The Edge - Nov 2011 (Issue 27) by Firefly Communications

CONTENTS

w w w. t h e e d g e - m e . c o m

2011

CONTENTS .36. special focus

Highlighting the legacy of Apple’s recently deceased CEO Steve Jobs.

FINANCE & ECONOMICS .44. market watch

World and regional market, commodities and financial sector update.

.46. Inside edge

The status quo of Qatar’s thriving automotive sector.

.48. special report

ON THE COVER

Rachel Morris looks at the growing global, regional and Qatari smartphone market, which is estimated to comprise more than 500 million users worldwide, and what the future holds for the sector as dominant players such as RIM and Apple up the ante and the ‘Phone Wars’ enter a new era of ‘ecosystems’ device innovation and ‘near field communication’. On the latter, Morris also delves into mobile banking and other payment methods, which are set to change commerce – and may potentially eliminate cash and credit cards forever. (Page 64)

Qatar’s oil and gas sector growth.

.50. balance sheet

Highlighting the inherent risks of mega projects.

.52. economic barometer A look at how ‘CEO Churn’ affects global, regional and local business.

FEatures .56. in the spotlight

The pros and cons of Qatar’s confident international investment strategy.

.60. feature story

Erika Widén reports on the QUWIC’s technology innovations.

.70. on the pulse

How ISO standards can deliver quality for Qatari businesses.

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KNOWLEDGE & EXPERTISE .76. BUSINESS MANAGEMENT

Identifying and utilising highpotential staff, Part I.

.78. SMALL BUSINESS KNOW-HOW Preparing for cross-border entrepreneurship.

.80. MARKETING & DESIGN Advertising, marketing and corporate communications using digital screens.

.82. LEGAL INSIGHT

Qatar’s gas industry regulations.

CONTENTS

buSINESS iNSIGHt

.85. buSINESS INSIgHT INTERVIEwS

Miles Masterson speaks exclusively to Cummins managing director of distribution for the Middle East, Rachid Ouenniche, about their joint distribution venture in Qatar with long-time business partners Jaidah Group, the first of its kind in the region; and Rachel Morris talks to Oliver Graue, who recently travelled to Qatar with a 40-strong travel sector delegation on a fact-finding mission to investigate the countryâ&#x20AC;&#x2122;s tourism and MICE potential.

rEGuLArS .08. .09. .12. .18. .20. .22. .29. .40. .91. .96.

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fROm THE EdITOR CONTRIbuTORS NEwS ETCETERa QaTaR ImpaCT dOHa dIaRy mIddlE EaST maTTERS ENERgy aNd RESEaRCH COuNTRy fOCuS TRaVEl & lIfESTylE 10 THINgS

FROM THE EDITOR

FROM PublicationS dirEctor Mohamed Jaidah m.jaidah@firefly-me.com ManaGinG Editor Miles Masterson m.masterson@theedge-me.com dEPutY Editor Erika Widén e.widen@theedge-me.com rEGional SalES dirEctor Julia Toon j.toon@firefly-me.com +974 66880228 SEnior SalES ManaGEr Emma Land e.land@firefly-me.com +974 33197446 SalES ManaGErS Pierre Le Bourdonnec p.lebourdonnec@theedge-me.com +974 55997802 Joseph Issac j.issac@firefly-me.com +974 33675301 diStribution & SubScriPtionS Azqa Haroon a.haroon@firefly-me.com +974 55692471 crEatiVE dirEctor Roula Zinati Ayoub art dirEction Lara Nakhlé dESiGn coordination Charbel Najem dESiGnErS Sarah Jabari, Teja Jaganjac FinaliSEr Michael Logaring PhotoGraPhEr Herbert Villadelrey PrintEd bY Ali Bin Ali Printing Press, Doha, Qatar

THE EDITOR

Compiling the article on the passing of Steve Jobs on page 36 of this issue, I could only at first reflect on the effect he had on my own life. In the early 1990s, during my journalism studies, I had my first exposure to printing. During a class tour we were shown the laborious method of typesetting in the dark labyrinth of a newspaper’s basement. Highly skilled practitioners, who could read backwards and had to work in shifts around the clock, hand placed reversed out blocks of individual letters made of lead in rows, which would eventually make up the lines of newspaper articles. Though computer and lithographic technology were advancing in the media, this archaic method was at the time still a widely used process in publishing, largely unchanged from the invention of the Gutenberg press in the 1600s. I then joined a niche publication and was educated in the process of producing a monthly magazine, which involved recreating the entire edition in what essentially was a scrapbook. Copy was mocked up in dummy Latin text; colours were pencilled in with numerical Pantone references; and we had to project photo transparencies on paper, and pencil around edges within them to indicate approximate positioning and correct crops. This book was then taken to a reprographics house, which would compile these elements and ‘play out’ lithographic separations required for making printing plates, in a machine the size of a large SUV. It was a hugely time consuming and costly endeavour, one that often resulted in embarrassing production errors and limited editorial (and advertising) page numbers and general creativity. When I left on an extended winter vacation, upon my return, instead of a typewriter, I found an

Apple Macintosh on my desk. It was my first bite of the Apple, and I was instantly hooked. What had become known as the Desktop Publishing or ‘DTP’ revolution transformed an entire industry overnight and precipitated an explosion in the number of print magazines worldwide, altering the business models of the print and advertising industries forever. It matters not to my narrative that Steve Jobs was absent from at Apple at the time. This is because he founded the company and mindset that lead this paradigm shift in publishing, and in doing so set in place a sequence of events that affected the creative print media world arguably more than any other individual in history, besides, perhaps, Johannes Gutenberg himself. On his return to Apple in the late ‘90s, the subsequent advances Jobs contributed to DTP, with his computer creations, the iMac and G3, and those that followed, he almost single-handedly took this potential and expanded on it tenfold. Jobs truly enhanced the lives of millions of creative folk, making us all lifelong disciples of the brand. It really takes a special human to influence the world in such a manner, and though he was not perfect, Steve Jobs was certainly that. It takes the loss of such a person for one to realise how profoundly he affected one’s own career. Thus, on behalf of the creative staff of Firefly Communications and Apple fans in Qatar and the world over, I dedicate this issue of TheEDGE magazine to Steve Jobs – created, as it will always be, entirely on Apple Macintosh computers. Miles Masterson, Managing Editor

Firefly Communications PO Box 11596, Doha , Qatar Tel: +974 44340360 Fax: +974 44340359 www.firefly-me.com

theEDGE is printed monthly © 2011 firefly Communications. All material strictly copyright and all rights reserved. reproduction in whole or in part, without the prior written permission of firefly Communications, is strictly forbidden. All content is believed to be factual at the time of publication. Views expressed by contributors are their own derived opinions and not necessarily endorsed by theEDGE or firefly Communications. No responsibility or liability is accepted by the editorial staff or the publishers for any loss occasioned to any individual or company, legal or physical, acting or refraining from action as a result of any statement, fact, figure, expression of opinion or belief contained in theEDGE. the publisher (firefly Communications) does not officially endorse any advertising or advertorial content for third party products. Photography/image credits and copyright, where not specifically stated, are that of Shutterstock and/or iStock Photo or firefly Communications.

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CONTRIBUTORS

featured contributor Matt Ghazarian Correspondent Matthew Ghazarian has spent a number of years as a writer, political analyst and journalist in the Middle East and its peripheral regions, including Turkey, the United Arab Emirates, Tajikistan and Armenia. In 2011, Ghazarian joined Oxford Business Group, working in the firmâ&#x20AC;&#x2122;s Istanbul production office. There, he collaborates with the Gulf Cooperation Council (GCC) regional editor to produce coverage on the Gulf. In this capacity, he writes about the economic, political and other developments in the GCC. He also works in conjunction with the managing editor, regional editor and in-country teams across the region to coordinate overseas operations. Matthew is a graduate of Harvard University and holds a bachelors degree with high honours in Government and Near Eastern Language and Cultures.

PG. 82 AarIj Wasti Associate SNR Denton Doha, Qatar

P.29 jamie stewart International Correspondent London, United Kingdom

P.44 Dheeraj Shahdadpuri Analyst Dubai, UAE

P.46 Manjeet Chhabra General Manager, Middle East, Dun and Bradstreet Dubai, UAE

P. 50 Peter Kohut Director Major Projects Advisory KPMG Doha, Qatar

P. 52 Karim Nakhle Senior Business Strategist Doha, Qatar

P.56 Edward Jameson Senior Business Journalist MENA Region London, United Kingdom

P. 64 Rachel Morris Journalist MENA Region Doha, Qatar

PG. 76 JAY CONGER Visiting Professor of Organisational Behaviour London Business School London, United Kingdom

PG. 78 Jaywant Michael Executive Director Banking and Financial Studies College of the North Atlantic Doha, Qatar

PG. 92 Victoria Scott Journalist Doha, Qatar

About TheEDGE: TheEDGE is an ambitious business magazine targeting professionals operating within Qatarâ&#x20AC;&#x2122;s multi-sector business landscape. Printed monthly, TheEDGE was launched in July 2009 to fill the market void and to provide the business community with insight into the latest business trends and market developments. TheEDGE is distributed 11 times yearly to a readership base of more than 7500 professionals, providing advertisers with the needed additional reach and frequency to their most important and affluent audience. TheEDGE is an authoritative business resource serving both large and small business operators. Please e-mail info@theedge-me.com should you wish to contribute.

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NEWS ETCETERA

NEWS ETCETERA LIFESTYLE

TO OF THE MONTH O H P

The

E D G E M A G A ZI N E

TUNISIANS GO TO THE POLLS On October 23, 2011 the people of Tunisia cast their votes in their country. It was the first such polling since the wave of uprisings now known as the â&#x20AC;&#x2DC;Arab Springâ&#x20AC;&#x2122;, which began with the demonstrative act of a Tunisian street vendor Mohammed Bouazizi, who set himself alight in protest at being prevented from plying his humble trade by officials of the now ousted Zine El Abidine Ben Ali regime. Facing a myriad of social and financial challenges such as corruption and massive unemployment, Tunisians are hoping the recent election will herald a new era of rebuilding and economic investment and stability. (Image Corbis)

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NEWS ETCETERA

nEwS Etcetera Qatar airwaYS PoiSEd For a380 ordEr Qatar Airways will announce a “multi-billion-dollar aircraft order” at this month’s Dubai Air Show, chief executive office (CEO) Akbar Al Baker has told reporters in Seattle, with the deal expected to include several Airbus A380 superjumbos. The flag carrier’s order-book already includes five A380s, due to begin arriving in 2013, but Al Baker said that he saw sufficient demand for a “few more” of the massive jets, which seat 525 passengers in a standard three-class configuration. The CEO was in Seattle to commemorate the delivery of the airline’s 100th aircraft, a Boeing 777-200LR, which Al Baker described as “the backbone of our long-haul fleet”. Qatar Airways is already the second-largest carrier in the Middle East, and with firm orders for more than 130 jets the airline shows no sign of slowing its ambitious expansion programme. Though Al Baker would not confirm the exact number of A380s being purchased, he dropped hints that the deal may include other aircraft types as well. Qatar Airways had been expected to place orders for up to 50 Airbus A320neos at the Paris Air Show in June, but decided against the move at the last minute. The airline is also due to receive its first Boeing 787 Dreamliner next summer, the CEO announced, following three years of production and certification delays. Brushing aside his earlier criticism of the programme, Al Baker said of Qatar Airways’ cabin configuration: “It will be the most luxurious 787 flying in the sky. I promise you that.” Behind the scenes, Al Baker and his counterparts at Boeing went on to discuss the airline’s recent acquisition of a 35 percent stake in Cargolux, the Luxembourg-based freight carrier. That deal was overshadowed by Cargolux’s cancelling of the first ever Boeing 747-8F, a stretched version of the classic jumbo, which it had been scheduled to receive on 19 September. Commenting on his company’s role in rejecting the launch

aircraft, Al Baker dispelled suggestions that the move was intended to heap pressure on Boeing over compensation for its delayed 787s. He singled out the General Electric engines used on the 747-8F as the cause of the dispute, adding: “Unfortunately, the management of Cargolux did not take the action they should have taken during the process of aircraft acceptance. The engine is under-performing. As we sit on the board of Cargolux, we have the right to object if we find something is not fair.” – Martin Rivers

Qatar railwaYS coMPanY GCC CONfErENCE Qatar Railways Company recently announced the launch of the Gulf Cooperation Council (GCC) Transport and Railways Conference. “The GCC is going through an incredible transformation at the moment,” said HE Sheikh Saoud bin Nasser Jassim Al Thani, deputy chairman of the board of directors of the event organisers, The Qatar Railways Company. “With money flooding in, all of us have a vested interest to increase investing in our infrastructure – namely in transportation networks and railroads. The timing and preparations for this conference, therefore, is not coincidental.” The conference gave participants the platform to debate ways of developing the maritime and air transport systems, logistics, transportation and railway systems, as well as plans to link road and railways networks of countries across the GCC. The conference attracted global and regional players. From the GCC

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and European countries, delegations were headed by ministers of transport, finance and public works. In addition, representatives of regional and global transportation organisations, transport experts, leading international transportation and railways companies, engineering consulting firms, and financial institutions took part. Among the topics discussed were the strategies and policies for development and finance of transport sector in the GCC, the major development of land and marine time transport and expansion and investment in the railways industry, to name a few.

NEWS ETCETERA

STaNdaRd CHaRTEREd wINS bEST fX SERVICES Standard Chartered has won the ‘Best FX Services in the Middle East Award’ from emeafinance, an accolade that reflects the bank’s increased turnover in GCC foreign exchange (FX) volumes and continued innovation in the market. Standard Chartered operates the largest trading floor in the region with more than 200 seats in its regional headquarters in the Dubai International Financial Centre. Against a backdrop of challenging market conditions, the bank has continuously quoted GCC FX prices through the inter-bank market, broker market, the e-platform and to all sales clients. Nafees Akbarali, regional head of fixed Income, currencies and commodities and global head of G10 rates trading, Standard Chartered said, “During the first half of 2011, Standard Chartered’s financial markets client income globally has increased by 10 percent year on year. Our interbank has also seen significant growth. This is the result of having a comprehensive on the ground presence that includes experienced trading, sales, structuring and research professionals. Our clear long term strategy and commitment to the region enabled us to step up and gain market share during the crisis.” Standard Chartered has been operating in the region for over 90 years and is a key market maker and liquidity provider in the Middle East foreign exchange markets. The bank focuses on innovative FX solutions and has established long term partnerships with clients. Standard Chartered is the first bank with a Shari’ah-compliant online FX offering, the first bank to introduce auto-quoting for GCC currencies 24 hours a day, the first international bank to quote GCC FX transactions with tenors of over 10 years, a leading price maker in the GCC currency options market and the first bank to offer cross-currency and basis swaps in the bulk of the Middle East; the first to trade long-tenor GCC cross-currency swaps (CCS) and the bank behind the biggest CCS completed in the market.

SIlaTECH aNd TuNINVEST SIgN mOu

In October a Memorandum of Understanding (MOU) was signed between Silatech’s chief executive, Dr. Tarik Yousef and a founding partner of TunInvest, Aziz Mebarek. The MOU supports the mutual objectives of both Silatech and TunInvest to provide improved access to capital and business support services for small and medium sized enterprises (SMEs) in Tunisia and Morocco. TunInvest-AfricInvest Group is one of the leading private equity firms in North and sub-Saharan Africa, specialising in managing small and medium enterprises, with over US$700 million (QR2.5 billion) of assets under management across three generations of funds. The group has a proven track record of creating high returns for its investors in addition to demonstrating significant development and social impact in the countries where they invest. Qatar-based Silatech, a social initiative that engages the private, public and civil society sectors to promote large-scale job creation, entrepreneurship, and access to skills development services for young people across the MENA region, joins TunInvest as an investor in two new MENA Mr. Aziz Mebarek, founder of TunInvest pictured left, shaking hands with Silatech’s chief executive, Dr. Tarik Yousef after signing fund initiatives in Tunisia a memorandum of understanding at the Four Seasons Hotel Doha. and Morocco.

octobEr IN BrIEf

REal ESTaTE TRaNSaCTIONS According to a Century 21 Qatar new real estate report released recently, the first week of September was recorded with the lowest value of transactions, nearing QR143 million for the month. The second week improved with transactions valued at QR251 million recorded, whereas the third week dropped by 61 percent. Transactions recorded during the fourth week then rose 280 percent, at an approximate value of QR633 million. Doha experienced the highest transactional value of nearly QR1.46 billion accounting for 78 percent of the total transactions, followed by Al Rayyan Municipality with 19 percent, Umm Salal with six percent and Al Khor with four percent. Al Wakra recorded only two percent of the total value. Doha International Airport was recorded as the most expensive land transaction for QR285 million, followed by a building in Onaiza at QR265 million. Two hotel buildings also transacted in Doha for QR201 million. JaIdaH gROup JOINT VENTuRE wITH CummINS Jaidah Group has officially signed a joint venture agreement with Cummins. Cummins is a global company that designs, manufactures and services engines and related technologies, including fuel systems, emission solutions and power generation systems. For two years Cummins has been a billion US dollar business and its products are sold in 190 countries around the world. “Our relationship with Cummins is already long established, with the United States brand having been represented by us in Qatar for more than 30 years, both as a dealer and a distributor,” said Mohamed Jaidah, chief development officer of Jaidah Group, “It is the right time now since Qatar is experiencing new developments in addition to the upcoming Fifa World Cup, clients will feel safe having a mother company in Qatar with more skills, rather than to relying on an outside source.” Rachid Ouenniche, Middle East Distribution Managing Director of Cummins commented, “It is an honour and a pleasure for us to be associated with the Jaidah name and an exciting time to launch Cummins Qatar, the first joint venture distribution that Cummins is undertaking in the Middle East.”

