British see Dubai as ?safe business? destination
Nick Dutt, chairman and CEO of the British Business Group (BBG), talks to Christopher Sell on how the business landscape in Dubai has changed over the last 20 years and how UK companies, although enjoying strong links with the region, must continue to remain at the forefront in the face of increasing competition.
How does the BBG promote Dubai as a destination for UK construction firms?
We do have various sectors, but our remit or the way we attract members is not industry specific. Mainly we get ourselves known through the Chamber of Commerce in the UK and through various trade ministers that come out as well as through advertising. We have 850 members representing 550 companies in the UAE and some overseas members in the UK. What we try and do is encourage people looking to come out to the region to join as overseas members initially, so they get access to the network, can talk to people in the industry, and can understand what it's about. Then once they come in, they become full members.
What tends to happen is if a company is interested in coming out to the region, they will contact the local Chamber of Commerce to find out about that market, in which case we catch them there or alternatively, if they come through the trade commission, then we will contact them through our contacts at the embassy.
So there is a symbiotic relationship between the BBG and the British Embassy?
We are actually located on their compound but there is no official link. We do work very closely with them, and we find that works for both of us. At the end of the day, the remit for us is to develop British - UAE relations. The Embassy is there to serve British business so it makes sense to work together. There are areas where we differ; the government has to follow local constraints and government policies, whereas we can give a more ÃƒÂ¢Ã¢â€šÂ¬Ã‹Å“warts and all' view. There are great opportunities here but there are frustrations as well. If you come in and do it properly, life is easier than if you come and try to muscle in without doing your research.
So what is the remit of the BBG?
Basically it exists under the auspices of the Chamber of Commerce to develop and encourage development of British business in Dubai and improve links between the UK and UAE. When we established in 1987, because of the nature of the type of companies over here, membership was fairly exclusive, so it was focused on senior members of British businesses. Over time the mix has changed, member numbers had not grown in line with the growth of Dubai. We still had 600-700 members but it was pretty stable, so we tried to understand why and from that we redeveloped our constitution, making it more inclusive and allow smaller businesses and individuals based here to join. So people whom may be senior managers in a local company that cannot or would not join can join in their own right. So it gives us more flexibility and representation.
Do you think UK companies are fully aware of the construction opportunities in Dubai?
I think they are becoming aware, Dubai has marketed itself very well - people in the UK are aware of the UAE and they are aware of Dubai. And I think with a lot of the press that has been going round recently, people realise it is a place for opportunity. Hopefully by businesses coming to us first we can explain the pitfalls, the benefits and the opportunities. For example, you cannot operate in this region remotely, you have to be here and be seen to be here, to give confidence that you are committed to the market.
Abu Dhabi has a number of key projects underway and there is talk of a metro project in Ajman. Is the focus on Dubai detrimental to the future development of the wider region?
True, but Dubai over the last 5 to 10 years has marketed itself so well that it happens to be more recognised in the UK. And also, the way it has become positioned, it is the ideal HQ's for the region. We are working with an initiative the Embassy has developed called ÃƒÂ¢Ã¢â€šÂ¬Ã‹Å“Britain in the Region', where they have recognised that businesses are hubbing out of Dubai, so the Embassy now has someone dedicated to the regional view based here. We have events so that trade commissioners from other Embassies and business forums from around the Gulf can come into Dubai and present to our members that are based here the opportunities in those markets.
So there is recognition of a wider scope?
Oh yes, there is tremendous opportunity, but a lot of companies are setting up here because of the lifestyle that Dubai has developed, with the view to basing their operation here and then spreading afield. It is perceived as a good, safe destination, although it is getting more expensive.
Has there been a noticeable increase in membership in light of the dramatic growth the region has been experiencing?
Well no, and that was the reason for the change of constitution. If you look at 20 years ago when the BBG started, it was the big companies; the big construction companies, the big banks, the big corporate organisations who were coming out here for a set term, focused on the UAE and developing the infrastructure. Over that time things have changed dramatically, the majority of businesses here are now SME's and individuals coming out and setting up. Because of that we are certainly seeing a change within the BBG; if you look at the committee for example, years ago it was all senior men from the big companies. Also the whole business ethic, the way business is done has changed, there are no more three-hour lunches, there is more pressure, more regional jobs - it is much more stressful than it used to be, in fact it is much more like the rest of the world now.
