage in their role as supply chain managers – but the act of integrating third-party logisticians early, and comprehensively, is the most important streamlining technique.

Any lessons the countries in this region can learn from other countries/models for collaboration on customs clearance?

The Dubai Logistics Corridor, to take just one exciting example of excellent functionality on the part of the industry in this region, is one of the more innovative freight and transport passages in the world. The integration

between product and personnel transport with the customs clearance process is very effective there. And there are investments in rail, shipping, transport happening all the time across the GCC and the whole of the Middle East. These investments need to be coupled with excellent practice on the part of customs clearance officials and the technology they use, certainly. But are there lessons the Middle East can learn from other countries about logistics performance and the easy flow of product and personnel? I think the region is teaching more than it has to learn in this area. Everyone in the industry has to be performing at their best in the coming decades if we want to take advantage of the opportunities that are being presented by the emerging market – every country and economic zone needs to be at their most efficient and their least burdensome to those doing business within them. That’s not just the Middle East, its Europe, North America, the Near East, the Far East, and Africa too.

How does cloud technology fit into all this?

In many ways the Cloud is paramount. By 2016, more than 40% of all new logistics application purchases will be delivered through it, and companies that choose to go this route will find themselves with reduced upfront costs, and greater capital preservation for strategic IT projects. It will give also them the flexibility and agility they need to find a partner that can satisfy their business needs now, while scaling with the business over time. The questions being answered by this technology are many – but some of the most pertinent for the industry are how it will enable the sharing and re-use of information and documentation flows, improving visibility and efficiency throughout the supply chain. The connected supply chain officers, globally placed and participating in their work via SmartPhone from warehouse and loading dock, will be the ones made powerful through adoption of this technology – as will the management and analytic practices that have craved real-time observation in logistics for so long.


NEW SOUTH WALES

NEW SOUTH WALES

BILATERAL TRADE

virtual office

DOING BUSINESS

JANUARY 2014

31


COUNTRY FOCUS Bilateral trade

Building the food chain The Australian State of New South Wales (NSW) has a global reputation as an industry leader in agriculture and food production. The Hon. Andrew Stoner, Deputy Premier, New South Wales along with Mr. Moin Anwar, Trade and Investment Commissioner, Middle East and Meat and Livestock Australia (MLA), highlight the importance of the food sector when it comes to bilateral trade and investment relations.

F

ood producers and suppliers from NSW are among companies, from all over the world, that will be exhibiting at Gulfood 2014 in Dubai. The Deputy Premier of the Government of NSW, Mr Andrew Stoner, encourages visitors to visit the Australian Pavilion to find out more about some of the world’s finest quality and variety of food available from NSW. “The NSW companies include beef, lamb, seafood and poultry suppliers, butters, sauces and condiments producers, and suppliers of equipment for commercial kitchens,” Mr Stoner said. “When I visited the UAE last year, I found there was great interest in our agriculture industry. NSW has the most diverse agriculture and food production of any State in Australia and we produce some of the finest food, wool and grain.” “NSW has developed extensive links to international markets and maintains an excellent biosecurity status to ensure continued access to crucial trade markets.With the 32

JANUARY 2014

sector’s extensive capabilities and competitive positioning, the NSW agriculture and food industry has the potential for enormous growth,” he further remarked. Mr. Stoner was quick to point out that the NSW Government is working with industry to increase innovation across the sector, from production, to processing and packaging, marketing, supply chain management and more and welcomes foreign direct investment in agribusiness and food processing, both wholly-owned or in partnership that can harness local expertise.” The table shows the products traded between the UAE and NSW and it’s clear that food products hold an important place. According to Mr. Anwar, the bilateral trade between Australia and the UAE stood at AUD 5,592.7 million in 2012-2013.

Agriculture and food industry NSW is an industry leader in the field of food through active management and investment in the sector.

Hon. Andrew Stoner, Deputy Premier, New South Wales

Food processing in NSW is highly automated, with highly efficient operations, including: • Rice mills, wheat flour mills, and corn mills • Canola seed oil and soybean oil plants • Meat packing and poultry slaughtering plants • Sugar cane refineries.


Research and development is an important focus for the NSW Government to drive improvements in agriculture and invest millions of Dollars each year to support up to 900 projects across the State. According to MLA, which is a producerowned company that provides marketing and research and development services for the Australian cattle, sheep and goat industries, NSW has Australia’s second largest cattle herd, after Queensland, with 5.8 million head of cattle (2012), 20% of Australia’s herd. Australia produced 2.2 million tonnes cwt of beef in 2012-13, with NSW producing 22% of the total. Beef cattle are raised on an estimated 50 million hectares throughout all agricultural areas of NSW, although most are found in the Upper Hunter, North West Slopes and the Northern and Central Tablelands. Beef cattle production was carried out on more establishments than any other agricultural enterprise in NSW, with over 14,000 farms and lot feeders receiving most of their income from beef production. MLA in the MENA region works with retailers, foodservice operators, importers, manufacturers and Australian Exporters to maintain and increase the demand for halal red meat and livestock to the region. MLA creates opportunities for livestock supply chains from their combined investments to build demand and productivity. According to the organisation, strong international demand for Australian beef and sheepmeat, including from the Middle East,

will continue to drive Australian production. Exporting 67% of all beef production and 51% of lamb production, Australia is focused on supplying high quality product for export markets. NSW, with its varied climate and strong history of beef and sheep production, will continue to be an important location for high quality red meat production. The NSW sheep flock comprises 37% of the 75 million sheep in Australia and is the largest flock amongst the Australian state and territories. NSW accounts for 23% of Australian lamb production and 26% of mutton production. The agriculture and food industry has strengths in wheat, meat, wool, fish, seafood, dairy, fruit and vegetable products, wine, edible oils and fats, flour milling, cereal foods and bakery products; pet food and animal feeds; soft drinks and more. Meat, meat preparations, cereals, dairy products, fruit and vegetables are major NSW exports to the Middle East. Many NSW producers are gaining Halal certification. Most effort has focussed on red meat (lamb, mutton and beef) exporters who have established processes to enable them to meet customer requirements in markets as far away as Morocco. Other Halal-certified produce includes honey and edible oil. The highest standards of food safety and hygiene are enforced in NSW, whether the produce is being exported or sold on the domestic market. Food, grain and produce

suppliers from NSW have a reputation for their reliable produce. A large proportion of national and multinational agriculture and food corporations have based their Australian operations or established substantial manufacturing facilities in NSW. These include well-known companies such as: Allied Mills, Arnotts, Bega Cheese, Cargill, Coca-Cola Amatil, Ferrero, George Weston, Goodman Fielder, H J Heinz, Inghams, JBS Swift, Kelloggs, Lion Nathan, Manildra, Mars, Masterfoods, Wrigley, McWilliams, Nestle, Primo, Sanitarium, Sara Lee, Simplot, Sunrice, Unilever and Viterra. These plants are very globally competitive. Nestle has major food manufacturing operations in NSW, and in June 2013 Nestle announced it would invest AUD 300 million to expand its Australian operations because its factories in Australia are among the top 25% of the most efficient factories in Nestle’s global operations. Sector strengths NSW producers are ideally positioned to supply counter-seasonal markets in Asia, Europe and North America during the Northern Hemisphere winter months. NSW is close to some of the largest and fastest growing food markets in the world, including Japan, China, India, South Korea, Taiwan and the ASEAN countries. JANUARY 2014

33


COUNTRY FOCUS Bilateral trade

Australian and NSW agriculture and food companies enjoy an international reputation for being “clean and green.” Stringent quarantine policies and sound management practices allow NSW produce to be grown free of many pests and diseases found in other parts of the world. The State’s relatively low population density and strict environmental controls protect the farming sector from contaminants that are commonly found in heavily industrialised, densely populated countries. NSW is the only Australian State with a fully-integrated food safety regulatory system. Administered by the NSW Food Authority, this system underpins the safe supply of food to both domestic and export markets, by providing high-level, sciencebased food safety information and access to leading-edge expertise.