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NEWS ETCETERA

2011

events calendar noVEMbEr DOHA, QAtAr

nEwS in QuotES “Today I can report that, as promised, the rest of our troops in Iraq will come home by the end of the year. After nearly nine years, America’s war in Iraq will be over.”

World Arabian Horse Conference

After the deaths of more than 4,400 US troops, tens of thousands of Iraqi civilians and the expenditure of hundreds of billions of dollars, President Barack Obama said late last month that the last American soldier would leave the country with his head held high.

8-9

“After assessing all indicators, we found the situation is getting serious and we expect it to get worse.”

Thailand’s worst flooding in five decades has killed at least 356 people and affected nearly 2.5 million, with more than 113,000 living in temporary shelters and 720,000 people seeking medical attention. Bangkok’s governor Sukumbhand Paribatra stated his concern during a press conference held in late October.

1-8

Financing Aviation

Asset Integrity Management in Oil and Gas

14-16

Civil Defence Exhibition and Conference

15-16

Gas Field Development

Qatar Global Investment Forum

18-19

Time Realty Doha

Qatar Investor Window

21-22

Middle East Gas and Infrastructure Summit

24-26

Qatar Model United Nations (QMUN)

28-30

Connect Arab States Summit

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“Our region stands today at the gates to the future…noting that there are four gates or crucial areas for consideration: dignity, opportunity, democracy, and peace and justice.” King Abdullah II Ibn Al Hussein of the Hashemite Kingdom of Jordan opened the World Economic Forum Special Meeting held last month in Jordan on economic growth and job creation in the Arab world, by observing that the Arab world has reached a critical turning point.

“This is a great achievement demonstrating years of hard work to ensure our inflight offering and the back-up infrastructure is today named best in the skies…the business has grown from strength to strength. We are selling many of the world’s leading brands across all sectors to provide passengers with an excellent shopping experience onboard at highly competitive prices.” The onboard Duty Free programme of Qatar Airways was awarded with the Inflight Retailer of the Year 2011 award at a leading industry event on the French Riviera. Chief executive officer Akbar Al Baker expressed his gratitude at the Frontier Awards, held each year in Cannes.

TECHDESK

tEchdESK wEbSitE rEVIEWS

httP://KnowlEdGE.wharton.uPEnn.Edu/arabic This website is the online home of the world-renowned Wharton School. The site freely offers what it calls “intelligent capital”, in other words information from its online business journal, including analysis of business trends, interviews with industry leaders and faculty, articles on recent business research, conference overviews, book reviews, and links to relevant content and its large database. www.20wPc.coM The home of the upcoming 29th World Petroleum Congress, taking place in Doha from December 4 to 8 2011, this site offers all you need to know about the event. Apart from there usual online registration etcetera, there is information about the event’s two main sections, The Global Business Opportunities Centre, featuring exhibits from the national committees of the World Petroleum Council and The World Petroleum Exhibition, featuring trade stands from a variety of companies in the industry. httP://dohatwEEtuPS.coM @DohaTweetups began early 2010 with a few people at the back room of Colombiano Coffee House, Ramada signal. It has grown to a community of almost a thousand people, and monthly events that see as many as 300 people getting together for socialising and networking every month – not to mention the interesting, informative (and sometimes entertaining) presentations on offer. a bionic FuturE

An engineer presents the new Bionic Exoskeleton to a patient during its launch in October 21 in London, United Kingdom. The bionic device developed by Ekso Bionics is a wearable, batterypowered, robotic exoskeleton, designed to aid wheelchair users and those who have suffered from spinal chord injuries to stand and walk. (Image Getty Images)

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wEb AND tEch NEWS dotbrand launchES in Qatar DotBrand Solutions MENA has launched in October in Doha to enable Qatari companies and non-profit organisations. Working with ICANN (Internet Corporation for Assigned Names and Numbers), Dotbrand aims to play a role in the changes to the Internet resulting from the introduction of new top-level domains (TLDs). “In the future, as well as .com and .org, we will have .coke and .unicef,” said Nabil Ali Alyousuf, an owner and director of DotBrand Solutions MENA. “And DotBrand Solutions MENA is planning to make Doha a global hub for new TLDs, as the many worldclass Qatari organisations take their place among the leading brands at the top level of the Internet – both in English and in Arabic script.” Saudi toPS inFEctEd coMPutEr liSt Saudi Arabia tops the list of countries in the Gulf region (GCC) in terms of the number of infected PCs at 50.77 percent. This was the conclusion reached by Kaspersky Lab experts after analysing data on malicious activity in the region during the third quarter of 2011. The data was received from consenting participants in the Kaspersky Security Network, a network that brings together millions of Kaspersky Lab users worldwide to detect and pass on information about malicious activity. With 8.23 percent Qatar placed third on the list, still far behind Saudi Arabia, and the United Arab Emirates at 27 percent.

tEch GadGEt:

SAMSuNG tABLEt

Widely regarded as a company at the forefront of in the electronic tablet sector, Samsung has just released the latest incarnation of its popular Galaxy Tab range, the Galaxy Tab P7300. This offering features 3G, WiFi and a 16GB memory, and weighs a mere 453 grammes. A continuation of the leading, user-friendly technology of Samsung devices, this product is now available in Doha. www.samsung.com/ae

QATAR IMPACT

PERCENT PARTNER Business is booming in Qatar, but Doha based news anchor Kamahl Santamaria wonders if the 51 percent ownership law could actually be holding the country back.

veryone’s looking for a gap in the market ahead of the World Cup in 2022, or dare I say the Olympic Games in 2020 if Doha’s bid finds some traction. But outside of government contract work, setting up a business in Qatar as a foreigner is tricky. Not least of all, finding your 51 percent partner. This is something I learnt about recently, when interviewing John Forde for my business programme Counting the Cost. His company, ProPartnership, acts as a go-between for the foreigner wanting to set up shop here, and the Qatari national or company which by law has to own 51 percent of that shop. In a way, it is a law that helps Qatar remain Qatari, ensuring an economy full of opportunity is not taken advantage of. This is important because, despite the enormous expatriate influence here, the Qatari people should ultimately control the destiny of their country. If you relax the immigration and business laws too much you risk fragmenting the market, and opening it up – knowingly or unknowingly – to more of society’s ills than you would otherwise want. The 51 percent law also indicates the financial strength of the country. Qatar can afford to limit itself to just 49 percent of

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foreign ownership in a company because it does not need cash injections like many countries do in Europe these days. But I also wonder if it is all a little bit too tightly controlled, and whether the law might in the long term end up putting people off investing here. Giving up 51 percent ownership in your own company is not something people elsewhere are used to. It is counter-intuitive for many, especially those coming from Europe and the United States. Because even if you were to find what seems like the right partner, there is always the fact that they control more of your own business than you do. And if your 51 percent partner is an individual rather than a company, the risks are even higher. Shari’ah law states that in the event of an individual’s death, his or her business interests are passed on to the next-of-kin. That person is then left with the options of leaving the businesses as they are, changing the conditions of the arrangement, or even liquidating if they do not wish to continue. As the minority 49 percent partner, that is perhaps an uncomfortable place to be. You could argue the simple premise of ‘our country, our rules’, which on paper is fair enough. But is that how business works in these times of globalisation? Remember, Qatar itself has made major business investments in other countries. But would its international portfolio be quite so strong if its own investment rules were applied? As ever, it becomes about striking the right

balance. Maintain control, but be flexible. I wonder if Qatar needs to look at more so-called ‘free zones’ where a business can operate within a certain complex but without regular restrictions. Currently there are two – the Qatar Financial Centre (QFC) and the Qatar Science and Technology Park (QSTP). But if your business falls outside the scope of finance or research and development, they are not going to be much help to you. They also require a lot of investment. ExxonMobil Research Qatar for example, which has set up at QSTP, is investing US$25 to 30 million (QR91-109 million) over the first six years, which shows you the level of funds needed to take advantage of these kinds of free zones. In 2006, a Qatari cabinet resolution did establish the country’s first free zone area, within a 10-square-kilometre-area close to Doha International Airport. It was authorised for a whole host of industries, but the project has not seen fruition yet. The sooner it does become a reality, the better for the country’s standing. A fully fledged free zone, and maybe an eventual review of the 51 percent ownership law, would show to the world that Qatar truly is open for business. Kamahl Santamaria is a Doha-based news anchor with Al Jazeera English, and host of the channel’s business and economics programme Counting the Cost.

DOHA DIARY

THE GAUNTLET Our resident real estate expert edd brooks vents in his unique way regarding an issue that has long been not just an annoyance to the population of Doha, but also a real danger: crossing many of the city’s busy roads on foot.

oha has many great things going for it, warm and friendly people (both local and the diverse mix of expatriates), a stunning mix of architecture and a positive can-do attitude. However, it is not is pedestrian-friendly. I’m not referring to various pavement closures or indeed the state of some of the walkways, which may not be in the best repair. That is an inevitable result of much of ongoing urban renewal and development and will be fixed in due course. What I am referring to is the difficulty in walking from one building to another – particularly in West Bay – without having to play chicken with powerful cars; especially if you are not totally sure the driver has even seen you. My case in point is that my office is located in the Tornado Tower. While we are fortunate to have a pleasant snack bar on the mezzanine floor (and a high class restaurant complete with cigar lounge mooted to be opening in mid-2012) sometimes one craves for something different for lunch. As an added bonus, I had a number of clients with me who suggested they take me out for lunch (though of course such a thing is rarely ever “free”). The closest restaurant within walking

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distance was only across the road in Al Fardan Tower – the excellent Bistro 61. It all seemed like a good idea – I could leave my car in the basement carpark, we wouldn’t need the headache of finding a parking space at the restaurant and we would avoid the midday traffic. All that separated us from a mouthwatering lunch was crossing Al Funduq Street. I’m sure most Doha residents will recognise this street, which runs from Majlis Al Taawon traffic lights up to the Sheraton roundabout. As streets go it is quite attractive with a nice central flowerbed. Unfortunately it has absolutely nowhere to cross and when you reach the relative safety of the middle, one is forced to walk over the flowerbed. Doha drivers by and large seem very unimpressed that someone on foot is on ‘their’ highway and if anything seemed to speed up on seeing a pedestrian. In fact it was so difficult to cross that particular day, it would probably have been easier to have driven there in the end. Thanks to this effect, you often get the feeling of an being stranded on an ‘island’ of towers in the West Bay area with the road network almost taking on the role of a moat and isolating each building. Another example is the infamous Ramada signal although at least here there are traffic lights, which gives the pedestrian a fighting chance of getting across in one piece (although not quickly or in one go, as each

direction of traffic operates on different stop lights – bearable in the winter but not in the heat of summer). I can only think of two pedestrian overpasses in Doha – both on the C-Ring Road almost opposite the arrivals terminal, and within a couple of hundred metres of each other. Crossing other main roads such as Salwa or Suhaim Bin Hamad Street (both major shopping areas where one would anticipate that people do actually need to cross the road) is even more dangerous – especially for those of us who are not part of an Olympic sprint team. While improvements are constantly on going, some thought to the pedestrians of these existing areas would be both appreciated by the pedestrians (and indeed the paramedics). During 2010, a third of all road traffic deaths were pedestrians and 2011 has seen the number of pedestrian fatalities drop, the number of those injured by cars has increased markedly. There is of course hope in some of the new master planned developments. However, the areas that really need attention are those existing roads with retail offerings on both sides. Until these areas are provided with adequate pedestrian crossing points let’s all show a little more consideration to our fellow residents who don’t happen to be in a car. Edd Brookes is a director and head of valuation, Middle East, at DTZ in Doha.

MIDDLE EAST MATTERS

BIGGER

Around the Gulf Cooperation Council there seems to be a captivation that bigger is a terminology of being the greatest. Dr. Tommy Weir, explains how it may lead to a downfall.

cross the region there is a fascination, possibly even an obsession, with being bigger. Regularly, there is another story of the ‘biggest’ taking place in the Gulf Cooperation Council (GCC). For example, the region is the home to the tallest tower in the world, is set to see the fastest growth until 2015, has the biggest order book for jumbo jets, has the largest reclamation projects, has the biggest supply of oil and natural gas, has the largest (at least among the largest) sovereign wealth funds, and the list continues. There is an inherent fascination with big and it is not just for the GCC, it also exists in the multinational firms who are present here. As an example, there is a large technology firm that it no longer satisfied with a doubledigit growth. They are now striving to grow two times the market rate. Or consider the global retailer that opened its first store here and within 12 months they were not only the fastest growing but had become the biggest of their 112 stores around the world. As a young boy, like most kids, I was obsessed with getting bigger. I would measure my height nearly daily hoping that I was growing. And my parents heard my constant nagging that I was a “big boy”, this continued into my adolescent years when

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I would argue that I was adult-like. While there is a fascination with getting bigger, the question remains, what do leaders mean by bigger? Traditionally speaking, there are key terms that are used to measure ‘bigger’ in a business setting. The following are a few of the most common: Share Price: the price of a single share of a number of saleable stocks of a company. P/E (price to earning ratio) – the measure of the price paid for a share relative to the annual net income or profit earned by the company per share. EBITDA – Earnings before Interest, Taxes, Depreciation and Amortisation. Top Line Growth – the annual gross sales or revenue. Size of Workforce – how many employees a company has. Market Share – percentage of a market accounted for by a specific company. While these are universal business measurements, given the reality that family businesses account for 90 percent of the private sector in the GCC, it is important to know what ‘getting bigger’ means for them. Growth means shareholder value, but does this mean the value of the shares or what brings value to the shareholders? For family businesses worldwide, it commonly refers to what brings value to the shareholder. In conversations with many of the regions leading merchant families, they are looking to get bigger and to have more, which translates to more geography, real estate, top line revenue and employees. This can cause friction when importing

expatriate leaders, as the metrics they are accustomed to are different. The math and science of business measurement varies between family-owned business and public traded corporations, where the CEO rarely knows who the shareholders are other than the few representatives of the core of the institutional investors. In a family business, it is clear who the shareholder(s) is and the honour is rooted in the business. In a similar fashion, multi-national companies who are striving to grow in the region are also looking for top line revenue growth and market share as their primary measurement of success. Their main focus is a revenue contribution to their balance sheet rather than having a neurotic focus on the other measures. In the back of my head, I am still asking the question, “is bigger better?” Growth is definitely exciting, but it can be dangerous. If I still had the same fascination and pursuit of getting bigger that I had when I was a small boy I would be a heart attack candidate as bigger would mean being overweight, out-of-shape and a bundle of other ailments. In boom times, getting bigger can give the illusion of being better. But when the music stops and the bills come due, bigger may mean bigger challenges and problems. The lesson here is ostensibly to be careful for what you wish for, as you may just get it. Dr. Tommy Weir is an authority on fastgrowth and emerging market leadership, and an advisor and author.

JAIDAH SQUARE

Make the move to Jaidah Square Jaidah Square infuses traditional and modern elements to create a striking building that simultaneously embraces and redefines Qatar’s architectural landscape. Jaidah Square is created as a green, efficient, and friendly building from the outside as well as from the inside.

technological infrastructure, Intelligent Building Management, and ecological design, Jaidah Square becomes the antithesis of ordinary.