Dubai has led that (change). When I came out, Bahrain was the centre, certainly for the finance industry. The handing over of Hong Kong was looming on the horizon, banks were looking for alternative locations and Bahrain had set itself up perfectly in the Middle East. But then they started putting in too many rules and regulations and at the same time Dubai made it very simple and encouraged people to come and overtook Bahrain and that has gone on.
Do you think Bahrain realised its mistakes made in the past and through projects such as the Bahrain World Trade Centre and Financial Harbour is trying to set in motion the sort of progress seen in Dubai?
Well quite, but I think Bahrain is well suited, because when Dubai took over, it took it to the extreme and other countries and emirates have seen what's going on and are trying to copy it without making the mistakes that Dubai has made. Because of its success and the way it has been driven, some things in Dubai have been done in a rush, and we are seeing some of the effects of that now. So other countries have looked at that and structured it better.
So how do you account for the region's spectacular growth over the last five years?
Well construction hasn't driven the growth itself, but the direction of Sheikh Mohammed has driven the country; he has encouraged investment and changed the rules to allow property ownership, which has had dramatic impact. Obviously that has created the current building boom, but also what it has done is create a stable economy. Even in 1990, when Iraq invaded Kuwait, the ex-pats went overnight and the danger is that if something happens again, your infrastructure disappears. But if you buy property, it changes the dynamics, you are not going to run away you are going to try and make it work.
And what are the emerging trends you have noticed in your position?
I think its across the board - a couple of years ago, there were 120,000 British in Dubai and Northern Emirates alone and that has grown significantly since then. If you look at British exports to this region it was $10.7 billion in 2005, which makes this market the 9th biggest export market for the UK. If you take Dubai alone it would be number 10 at $9.9 billion, which shows how important this region is. From a government point of view, the UAE is designated one of its top 10 emerging markets so they are beginning to put more resources in - Tony Blair was out recently for example.
Dubai and the UK and UAE have strong links, they have had for a while. It is still there and gives us a lead in, but there is a danger of becoming complacent, we still need to keep pushing the relationship, we need to still meet price and quality because we are up against tough competition. We are still trusted and have good contacts but there is a lot of competition from China and India for example.
Where are UK companies now basing themselves geographically?
All over really, Dubai has got a problem with real estate and getting an office is very difficult, but the freezones such as Jebel Ali, Media City and Knowledge Village are very successful. Yes the focus is heavily on construction as it builds an infrastructure, but as the country diversifies, you have other services such as education and hi-tech industries coming in and taking over. But again, this is driving the construction industry because as they expand they will require more facilities.
When you think what they are building in Dubai, the Dubai World Central and Dubailand for example, the construction industry has a good short to medium term future. And of course Abu Dhabi is catching on - they have seen the success of Dubai and they want to emulate that but keep the local flavour, which Dubai has lost.
What are the competitive advantages companies have out here?
British companies are still trusted out here, but it comes back to ÃƒÂ¢Ã¢â€šÂ¬Ã‹Å“you have a way in' but you have to deliver. There is so much competition out here from other countries; European and Asian that we have to be sure to be delivering top quality products and projects. It is getting more challenging and competitive.
So what is the BBG doing in the next 12 - 24 months to take advantage of growing interest from the UK?
From a BBG point of view, by implementing the changes we have put in, I would like to see a dramatic growth in membership to 1000 - 1500 in the next 18 months by making it more inclusive and making business opportunities for our members. With the construction industry there is going to be opportunities for more business but it has to be managed.
It is becoming a self-fulfilled prophecy in a way - as it becomes more successful, more people and business want to come here. The biggest danger I see is the cost base, businesses are going to look at the cost base and if it is too high, they will decide to base themselves in other Emirates or other countries and I think that's the danger. That is probably the key because big companies can afford to come and bring senior managers here, but it's the middle management that will be squeezed.