Moin Anwar, Trade & Investment Commissioner, Middle East, New South Wales

NSW’s multicultural society has introduced the State’s food businesses to different cuisines, flavours, ingredients, techniques and practices – encouraging the development of new industries, such as wine, olive oil and Asian vegetables, to name a few. It continues to inspire the development of new products, as well as business links to many of the State’s most prospective export markets. NSW has a great diversity of natural environments, as well as wide-ranging agricultural production systems that allow farmers to grow a broad array of high-quality, 34

JANUARY 2014

ABOUT The NSW Government has a Trade & Investment Office in Abu Dhabi which provides a contact point for businesses and people who want to do business in Sydney and NSW. For more information, please contact uae@sydneyaustralia.com

low-cost produce. This gives NSW strengths across the full spectrum of product categories. NSW hosts some of the best food research and development and training institutions in Australia. They include: • The Department of Primary Industries’ integrated network of 28 research stations, centres of excellence and institutes (DPI is ranked in the top 1% of world research institutions in agricultural science, and plant and animal science) • Technical and Further Education NSW’s network of ten institutes and over 130 metropolitan and regional campuses • 11 major universities • CSIRO’s Food Science Australia; and • BRI (formerly the Bread Research Institute).

Driving growth As the world’s population continues to increase, and Western food trends spread, the demand for animal-based protein (i.e. meat, dairy, seafood) and processed foods grows, opening up new export opportunities for NSW agriculture and food companies. The State’s international reputation for quality and robust traceability and certification systems have put NSW agriculture and food

companies in an ideal position to make the most of consumer mega-trends such as ethical consumerism, premiumisation, convenience and functionality, as well as demand for culturally-certified foods, such as halal. There is also enormous potential opening up for NSW agriculture and food products that help address health issues such as obesity, diabetes, celiac disease, heart disease, allergies, some forms of cancer and alcohol abuse. NSW agriculture and food companies are at the forefront of novel technologies such as genetic modification, nanotechnology, new processing technologies (irradiation, high pressure processing, low-energy electron beam processing, pulsed electric field processing), “smart” logistics control and e-commerce. These technologies are opening up new product ideas, new market opportunities, and new, more cost-effective business processes. In Dubai, Qantas in association with Australian Business Council Dubai and supported by the NSW Government will promote and host a series of events across the Australia Day weekend. The highlight is on 25th January when there will be a G’Day Dubai Gala Evening at the Park Hyatt, Dubai Creek with live gourmet cooking stations.


The Sumo Group of Companies is a

multifaceted conglomerate that offers its mostly high-net worth client base a variety of services, including: • Health and wellbeing advice (Sumo Health & Harmony) • Wealth accumulation and management strategies (Sumo International) • Exclusive events, travel opportunities and auto brokerage services (Sumo Events Platinum) • Life guidance and coaching (Sumo Life & Harmony) The various entities within

the Sumo Group of Companies form a

cohesive package aimed at holistically enhancing people’s life experiences.

As well as this, it offers four financial products: • A self-managed superannuation facility (Sumo Super Services) • A managed fund – the SUMO SIV Managed Fund – for those who apply for the Australian Significant Investor Visa 188/888 • Prestige property agency services (Lim + Pather) • Accounting services (Sumo Austin Accounting)

Contact the Sumo Group of Companies Suite 802, Level 8, 55 Clarence St, Sydney, NSW 2000, Australia GPO Box 4192, Sydney NSW 2001, Australia T +61 2 8297 6606 F +61 2 8297 6688 E info@sumogroup.com.au W www.sumogroup.com.au


COUNTRY FOCUS Virtual office

Why Servcorp works?

Laudy Lahdo, General Manager, Servcorp Middle East, tell us how virtual offices are the solution to doing business in a cost and time effective way. Please tell us about the concept of virtual and serviced offices.

Servcorp was founded on one principle - sharing the costs of the day to day running of an office will give a company the infrastructure, people and fit out that will allow them to compete and become more successful. The serviced and virtual office solutions allow companies to compete in global markets, with the IT infrastructure and presence of a multinational company and without capital overlay. A virtual office is a solution that enables a company to work from anywhere in the world and still have a prestigious CBD address. This is ideal for businesses who understand the significance of having a presence in a central business address without committing to a physical office lease. The Servcorp Virtual Office takes the offering even further, thanks to the global IT and communications network. This exclusive benefit gives Servcorp clients access to a portfolio of IT and communications saving them money and time. This is especially beneficiary for business people who work remotely or are mobile and on the go. These services include real-time meeting room reservation, real-time receptionist instruction panel, fully secure faxto-email, commercial grade voice over internet protocol phone technology built around a single landline number, online meetings (via WebEx) and large file transferring. It is everything, but the physical office! Serviced offices on the other hand are fullymanaged and equipped office suites complete with an already set up IT and communication systems, dedicated receptionist to answer calls and additional support staff to take care of the day to day requirements. 36

JANUARY 2014

THE SERVCORP NETWORK

Your business network of locations, people and communications technology

A US $50 MILLION NETWORK LIKE NO OTHER.