The building provides an unprecedented digital environment that connects people, encourages collaboration, and facilitates complex business functions. By meticulously shaping the spaces’

Connected to the city’s evolving civil infrastructure, the building is ideally placed with a direct link to the New Doha International Airport. The elements of connectivity, centralization, and

Located in downtown Doha, Jaidah Square is situated on Airport Road, and acts as a centre for local and international businesses.

accessibility inform Jaidah Square’s strategic location within the city and endeavor to redefine the area. Jaidah Square was born out of an initial concept to build an inversion of the ordinary, an idea that was refined, focused, and sculpted by the “Woods Bagot” team. The organisation approached the space as a metamorphosis of contemporary and traditional motifs. Employing the experience gained from their work on Qatar Foundation’s Science and Technology Park, “Woods Bagot” created the building’s primary plan.

“MZ & Partners” further cultivated the building’s visual aesthetic by overseeing the architectural mapping and employed their expertise to serve as consultants of record. The company developed the initial framework of the building that offered a structure through which the eclectic design could be illuminated. “United Designers” were responsible for distilling the building’s concept into specific elements that adhered to Jaidah Group’s governing vision; a desire to reengineer the expected. Their task was to create a space that was environmentally conscious, technologically infused, holistic, ﬂuid, contemporary, traditional, and evolving. While incorporating all of these elements the international firm used green technology to help facilitate their design objectives.

a veil of privacy, a moment of intrigue, a desire to explore antithesis of ordinary, born out of a line, a shape - the desire to be unknown.

access to innovative business solutions. The twelve fully-equipped serviced offices, five self-contained meeting rooms and one boardroom accommodate all clients and members of the public wishing to rent Jaidah Square’s architectural, digital, and service-oriented landscape.

a PLaCe to do BuSiNeSS Jaidah Square brings a new approach with its first ﬂoor business centre - an environment where the worlds of business and community can converge.

Conference Centre & auditorium In addition to these areas, Jaidah Square also offers a state-of-the-art conference call centre, an auditorium that will facilitate up to 100 people and an expansive business library. The building’s ﬂuid construction and structural language provides a space where even the smallest and largest businesses can co-exist thanks to its ability to evolve and reﬂect the needs of its inhabitants.

ofﬁces The first ﬂoor blends technology with a centralised layout to offer unprecedented

key Facts • 12 Fully-Equipped Serviced Offices • Five Meeting Rooms

• One Boardroom • Cutting Edge Video Conference Centre • Unique Business Library • 100 Plus Seat, Auditorium at Your LeiSure Jaidah Sqaure understands that a holistic corporate culture blends the worlds of leisure and business. The building has a 500 Sq.m gym, the famous Italian “Paper Moon” restaurant, and a coffee shop

We understand that design is always a balance of form and function, it’s not enough to just create a building that looks good, it has to perform and exceed expectations.

to provide people a host of spaces that promote creativity and wellness. key Facts • Chic Paper Moon Restaurant • 500 Sq.m State-Of-The-Art, Gym • Organic Themed Cafe GeNeraL keY FaCtS Building • Total Office Space available for rent of 20,000 Sq.m • Flexible Office Configuration • 7 Business Floors Offer 4000 Sq.m each • 9 state-of-the-art elevators • Fully Integrated Security System • Intelligent Building Management System • Mezzanine Floor of 1,300 sq.m each • The Ground Floor Contains 2 mega Showrooms of 2300 Sq.m each Parking • 3 Underground Parking Levels to house 662 parking spaces • Automated Parking and Reactive Lighting Leisure • Unique Business Library • Fitness Centre, Restaurant & Coffee Shop Business • Cutting Edge Video Conference Center • Plug & Play Offices • Wireless Networks • Data Centre; 380 Sq.m area; Tier 3 • Hosting Service; Co-location Service • Multimedia Service

For further information or details please contact: Tel: +974 444 66 767 P.O. Box: 150 - Doha, Qatar Email: jaidah.square@jaidah.com.qa www.jaidahsquare.com

ENERGY & RESEARCH

QATAR: THE 200 YEAR WINDOW

Hydrocarbons and sustainability are two terms that rarely go together. In a bid to change that, Qatar is taking a two-pronged approach to ensure the sustainability not only of its gas reserves, but also of its energy future. By Jamie Stewart

wo hundred years. It sounds a long time – indeed, we will no longer be here – but in terms of nation building, 200 years passes in the blink of an eye. Famously boasting the world’s third largest natural gas reserves beneath the seas off its north coast, with 14 percent of the globe’s total, according to industry publication the Oil & Gas Journal, Qatar is believed to possess enough of this valuable natural resource to last it approximately 200 years, at present rates of production. The state pumped a fortune into the fulfilment of its ambition: to increase production capacity to 77 million tonnes per annum (mtpa), a feat that was achieved with great fanfare on 13 December 2010. As a result, the nation is the world’s largest exporter of liquefied natural gas (LNG), sending its natural resource to the United States (US), Europe, central Asia and the Far East. Now that the task of gas infrastructure building is complete, the state can set its sights on an altogether more illustrious project – that of nation building. Like many states across the Middle East, the pace of mass development in Qatar is dictated by the country’s reliance on hydrocarbon exports to ensure economic growth. When the natural gas runs out, Doha must possess the economic diversity to ensure the continuation of growth, for the sake of future generations.

With a combination of efficient production of gas and renewable powered electricity, in the future Qatar could export its excess energy to other GCC countries such as Saudi Arabia. (Image Corbis)

TWO-PRONGED APPROACH The terms hydrocarbons and sustainability are rarely uttered in the same breath, unless it is to compare the two as alien concepts. Hydrocarbons – in short, oil and gas – are by their very definition an

ENERGY & RESEARCH

By adopting a long-term and sustainable approach to energy locations such as Ras Laffan will remain productive well into the next century. (Image courtesy Ras Laffan)

unsustainable resource. That is why Qatar is engaged in an interesting two-pronged approach in its battle to ensure the sustainability of its gas resources, and its energy income, beyond the 200 year window. On the one hand the state is pumping cash into domestic gas-related schemes; while on the other it is simultaneously reinvesting its hydrocarbon income in renewable energy projects and research. The first part of this approach ensures the most efficient ‘bang for the buck’. It protects the Qatari economy by guaranteeing the country will not have to spend cash on energy imports to fuel its development drive, while any excess power generated can be exported, further boosting the national coffers. The second part is more far-reaching. By striving to be at the forefront of renewable energy development, Qatar can both safeguard the longevity of its gas resources by cutting its own domestic consumption, while simultaneously seeking to maintain a leading role in the post-fossil fuel energy landscape. POWER EXPORTS Qatar’s interest in the Gulf Cooperation Council (GCC) power grid project falls firmly within the first part of this two-pronged push. The interconnected GCC power grid has passed through its first two phases and is now in its third and final phase: the inclusion of Oman. The grid will allow Qatar to export electricity directly to Saudi Arabia. According to the Kuwait Financial Centre (Markaz), the GCC combined has a reserve margin – the difference between its maximum power generation capacity and its likely peak demand – of 19 percent. Qatar, however, boasts a mammoth 43 percent reserve margin. Qatar “aims to be a source of power exports after the GCC power grid is fully functional,” Markaz says in a study released in October. “It is well placed to supply power to its neighbours,” the centre adds. Domestically, 79 percent of Qatar’s total energy consumption comes from natural gas, with the balance supplied by oil. The state is in the process of building gas extraction facilities specifically to supply its domestic needs. Paradoxically, such a strategy can go a long way to protecting the sustainability of its hydrocarbon industry. It ensures cash is not squandered on importing natural resource for domestic consumption, whilst protecting reserves specifically intended for export, therefore maximising net income from the sector.

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By striving to be at the forefront of renewable energy development, Qatar can both safeguard the longevity of its gas resources by cutting its own domestic consumption, while simultaneously seeking to maintain a leading role. BUILDING A NATION The second part of Qatar’s hydrocarbon sustainability plan is already seeing the state bid to position itself at the forefront of renewable energy development. Doha’s push is being spearheaded by publically-funded bodies such as the Qatar Environment and Energy Research Institute (QEERI), a member of Qatar Foundation. “Qatar is extremely well-placed to drive innovation in renewable energy technology,” QEERI executive director Rabi Mohtar says. “It has the resources and increasingly has a strong scientific community to draw talent from.” The institute began activities in January and is now becoming fully operational. It hopes to establish itself as a worldwide centre of excellence and a reference body for the energy industry on dry area research. The team has already identified solar energy among its key research areas, and has begun developing research projects such as wind and solar mapping of Qatar. “Initially our main focus will be on the field of solar energy research, because the success in this area will be of greatest immediate benefit to Qatar,” Mohtar says. “Qatar has good potential to utilise solar as a viable energy source.” According to Mohtar, QEERI will also be looking into how the institute can help Qatar in its optimal operation of the oil and gas sector, an activity that will be co-ordinated with the appropriate agencies in Qatar. “While we are trying to move away from a carbon economy to a knowledge-based economy, it also makes perfect sense to use revenues from finite oil and gas supplies to research new, more sustainable energy sources,” Mohtar says. Projects such as QEERI are the future of Qatar. They not only help guarantee its mid-term prosperity by boosting the sustainability of its hydrocarbon sector; they may also ensure its long-term economic diversification targets are met, thereby working towards the ultimate goal in the process: building a nation.

ENERGY & RESEARCH

LNG looking east Qatar is targeting natural gas supply contracts with giant emerging markets in Central Asia and the Far East as demand in the US for Middle Eastern gas falters, writes Jamie Stewart

he distinct change of strategy has emerged because of advances in drilling techniques, which mean the United States (US) – a key Qatari export market – is capable of extracting what was previously termed unconventional gas. As a result, Qatar has been forced to look eastwards to the emerging markets to ensure its export industry does not suffer from being suddenly over-capacity, which would result in the mothballing of mammoth facilities that were only brought into operation relatively recently. Gas demand in Europe, another key market for Qatar, has been relatively stagnant in recent years as the continent struggles with the ongoing aftermath of the great recession. So as the axis of global power has tilted from Europe to the East, so has Qatar’s business model. On 18 October, giant Qatari energy supplier RasGas said its liquefied natural gas (LNG) shipment volume to South Korea this year would total approximately 8.3 million tonnes – “nearly a quarter of the total anticipated demand in South Korea this year,” according to Qatar energy minister HE Dr. Mohammed bin Saleh Al Sada. “Today, RasGas is the largest single supplier of LNG to South Korea delivering over seven million tonnes of LNG per year on a longterm basis. In addition to our current long-term commitments, RasGas has delivered over one million tonnes per year of incremental spot cargoes for the past several years,” Al Sada added. GAME CHANGER Unconventional gas, the most common source of which is shale gas, has been termed the “great game changer” by some analysts – and to date the shale gas revolution has not disappointed. According to the US Energy Information Administration (EIA), the US sits on top of 827 trillion cubic feet of shale gas reserves (equivalent to 17.4 trillion tonnes of LNG). The agency’s latest long-term production forecast puts extraction at 12 trillion cubic feet by 2035, up from 4.9 trillion cubic feet last year. The EIA goes on to forecast that imports of gas will account for just 18 percent of US demand by 2035, gradually declining from 24 percent in 2009, despite energy consumption being expected to grow by 21 percent over the same period. This underlines the importance to Qatar of securing deals and maintaining relations with Far East nations such as South Korea.

The fact that the United States has its own massive gas reserves, which it has only recently begun to exploit, has changed the global dynamics of the sector and forced countries such as Qatar to look east rather than west for business opportunities. (Image Corbis)

Gas demand in Europe, another key market for Qatar, has been relatively stagnant in recent years as the continent struggles with the ongoing aftermath of the great recession. So as the axis of global power has tilted from Europe to the East, so has Qatar’s business model. TheEDGE

ENERGY & RESEARCH

In December Qatar will host the ‘Oil and Gas Olympics’, otherwise known as the World Petroleum Congress. Held every three years, this year the theme of the event is ‘Energy Solutions for All’ and will showcase the latest research and innovations in the sector. (Image courtesy TAMUQ)

ENERGY AND RESEARCH BRIEFS DOHA OIL AND GAS ‘OLYMPICS’ On 4 December, 5000 delegates from the oil and gas world will descend on the Qatar National Convention Centre, Doha, for the 20th World Petroleum Congress – the first time in history the mammoth event has been held in the Middle East. The four-day event, billed the “Olympics of the oil and gas industry” by the World Petroleum Council, takes place every three years. It will bring together “a global oil and gas audience alongside stakeholders including governments, NGOs, and international institutions”, the council says. The theme of the Congress is “Energy Solutions for All – Promoting Cooperation, Innovation and Investment”. Qatar boasts no shortage of oil and gas people, all of whom should be in attendance. This is one Olympics that Doha does not have to wait long for. QATAR WARNING Qatar has thrown its weight behind calls for the European Union to resolve its sovereign debt crisis, amid fears that the bloc – a key export market for Qatari natural gas – could slide back into recession. Global energy markets have continually been buffered as a result of Europe’s ongoing debt negotiations, with stakeholders looking to second-guess any impact that a return to recession may have on fossil-fuel demand across the continent. Speaking at last month’s World Economic Forum in Jordan, Qatar prime minister HE Hamad bin Jassim bin Jaber Al Thani warned: “If there is nothing positive then we will find a very difficult situation, not in Europe but in the world, that would take a decade to fix.” The global natural gas market has been in a flux for some time, with faltering western demand and advances in extraction techniques forcing Qatar to reconsider its long-term export strategy.

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HSE FORUM THE three-day 7th Annual HSE (health and safety experts) Forum in Energy opened on 10th October with a call to instil the concept of safety among youth and regard it as a core value in all their activities. Fleming Gulf’s 7th Annual HSE Forum in Energy was hosted under the patronage of HE Dr. Mohammad bin Saleh Al Sada, Minister of Energy and Industry and chairman of Qatar Petroleum. Around 300 leading regional and international industrial stakeholders gathered from the oil and gas sectors to chart; identify solutions essential to ensuring effective health and safety management and sustainable environmental practices. Highlighting HSE as a global concern, Saad Al Kubaisi, corporate HSE manager of Qatar Petroleum said in his keynote speech that the concept of safety should be integrated in academic curriculum not only at the higher education level but also at the primary and secondary levels. He lauded companies in Qatar for complying with and giving high priority to implement safety standards as well as protecting the environment in consonance with the articles of the Qatar National Vision 2030. “Qatar Petroleum endeavours to create a safe working environment for all employees by implementing the required safety standards,” Al Kubaisi said and stressed the company’s focus on promoting safety standards through various initiatives one of which is the setting up of a college of safety and emergency training in Ras Laffan City. Held at Grand Hyatt, the conference over three days reiterated the importance of adhering to all aspects of HSE standards for companies operating in the energy sector. It provided the industry with necessary stepping stones to enhance skills and performance through a series of debates, presentations, and case studies and focused workshops delivered by Qatari as well as an international speaker faculty across all aspects of health and safety in the oil and gas industry.

A New Jewel SpArkleS iN DohAâ&#x20AC;&#x2122;S SkyliNe

An exciting new landmark will soon be available in Qatar, with the Al Gassar Resort opening imminently, providing a range of offerings from 5-star deluxe hotel services of the renowned St. Regis Hotel to the very best in luxury waterfront living for Dohaâ&#x20AC;&#x2122;s discerning residents. With the upcoming launch of Al Gassar Resort a team of top-level executives considered experts in the industry have been recruited to ensure the overall success of the entire development and in particular the

Al Gassar Resort Residences which will provide the highest standards to residents and guests alike. Wolfgang Pachler, the new Chief Operating Officer at Resorts Development Company, the Master Developer behind Al Gassar Resort, will be one of the developmentâ&#x20AC;&#x2122;s main driving forces, providing a wealth of global experience alongside a strong business heritage that will ensure the highest level of luxury and service throughout the new project. Bringing with him over 30 years of business

experience, 20 of these working within the hospitality sector, Pachler has worked with the operational departments of international hotel groups across Europe, the Middle East, the Far East and the USA for prestigious hotelier groups including the Mandarin Oriental Group, Marriott Hotels and Resorts and Grand Metropolitan Hotels. The Al Gassar Resort is set to be another mega landmark in Doha, presenting the highest standards in hotel and residential services, for both

leisure guests and those seeking to make Doha their home on a more permanent basis. Mixing together a majestic atmosphere of relaxation, refinement and high-end service that will be unrivalled in the region. Al Gassar Resort is ideally suited for both families and for executives looking to experience an extraordinary lifestyle during their time in Qatar. The much-anticipated development will bring the very latest in lifestyle accommodation to Qatar. Inspired by the finest traditions of Arab architecture, the Al Gassar Resort sits on Doha’s pristine coastline in a prime location between bustling West Bay and Doha’s cultural hub, Katara Village. The opening of Al Gassar Resort early next year will launch a development within Qatar that has it all, from the renowned opulence of the St. Regis Hotel, to luxury residential options, with an extravagant ballroom, a range of dining options and a variety of community offerings. This destination of choice provides residents and guests with a dream lifestyle of unparallel sophistication and luxury. With around 422 luxuriously furnished apartments available, residences of

Al Gassar Resort will provide choice and value as well as unmatched luxury and exemplary attention to detail. The amazing waterfront community has been designed for residents looking for a hotel-style living experience with a customised service in their own home. The extensive amenities exclusively available to the Al Gassar Resort community include food and beverage outlets, a full-service Business Centre as well as grocery shopping assistance services. The elegant mixture of features will also incorporate health, fitness and outdoor facilities for sports and recreation. Children will be catered for with a kid’s club, pools and babysitting services available. Because of the residences’ proximity to the St. Regis Doha, which is part of the Al Gassar Resort, there will also be access to the luxuries and world-class facilities offered by the high-end hotel. The grandly-scaled domed towers of Al Gassar Resort are all unified through the skilful placement of piazzas, decorative water elements and pools, and inviting open spaces for walking and relaxing. Enhancing the feeling of an exclusive community, lounges and BBQ areas offer welcoming indoor and

outdoor environments, with the added advantage of a wealth of services and activities. Set to be the brightest jewel in Doha’s skyline, the new destination resort will offer an unparalleled level of luxury that is translated into every aspect; from the concept to the design and execution.

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THE PASSING OF

AN ICON LESSONS from the life of appleâ&#x20AC;&#x2122;s STEVE JOBS

Steve Jobs, the co-founder and former CEO of Apple Inc. who through its myriad of innovative products was widely regarded as one of the most influential geniuses of his generation, if not all time, passed away in early October 2011 from pancreatic cancer. In a special tribute, TheEDGE takes a look at the lessons we can learn from a creative and business life well spent, and some of the most groundbreaking products this Arab-descended IT pioneer brought to the world. By Miles Masterson

Steve Jobs was never more truly in his element than when, clad in his ubiquitous black pullover, he was onstage at a presentation at an expo or Mac event. revealing a wonderful new Apple product, the details of which he had made sure remained secret to the point of paranoia. Here he is pictured while still in comparatively good health in 2004 at a Macworld expo in San Francisco, where Jobs debuted the Mini iPod and iLife 4 software. (Image Getty Images)

A HUMBLE BACKGROUND IS NO OBSTACLE On February 24, 1955, Steve Jobs entered the world with certain distinct disadvantages to overcome. As an illegitimate child of a single mother and an immigrant Syrian father, before he was born he already faced stigmatisation in an era when a single mother was

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considered taboo, even in comparatively enlightened beatnik San Francisco. Put up for adoption, he of course had to deal with all the emotional baggage this can create throughout his life, as well as the fact that his new family was working class and of meagre means, his new father a Midwest machinist who had not graduated from college. rESPond to EncouraGEMEnt Described by many sources as a somewhat rebellious youngster, ostensibly understandable given his early life, Steve Jobs eventually came under the tutelage of a perceptive and cunning teacher, Imogene Hill who recognised in this young boy a potential extraordinaire. As the story goes, she famously bribed him with candy and money to get him to do his schoolwork. Once he began to apply himself, the young Jobs obviously realised he had a chance to do something with his life and embraced his studies and jumped a year at school. Eager to get him out of a rough school (which he threatened to leave if they didn’t) and recognising his intelligence his ever-supportive, patient parents moved Jobs to a new school, where he began to blossom academically. EMbracE curioSitY and Follow what You loVE A voracious reader as a youngster, Steve Jobs was also fortunate in that his adoptive father used to restore old motor vehicles, exposing him to mechanics and electronics. Though he had a false start with the latter when he stuck a pin into a plug socket, the combination of his enquiring mind and early technical acumen laid for Jobs the foundations for the pioneering technological genius the world was soon to know. Of course it also helped that Jobs parents lived in what is now known as Silicon Valley and his next-door neighbour was an early Hewlett Packard (HP) employee who revealed to Jobs his first computer circuitry. Jobs, who then saw his first HP desktop computer at the age of 12, was hooked. SuccESS coMES FroM FriEndShiPS and PartnErShiPS Given his history Steve Jobs could arguably easily have been a loner, but he was a gregarious sort and soon befriended another neighbour his own age, one Bill Hernandez, another an electronics geek, who in turn introduced Jobs to another computer buff five years older than them called Stephen Wozniak. ‘Woz’ as he will forever be known, was an electronics whizz and at the time was building a computer he called the

FIVE APPLE PRODUCTS THAT CHANGED THE WORLD aPPlE MacintoSh ii Released in 1978 this machine was the culmination of all the work Jobs and his partners, developers and product designers had been doing to date to create the ultimate personal home computer. Revealed to the world as a prototype at a computer fair in California the previous year, the Apple Mac II became Apple Computer’s first mass market success, more so when it introduced spreadsheets in 1979. Released two years after the departure of Jobs from Apple, the colour Apple Macintosh II set the bar for colour compact computers, and had a (then) staggering one megabyte (MB) of random access memory (RAM) and up to an 80MB hard drive. PowErMac G5 Though during Jobs’ absence, and especially on his triumphant return to the company when he returned it to profits and then some, Apple brought out many progressive computer designs, as well as printers and many other associated forms of computer hardware, including the iMac in 1998 and the iBook laptop in 1999. But it was the ‘G’ series that truly empowered Apple Mac users, especially creatives in the photographic, publishing, advertising and nascent web design industries. Released in 2003 and billed as the most powerful Apple computer ever, the G5, with its IBM PowerPC based processer was able to store and process incredible amounts of data at lightening fast speeds. thE iPod Not content to limit itself to the desktop and laptop, Apple Computers had long since rebranded itself as ‘Apple Inc.’ – a strategy that truly reaped massive dividends in brand cache and profits when it released the iPod in 2001. Taking advantage of the huge advancements being made at the time in compressing music files in the form of MP3s, Apple recreated a buzz last felt by the electronics consumer with the emergence of the Sony Walkman decades previous. Though it wasn’t the first company to produce a portable digital music player, it was the first to present it in such a slick, ergonomically designed pearl-coloured, ‘must-have’ package, one that arguably simultaneously changed the consumer electronics and music industries forever. thE iPhonE Released in 2007 the iPhone was yet another Jobs-inspired Apple product that revolutionised its business sector and created a media frenzy that far outweighed its actual sales penetration. To this day iPhone sales are dwarfed by those of competitor devices, but it could be argued it was not the phone itself that changed the game so much, but it was the applications that went with it, now known as ‘apps’, that

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‘Cream Soda’. The two developed a close relationship, one that later was formalised of course in the founding of Apple.

did so. Now an industry of its own, the creation and usage of apps has become so central to modern life that many can scarcely remember a world without them.

rEcoGniSE Your oPPortunitiES and liMitationS College dropouts the world over will forever cite the likes of Virgin founder Richard Branson, Microsoft’s Bill Gates and Steve Jobs as examples of flunkers who made good. Despite the dubious distinction, there is no doubt that both of these men made the most of their circumstances and coupled with hard work, became who they did. Jobs is reputed to have left his college, an expensive art school, because of the financial strain this caused for his parents, who had promised Jobs’ biological mother they would send him to tertiary education as a condition of his adoption and were spending most of their live savings to do so. Instead Jobs took his interest in electronics and computers and his entrepreneurial spirit and made a career.

thE iPad For many months the rumours surrounding ever-secretive Apple’s imminent release of its ‘table’ computer circulated the globe. “What will it look like? What will it do? How much will it cost? Where can I get one?” were the kinds of questions being asked by Apple fans and new converts alike during the northern hemisphere summer of early 2010. The iPad’s eventual release, in Japan, was a truly global media occurrence, and was followed by a product hysteria rarely seen, often selling out before they arrived or prompting long queues of the devoted, often overnight, to get their hands on one. Again, thanks to Jobs, another Apple innovation had changed the game forever.

don’t bE diScouraGEd bY doubtErS Once Wozniak and Jobs had founded Apple and began working on their first computer, through their earliest days they encountered doubt as to what they were trying to do, which was build a simple, easy to use personal computer, the Apple I, for business and home use. Wozniak was still working at HP at the time, and so they could have taken ownership of the computer, but they were not interested. At an early computer fair attendees were not impressed with the Apple I either, but the partners persevered, and before long had improved their first incarnation into the Apple II, which as we now know, proved infinitely more popular. crEatE a brand that EndurES Though by the late 70s, Apple was now a fullyfledged business enterprise funded by outside investors, courted by Jobs, and which hired outside help to create a marketing campaign, it was Jobs who drove the quest for the perfect logo, the apple with a bite taken out of it, which was designed by an art director called Rob Janoff. However, it was Jobs that insisted on the colours, which he felt humanised the company and reflected the fact their computer monitors were in colour. From that point on Jobs, throughout his first tenure, and especially upon his return to the company in the 1990s, was as careful to nurture the marketing of the brand and indeed ‘cult’ of Apple as he was its innovative products, most notable for the 1984 Superbowl commercial, directed by Ridley Scott, that placed Apple in the world’s public spotlight forever afterwards.

TheEDGE

Stand uP For what You bEliEVE in Succeed in anything and there will be those who will denigrate you. Critics of Steve Jobs are plentiful, deriding him for his alleged or tyrannical and manipulative management style, paranoid secrecy, indifference towards his customers, overpriced products and even down to his monotonous attire of black pullovers, sneakers and jeans. Throughout his career Jobs was turned down, ousted from the company he founded, had product failures, doubted and sued and experienced the darkest of life. But a pragmatic guy, equal parts spiritual and businessman, Jobs continued to succeed, forming NeXT, joining Pixar and generally remaining a force in the electronics and information technology sectors until his return to Apple in 1997. PErSEVErE throuGh SicKnESS and hEalth One thing Jobs could of course not beat was cancer. But, that’s not to say he didn’t try. Diagnosed with pancreatic cancer in 2003, shortly after Apple released the Apple Power Mac G5, at the time the brand’s most powerful computer he continued to push for innovation in the company’s range and released new products, such as the iPod a year later. It took the disease another eight years to conquer the resilient Jobs, who in that time brought the world the iPhone, iPad and MacBook Air. Not bad for a man who if most of us were him, might have been at home just waiting out our days. lEaVE a lEGacY – and a buSinESS Plan The duration of Jobs’ illness allowed Apple to set up a succession plan in the form of new CEO Tim Cook, who has in essence been running the company for a few years behind the scenes anyway, and put all the necessary contingencies in place. Just how Apple will fare without its visionary founder and the dynamic new product machine that was Steve Jobs remains to be seen. But whatever its face, the legacy of the company, and of Jobs himself was certainly game- if not world-changing and we are certainly at loss for his passing. However, persistent rumours of Jobs-inspired new Apple product releases for another half decade persist – though what these might be we can only wait – and wonder.

COUNTRY FOCUS

BELGIAN Potential For a small country of just 11 million people, Belgium is one of Qatar’s key trading partners. Rachel Morris meets Belgium’s ambassador to Qatar, Luc Devolder, who explains the genesis of this long and profitable relationship and the opportunities that exist for companies looking for niche investments in the small European nation.

n terms of countries that began trading with Qatar in recent history, the tiny low-lying European country of Belgium was a very early adopter. Not having been blessed with natural resources, the country moved in the mid 2000s to secure its energy future – one that included Qatar. The two countries signed an agreement in 2004 to export liquefied natural gas (LNG) to Belgium. The export figure currently sits at around two million tonnes a year. “The first exports started in 2006,” explains Devolder, who revealed the deal is worth EUR1.2 billion (QR6 billion) annually. “Belgium was the first European country to buy LNG from Qatar. A major reason for this was that there was already an LNG terminal at the port of Zeebrugge, because Belgium had been buying LNG from Algeria for some time. Now we see Algeria’s imports to Belgium decreasing and Qatar’s rising.” It is the central location of the Zeebrugge port that has deepened the relationship, acting as a conduit to nearby central European nations

for imports including LNG and other products. The first country to undergo an industrial revolution on the continent of Europe in the early 1800s, Belgium developed an excellent transportation infrastructure of ports, canals, railways and highways to integrate its industries with those of its neighbours. Generally friendly to free-market competition, Belgium’s economy has long benefited from its openness to global trade and investment both by necessity and design. The country’s recovery from the 2008 economic crisis has been described by experts as modest and uneven, even the ambassador says the country’s economic outlook was good. The reverse trade, from Belgium to Qatar is a respectable US$400 million (QR1 billion) to US$600 million (QR2 billion) a year, comprising mainly of machinery (including kitchen equipment for hotels) and chemical products. About 80 percent of Belgium’s trade is with fellow European Union (EU) member states. Given this high percentage, it seeks to diversify and expand trade opportunities with non-EU countries. “This presents a great opportunity,” says the ambassador, who admits he would like to see more investment from Qatar. According to the ambassador, Belgium’s economy will grow by 1.8 percent in 2012 and unemployment and the massive public debt (100 percent of GDP) are declining gradually as the country gets back on economic track and moves to avoid the problems experienced by troubled European nations such as Greece and Italy. Belgium’s modern financial sector is dominated by banking. Domestic and foreign banks operate in a very competitive environment but there have also been some large scale failures, which have seen angel investors, like Qatar’s investment arm, Qatar Investment Authority step in. Indeed, Belgium and Qatar’s relationship has been the focus of much speculation in financial sectors recently amid claims the emirate would buy into the troubled Brussels-based bank Dexia through its Turkish arm, DenizBank. Meanwhile Qatari investors agreed to buy the private banking division of Belgium’s KBC Group for just over EUR1 billion (QR5 billion) in early October. Qatar has been increasing its European investments in recent months as policymakers on the continent scramble to contain the debt crisis on the continent. KBC said it will sell the KBL European Private Bankers subsidiary, known as KBL ebp, to Luxembourg-based Precision Capital, which it described as “a company representing the business interests of a Qatari investor.” The Belgian industrial sector can be compared to a giant, complex processing machine: It imports raw materials and semi-finished goods

COUNTRY FOCUS

Many Belgian companies have expertise in construction and dredging, both of which have been important for Qatar’s development. that are further processed and re-exported. Except for its coal, which is no longer economical to exploit for the small nation, Belgium has virtually no natural resources. Exports and industries include steel, textiles, refining, chemicals, food processing, pharmaceuticals, automobiles, electronics, and machinery fabrication. Despite the heavy industrial component, the service industry accounts for 77.4 percent of GDP as of 2009. Agriculture accounts for only one percent of GDP. That said, Antwerp in Belgium is still considered the diamond capital of the world and the country is known for its food exports including malted beverages and its much vaunted chocolate. Qatari investments in other Belgian industries are sparse, primarily due to the nature of the Belgian economy. “Small and medium enterprises (SMEs) comprise 70 to 80 percent of the economy,” the ambassador explains. “The markets for these companies are generally within Belgium and within Europe. These are niche enterprises, with specialisations, but there are still opportunities.” But, he says, those smaller companies in Qatar looking to invest or expand to new markets in Europe, would do well to look at Belgium. The country, he says, has a highly developed market economy and belongs to the Organization for Economic Cooperation

and Development (OECD), a group of leading industrialised democracies. Known for its well educated and highly productive workforce (some experts put productivity at 20 percent higher than Germany’s) Belgian companies however, have been working in Qatar for more than 30 years, from the earliest days of the country’s LNG-fuelled construction boom. “Many Belgian companies have expertise in construction and dredging, both of which have been important for Qatar’s development,” says Devolder. In fact, many of Qatar’s iconic developments and buildings have seen the well known Belgian ingenuity play a part from construction, to reclaiming land to steel works. These include the steel fabrications used to rim the Khalifah Stadium and the eye catching Sidra Tree rendering that adorns the Qatar National Convention Centre. Belgium, one of Europe’s lowland countries along with The Netherlands, has particular expertise in dredging and reclaiming land. Belgian giant Jan Du Mal was deployed to dredge for the massive Ras Laffan port development the biggest dredging operations ever undertaken. Fellow dredging experts Dede-MEDCO were deployed to undertake preparation work for The Pearl-Qatar. The project alone was one that involved reclamation of four kilometres of new land utilising some 13.5 million cubic metres of landfill. This also involved dredging of 9 million cubic metres of existing seabed materials to create a number of coves, channels, canals and an area of blue water surrounding the new island. Meanwhile construction company Besix, known as Besix - Six Construct in Qatar, has built some of the country’s best known landmarks including major parts of the new Qatar National Convention Centre, the Tornado Tower and large parts of the New Doha International Airport. The airport contract itself is worth US$750 million (QR3 billion) alone.