SERVCORP

The Servcorp global network ensures performance and quality, with a guaranteed 99.98% uptime providing you with massive savings. This is the only global network owned and operated by a Serviced and Virtual office provider. Our global network is like a facilities cloud combining virtual with actual physical capabilities. Run your business from anywhere in the world whilst Servcorp give you the local physical presence that your customers expect. LONDON

BRUSSELS PARIS

SAN FRANCISCO LOS ANGELES IRVINE

BOSTON CHICAGO NEW YORK CITY TYSONS CORNER PHILADELPHIA WASHINGTON D.C. ATLANTA DALLAS HOUSTON MIAMI

ISTANBUL

BEIJING

NAGOYA TOKYO YOKOHAMA OSAKA SHANGHAI HANGZHOU KOWLOON HONG KONG FUKUOKA

BEIRUT KUWAIT CITY AL KHOBAR-DAMMAM RIYADH JEDDAH

CHENGDU

MANAMA DUBAI ABU DHABI DOHA MUMBAI

HYDERABAD BANGKOK

MANILA

KUALA LUMPUR SINGAPORE

BRISBANE PERTH ADELAIDE MELBOURNE

SYDNEY CANBERRA

AUCKLAND WELLINGTON

HOBART

AUSTRALIA | NEW ZEALAND | INDIA | SOUTH EAST ASIA | CHINA | JAPAN | EUROPE | MIDDLE EAST | USA | UK

Please give us some background about Servcorp’s operations globally and in the Middle East. Servcorp is the world leader in serviced and virtual offices and IT services providing business solutions to multinational companies as well as small and medium enterprises in over 140 locations across the globe. Servcorp was founded in Sydney by Mr. Alf Moufarrige in 1978, and within 12 months, had two floors in Sydney’s MLC Centre and a location in Melbourne’s business district. Over the following years, Servcorp expanded into Singapore, France, Japan and across South East Asia, closely followed by expansion into Belgium, the Middle East, China, India and New Zealand. Servcorp entered the Middle East market in 1999 renting two floors in the iconic

Emirates Towers in Dubai. Demand for the premium services led to further expansion in the Middle East. Servcorp now has 15 locations in the Middle East in the UAE, Qatar, Bahrain, Kuwait, Lebanon and Saudi Arabia and is still looking to expand in this region.

For a company looking at availing your services – what advantages do you offer?

Servcorp offers multiple advantages to any company looking to be one step ahead of the rest. First and foremost, is the strong first impression a CBD address and professional environment can create for a business. Secondly, the 5 star service the professional support team provides plays a significant


reduction in stress and time of a business owner and results in increased productivity. And the final advantage is the proprietary technology Servcorp offers exclusively to its clients, such as Servcorp Online, a powerful system which allows total call management online, book boardrooms and meeting rooms at any of the Servcorp locations instantly, access to store, share and distribute electronic files, host a web conference via WebEx, reserve multilingual administrative assistance and even enables a Servcorp client to convert their computer into a VoIP phone with Servcorp Onefone. All are business-savvy ways to ensure a business is on track, whether they’re in a meeting, at their desk or out of the office on travel.

How is it cost and time effective to use the services of a company like Servcorp?

The formula behind “Why Servcorp works” is simple – by providing a corporate presence, an infrastructure of a multi-national corporation and administrative support without having to commit to the normally required long term contracts or large capital investments, a business owner can then focus on running his company without having to worry about managing the office as well. Servcorp’s solutions can save a business the time, costs and hassle of setting up their own office space which can take months and which usually require fit-outs, hiring staff, finding furniture and setting up the communication and IT systems. For example, the minimum term for a traditional office lease is three years, but with a serviced office, it can start at just one month. The beauty is that the client can walk in with their laptop and be operational from day one. A receptionist will handle the calls, the support team will manage all office requirements, all the phone and internet connections are setup and the client doesn’t have to worry about repairs, maintenance or multiple bills because the serviced office provider is also their dedicated landlord and everything will be billed in one invoice at the end of the month. With a serviced office, a business can save on the cost and enjoy all additional perks such as premium fit-outs and furnishings.

What differentiates you from competition? What is your USP? Servcorp is committed to being the world’s best serviced office and virtual office provider, and to do that the following factors cannot be compromised: The people The Servcorp team is proactive, efficient and hands on with clients so that they can focus on growing their business. The team is highly trained to international standards, multi-lingual and provide excellent customer service.

Technology Servcorp has invested over USD 50 million in building a global interconnected data network designed to help clients improve their sales while saving them on time and money. From cloud computing, to communications and an online integrated facilities system, the benefits are many. The address Servcorp only adds the finest hand selected iconic locations in the best cities in the world to its portfolio, providing a consistent and unbranded customer experience. Flexibility The serviced and virtual office solutions allow a business a great deal of flexibility, starting with the monthly contracts, monthly payments, options of upgrading or downgrading an office or even moving to another Servcorp location. Even boardrooms, meeting facilities and the team can be booked in ten minute increments, one hour slots or for the whole day.

In the UAE and the Middle East, how do you see the future for serviced and virtual offices?

As awareness increases, demand for virtual and serviced offices continues to grow. The end client has become a lot more sophisticated and demanding in what he’s looking for in his business solution. It is no longer a real estate game – people are looking for real IT solutions. Servcorp is a benchmark in the industry and continues to raise the bar.

Laudy Lahdo, General Manager, Servcorp Middle East

The changing macroeconomic environment means national markets are shifting powers, affecting things all the way down to local businesses. This means businesses need to be aware, stay competitive, and have the ability take their business wherever it needs to go to match the market’s demand.

What are your expansion/growth plans in the coming years?

2011 was Servcorp’s biggest expansion year in its history, with 40 new floors in 29 cities in 12 countries and it has continued expanding over the past couple of years. Globally, Servcorp’ s goal is to provide flexible business solutions that help companies succeed. Today, steady expansion of the Servcorp global network of offices is continuing in the Middle East and beyond. Servcorp has 140 locations in 52 cities around the world, including Singapore, France, Japan, South East Asia, Belgium, the Middle East, China, India and New Zealand. Servcorp now has fifteen locations in the Middle East spread across the UAE, Qatar, Bahrain, Kuwait, Lebanon and KSA and is still looking to expand in this region. JANUARY 2014

37


Country focus Education

Building the

future

Education is an important sector for New South Wales and offers very attractive opportunities for businesses as well as students. Belinda Howell, General Manager, Market Development and Jalal El Nasar, Regional Manager, Middle East, UTS:INSEARCH speak about how this sector is a pathway to prosperity and cooperation.

38

JANUARY 2014

S

tudents who travel from the UAE continue their education in Sydney are key to creating an even closer bond and economic relationship between the Middle East and Australia. Not only are young people who gain an international tertiary education one of the most valuable assets for the UAE, those students will bring a wealth of experiences and benefits to both countries as they exchange ideas, knowledge and skills. The relationships they form, gained through studying together with students from all around the world, last long after their studies end, and support strong international relationships and economic ties between Australia and the UAE.

Commitment to close ties The University of Technology, Sydney (UTS) is the preferred university for thousands of international students coming to Australia, many of whom gain entry through UTS’s pathway provider UTS:INSEARCH. As a leading tertiary institution, UTS sees opportunities to build its relationships in the Middle East. Supporting this aim, last year UTS:INSEARCH appointed its first manager for the Middle East, Jalal El Nasar, to work with government bodies, education agents and students across the region. Having completed his Masters of Business Administration abroad and worked in the tertiary

Jalal El Nasar, Regional Manager, Middle East, UTS:INSEARCH

education sector in both the Middle East and Europe for several years, Jalal, who is based in Dubai, is well positioned to advise students on the opportunities available at UTS and the benefits of studying internationally. “Attending UTS:INSEARCH is a really valuable way for UAE students to develop their English skills and prepare for studying at UTS, which is one the world’s top 50 universities under 50 years old,” Jalal said. UTS:INSEARCH diploma graduates qualify to enter UTS courses in areas


Contact us: +971 2 628 9969 / +971 50 4110711 and EMEAenquiries@garlospies.com.au


Country focus Education

such as engineering, IT, business, architecture, communication, design, nursing or science.