Belgium at a Glance Population: 11 million Belgium shares its borders with France, Germany, the Netherlands and Luxembourg. GDP per capita (nominal): US$43,000 (QR 156,000) Languages: French, Dutch (Flemish) and German Industries: Steel, textiles, refining, chemicals, food processing, pharmaceuticals, automobiles, electronics, and machinery fabrication. Belgium is a federal state consisting of three culturally different regions: Flanders, Wallonia, and the capital city of Brussels, which houses the headquarters of NATO and the European Union.

FINANCE & ECONOMICS

Market Watch • Inside Edge • Special Report • Balance Sheet • Economic barometer

MARKET WATCH (P.44)

In his regular world market report Dheeraj Shahdadpuri outlines how in its latest policy measure the European Central Bank, besieged here by protesters inspired by the Occupy Wall Street movement in late October, has provided additional liquidity support to regional banks by way of short term loans. This section also takes a look at the recent price fluctuations in gold, a recent announcement that Qatar Exchange dividends can now be made by bank transfer and that Qatar is the safest investment country in the MENA region.

ALSO IN THIS SECTION: • Inside Edge: Manjeet Chhabra breaks down the numbers and looks at various issues facing Qatar’s accelerating automotive sales sector (P.46). • Special Report: Matt Ghazarian looks at how Qatar is bringing a new LNG processing facility online to support a projected jump in sector activity. (P.48). • Balance Sheet: Peter Kohut advises a cautious approach to mega projects and warns of the pitfalls that await those who embark on them. (P.50). • Economic Barometer: Karim Nakhle discusses the recent global trend of ‘CEO Churn’ and how this is manifesting in Qatar and the GCC. (P.52).

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MARKET WATCH

Global MARKET WATCH by Dheeraj shahdadpuri

WORLD REPORT: TWIST OF FATE The United States (US) economy is hovering near to flat growth rate as major economic indicators signalled a declining trend. The state of economic affairs had raised investors’ expectations world over that the Federal Reserve will once again take some bold measures to protect the fragile recovery. The term “bold” here widely resembles something similar to the second round of Quantitative Easing (dubbed as QE2) wherein the Federal Reserve bought treasury securities worth US$600 billion (QR2 trillion) from the market. However, the Federal Reserve this time launched a rarely used mechanism known as ‘Operation Twist’ to give a jolt to faltering economic activity. It would buy US$400 billion (QR1 trillion) worth of long dated treasuries, financed by the sale of an equal amount of bonds with maturities of three years or less. This programme should put downward pressure on the long-term interest rates and make broader financial conditions more accommodating. This move has failed in financial markets due to the fact that long-term interest rates (particularly the mortgage rate) are already at multi-year lows. Due to this investors are anticipating that Operation Twist might fail to have an impact similar to what Quantitative Easing had in jump-starting the recovery process when it was launched last November. In Europe, Euro Area member nations have agreed to pay Greece the next batch of EUR8 billion (QR40 billion) bailout loan to potentially save a disastrous default, the situation nevertheless remains pressing. The debt crisis in Greece is only a part of larger regional fiscal imbalance, where Italy and Spain have also lately come under scrutiny due to excessive debt burdens. The European Central Bank (ECB) pledged to continue supporting the troubled countries to avoid any possibility of a meltdown in the regional banking industry. As a latest policy measure, the ECB has provided additional liquidity support by way of loans of shortterm duration to regional banks. But due to high inflationary expectations, the ECB resisted decreasing its benchmark interest rate, which is currently pegged at 1.5 percent after two hikes this year. Global financial markets continue to move sideways as investors await a solution to address the debt concerns. An immediate relief could be seen in the current discussions going around of European Financial Stability Fund (EFSF) to buy sovereign bonds and regional banks are recapitalised to face any losses arising on account of potential sovereign debt restructuring. In the US, recent unemployment data showed that the country added 103,000 jobs in September. This is positive for the market, along with improved sales figures, but too small to address the economic outlook. In order to sustain activity, the Federal Reserve will keep its benchmark interest rates low until 2013. For QE3, it is believed that this remains a possible measure that The European Central Bank (ECB) – pictured here with protesters inspired the Federal Reserve might by the Occupy Wall Street movement, carrying a paper mache golden use, in case the economy calf – pledged to continue supporting the troubled countries to avoid any possibility of a meltdown in the banking industry. (Image Getty Images) deteriorates further.

COMMODITIES

CORNER IS THE SHINE OFF GOLD?

Gold has always been presumed to be a safe haven. However, the commodity has recently failed to rescue investors from mounting concerns of global economic slowdown. By the end of September, gold was down 16 percent from its peak and recorded its biggest drop since October 2008. This decline is linked to the dollar, with which all denominated commodities have an inverse relationship. As concerns of global slowdown intensified, the greenback strengthened against most other currencies which in turn encouraged investors to book their recent gains made in gold after its sharp rally early during the last quarter. Looking at the state of the global economy, it would be interesting to see whether the gold price will reach near its record peak or investors will wait for a prolonged period of time. Oil prices also declined with the strengthening dollar during the beginning of current quarter. In intra-day trade, Brent dipped below the US$100 (QR364) key mark for the first time since late February. But the selling pressure was short-lived and oil prices soon recovered on bargain support. This may be attributed to the heightened concerns over the Euro Area debt crisis. Recent data reveals that oil inventory levels have fallen below their five-year average even without taking into account the recent landmark decision in the US to release buffer inventory in the market. Global oil prices have recovered despite an announcement made by Libya’s National Oil Company that around 390,000 barrels of production has been recently restored.

MARKET WATCH

qatar

is the safest country TO invest in THE MENA REGION BY ASIF IQBAL Qatar has been placed as the safest investment destination in the Middle East and North Africa (MENA) by a new survey. The country was ranked 20th in the MENA region across a range of political, economic and structural risk criteria, by Euromoney’s Country Risk (ECR) survey. Qatar is rated higher than Belgium, Japan and Malaysia and economists also judged the country to be less risky than either Kuwait or the United Arab Emirates (UAE). “Qatar’s political risk score is now higher than the average score for Latin America,” the survey titled Euromoney Country Risk Q3 Results Top 10 MENA, September 2011, said. The survey further pointed out that Saudi Arabia, the largest economy in the region came in at 39th place, while Kuwait came next to Qatar at 30th position. The UAE was 36th and Oman at 34th, while Bahrain took 61st. According to the survey, the top three emerging sovereigns, Taiwan, Chile and Qatar that were ranked 17th, 19th and 20th respectively boasts of favourable macroeconomic fundamentals, a stable political risk outlook and a strong policy track record. “The creditworthiness of Qatar, Chile and Taiwan is reflected in the low borrowing costs paid by these sovereigns. Chile and Qatar’s status is also reflected in the credit default swap (CDS) market, where the cost of insuring Chilean and Qatari debt is now within 55 basis points of so-called ‘risk free’ US sovereign debt,” the ECR survey stated. The survey also noted that neither the US, the UK nor France can demonstrate anything like the growth outlook of these sovereigns, particularly Qatar, which the IMF expects to grow by 20 percent this year. The ECR survey evaluated the investment risk by asking more than 250 expert economists to rate 186 countries across a range of political, economic and structural risk criteria.

QATAR STOCK MARKET INVESTORS TO HAVE DIVIDENDS PAID ELECTRONICALLY

BY ASIF IQBAL Investors in Qatar are now be able to have their dividends directly deposited in their bank accounts rather than the existing practice, where they have to go to their banks to deposit these cheques. This was announced by the chief executive officer (CEO) of Qatar Exchange (QE), Andre Went, at a press conference in late October. “The purpose of this initiative, which comes in line with the best international practices, is to help develop the Qatari financial market and protect investors’ rights,” Went said. According to Went investors will not have to pay any fees or charges for taking advantage of this service. “All that the investors need to do is to visit their bank to provide the necessary instructions to ensure getting the dividends through their bank accounts. QE has provided all banks with forms, which will be required to be filled out by investors to include their bank account information,” he added. On being asked if this process would be mandatory, he said: “The procedure, in the first phase, will be mandatory for Qataris and residents. Once the legal and regulatory procedures are finalised, which is expected before the end of the year, it would be gradually applied afterwards on investors from Gulf Cooperation (GCC) countries and foreign investors in general.” The Deputy CEO of QE, Rashid bin Ali Al Mansoori said investors’ dividends paid by the shareholding companies would be electronically transferred to their bank account upon dividends distribution. He pointed out that investors have to visit their banks and fill in the form available from the customer service staff to include account number and signature, so the bank can verify and stamp the forms and deliver them to QE’s central registration department (CRD). Mansoori also said that the CRD at QE would then enter the bank account numbers in the shareholders’ records and include those numbers in the statements sent to the shareholding companies in order to transfer the due dividends to the investors’ bank accounts at the end of each year. In response to another question about the minors who do not have bank account numbers, Mansoori said all banks have expressed their willingness to open accounts for minors, adding that their guardians need to visit the bank, open an account in the minor’s name, fill out the required forms and sign them on behalf of the minor. He added that the guardians are eventually entitled to have access to those accounts in accordance with the prevailing laws and regulations.

In late October Qatar Exchange announced that Doha investors will now be able to receive payments by direct transfer into their bank accounts rather than through the existing practice of only being able to deposit payments in the form of cheques.

TheEDGE

INSIDE EDGE

ACCELERATING

AUTOMoTIVE SECTOR

Qatar is evidently becoming a platform for the auto industry in the Gulf region with the hosting of Motor Show and the announcement of Baraha Motor City. Manjeet Chhabra, takes a closer look at the Qatari auto industry and highlights the challenges facing this sector in Doha.

he Gulf Cooperation Council (GCC) as a whole retails around 1.2 million vehicles, qualifying as a market large enough to create an industry. Around 75 percent of the total auto sales in the GCC are accounted for by the United Arab Emirates (UAE) and Saudi Arabia, where a strong auto finance market in the region have also aided in the growth of this sector. The CEO of Qatar Ag, Ahmed Sohour reported that Saudi Arabia is the biggest market in the GCC retailing around 600,000, UAE around 312,000, Kuwait 130,000, Oman around 70,000 and Bahrain close to 60,000 units. QATARâ&#x20AC;&#x2122;S AUTO SECTOR Qatar is relatively a small market retailing around 28,000 units in the GCC. In 2010 it was a good year for the Qatari economy and specifically for the auto sector. Figures published by Qatari dealerships highlighted robust growth in car sales in that year. Auto dealer Alfardan Automobiles reported a nine percent growth for BMW and MINI sales for

the first half of 2011 as compared to the same period last year. The BMW 5 Series had the highest sales growth of 43 percent over last year. Chevrolet reported a 35 percent increase in car sales for 2010, while that of Cadillac saw sales grow by 31 percent in 2010 compared to last year. CHALLENGES The relatively high living standards in the GCC countries, rising oil prices, coupled with a growing population are the driving forces behind the sectorâ&#x20AC;&#x2122;s growth in the region. Given the challenging automotive scenario, a major cause of concern are the high prices of new cars in Qatar, which not only reduces the overall car sales volumes, but also forces the locals to buy them from the other Emirates such as the UAE and Saudi Arabia and then import them in to the country. For example a report in The Peninsula newspaper cited that the Toyota Land Cruiser model costs about US$78,299 (QR285,000) in Qatar as compared to US$45,916 (QR116,000) in Kuwait. It also

cited that Toyota Corolla can be bought for US$19,773 (QR72,000) in Qatar but only US$15,924 (QR58,000) in Kuwait. Adding to this, auto parts also sell at a comparatively higher price in Qatar. The Peninsula reports that price increases in the country now range from QR 2,000 to QR 15,000, depending on the type of vehicle. Car dealers, on the other hand, justify their stance to a mix of factors that include increasing rentals, transport and warehousing costs as well as rising staff salaries. Also, Qatar has its own set of standards and specifications for cars which are different from other GCC countries. Considering that around 60 percent of imports are from Japanese car makers, the country faces a supply constraint given the natural calamities in Japan. With the government trying to fix showroom prices, dealers are under pressure regarding their pricing policy, which at the moment is forcing them to remove discounts. In April 2011, the Qatar Central Bank reduced its key overnight deposit rate from 1.5 percent to one percent. The low rate

INSIDE EDGE

PASSENGER CARS & LCV PRODUCTION BY REGION (MILLION UNITS) 20

18.9 16.6

16 12

12.3

15.1

14.1 10.4

7.5 5.7

6.1

4.1

5.9

4.5

4.4

3.3

1.9

3.4

0 North America

West Europe

Japan/ Korea

South America 2009

environment led to an uptick in consumer demand while car buyers relying on borrowing to fund purchases were able to access cheaper credit. Streamlined regulations for auto-financing also led to increased new car purchases in 2010. QATAR’S INITIATIVE IN THE REGION’S AUTO SECTOR The significance of Qatar as an upcoming platform for the auto industry in the region was clearly highlighted by the hosting of the Qatar Motor Show (QMS). In January, the country held its inaugural QMS, though not a direct sales platform, served as a medium to showcase new models. It attracted about 80,000 visitors to the Doha Exhibition Centre. Around 36 global manufacturers were exhibiting cars at the event, along with a further 20 parts and auto equipment suppliers. Several car companies chose the QMS to put forth new models, including German manufacturer Audi, exhibiting its new car models ahead of them going on sale within the Middle Eastern region later in the year. QATAR THE FUTURE HUB FOR THE AUTOMOTIVE INDUSTRY A feather in Qatar’s cap was the establishment of an industrial automotive cluster this year which will be fully operational by 2020 – the Qatar Automotive Gateway (Qatar Ag). The setting up of this cluster is in line with achieving the goals spelled out in Qatar’s National Vision 2030 in turning the country into a diversified

Central & East Europe

Greater China

2009 - 15 Growth

South Asia

Middle East & Africa Source: Qatar Ag

economy through industrialisation. The cluster will invest in both the traditional and new technologies value chains. Qatar Ag has adopted the slogan “A new driving force in the automotive industry” and plans on co-investing in multiple ways, both within Qatar and outside which includes considering joint ventures, technology licensing, research and development partnerships and venture and equity investments so as to leverage Qatar’s resources and financial operational synergies. Qatar Ag aims to be a component manufacturer for the industry supplying parts globally and later on diversifying to include the whole automotive cluster and an industry value chain to the country. Qatar’s primary appeal in the industry would be its potential in luxury and high-end automotive sector. BARAHA MOTOR CITY At the beginning of the year, Barwa Real Estate Company announced the launching of a QR2 billion project in Doha – the Baraha Motor City. A self-contained integrated project in itself, to provide motorists automotive services all under one roof. The main hub of the city will provide retail and merchandising areas, commercial offices for trading, insurance, logistics, car showrooms and light food and beverage outlets. There will be an area for car auctions, both private and public, workshops offering repairs and garage services as well as vehicle technical inspections. Driving schools and test track zone are also being planned along with heavy commercial vehicles and truck parking zones.