Growth in education With, both the, UAE and Australia seeing university graduates as central to their economic future, both have made strong commitments to increase the number of tertiary-qualified people. This commitment is demonstrated by the ongoing support the UAE Ministry of Higher Education provides in its forward-thinking approach to investment in students’ tertiary education, maximising the number of students who can study abroad. Each year, more than 100,000 international students choose to undertake education in New South Wales (NSW), with an IBISWorld’s Industry Report on University and Other Higher Education in Australia forecasting the sector will grow at an annualised rate of 3.7% nationally, reaching AUD 31.9 billion in 2018-19. Australia’s International Education Advisory Council predicts there will be a total of 1.3 million higher education students in NSW by 2020, which will support more investment, education and cultural opportunities. General Manager, Market Development at UTS: INSEARCH, Belinda Howell, said the experience gained by students in studying in Sydney is invaluable. “Not only are tertiary students looking to gain strong university qualifications for success, employers of the future will be looking for students who can interact in an international environment,“ she said. “Their studies will help them develop and apply cognitive skills and achieve a level of sophisticated thinking that will enable them to develop innovative solutions to the challenges faced by organisations in the future. “At UTS:INSEARCH, we are ideally placed to prepare international students with the skills they will need and combine the benefits of an English-language education with being in one of the most desirable cities in which to live and study.” According to the 2013 Bank of Communications Sea Turtle Index, Sydney is in the top 10 cities in the world for potential returns on investment in international education, while QS Best Student Cities 2014 ranked Sydney fourth globally, based on factors such as lifestyle, cost of living and quality of education. As NSW’s largest city, Sydney is an international business hub and is home to the headquarters of 40

JANUARY 2014

Belinda Howell, General Manager, Market Development, UTS:INSEARCH

90 per cent of the international banks operating in Australia, and 60% of the ICT regional headquarters and operations centres.

Multicultural immersion Australia’s strengthening relationship with UAE also helps to create a meeting point between cultures, ensuring students can follow their own religion and customs while developing their intercultural experiences. Multicultural immersion not only enhances students’ English skills, but also prepares them for a dynamic career, whether that be in their own communities and economies or as part of global teams. “We really work hard to help students to make their transition into a new country and culture as easy as possible, and our students benefit from our small class sizes, making it easier to be successful at study, make new friends and get to know Sydney,” remarked Jalal. “We can even help students find accommodation in a home-stay environment, providing a welcoming family atmosphere.” Preparing for the future Yaser Bani Hammad, a student from the UAE currently studying in Sydney, successfully completed a Diploma of Engineering at UTS:INSEARCH before commencing his Bachelor’s degree in Mechanical Engineering at UTS. His choice to study at UTS:INSEARCH and UTS was motivated by wanting to go to a leading university to receive a quality

education, preparing to capitalise on the boom in infrastructure in his home country. “I wanted to go to the best university in Australia,” he says. “I’ve always liked engines and turbines, and want to go into the mechanical engineering field.” Yaser’s ambitions include plans for further study at a Masters’ level at UTS, and he then intends to return the UAE to establish his career. “There is a big demand for engineers. I will go home and work in mechanical engineering, perhaps in the petroleum, airlines, electrical or nuclear energy sectors,” he remarked. In particular, Yaser has been impressed by the quality of the UTS:INSEARCH campus facilities and range of amenities. “The campus is really nice, with modern technology and smart boards, and there are many places for students to relax and study.” With a AUD 1 billion investment underway as part of the UTS Campus Master Plan, the UTS education precinct is being transformed with iconic new buildings, renovated facilities and increased public spaces embody its innovate approach to quality education. UTS has an enviable international reputation for the quality of its premises, teaching and research, which is recognised by the international QS Stars Ranking System, which awarded it five stars for excellence in higher education, including five stars for teaching, facilities, innovation and employability of graduates. As one of Australia’s leading universities, UTS is also known for its distinct and practical model of learning, its commitment to international students, strong research performance and enjoys an excellent reputation for working with business. “With an enormous demand for tertiary educated professionals in UAE, I would particularly encourage students contemplating courses in engineering, business, IT, science and the healthcare sector to seriously consider the benefits of UTS:INSEARCH’s approach and the fantastic opportunity to study in Sydney in a supportive and vibrant environment,” said Belinda. “We are very optimistic about the long-term relationship between NSW and the UAE, and we value our relationship with students from the Middle East as part of a wonderful education, cultural and economic exchange, “ she added.


Ensure your degree is a great investment. Did you know Sydney ranks in the top ten cities in the world for return on investment (ROI) in international education1? The University of Technology, Sydney (UTS) is a world-class university. • Rated five stars in the international QS StarsTM Ranking System. • A TOP 100 university in the world for Accounting, Computer Science and Information Systems, and Engineering.2 • A TOP 150 university in the world for Communication and Media Studies, and Economics.2

UTS:INSEARCH is the premium pathway provider to UTS. Complete a diploma with us and you are GUARANTEED ENTRY* into the second year of a corresponding bachelor degree at UTS. Developed in collaboration with UTS, we offer higher education diplomas in the areas of business, design, communication, IT, engineering and science.

insearch.edu.au follow us

utsinsearch

UTSINSEARCHFAN

UTS_INSEARCH

UTSINSEARCHCHANNEL

1.The Economist’s Sea Turtle Index 2013. 2.World QS Rankings by Subject 2013. * Dependent on course chosen and subject to successful completion of a diploma with no more than two subject fails; for international students only.

INSEARCH CRICOS provider code: 00859D I UTS CRICOS provider code: 00099F INSEARCH Limited is a controlled entity of and pathway provider to the University of Technology, Sydney (UTS). 1394_1213


COUNTRY FOCUS Technology

Mobile analytics on steroids Mobillytics is an innovation driven company and specialises in business intelligence exploitation and App innovation. It is recognised for delivering significant value and competitive advantage to well known enterprises across different industries globally. As part of its growth, Mobillytics intends to leverage its innovative expertise to deliver niche business solutions and provide businesses in the MENA region a competitive advantage.

M

obillytics is a dynamic software development company that specialises in building mobile business intelligence applications for enterprise customers. With a worldwide customer base that spans a number of different industries, the company has experienced rapid growth over the last few years. The company is rapidly expanding its operations and now has a presence in Australia, New Zealand, the Middle East, Africa and United Kingdom. Mobillytics 42

JANUARY 2014

prides itself on its focus on innovation and has recently established its unique ‘Innovation Tank’ brainstorming facility in Sydney, Australia to facilitate rapid development of innovative mobile business applications. Innovative solutions Mobillytics assists large enterprises to create superior value and competitive advantage for them by influencing the ultimate business intelligence end user experience.

It mobilises and develops best of breed, simple and efficient mobile apps that execute transactions that can generate new Intelligence. Its mobile powered apps seamlessly integrate with native device specific capabilities to create a rich, fully immersive user experience, while also providing off-line access when connectivity is limited. Its solutions integrate effectively with large enterprise systems, such as SAP, Business Objects, Oracle, Microsoft


SQL & Sharepoint, Salesforce, Siebel CRM, Hyperion and Teradata systems. With a range of hosted and enterprise configured solutions, Mobillytics provides organisations and business functions the agility and cost effectiveness with significant return on investment within a shorter span compared to traditional BI and Data warehousing solutions . Mobillytics have successfully provided m a rke t l e a di n g so l u t i on s o fferin g competitive advantage to well known major brands within Australia and globally enabling business teams across various industries such as financial services, telecommunications, retail, airlines (aviation), automotive, manufacturing and fast moving consumer goods, to realise significant business value and operational efficiency through their unique innovations. Solutions across industries Mobillytics has been championing and leading the mobility solutions space for some of the largest banks in Australia, such as ANZ and Westpac Group. They have offered these large enterprises solutions with differentiation and competitive edge by harnessing their key business intelligence insights to enable diligent decision making. They have also developed innovative mobility solutions for the aviation industry, with Qantas, the leading Airline in Australia experiencing transformation in airport operations, ground operations and baggage handling through these solutions. In the retailing and FMCG space, Mobillytics has helped large enterprises such as Coca-Cola and Red Bull impart new innovative ways of looking at business performance and consistent field force data intelligence gathering solutions. Mobillytics have developed several innovative solutions in the telecommunication industry for large clients such as Vodafone Procurement Group and Optus (SingTel) which has transformed the supplier spend monitoring and retail network management capability for these organisations. Mobillytics has been providing leading organisations with innovative and rich mobility solutions that include: • Providing executives, business unit heads, country heads, territory managers and in

ABOUT For more information about Mobillytics in the Middle East, please contact, Irfan Malik, General Manager, at malik.irfan@mobillytics.com

the field staff with simple and effective metric frameworks enabled on mobile devices such as iPads and SmartPhones to materially lift business performance. • Delivering pragmatic and fast outcomes to teams who are disjointed and are struggling to keep up with the business. • Channelling and aligning the decision making of the senior ranks to a single version of the truth/consistent set of key performance indicators resulting in great reduction in analytical waste. • Transforming the decisioning culture from rear view to looking across and looking forward, by leveraging a number of performance, benchmarking and opportunity metric frameworks developed for a diverse set of multinationals.

Innovative delivery approach Mobillytics has mastered a well-recognised 4-step Design & Delivery methodology with its various client engagements to maximise the value realisation and speed to market for the clients. This approach provides clients flexible and transparent mode of engagement in an agile and collaborative manner to design and develop the mobile solution with the ultimate end user experience at the forefront. From “Sensing” stages of “AS-IS” state to “Shaping” the “TO-BE” state, this unique methodology ensures stakeholder engagement , cross team collaboration, value-benefit prioritisation leading to maximum value generation & significant ROI. This fast prototyping approach provides the organisation and transformation leaders/sponsors the capability to demonstrate on a small scale in real terms the targeted “TO-BE” state and help them influence broader transformation and further stakeholder buy-in. Mobillytics in the Middle East Mobillytics has established its presence in the Middle-East region with regional head office

based out of Dubai and current operations in Abu Dhabi & Qatar with several leading organisations across banking & financial services sector, telecommunications, aviation & airline operations and hospitality. It aims to drive further strong growth across other services and government sectors with its innovative solutions supporting the local large enterprise to leverage international thought leadership and also create local innovations. Mobillytics is committed to leverage its cross industry and cross domain innovation expertise to impart to businesses in this Middle East region the capability to realise maximum potential from their data assets enabling them to derive competitive advantage globally. Mobillytics intends to work with large enterprises in this region to innovate ways to use intelligence from: (a) Hindsight past performances (Looking Back) (b) Insights benchmarking (Looking Across) (c) Foresight opportunities (Looking Forward) to maximise business opportunities. With strong directions from the government to embrace technology, m-governance and operational transparency measures, Mobillytics is positioned very well to cater and tap into the strong business needs for its innovative and highly effective mobility solutions. The continued and buoyant growth across various sectors in this region also augurs quite well for this transformation within the business intelligence landscape. Mobillytics intends to expand their operations, development and support capability within this region to service their growing client base in this region. They are also aligning and partnering with local business networks and large Business groups for supporting this growth as part of its core strategy within the MENA region. JANUARY 2014

43


Country focus Finance

Your guide to investing in

New South Wales When the financial crisis struck, Sumo International Director Suren Pather, knew it was an opportunity to dramatically transform his financial planning business. It has now evolved into the Sumo Group of Companies, a multifaceted venture that offers an array of services to enrich its clients in holistic and positive ways. Tell me about the name Sumo. You’re not offering Japanese wrestling lessons, are you? No, we never did, and we don’t envisage doing that in the future. The term is an amalgamation of my name and the name of one of my business partners. Its Japanese connotation was clearly an oversight! Sumo also stands for ‘super money’ – a fun play on the superhero theme. It is also fitting that the word implies largesse, as our service proposition is indeed grand in scale.

To what extent did the financial crisis ravage your business?

The crisis had a devastating effect on my financial planning business. It was crippled as clients became fearful of investing. I knew I had to change my tack to survive.

purpose of wealth. From this musing, I developed products and services that transcended traditional wealth generation and management. I came to realise that financial independence is the ultimate opportunity to search for meaning in your life, and should not be the end result of wealth creation. My clients were, and remain, the absolute core of my business, so when creating new concepts I kept their needs and wants in mind. From this I devised five ‘pillars’ – health, wealth, leisure, life, and products/services. Each serves a discrete purpose, yet together, they work to achieve life balance for clients.

So what did you do?

Tell me more about these pillars – the first of which is ‘health’. Why make health services the cornerstone of your business when financial planning is your specialty?

Firstly, I didn’t simply try to pick up the pieces. I took this crisis as an opportunity to re-evaluate the meaning and

I believe good health is a critical prerequisite to everything. What’s the use in being financially successful and luxuriating

44

JANUARY 2014


in your wealth if you’re physically or mentally unwell?

ABOUT Suren has over twenty years of experience in the finance industry( BEc (Hons), LLB (Syd), CFP, FFPA, LREA, JP). He is the Founder and Director of all of the entities within the Sumo Group of Companies, including the Sumo SIV Managed Fund. Suren holds bachelor degrees in Law and Economics (with Honours) from Sydney University. Additionally, he is a licensed chartered financial planner and real estate agent, and is a Fellow of the Financial Planning Association of Australia. He can be contacted at suren.pather@sumosiv.com

That’s a sound point. Aside from healthcare, what else does ‘super money’ offer?