FUELLING QATAR’S FUTURE IN THE SECTOR According to the International Monetary Fund (IMF), Qatar had the world’s highest gross domestic product (GDP), growing by 16.6 percent in 2010 and is forecast to pick up by 18.7 percent in 2011. The GDP per capita stood at US$76,160 (QR277,000) in 2010 and is forecast to grow to US$109,900 (QR400,000) by the end of 2011. With the country on the growth trajectory car sales is poised to grow with the automotive sector continuing to be significant. The country’s strategic location between Asia and Europe will help cater to the changing technology for suppliers and top tier manufacturers to set up shop here. Opportunities in the automobile sector will largely be driven by a dramatic shift and a global restructuring on the technical side where hybrid and electric vehicles are now being adopted for their fuel efficiency and environment friendliness. This will open up a huge market for vehicle components such as the designing and manufacture of lithium ion batteries and components. Industry experts have emphasised that the global industry for aluminium components – die castings, forgings, and extrusions is expected to grow significantly creating an opportunity to produce high quality automotive aluminium components that will leverage Qatalum’s aluminium capacity. Given the country’s low cost energy sector, it can achieve a cost advantage and over many developed countries. Backed by its competitive tax initiatives, incentives for FDI and its vision for 2030, including an emphasis on technology and knowledgebased industries. Accelerators of Qatar’s Automotive Sector • Low energy cost • Leveraging the country’s aluminium capacity • Competitive tax initiatives and FDI incentives

TheEDGE

SPECIAL REPORT

QATAR

QATAR’S PROCESSING

POWER By Matt Ghazarian

aving established itself as the world’s leading supplier of liquefied natural gas (LNG), Qatar is now looking to bring a new processing facility online to support a projected jump in the local industrial activity. Over the past decade, Qatar has invested heavily in increasing its gas extraction and processing capacity, with output of LNG having peaked at 77 million tonnes this year. Although most of the country’s natural gas production is destined for the export market, Qatar is now focusing on building processing capacity to serve the domestic economy. The US$8.6 billion (QR 31 billion) Barzan natural gas project, to be located in Ras Laffan Industrial City, north of Doha, will process gas from Qatar’s North Field. The new facility will supply gas to power plants, ethane to the local petrochemicals sector and liquid hydrocarbons for sale in both the local and international markets. The first of two production plants is set to begin operations in 2014, with the second coming online the following year. The plants will have a combined capacity of 39.6 cubic metres a day and will increase local gas supplies by around 50 percent. Barzan is a joint venture between Qatar Petroleum (QP), the state-owned energy company, which will have a 93 percent stake in the project, and ExxonMobil, which will hold the balance of the shares. JGC Corporation of Japan and South Korea’s Hyundai Heavy Industries have been awarded contracts for onshore and offshore engineering, procurement and construction, with a number of other international firms having been contracted to supply materials and services as part of the project. One such contractor, Swedish engineering firm Alfa Laval, on September 6, announced that it had received a US$13.75 million (QR 50 million) order from JGC to provide heat exchangers for the Barzan onshore plant. The heat exchangers, to be delivered in 2012, will be used for recovering energy in the gas cleaning process and for cooling of the overall plant. Financing for the Barzan facility has yet to be finalised. In late August, Reuters reported that the joint venture was awaiting proposals from international, regional and local banks on a US$4.7 billion (QR 17 billion) syndicated loan to back the project. According to the report, the 16-year amortising loan will be divided between a US$2 billion (QR 7 billion) uncovered loan and US$2.7 billion (QR 10 billion)

in financing from export credit agencies, which includes a mixture of covered loans and direct lending. Although the deadline for responses to the loan package plan was extended into September, neither the joint venture partners nor the Royal Bank of Scotland, which is acting as an adviser on the financing, has issued a statement regarding any bank proposals. Barzan is by no means a new project, having been on the drawing board for a number of years. Indeed, QP and ExxonMobil signed their initial memorandum of understanding for the development in 2007, but Barzan was later put on hold by Qatar in early 2009 due to the soaring costs of materials and labour. Although the delayed start has put off the planned commencement of operations from 2012 to 2014, it appears that the rescheduling will have a little impact on Qatar’s continued transition to an industrialised economy. The move has also saved the joint venture an estimated US$2.5 billion (QR 9 billion), thanks to a decline in expenses. The timing of Barzan is favourable, with a series of large-scale industrial and infrastructure projects due to take off in 2014 and beyond. Alex Dodds, the president and general manager of ExxonMobil Qatar, sees Barzan as the cornerstone of the country’s economic expansion. “The Barzan project is a critical component of Qatar’s strategy because it will provide the remaining energy needed to propel the country towards sustainable development,” said Dodds in a recent interview with OBG. “Without an energy source to help develop and power the economy and provide the electricity needed to build the infrastructure, none of that can happen.” For the moment at least, Barzan is expected to be the last of Qatar’s major gas projects. The government has announced a moratorium on further development of the North Field reserves to support the longterm sustainability of both the field and the national economy. Increasingly, it is intended that the economy will be supported by domestic activity, rather than exports, with Barzan at the core of the plan.

Matt Ghazarian is an editorial contributor at Oxford Business Group.

BALANCE SHEET

MEGA DEVELOPMENTS

Approximately QR80 trillion will be spent over the next 10 years on large scale infrastructure projects globally. Peter Kohut explains the unseen risks that can lead to chaos in mega developments. atar has outlined a budget of over US$100 billion (QR364 billion) to be spent over the next decade for creating a world class infrastructure aligned with its long term strategic plan ‘Vision 2030’ and to support the World Cup 2022. A portfolio of mega projects including a new passenger and freight rail network, international airport, highways, expansion of the seaport and multiple sporting and nonsporting venues. Many other economies have earmarked large investment plans in infrastructure projects, some are using this as an initiative to kick start their economies and throw a lifeline to ‘at-risk’ industry sectors, while other emerging economies are undertaking such projects to match their ever growing infrastructure needs. Approximately US$22 trillion (QR80 trillion) is going to be spent on large scale infrastructure projects worldwide over the next decade. Over half are planned for emerging economies, considered one of the biggest infrastructure booms in history. At the same time as more and larger infrastructure projects are being proposed and built around the world, it is becoming clear that such projects have strikingly poor performance records in terms of the benefits for the economy, environment and public support. PROJECT PARADOX Major projects examined from around the world have traditionally suffered from

similar drawbacks – the Channel Tunnel cost was double its original budget and only returned a profit 20 years after the project started. Denver’s international airport saw its eventual cost triple from what had originally been planned, and Sydney’s Opera House had the worst project cost overrun at 1400 percent over budget. Its construction started in 1959 before either drawings or funds were fully available and when it opened in 1973. Ten years later than the original planned completion date and scaled down considerably, the building had cost AU$102 (QR376 million) rather than the meagre AU$7 million (QR26 million) budgeted. It is estimated that more the half of the mega projects underperform and about 15 percent never leave drawing board stage. These are staggering numbers reflecting the success rates of mega projects, but the problem is global. According to a KPMG global construction survey only 34 percent of the projects were reported to be completed on time, and only 42 percent adhered to the original budget. Similar findings are also resonated by a global project management survey released in February 2008, where 40 percent of the projects in the US, 30 percent of the projects in UK and Europe and 18 percent in the South East Asia region were delivered successfully. Such enormous sums of money ride on the success of mega projects that company balance sheets and even government balance of payments accounts can be affected.

A point in case could be problems associated with Hong Kong’s US$20 billion (QR73 billion) Chek Lap Kok airport, which opened in 1998. Initially caused havoc not only to costs and revenues at the airport; but the problems spread to the country’s economy as such with negative effects on growth in the gross domestic product. After nine months, many economists dubbed the airport a failure, as it is said to have cost the Hong Kong economy close to US$600 million (QR2 billion) according to 1998 values. BEHIND THE FAILURE The reasons these mega projects often fail point towards their inherent complexities. Regional variations, regulatory needs, different stakeholder further create an additional layer of complexity that requires to be dealt with. Summarised as follows: • High Stakes: These projects attribute a high level of importance, often at national level, or otherwise at an organisational level. • Consequential: Cost of failure/benefits of success are usually very high. • Ad hoc teams: New players often come together for the first time to deliver these unique projects. • Time pressure: There is limited time to capitalise on market opportunity or other drop dead date time lines associated with the projects. • Multiple stakeholders: Projects usually involve or impact multiple parties.

BALANCE SHEET

• High visibility: People who count are constantly watching and holding the project teams accountable. • Risky: Mega projects are one of a kind with many unknowns, and all the variables that the solution requires often cannot be controlled. • Hard to measure: Progress and success are hard to track and measure. According to multiple global construction surveys conducted by KPMG and an independent publication by the OGC – the UK Office of Government Commerce, a body involved in the delivery of large public projects – multiple other explanations, as mentioned below, provides insights into some of the leading causes of failures for these mega projects. There is often a lack of clear links between the project and organisation’s key strategic priorities. Organisations often lack a clear project plan covering the full period of the planned delivery. Key success factors are not defined with key suppliers or other stakeholders. Projects are often founded upon unrealistic timescales. There are inadequate governance arrangements to ensure suitable alignment with the business objectives of all organisations involved. Senior management lacks clear leadership of projects and project management teams do not have a clear view of the benefits and the criteria against which success will be judged.

Qatar’s infrastructure development budget over the next decade is more than QR364 billion. Traditionally project delivery has focused on the on time, cost and scope. In many cases ignoring social aspects of a mega project which can cause them to fail. There is often lack of skill and proven approach to project and risk management, which directly impacts the outcome of these large projects. Another common reason for failure of projects is due to what can be defined as optimism bias, whereby project teams are overly optimistic about what the project will achieve, rather than focusing on what it will take to get the project to deliver. Driven by high budgets, rising material and labour costs, and past history of cost and time over runs, project teams often tend to become opportunistic in saving costs at any available opportunity. In most cases procurement strategy for these projects are more than other governed by initial prices than long term value for money, resulting in either selection of the lowest bidding contractor. Mega projects fail to attract sufficient competitive interests, resulting in single bid contracts, and/or

preventing competitive evaluation of vendors. In many cases a clear strategy for engaging with the industry is missing and sourcing decisions are based on piecemeal basis. Another key factor that often gets overlooked is the dynamics of the industry to determine whether project’s acquisition requirements can be met, given potentially competing pressures in other sectors of economy or other competing economies themselves. Procurement of this scale is from multiple sources, often global, competitive demands of key construction materials in the global markets can lead to high costs and delayed availability of both impacting the projects negatively. Some of the prevalent and traditional contracting approaches often prevent effective project team integration between clients, suppliers and the supply chain. It is clear that mega projects are unique with deep inherent complexities. Throughout the entire life cycle of the project they require detailed planning and effective project management strategies to manage initiatives of this scale and complexity. TheEDGE

ECONOMIC BAROMETER

nEXt cEo tO tHE tHrONE Karim Nakhle looks at the growing trend of chief executive officers either stepping down or being fired recently; something gaining ground in the region and also known as ‘CEO Churn’.

good board cannot make a company, but a bad one will inevitably kill it. One may recall Carol Bartz’s dramatic exit from Yahoo or even Leo Apotheker HP’s top dog who got the boot less than a year on the job and replaced by the former eBay chief executive officer (CEO) and one time candidate for California governor Meg Whitman. These high-profile firings were the most public ones but there were actually quite a few more CEOs that either stepped down or were fired this year. September became the sixth consecutive month with more than 100 chief executive changes in the United States (US), as turnover in the position reached a 12-month high, when 108 CEOs said they were leaving. It was the highest number of departures since September 2010, when 111 CEO changes were reported. So far, the US market alone has tracked 922 CEO departures from US and International US based companies through three quarters of 2011. REgIONal CEO TuRNOVER HIgHEST IN aSIa paCIfIC aNd TRENdINg up Proportionally, Asia Pacific elite companies experienced the highest turnover in the last two years compared to other regions, losing over one in five of their largest company chief executives. However, Asia Pacific CEO turnover is primarily due to retirement and normal succession planning. North American CEO departures increased mainly in the healthcare industry, which recorded the highest turnover activity followed by the financial and technology sector as both industries were recently hurt by the economic slowdown. This consequently affected the CEOs jobs in the government and non-profit sector, 31 percent were planned (retirement, illness, long-expected changes), 48 percent were forced (for poor financial performance, ethical lapses or irreconcilable differences) and mergers prompted 21 percent.

ECONOMIC BAROMETER

In contrast to its regional counterparts, CEO turnover among Europe’s largest global companies decreased 15 percent from its peak in 2008 and 2009. This reduced departure rate augurs well for the region, especially since the current issues and problems that European companies are facing in their markets are not due to a lack of performance from the CEO themselves, but rather from the overall economic slowdown and the financial crisis of Greece, Portugal, Ireland, and the eurozone, still on the horizon. WHY DO THESE CHANGES OCCUR? In most cases, the board of a company develops expectations of corporate performance, annual earnings, change in return on equity, company strategy, ensuring that actions taken by management are in the best interests of the shareholders, expansion plans, and acquisitions are met. Failure to meet expectations may contribute to the dismissal of the CEO. In public companies, three performance criteria frequently judge the CEO’s success: stock price performance, earnings targets, and ROI Investments on Return. Boards are quickly disillusioned with CEOs who

are slow to deliver the expected results, in addition to the relationship between the board of directors and the CEO, which plays a pivotal role. A fundamental concern of the shareholders in the modern corporation arises from the separation of ownership from control. Because of the complexities of corporate operations, the owners (the shareholders and their representatives, the board of directors) are not able to manage all aspects of the corporation, and so must delegate control of operations to professionals (the CEO and the management team). The board is primarily interested in increasing shareholder wealth by maximising stock prices, whereas the CEO is motivated by self-interest and an increase in personal wealth through compensation (stock option plans based on future stock prices, performance plans based on the attainment of corporate earnings targets, and target accounting ratios) and other performance related benefits. The board is then faced with finding ways of ensuring that the CEO will act in the shareholders’ interests. Compensation contracts and dismissals are mechanisms for controlling the CEOs actions and aligning the CEOs and shareholders’ interests.

Dr. Tarik Yousef, appointed in July as the new CEO of Silatech is recognised as one the most respected economists specialising in youth employment of the Middle East and North Africa.

THE INSIDER ADVANTAGE OR DISADVANTAGE? With every appointment or dismissal, all the company’s C-level executives come under the radar, and are next in line for dismissals if they were too close to the CEO and tagged along when wrong decisions were being made. On the other hand, these are also seen as opportunities that shed light on the career paths of executives who advance to the top of their organisations, and immediately step in as the next in line to replace the CEO. Many incoming CEOs in planned successions assumed office having been apprentices, as their predecessors ascended to the chairman role. This trend grew profoundly in North America, and Europe where 46 percent of new CEOs took office in an apprenticeship situation. The apprentice model has always characterised Japanese businesses – with 82 percent of that country’s outgoing CEOs over the last 10 years falling into that pattern. THE REVOLVING DOOR TO THE MIDDLE EAST’S CHIEF EXECUTIVE SUITES IS SPEEDING UP The Middle East has lower CEO turnover than the rest of the world, mainly because we have many privately/family owned conglomerates where the CEO is usually the founder of the organisation. Furthermore, many large companies public or private, gave very little importance to disclosure or transparencies, and managed to sweep under the carpet their numerous undisclosed errors, helping them retain their position at the helm of the organisations. But this pattern is rapidly changing as Corporate Governance is being introduced in the region. Corporate Governance is the framework of rules and practices by which a board of directors ensures accountability, fairness, and transparency in a company’s relationship with its all stakeholders. It is putting pressure on the boards to raise their game, shape up, monitor CEO performance and take all necessary action to safeguard investors and shareholders’ interests. Furthermore, as in every trend, the Middle East always follows its Western counterparts, and subsequently introduced the concept of TheEDGE

ECONOMIC BAROMETER

‘CEO Churn’ and C-level executive culling in the region. In our part of the world, the new breeds of CEOs are mainly international who have previously held a similar role. But the most important criteria is to be multicultural, understand the culture, code of conduct; ethics, patriotism and lifestyle. Many new hires are successful expatriates who had previous experience and success in the region. Qatar leads the pack with the appointment of numerous new CEOs in 2011: In June, Qatari incumbent operator Qtel Group appointed HE Sheikh Saud bin Nasser Al Thani as the new CEO of its operation in Qatar – he started his career at Qtel in 1990. Al Thani’s appointment as CEO of Qtel Qatar enabled Marafih (previous CEO) to focus on his group-CEO duties. Tom Petter Johansen took over as CEO of Qatalum on July 1. Johansen succeeds Jan Arve Haugan, who has taken on a new position as CEO of Norwegian oil and gas contractor Kvaerner ASA. In July, Silatech named Dr.Tarik Yousef as new CEO, one of the most respected economists and recognised authorities on issues of youth employment, economic development and education in the Middle East and North Africa. Dr. Yousef assumed the role held by Rick Little who was appointed as chairman of the board executive committee. Qatar Railways Company (QRail) has announced in July the appointment of Engineer Saad Ahmed Al Mohannadi as the company’s new chief executive officer. Engineer Al Mohannadi joined QRail as the company is ramping up operations in preparation for the Qatar Integrated Railways Project, which will incorporate a metro system, long-distance passenger travel and freight transport. In August, Standard Chartered has appointed Charles Carlson as CEO for its Qatar operations. Under Carlson, Standard Chartered is committed to serve the small and medium enterprises in the country, by providing finance with proper interest rates and a chance to grow and expand their activities. In September, Citigroup named Izzat Dajani to serve as CEO of its Qatar operations. Dajani replaced Farhan Mahmood, who has been transferred to the firm’s Middle

TheEDGE

East public sector group. Dajani joined Citi from Goldman Sachs . Vodafone Qatar appointed a new CEO Richard Daly, to replace Grahame Maher who died last November. Richard Daly, formerly the CEO of Vodafone Egypt and Vodafone Partner Markets, was brought in to implement his international experience to the market while at the same time adapting to the culture of Qatar, and take the company to new strengths. buT dOES THE CEO TuRNOVER mEaN OuR ECONOmy IS IN bad SHapE? Generally, CEO turnover typically happens when the economy is turning. Unsurprisingly, 2008 was a big year for executive departures. Recessions are tough times for anyone to keep his or her job. But companies also tend to retool their executive branches when things are looking up. CEO fires and hires could be a good sign as well. If there is a lack of leadership in the boardroom so what better time for change than now?