Yes – as I mentioned, the second pillar is ‘wealth’. This is where my financial planning business, Sumo International comes into play. It was established over 20 years ago and, although temporarily battered by the global financial crisis, is once again thriving. The third pillar is ‘leisure’. I reasoned that once people had worked hard to create wealth; there should be an outlet for enjoyment of it. Thus, the Sumo Platinum Club was born. It offers members unique and luxurious life experiences, such as bespoke holidays, and premium access to exclusive events, such as worldwide Formula One races. On a more local level, prestige car drive days and luxury yacht trips are a just a taste of what the Club has offered so far, and it has only been operational for seven months.

I’ll get back to the remaining pillars shortly; I’m just wondering, how you manage so many businesses at once? You must be a multi-tasker par excellence!

I am extremely busy! Though I must pay credit to the directors of each business with keeping the Group running. Being a financial planner by trade, I focus on ‘wealth’, and am also responsible for overseeing the Group as a whole, yet each business is managed by a director who specialises in the relevant field. For instance, Sumo Health is run by a team of qualified medical doctors and nutritionists, while the Sumo Platinum Club is run by Thevan Krishna, whose travel expertise is derived from his tenure as head of South Africa Airways Australasia for decades.

So, back to the pillars…

Yes, the fourth pillar is ‘life’. Although it sounds all-encompassing, it’s not! While the other pillars address clients’ physical requirements and desires, this one appeals

to their emotional and spiritual needs. By drawing on a diverse range of philosophies and practices, from Eastern spirituality to psychology, it offers strategies for personal enrichment. The head of this pillar is internationally-acclaimed motivational speaker, Kamal Sarma.

What is the fifth pillar?

Last but not least, ‘products and services’. They were devised to complement the other pillars, and range from a boutique, highend Australian real estate agency to the SUMO SIV Managed Fund, a unique vehicle for UHNW individuals who wish to attain Australian residency through the 188/888 Significant Investor Visa (SIV). The Fund is my proudest creation to date. To my knowledge, it is the only governmentapproved SIV Fund that is completely investor directed and offers every asset permitted for investment, as determined by the Minister for Immigration. That makes it the most flexible and broad legitimate SIV fund on the market. Other products and services offered by the Sumo Group include an end-to-end selfmanaged super fund service, accountancy, and a specialist Indian property sales agency. Due to demand, our product list is ever-expanding. I’m sure more products will be developed and proffered in due course, so check our website regularly for updates.

You mentioned that the various entities in the Sumo group complement each other. How does this work in practice?

I will answer this question by providing an illustration. Investors in the SUMO SIV

Managed Fund can do all of the following (and more) by harnessing the services of the Sumo Group: • Invest in Australia thereby securing residency status; • Access the financial advice required for prudent investment decisions; • Secure a prestige Australian residence for themselves and their families; and • Become acquainted with their new environment and expand their social and professional networks by attending Sumo Platinum Club events. We have purposefully designed the Group so that it caters for all conceivable needs and wants of our clients.

I noticed your logo incorporates life bubbles – a Buddhist symbol, and your holistic business philosophy seems Buddhist in nature. Was this intentional?

I suppose it was. I have always been drawn to the Buddhist notion of equanimity – the state of being balanced, which is one of the ‘Four Immeasurables’ that the Buddha taught his disciples to cultivate. Perhaps this inclination stems from my Indian heritage (although I was born in South Africa and reside in Australia, my background is Indian).

From what you’ve stated, it is clear that the Sumo Group is literally large! If you had to summarise what it offers in five words, what would they be?

I could go with literalism, and say ‘health, wealth, leisure, life and products’. However, I’ll settle on security, prosperity, indulgence, wisdom, and balance [instead]. JANUARY 2014

45


COUNTRY FOCUS Business set up

How to do business in New South Wales? New South Wales (NSW) has low barriers to trade and investment and welcomes foreign investment. David Yates, Partner, Corrs Chambers Westgarth, gives us a synopsis of the rules and regulations.

W

hy New South Wales? Each year over USD 54 billion investment is made in private business in New South Wales (NSW). Over 80% of NSW’s industry income is generated from services and it also has the largest manufacturing sector in Australia. NSW is Australia’s economic powerhouse and contains 43% of the top 500 companies in Australia. It has 7.3 million residents, which is 30% more than the next largest state. The State’s population is highly educated. Of the working age population, 55% hold tertiary qualifications. A key characteristic of Sydney is its multicultural society and its large number of multilingual citizens. One in three people in Sydney can speak a non-English language and over 200 languages are spoken in Sydney. It is cheaper to establish commercial offices in Sydney than in most other Asian cities. Prime commercial office space in Sydney is cheaper than Singapore, Hong Kong, Mumbai and Tokyo. Leasing prime bulk industrial space in Sydney is similarly affordable. 46

JANUARY 2014

Legal system The Commonwealth of Australia is a federation of six States (including New South Wales)1*, two internal Territories2* and a number of minor external Territories. The Australian Constitution gives the Federal Parliament the power to make laws relevant to foreign investment, including laws concerning corporations, taxation, trade and commerce, communications, banking, insurance, bankruptcy and insolvency, intellectual property, immigration and industrial disputes. Consequently, most of the issues concerning foreign investors are consistent across the various States and Territories. Each State, including NSW, has legislative power to make any laws it desires, except in relation to the matters reserved to the Federal Parliament by the Constitution. Federal law prevails over State or Territory law to the extent of any inconsistency.

Business structuring and regulations The World Bank ranks Australia fourth in the world for the shortest time needed to

David Yates, Partner, Corrs Chambers Westgarth

set up a business – approximately two to three start-up days.3 In Australia, business may be conducted by way of several types of legal structures, including companies registered in Australia, registered foreign companies, partnerships, joint ventures, trusts and sole proprietors. The Corporations


Act 2001 is the primary source of company regulation in Australia, and is administered by the Australian Securities & Investments Commission (“ASIC”). Companies that are incorporated outside of Australia that wish to carry on business in Australia must register with ASIC, which issues an ‘Australian Registered Body Number’ (ARBN). Unincorporated bodies wishing to carry on business in Australia must also register with ASIC if they do not have their head office or principal place of business in Australia. Alternatively, foreign investors may incorporate a company in Australia. Subject to certain exemptions, registered foreign companies must annually lodge with ASIC a copy of their balance sheet, profit and loss statement and cash flow statement for the previous financial year, which must be prepared in accordance with the laws of the company’s place of incorporation. These financial reports must be accompanied by other documents that the company is required to prepare under the laws applicable in its place of incorporation, such as an auditor’s report or director’s statement. ASIC may require registered foreign companies to provide further information if the statements do not sufficiently disclose the company’s financial position. A small proprietary company controlled by a foreign company must prepare a financial report and directors’ report only if it was controlled by a foreign company for all or part of the year and it is not consolidated for that period in the financial statements for that year lodged with ASIC by a registered foreign company.

Overview of foreign investment regulation Foreign investment in Australia is regulated principally by the Foreign Acquisitions and Takeovers Act 1975 (Cth) (“FATA”), the Foreign Acquisition and Takeovers Regulations 1989 (Cth) (Regulations) and Australia’s Foreign Investment Policy (Policy) issued by the Australian Government. While elements of the Policy are a restatement of what is contained in FATA and the Regulations, certain aspects of the Policy (such as the national interest considerations and the requirements on foreign government investors) are not dealt

with in FATA. Given the significant discretion of the Australian Treasurer under FATA, investors should comply with the Policy as if it had the force of law. The Australian Treasurer is responsible for the foreign investment framework and reviews investment proposals against the national interest on a case by case basis. The Foreign Investment Review Board (“FIRB”) is a nonstatutory body which advises the Treasurer on the foreign investment regime. Under FATA the Treasurer examines investment proposals and may: • prohibit a proposed investment which the Treasurer decides would be contrary to the national interest; or • raise no objections to an investment subject to the satisfaction of particular conditions which the Treasurer regards as necessary to address any national interest concerns. Direct investments by foreign governments and their related entities (including stateowned enterprises and sovereign wealth funds) are assessed on the same basis as private sector investment proposals. However, the Treasurer considers a number of additional factors in respect of an investment proposal by a foreign government or a related entity. FATA and the Policy require notification to FIRB of certain proposals by foreign persons. These include, but are not limited to, proposals involving: • an acquisition of a substantial interest in an Australian business or corporation in a non-sensitive sector that is valued above AUD 248 million* • a takeover of an offshore company whose Australian subsidiaries or gross assets are valued above AUD 248 million* • a proposal to invest 5% or more in the media sector, regardless of the value of the investment • a direct investment by foreign Governments and their related entities irrespective of the value of investment, including starting a new business or acquiring an interest in Australian urban land

Taxation Amongst the 34 member nations of the OECD, Australia has the sixth-lowest tax to GDP ratio, ahead of Switzerland and Ireland. Each level of Government (Federal, State and Territory, and Local Government) imposes its own taxes. The Federal Government imposes the most significant taxes. It levies income tax (on “taxable income”, which includes net capital gains), Fringe Benefits Tax (FBT), Goods and Services Tax (GST), customs duties and excise duties. There are no gift, death or succession taxes. As a State government, New South Wales imposes no taxes on income or capital gains. However, State governments impose stamp duty, pay roll tax and land tax to raise revenue. Companies that are residents of Australia for taxation purposes will be taxed on income and gains from sources both in and outside Australia, reduced by any allowable deductions. Conversely, companies that are non-residents of Australia will be generally only be taxed on income with sources in Australia and gains arising from dealing with certain assets that have the “necessary connection” with Australia. Incentives The New South Wales government considers assistance for major projects on a case-bycase basis. Major investors should contact the Department of Trade and Investment as the first step as incentives typically vary from practical advice to potentially funding and regulatory assistance. Tax concessions may be accessible from the Australian Taxation Office for research and development activities. The research and development entity must be one of the following: • an Australian company • a foreign company that is an Australian resident for tax purposes • a foreign company carrying on business through a permanent establishment in Australia • a public trading trust with a corporate trustee (taxed like a company)

The other states are Victoria, Queensland, South Australia,

1

Western Australia and Tasmania

* Threshold figures are indexed on 1 January annually

2

against the Australian Consumer Price Index (the most

3

Northern Territory and the Australian Capital Territory

widely accepted measure of inflation in Australia).

australia/#getting-credit

http://www.doingbusiness.org/data/exploreeconomies/

JANUARY 2014

47


COUNTRY FOCUS Food sector

Go big or go home! Former NRL superstar Sean ‘Garlo’ Garlick turned his once fledgling retail pie business into a wholesaling empire, supplying the likes of Australian supermarket chains such as, Coles, the Australian Navy and countless New South Wales outlets. We bring to you the details of their operation in the Middle East.

T

he problem with success as a professional athlete is that it can’t last. The body can only do it for so long before calling it quits, and fame deprivation syndrome is inevitable. But does it have to mean financial deprivation as well? Sean Garlick had two key assets as an National Rugby League (NRL) superstar: his body and the name “Garlo”. One of those has now faded as a money-earner; the second is coming into its own. Garlo’s Pies is Sean Garlick’s answer to the age-old problem for professional athletes of what to do next. Sean was lucky: he had a catchy nickname and a brother who could 48

JANUARY 2014

make a decent pie. And everyone – not just sport stars – can learn an important lesson from Sean. Go big or go home. A room full of pies, famous rugby league players, a stopwatch and TV cameras. That’s how Garlo’s Pies was introduced to the world in 2001 and now it churns out 12,000 pies a day. Employs 40 people and turns over AUD 8 million a year. So how did he do it? By getting three crucial moments right: the launch, heading into wholesale and a huge one-off gamble on advertising. Sean’s brother Nathan (seven years younger) had finished his baking apprenticeship and,

while fantastic at making pies, became frustrated with the people he was working for and gave it away to start driving a truck. Sean didn’t like what he saw. “This is a waste of your talent,” he said to his brother. “Would you be interested in getting back into this game if we had our own shop?” They wasted no time recruiting their dad, Terry who was wrapping up a 40 year career as a wharfie. Sean’s sister, Dana, and wife Samantha soon joined in too. A family business was born. Nathan started baking his pies like a madman and Sean set about using his fame to market the business. He was no ordinary player. He’d played for NRL team of South Sydney Rabbitohs as a


young man, then switched to Eastern Suburbs, then came back to the Rabbitohs and was captain in 1999. In his early days, believe it or not, he appeared in movies alongside Rachel Ward and Nicole Kidman as well as starring in Home and Away in 1991. And he was a policeman throughout his whole playing career. During a famously hard time for the club in 2001, Sean stepped up and was a key fighter alongside Russell Crowe in the battle to get Souths reinstated to the NRL. He’s one of the NRL’s favourite sons. So when he said he wanted to launch his business with a pie-eating contest, The Footy Show happily broadcast it. Big Artie Beetson, along with greats like Mark Carroll, Craig Salvatori, Mark Geyer and Daryl Broham all stuffed themselves until Geyer was crowned champion after eating a staggering 14 meat pies. He won the contest but would have been nursing his guts for days. The real winners were definitely the Garlicks. Over the next couple of years Garlo’s Pies took over Sydney. “We had 13 stores in Sydney in the next four years – eight of them owned and five were franchise. We had to start finding sites that were equally as profitable, which was difficult,” said Sean. It’s a seasonal and volatile business because, as Sean found out, people are keen on pies when it’s cold and rainy but not so much when the weather is good. It was wholesale, not retail that turned their pie domain into an empire. Australian supermarket chain Coles approached Sean in mid-2009 wanting to sell the pies and instead of diving into the deep end, he played hard to get. “I’d heard they screw small business on price and terms and I didn’t think it’d be good for our business if they were selling our pies for AUD 1 each – how would we get AUD 4.50 for them in our stores?” But Coles agreed to his terms and prices and stocked Garlo’s in 20 stores right away. Six months later they came back wanting to stock the pies in 206 stores around NSW. This is where things got tricky. Garlo’s had to beef up their production and throw money at bigger and faster machinery. And Sean was worried people wouldn’t know to look for the pies in