STRIVINg fOR SuCCESS Today’s freshman CEO class needs to take to steer a course through the current turbulence and position their companies for long-term success. Among the steps are resetting expectations of how the business will work, affirming or changing the leadership team within 60 days, keeping an ear to the market through customers and suppliers, and engaging the board around its expectations. As CEO turnover rates among the world’s largest companies continue to shift year by year and region by region, straightforward leadership communications to all stakeholders rises in importance. In today’s uncertain economic environment when information and news are at a premium, CEOs would be wise to actively over communicate and regularly meet employees and customers face-to-face to get a real feel of market demands and customer needs, and plan their company’s strategies accordingly. Company boards are willing to take risks and invest in a new hire. Who knows, maybe one day that new hire could be you.

Richard Daly, chief executive officer of Vodafone Qatar, appointed recently after the unexpected death of Grahame Maher last November.

IN THE SPOTLIGHT

DOHA’S GLOBAL MUSCLE Is Qatar’s high rolling international acquisition strategy the ‘riyal deal’?

In recent years Qatar’s confident state-led investment strategy has spawned an international reputation that belies the nation’s size. But can Doha’s purse strings stretch far enough to maintain its place in the spotlight? And what does a cash-strapped global economy make of the lavish spending of the Gulf region’s most prominent high roller? Edward Jameson investigates.

IN THE SPOTLIGHT

arely over the past few years has Qatar been outside of the world business headlines. The state has been on a global shopping spree of epic proportions, acquiring assets in Asia, swallowing flagship buildings in Europe and the United States (US), and bidding for the globe’s most extravagant sporting events. At the centre of this global shopping spree has been Doha’s sovereign wealth fund (SWF), managed by the Qatar Investment Authority (QIA), one of six SWFs across the Gulf region that rank among the world’s fifteen largest, according to latest SWF Institute rankings. Rated at a value of US$85 billion (QR310 billion), the QIA is the 12th biggest SWF in the world and the fourth biggest in the region behind Abu Dhabi Investment Authority, SAMA Foreign Holdings (Saudi Arabia) and Kuwait Investment Authority.The QIA was formed in 2005, and is regarded as one of the most active SWFs on the planet. Its purpose is a bold one. Among its mission statements is the line: “The QIA benefits from being a central part of the State of Qatar’s economic vision which allows it to invest in a manner which transcends the cyclicality of economic cycles and fluctuations of the financial markets.” This statement offers a motive behind the high frequency with which the QIA and the state of Qatar flexes its financial muscles in the global market place. Transcending the “cyclicality of economic cycles and fluctuations of the financial markets” – in short, turning a profit regardless of the peaks and troughs of the global economy – is the holy grail of any international business. In order to fulfil this goal, the state has invested fast, far and wide in a diverse mix of sectors, in an attempt to protect itself from slowdowns in any geographical region or specific area of the economy (see box text overleaf for more on recent activity). However, there are potential pitfalls for Doha to consider as it seeks to stamp Qatar’s name across the four corners of the globe. And for how long can such a strategy, which ultimately includes state investments outside of the QIA’s mandate, really be sustained?

AIMING HIGH: Aside from the high profile investments and purchases of Doha-based business entities, not content with just the 2022 FIFA World Cup, the State of Qatar is also ambitiously aiming to secure both the 2020 Olympic Games and 2017 the International Association of Athletics Federation International Athletics Championships. Pictured is high jumper Mutaz Essa Barshim of Qatar competing in the 2011 IAAF World Athletics Championships in South Korea. He may one day see the event at home if his country’s ambitions are realised. (Image Getty)

DOHA’S DEEP POCKETS There is no question that the international investment strategy of Qatar has paid dividends. The QIA in particular has shown an interest in acquiring distressed assets with a sharp focus on future margins. The fund made a profit of QR3.5 billion on a stake in UK bank Barclays – a stake that it purchased at the height of the global financial crisis. And in August this year, the QIA swooped for a 17 percent share of the lender that will be created by the merger of two banks in troubled Greece, Alpha Bank and Eurobank, at a cost of QR2.5 billion. In addition, as recently as October, funds owned by Qatar’s royal family were linked to investments in troubled eurozone banks in Luxembourg, France and Belgium. The strategy appears simple: be the knight in shining armour at times of economic crisis – acquiring assets at knock-down prices in the process – collect the income, and later consider cashing-in at times of economic prosperity. But how far can this strategy stretch? An analysis of the figures gives a window into the reach of Doha’s funds. The income from its giant fossil-fuels export

industry accounts for the QIA’s liquidity pool, as well as maintaining the various Al Thani royal family-linked funds. In 2009 Qatar’s total oil and gas export earnings hit QR161 billion; in 2010, this figure climbed to QR234 billion; while in 2011, the Saudi Arabian Monetary Agency predicts the highest earnings ever seen in Doha – QR294 billion. This income feeds into the state budget. In 2009/10 Doha ran a budget surplus of QR54.1 billion according to Qatar Central Bank (QCB) figures. This left a large wad of cash to potentially spend on hotels, football teams and sporting events. But in 2010/11 the surplus shrank to QR13.5 billion accordingly – a 75 percent reduction. The fall was attributed by the QCB to a huge rise in expenditure. Qatar’s investment strategy is ultimately driven by the state’s need to diversify economically away from hydrocarbons in a comparatively small period of time, and a drive of this kind comes with an exorbitant price tag. The sporting events that Qatar is hosting or bidding to host all fall within this wider diversification strategy. According to a study published last month by Business Monitor TheEDGE

IN THE SPOTLIGHT

WISE PURCHASE: The Qatar Investment Authority’s large stake purchase of then-troubled UK bank Barclays at the height of the 2008 global financial crisis proved a sage decision. In February 2011 the bank reported pre-tax profits in 2010 of more than GBP six billion (QR34 billion). Today the QIA has earned QR3.5 billion in profit itself from its share in Barclays. (Image Getty Images)

International, the state will spend up to QR365 billion on road and rail projects alone over the next five years in preparation for the 2022 World Cup – a figure that swallows up the combined budget surplus from 2009/10 and 2010/11 five times over. Looking ahead, the country’s budget surplus is projected to rebound, a study published in October by Qatar financial giant QNB Capital says. It projects a surplus of QR30.9 billion in 2011/2012, easing to QR27.3 billion in 2012/2013. This totals QR58.2 billion – still a barely one-sixth of the World Cup road and rail bill. Therefore, if the infrastructure price tag for the tournament alone is to be met, the state will be forced to consider running a series of budget deficits, while repeated visits to international bond markets will also be in order. So despite the flow of liquidity, there is a limit to how far Doha’s purse strings can stretch, particularly in light of the growing domestic bills. Outside of the inward investment required, take the eurozone banks for example. The deals discussed with Greece, France, Luxembourg and Belgium are considered relatively small in comparison to the size of the bloc’s collective problem: “Not even Qatar’s pockets are deep enough to really throw meaningful capital at the European financial system. They could participate in some of the capital raising that banks are doing, but ultimately, public multilateral support is needed,” Roubini Global Economics director Rachel Ziemba told news agency Reuters.

TheEDGE

Public relations risks Exorbitant price tags are one thing, but there is a second problem of a very different nature that Qatar must face if it is to ensure its future economic prosperity. The aggressive investment strategy pursued to date carries with it a potential public relations pitfall. In December 2010 Spanish football club FC Barcelona signed a QR715 million deal with the Qatar Foundation to carry the organisation’s logo on its shirt until 2016, yet the deal was no straightforward one. The Spanish football team ended its long tradition of refusing commercial shirt sponsorship – for the preceding five years, it had paid to display the logo of international children’s charity Unicef on its shirts. The deal was viewed in light of the football team’s growing debt, which reached EUR442 million (QR2.2 billion) in 2010 according to an audit carried out by financial house Deloitte. The football club’s former president Joan

Laporta went on record saying the deal made the Spanish champions look “like the Qatar national team”. The move was voted on by the club’s general assembly in September of this year – 697 voted in favour with just 76 against, plus 36 abstentions. The controversy is one born out of tradition. Many of the high-profile targets of Qatar’s various funds are held in great esteem by nationals inside the host country. Outside investment is often seen not as supportive, but interventionist, or worse still, predatory. In such instances, the name of Qatar is not going to be associated with the positive impressions that the state would seek to portray through its deals. To ensure success in its long-term goals, Qatar wishes to build its national brand – not taint it. However, in Doha’s case, the thorny issue can be approached from a practical angle. Part of the problem Qatar has is being considered in the same breath as Saudi Arabia and the United Arab Emirates (UAE). “In the eyes of the world, Qatar is from the same neighbourhood,” says Middle East author and economist Christopher Davidson. Davidson explains that the political standing of many Gulf States, including Saudi Arabia and the UAE, is often called into question by the western media, a sentiment that gets passed on with few questions asked to general populations. However Qatar, Davidson says, is distinct from many of the Gulf States on the political map – the government’s bold decision to send fighter jets in support of western forces in Libya being a prime example. “Qatar needs [better] public relations,” Davidson says. “The world needs to be

Rated at a value of QR310 billion, the Qatar Investment Authority is the 12th biggest sovereign wealth fund in the world and the fourth biggest in the region, behind those of Abu Dhabi, Saudi Arabia and Kuwait.

IN THE SPOTLIGHT

QATAR’S RECENT ACQUISTIONAL ACTIVITY

GREEK BAILOUT: In August 2011 the QIA bought 17 percent share of the lender that will be created by a merger of two banks in troubled Greece, Alpha Bank and Eurobank, at a cost of QR2.5 billion, once again focusing attention on the potential economic muscle of the small but financially powerful Gulf State of Qatar. (Image Corbis)

made aware that Qatar is different from its neighbours.” An international public relations campaign would – you guessed it – cost money. But “Qatar has enough to go around,” Davidson adds. The state has run its global affairs like a multi-national corporation for some time now, making acquisitions and investments the world over. Whether or not it chooses to pour some cash into its public relations department could be the various fund managers’ most important business decision to date.

On 22 September the Qatar royal family-owned Al Faisal Holding, via its subsidiary Al Rayan Tourism and Investment Company, snapped up the W London Hotel in the United Kingdom (UK) capital for a cool QR1.15 billion. Al Faisal Holding chairman HE Sheikh Faisal Bin Qassim Al Thani said the deal reflected the firm’s “clear investment focus on high quality assets in prime locations” as it “continues to grow the business both locally and internationally”. The acquisition of the W Hotel London brought the fund’s hotel portfolio to 11 properties located across Qatar, the UK and Egypt, including seven fully operational hotels and four under development. To give some indication with the speed at which Qatar moves, the W Hotel London opened its doors for

QATAR CONTROVERSY: The 2010 decision by then-cash strapped Spanish football club Barcelona to allow the Qatar Foundation logo garnered some negative news attention as it was the end of the team’s long tradition of refusing commercial sponsorship on its team football shirts. Earlier this year the football club’s former president Joan Laporta went on record saying the deal made the Spanish champions look “like the Qatar national team” but a move against it was voted on by the club’s general assembly in September 2011. (Image Getty Images)

business only 10 months ago. Even more recently, and perhaps not to be outdone, the QIA was in October linked to the impending sale of Amanresorts, an international hotel chain owned by Indian real estate giant DLF. Amanresorts has in its portfolio 25 highend hotels in 16 countries, and DLF is reportedly seeking more than the QR1.46 billion it paid for the chain in 2007. The QIA has not commented on the proposed deal. In addition, the QIA has long been linked to a possible bid for UK-based Manchester United – the world’s most expensive football club, valued at QR6.5 billion – although such interest has repeatedly been denied by both parties. Such a deal would be the highest of high-profile acquisitions undertaken by the QIA, which includes stakes in German can manufacturers Volkswagen and Porsche, the Brazilian branch of global banking group Santander, Spanish energy giant Iberdrola and outright ownership of flagship London department store Harrods. And Qatar’s shopping list does not stop at traditional commercial ventures. The state budget, outside of the mandate of the individual investment funds, has in recent years been focussed towards bidding for major international sporting events, including the 2017 World Athletics Championships. The successful host city will be announced by the International Association of Athletics Federations in November. The magnitude of Doha’s event wishlist then reached its zenith on 26 August when Doha announced it would bid for the 2020 Olympic Games, following the disappointment of the 2016 attempt. And finally, with regards to bids that have already proved successful, let us not forget the 2022 World Cup.

TheEDGE

Feature Story

100 QATARI INNOVATIONS

How three technology innovations from QUWIC may change the way Qatarâ&#x20AC;&#x2122;s population commutes, approaches air pollution and consumes digital content.

Feature Story

Since its inception more than two years ago, QUWireless Innovation Center outlined an aggressive business plan and agenda to utilise mobile and wireless technology. Their main objective is to create and introduce locally engineered innovations to the market. Erika Widén reports on three of their recently unveiled ‘Smart Living Services’.

Doha has experienced an increase of congestion in the road network in recent years, mainly due to an influx of expatriates in the workforce parallel to major construction developments. New technology created by QUWIC aims to help alleviate this problem.

atar has witnessed an influx of expatriates in the workforce sector in recent years, which has led to an increase of congestion on the road network. In parallel, the preparation for the upcoming World Cup 2022 and other infrastructure construction is further contributing to increasingly congested traffic. It is not uncommon for a Qatari to have two of the latest mobile smartphone devices, in addition to one or two of the various tablets available in the market. The new generation is becoming more dependent on the Internet and mobile applications offering smart friendly services such as the global positioning system (GPS), also known as a digital road map. Recently, Qatar University Wireless Innovation Center (QUWIC) announced a number of initiatives and revealed a number of branded innovative solutions under the banner of ‘Smart Living Services’. These include intelligent transportation, monitoring of the environment, and digital content management and delivery. QUWIC is a new research and development centre, established by Qatar University in collaboration with Qatar Science and Technology Park (QSTP). Through its diverse programmes and its focus on technology and product innovations, QUWIC contributes to the goal of making Qatar a

regional hub for wireless telecommunications research and development. The Smart Living Services is a professional initiative, developing concepts in the services domain which will impact the lives of all of Qatar’s people, whether they are consumers, businesses or government agencies. “Within this initiative we launched our technological platform, which we called ‘Labeeb’ which in Arabic means smart,” says Dr. Adnan Abu-Dayya, executive director of QUWIC. “This is our main technology asset that will enable us to create these applications and services in sectors which are important to Qatar and the region.” Labeeb is comprehensive software, technological platform that collects data from multiple sources and translates the data into information, which leads to services and applications. It is a technological enabler that is not a customer viewed product, however it assists in creating new services and applications. “We will continue to evolve it to meet the emerging needs of partners and customers. Through its innovative design and open architecture, it represents a strong local answer to a global technological trend related to sensing machine to machine communications,” adds Abu-Dayya. In conjunction with Labeeb, QUWIC announced the launch of Masarak, which in Arabic means “your path, your way”. Masarak is the first innovation of its kind in Qatar. It is an intelligent logistical solution and application; which represents a rich suite of services enabled real time and historical traffic information. BEST ROUTE Masarak delivers immediately accessible intelligent traffic services such as congestion monitoring, vehicle tracking, trip planning, dispatching and intelligent fleet management. This suite of applications will clearly support the national transportation strategy of Qatar and provide business and government agencies with intelligent applications to better handle and manage their fleets and field operations. Real time traffic information is relevant for all residents in order for them to know where the traffic congestion is. In addition, TheEDGE

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government agencies can comprehensively study the movement in the country to plan and lay roads accordingly. Furthermore, the application will assist the government to monitor the traffic management centre to know which vital roads require updating to facilitate less traffic congestion. For the consumer side, the application will facilitate the best route from destination A to destination B based on the real time traffic information. “This is a very significant enabler as traffic is a dynamic phenomenon and there is always an alternative route to take,” says Abu-Dayya, “If I have to go from here to the airport there are many different options for me to take, but if you base your decision on real time traffic information you will be able to find the best way to your destination.” From an enterprise viewpoint, fleet management, dispatching, asset management and logistics are all related to road conditions and tracking vehicles, therefore current traffic status is essential. Masarak also includes an application that targets companies that have fleets of vehicles. For example, Karwa will be accessible to find available taxis that are closest to the users’ current location. “For Masarak, we have a very rich business ecosystem,” says Abu-Dayya. QUWIC has a solid key partner relationship with the Ministry of Municipality Affairs and Urban Planning, Mowasalat, Qatar’s major transportation company, as well as Qtel, Qatar Foundation and Qatar University.