the supermarkets and so wanted to get the word out. At the worst possible moment, one of his franchisees went bankrupt owing the business a stack of money. With his back to the wall, Sean decided, against the advice of pretty much everyone around him, to double down and risk the lot. He took out a AUD 50,000 loan plunged it all into intensive one-month advertising campaign. They also started going around to the supermarkets giving free sample, something they still do regularly. It worked. Brand recognition skyrocketed and they were set. On top of Coles, they now supply IGA and the Australian Navy, plus countless schools, sports grounds, hotels, food trucks and service stations around NSW. It’s yet to be seen if they can perform away from their home ground but they are giving it a shot. The pies are all halal certified and with that, the first order is being shipped to the UAE. Garlo’s will be supplying pies to various 2014 Australia day events, which will be held in the UAE, including the Australian Embassy hosted event. Garlo’s will also be supplying pies and sausage rolls to the Aussies Abroad Australia day event in Abu Dhabi and Dubai Discussions are also underway with various supermarket chains and other distribution points both in the Middle East and Europe. A UAE enquiries desk is now setup to accept orders for the EMEA region. So is this the start of a family business dynasty? Too early to say. He’s still only 44 and has plenty of ideas for the future. If he was approached to sell, he’d have a good think. But a family rugby league dynasty could be a handy fall back plan. He’s got three sons and the oldest two, Jackson (19) and Bronson (17) have already been scouted to pull on the red and green for the Rabbitohs like their famous dad and the third, Campbell, is one to watch too (he’s in year seven). When they’re not training or at school they work at Garlo’s. So there you have it, sports stars – you could do worse than go big like Sean “Garlo” Garlick.

For more information, please contact EMEAenquiries@garlospies.com.au

*This is an amended version of the original article, which was published in the Family Business Magazine, Australia, November 2013.

JANUARY 2014

49


Country focus Food

Over a hot cup of coffee!

Aparna Shivpuri Arya spoke to Nabi Saleh, Executive Chairman, Gloria Jean’s Coffees about their business in the Middle East.

strategy across many fronts, both in the format of our coffee houses and the product offer. For example, we built many of our coffee houses here attached to institutions such as government departments, hospitals, offices and universities, placing Gloria Jean’s Coffees close to where our guests live, work and relax, which, along with our superior product offering and quality service, is a significant reason why we are regarded as the UAE’s premier coffee house.

Nabi Saleh, Executive Chairman, Gloria Jean’s Coffees

Please tell us briefly about Gloria Jean’s Coffee foray into the UAE in 1998. While the original agreement was struck in 1998 before we acquired the worldwide brand rights in 2005, it shows an enormous amount of foresight by the Master Franchise Partner who saw an opportunity for Gloria Jean’s Coffees in the UAE long before coffee was popularised in this market, and certainly long before the rapid development of Dubai. Only a relatively young player in the market, Gloria Jean’s Coffees opened its doors in Sydney in 1996, growing to 400 locations in Australia with 800 coffee houses in 39 markets globally.In the Middle East, there are 77 coffee houses across the UAE, Kuwait, Kingdom of Bahrain, Kingdom of Saudi Arabia, Qatar and Oman Since 2005 we’ve built upon this strong platform, while also having to adapt our 50

JANUARY 2014

As a global leader in your sector, how has your experience been on doing business in the UAE? Are there any dos and don’ts that you would like to highlight?

We understand that the UAE market, although one of the most mature retail markets in the world, is still very much a developing market when it comes to lifestyle coffee houses such as ours. In order to be successful in UAE you need to be flexible in the delivery of your business model and also adapt your product offer to suit the preferences of our Emirati guests. We approached the UAE market with a focus on attracting Emirati guests rather than only focusing on expat customers. As a result, we have a competitively priced offering and many of our coffee houses are strategically located to attract local guests. In many ways this has insulated us against the financial crisis when many expats left the UAE. One thing we’ve come to learn is that in the Middle East, relationships and local partnerships are the keys to success. If you get this right then you will be positioned well

to grow your brand in the market. If you get it wrong, it doesn’t matter how good your brand and product are, you will struggle to succeed.

What are your expansion plans in the Middle East?

We have a strong vision for Gloria Jean’s Coffees in the Middle East. We have just launched in KSA, with flagship coffee houses located in Riyadh and Khobar and expect to drive significant growth for our brand across the Middle East in years to come. We presently have partners and a presence in the UAE, Oman, Kuwait, Bahrain, Qatar and Saudi Arabia along with coffee houses in Jordan, Lebanon and Egypt.

If you had to give some advice to international businesses looking to enter the food and beverage sector in the Middle East, what would it be?

There are a few key pieces of advice I would pass on. Certainly, having a long term perspective when developing a market is crucial – be patient, as anything worth doing takes time. Secondly, it may seem obvious, but I would say to ensure your product offering delivers on the preferences of local guests; and further to that, be prepared to adapt your business model to suit the market, as we have. Join hands with experienced local partners, and ensure you are well resourced. Last, but not least, recruit a great team to execute your strategy and tell your story to your guests.

What are some similarities and differences between doing business in Australia and doing business in the UAE?

Some similarities between doing business in Australia and the UAE include the presence of mature retailers, the healthy amount of competition and the high rental rates for prime retail space; while the differences include the high expat base in the UAE, the limited breakfast dine out culture in the UAE – there is a much greater focus on evening dining – and franchising is not as mature in the UAE as it is in Australia.


WORLD’S FINEST

FULLY SERVICED OFFICES Your Address Could Be Here!

Levels 41 & 42 Emirates Towers Dubai T | +9714 319 9100

Level 4 Al Mamoura Building B Abu Dhabi T | + 9712 659 4000

Level 23 Boulevard Plaza Tower 2 Dubai T | +9714 409 6800

ƒ

Phone number INSTANTLY with great IT solutions

ƒ

A fully serviced office for less than the cost of a secretary

ƒ

Dedicated bilingual receptionist to answer you calls the way you like

ƒ

Personal assistant at your service

ƒ

Global network of fully equipped boardrooms, meeting rooms and offices

ƒ

Flexible lease term starting from 1 month

Levels 21 & 28 Habtoor Business Tower Dubai T | +9714 453 2800

Serv c Bus orp ines s Pac From kages AED 5 per mon 50 th

W | SERVCORP.AE AUSTRALIA | NEW ZEALAND | CHINA | JAPAN | SOUTH EAST ASIA | INDIA | MIDDLE EAST | TURKEY | EUROPE | UK | USA + 140 LOCATIONS ACROSS THE GLOBE


CONVENTIONAL LAMPS

PHILIPS LED LAMP

1 Year Lifetime*

15 Years Lifetime*

60 Watts

86% energy saving**

Pleasant Bright Light

Pleasant Bright Light

Philips LED Lamps Light at its most beautiful Save time and money when you use Philips LED Lamps. With a lifespan of up to 15,000 hours* and up to 86% energy saving** not only do you get good quality lighting for longer, you also save on your energy costs.

Trade and Export Middle East | January 2014  

Trade and Export Middle East | January 2014

Read more
Read more
Similar to
Popular now
Just for you