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Masarak is the first innovation of its kind in Qatar. It delivers immediately accessible intelligent traffic services such as congestion monitoring, vehicle tracking, trip planning, dispatching and intelligent fleet management.

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Smart Living Services will impact the lives of the people, whether they are consumers, businesses or government agencies. “We are determined to become the regional leader in delivering innovative services and applications in this important area of intelligent transportation and logistics. We therefore have developed and integrated long term roadmap in terms of technology development, services and applications, and business development,” says Abu-Dayya. “The launch of the Masarak suite of services, demonstrate the significant progress we are making and our intense focus on delivering new rich services that will make a difference for all of us in terms of safety, productivity, and quality of life.” The Masarak suite will be available to the public by next year, and accessed via the Internet and other smartphone

Dr. Abu-Dayya, executive director of QUWireless Innovation Center, spoke with TheEDGE about their recently unveiled ‘Smart Living Services’ innovations.

platforms. In addition, there will also be voice-enabled application. “You can call a number and they will be able to detect your location, you then give them your destination and they will be able to work out the best route around congested traffic,” explains Abu-Dayya. MONITORING POLLUTION Another major initiative unveiled by QUWIC was an air quality monitoring system, known as Air Pollution Surveillance System (QAPSS) solution. QUWIC have used the same Labeeb intelligent platform to create a comprehensive air quality monitoring system, which utilises a network of low cost mobile sensors and fixed stations for collecting relevant data and translating it into rich air quality information. This real time historic information will be used to create services and applications that address the specific needs of consumers, enterprises and government agencies. “It is important to check out the air quality for certain places as people may have certain allergies to certain pollutants. The environment is also very important for every company and QAPPS will become a very useful tool for them to use,” explains Abu-Dayya. “The government would also be interested in using this service, as we are able to create a data bank and this data can then be made into very useful information that health professionals or environmental specialists could use for future planning.” QAPPS will be delivered to users via web portals, mobile devices

and via text message. Currently, QUWIC is working on a pilot system, which will be used in the field trials with local partners in the coming months. “In QAPSS we are still working on the ecosystem. We have a lot of interest within the region. There have been some technological challenges along the way, we are not there yet with QAPSS compared to Masarak, it is still very much a work in process,” says Abu-Dayya. ONLINE PURCHASING Kotobi solution is a similar concept to Amazon.com, which is another innovation launched by QUWIC. It is a purely Arabic management system which enables the delivery of Arabic and English electronic books, newspapers and magazines to users’ mobile devices or tablets. Kotobi will enable citizens in Qatar and the region to select, purchase, download and view electronic content using mobile applications. “It is a broad initiative related to digital content management and delivery. Special delivery of digital content in Arabic is a very hot topic in the region, from content creation viewpoint to a content delivery viewpoint as well as content consumption,” says Abu-Dayya. Digital content creation, management and delivery to mobile devices are among the emerging trends globally. QUWIC’s aim in developing Kotobi is to provide a better experience for an Arabic speaker. They have reviewed current applications and realised that they are not optimised in ensuring that the language format is accurate. Kotobi is currently in the development stage and within the following months experimental applications will be conducted to collect the feedback to ensure a better experience. As part of Qatar’s vision, HH Sheikh Hamad bin Khalifa Al Thani, the Emir of Qatar would like to target the country as a producer of knowledge and innovation instead of being just consumers. QUWIC’s marketminded innovations adhere with this national development strategy, directly contribute to its progress and are clearly a major step in the right direction. TheEDGE

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MOBILE SECTOR BUSINESS IN THE 21ST CENTURY Not so long ago, in a country half a hemisphere away, a company called Research in Motion (RIM) created an idea for a new mobile device combining email, instant messaging and phone capabilities. The BlackBerry swept all before it and become a valuable business tool and accessory. But soon, other rivals start jostling for supremacy â&#x20AC;&#x201C; the iconic Apple iPhone with its sleek white exterior, and the new Android phones. Suddenly, the RIM empire was under attack and there was worse to come, at least for them. The Phone Wars had begun. Rachel Morris looks at the growing smartphone market, estimated to comprise more than 500 million users internationally, and what the future holds for big players RIM and Apple as their competitors up the ante.

COVER STORY

t struck in mid-October. A silent yet effective attack at the very heart of RIM’s global network. The airwaves of the Middle East, Europe, parts of Asia and North America went silent. A huge chunk of the company’s 80 million subscriber network lost data connectivity. No mobile email. No BlackBerry Messenger. No mobile Twitter. No mobile Facebook. Nothing. A reduction in car accidents was reported in Abu Dhabi over the same period was about the only advantage. The reason was a hardware breakdown at Research in Motion (RIM), the creators and operators of the BlackBerry smartphone network. It was another blow among many recently for the Canadian-based company. In 2011 RIM’s profits are down nearly 10 percent from a year ago. RIM lowered its profit expectations for 2011, just as its stock price dropped to the lowest it has been in five years. Its much vaunted Playbook, a rival to the Apple iPad, has also failed to ignite the same kind of devotion. Meanwhile, in 2010 the company had been forced to fend off concerns about the security of its network and claims it was acceding to strict government regimes when Saudi Arabia and the United Arab Emirates threatened to shut down their BlackBerry networks. Concern had been raised about inappropriate content being shared by BlackBerry users over the messenger network, which allows free, real time instant messaging with other BlackBerry users. The BBM network as it was known also came under fire during the London riots early in 2011, when it emerged rioters and looters were using the network to spread the message about fresh places of disturbance around the city. The October outage crippled the network and resulted in a public relations and reputation management nightmare for RIM, who were forced to apologise to customers and offer compensation by way of US$100 (QR300) in free applications. Many were calling this the death knell for RIM as their rivals looked ready to take advantage of their weaknesses. thE ForcES SQuarE uP The BlackBerry services outage comes at a time when Apple was poised to introduce

Research in Motion (RIM) president and co-CEO Mike Lazaridis delivers a keynote address at the BlackBerry Devcon Americas event on October 18, 2011 in San Francisco. Later that week his company faced the biggest crisis in its history as its services entered a black hole outage in many parts of the world. (Image Getty Images)

The October BlackBerry outage crippled the network and resulted in a public relations nightmare for parent company RIM, who was forced to apologise to customers and offer compensation. iMessage – a free messaging service that is part of Apple’s iOS 5 platform. Apple’s iMessage will be going head-to-head with RIM’s BlackBerry Messenger, which gave many mobile users a reason to stick with the BlackBerry platform when the time came to upgrade to a new smartphone model. Indeed, RIM’s empire is under attack on several flanks as not only Apple, but Nokia, Samsung and an array of Android phones line up to take a shot. According to 2010 statistics, Nokia remains number one in both smartphones and mobile phone sales internationally, but

Android powered phones, such as Samsung, are expected to become the top operating system (OS) for new smartphones by the end of 2011. Internationally, normal or ‘feature’ phone sales still outnumber smartphone sales four to one, primarily driven by the Indian and Chinese markets. Meanwhile in Africa, mobile usage is booming. In Nigeria alone, the main mobile network, MTC, has 30 million subscribers. The top mobile phone company in Indonesia signs up 15,000 new customers a week. These impressive sales are a result of low cost phones flooding the market TheEDGE

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Intel CEO Paul Otellini holds a Google Android phone that uses an Intel chip as he delivers a keynote address during the 2011 Intel Developer Forum at Moscone Center on September 13, 2011 in San Francisco, California. It seems that Android is a rising force to be reckoned with in the smartphone universe, one that competitors such as Apple and BlackBerry are taking very seriously. (Image Getty Images)

and the fact that the globe is now more interconnected than ever. More people have access to a mobile phone than a laptop or desktop computer. To put this in perspective, while Apple gets the lion’s share of publicity and has attained cult status, their sales make up only a fraction of smartphone users and sales internationally. According to recent statistics, only four percent of mobile users internationally have an iPhone. But, aside from its glossy Apple rival winning in the public relations stakes, in news more troubling for RIM, a 2010 report by Gartner research predicted that 468 million smartphones will be sold in 2011 – a 57.7 percent increase from 2010. Of those phones,

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38.5 percent will be powered by the Android operating system. Indeed, in late October Samsung announced that its Android-using Galaxy S and Galaxy SII handsets had achieved a combined total of 300 million units in global sales. Launched in 2010, Samsung Galaxy S reached almost 20 million sales, making it the highest-selling mobile device in Samsung’s portfolio to date, Galaxy SII has set a new record for Samsung, generating more than 10 million sales at a pace quicker than any device in Samsung’s history. These are impressive numbers and if nothing else an indication of the huge potential of this global market. In fact, by 2015, 631 million smartphones will be sold

and an estimated 50 percent of these will be powered by the Android system. BlackBerry is seen as a business phone for executives, meanwhile Apple and Android powered phones are seen as for everyone. The future it seems, is going to be Android. MaY thE aPP bE with You And now, it’s not just about the phone, but the so called ‘ecosystem’. Developers and companies are battling for the hearts, minds and pockets of phone users through the pursuit of new technology. Android technology was developed by Google and is open source, meaning that manufacturers do not have to pay Google to use it, and that they are free to modify it. This means that it

COVER STORY

Visitors crowd the stand of HTC during a telecommunications exhibition in Beijing, China, 27 September 2011. In October the brand released that its unaudited third-quarter net profit grew 68 percent, as the Taiwan-based handset makers’ smartphones continued to woo consumers away from traditional cell phones, increased market share in the US, Asia and Europe in recent years with its early adoption of Google Android software. (Image Corbis)

A 2010 report predicted that 468 million smartphones will be sold in 2011 – a 57.7 percent increase from 2010. Of those phones, 38.5 percent will be powered by the Android operating system. is used in a wide range of hardware varying in price from small budget phones to largescreen high-end handsets. “By 2015, 67 percent of all open Operating System (OS) devices will have an average selling price of $US300 (QR1092) or below, proving that smartphones have been finally truly democratised,” said Roberta Cozza, principle analyst at Gartner, a United States (US)-based technology data research firm. “As vendors delivering Android-based devices continue to fight for market share,

price will decrease to further benefit consumers,” Cozza continued. “Android’s position at the high end of the market will remain strong, but its greatest volume opportunity in the longer term will be in the mid- to low-cost smartphones, above all in emerging markets.” In mid-October, Google released Android 4.0 (cutely named Ice Cream Sandwich), which upped the ante on Apple and BlackBerry. The update includes face recognition security software, replacing

physical buttons with onscreen icons and Android Beam where users can swap web content by placing their phones together. Developers and geeks alike hailed it as a “smoother and slicker experience”. Samsung made the first Android inroads into the Middle East market with its Galaxy handset in late 2009. So far uptake has been slower than in other parts of the world, namely because of the operating system’s difficultly in handling Arabic text. BlackBerry’s messenger service is also a key selling point in the Middle East, where sms and call prices still remain relatively high. It is a quick, easy and cheap way to connect and Arabic text is supported. Regardless, as of September 2011, Android phones are now outselling the iPhone in the highly competitive US market. And one in four phones sold in Europe was also powered by the technology. Realising its slipping market share to Android powered phones, last month, just days after the worst service outage in its history, RIM unveiled a new operating system. Designed for its next-generation BlackBerry smartphones to better compete with Apple and Android devices. The new BlackBerry operating system is called BBX and is based on the operating system that is already in place in RIM’s PlayBook tablet. The BBX operating system will give RIM’s future smartphones the ability to run Android software applications, such as games, business and medical apps. The new BlackBerry smartphones are expected to be more like mobile computers when they are launched early 2012. Back on the smartphone front, more applications (apps) have been developed internationally over the last three years and the offerings continue to grow. Current apps have been downloaded 10.9 billion times allowing for anything from gaming to finding your local petrol station to flight times. And demand for download mobile apps is expected to peak in 2013. Apps, such as those the Android operating system allow to be developed, have become a widespread mode of instant information and entertainment with everything from Skype to currency converters to games. They have also TheEDGE

COVER STORY

thE FuturE iS MobilE banKinG Smartphones have integrated themselves into almost every aspect of our lives not just for communications and fun. Banking and retail outlets have begun to see how mobile technology can be applied to everyday transactions and this technology is spearing to the Middle East. Paying by mobile also known as ‘m-payments’ will be worth US$240 billion (QR146 million) globally in 2011 and could generate more than US$1 trillion by 2015. Purchasing digital goods is the largest segment ahead of physical goods, near-field communications (NFC), m-banking and mobile money transfers. NFC allows for data exchange and transactions between two devices. It has become a widely used way to make payments in the United Kingdom (UK) and United States (US) at banks and supermarkets. Smartphones use an embedded chip (most new generation phones are fitted with them) that can send encrypted data a short distance ( in other words ‘near field’) to a reader. Those who have their credit card information stored in their NFC smartphones can pay for purchases by waving their handsets near or tapping them on the reader attached to a cash register. In fact, in the UK, many supermarkets already use NFC and customers can purchase items worth up to GBP15 (QR87) without having to remove their wallets. A planned launch of the technology by UAE-based mobile provider Etisalat in 2011 has been postponed. But a conference is planned in 2012 to examine the roll out of the technology in the region. Outside the retail space, one in eight mobile subscribers will use m-ticketing in 2015 for airline, rail and bus travel, music events, cinemas and sports events. Already, Qatar Airways uses this technology, allowing passengers the option of having their ticket sent to their mobile or smartphone. This form of mobile commerce is fledgling in Qatar, but companies like Qtel and Qatar National Bank are seeing the benefits of using the technology. The first widespread trial of this technology involves the lucrative expatriate remittance market. Each year expats living in Qatar send to their home countries more than US$7 billion (QR25 billion). Most send through currency exchange and online remittance. Qtel’s Mobile Wallet enables customers to transfer money domestically and overseas and buy new credit for their mobiles. The service will also enable customers to pay Qtel bills, make merchant payments and buy services when the next phase goes live in 2012. Waleed Al Sayed, chief operating officer, of Qtel recently said: “Qtel believes there is a significant market of people who currently rely on cash-based financial services, including money transfer services, to support their families. The launch of this new service will provide them with an important and safe alternative.”

Mobile usage is expected to double within five years as mobile overtakes the personal computer (PC) as the most popular way to access the Internet. In China alone there are more than 277 million mobile web users. 68

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integrated themselves into our everyday life, with companies seeing their value beyond the handset. Qatar Airways have adopted the android app technology on its inflight entertainment systems. thE PhonE warS Half a billion accessed the Internet using a mobile phone worldwide in 2009. Usage is expected to double within five years as mobile overtakes the personal computer (PC) as the most popular way to access the Internet. In China alone there are more than 277 million mobile web users as of 2010 – so the potential is enormous. Those who have Android phones, tend to keep them for longer and are happier with them, perhaps because of the variety of options and information at their fingertips. But a 2011 UBS Investment Research survey found that no other smartphone manufacturer received a retention rate within 40 points of Apple’s 89 percent rating. The closest runner up, HTC, nailed a 39 percent. When asked about the quality of their mobile operating system, a total of 55 percent of survey respondents using smartphones with the Android OS said they planned to keep their platform, although 31 percent of Android users stated a desire to switch to Apple’s iOS with their next mobile device. The competition between Apple and competitors such as Samsung goes beyond the shop floor. The brands are currently engaged in a number of legal battles around the world, some of which involve claims of patent infringement and copying of device aesthetics. To date, Apple has obtained injunctions on Samsung Galaxy tablets being sold in Germany and Australia, with a ban on some smartphones due to come into effect in the Netherlands. thE MiddlE EaSt: thE Final (lucratiVE) FrontiEr As recent events in the region have proved, mobile and mobile technology is a growth market in the Middle East. A 2010 survey by Oracle revealed that 62 percent of mobile phone customers in the Middle East said they use two or more mobile phones. According to the survey, 97 percent

COVER STORY

A customer uses Google’s newly released smart phone Nexus S in a Best Buy electronics store in New York, the United States in December, 2010. Nexus S was one of the first new generation smartphones with built-in NFC (Near Field Communication), a wireless standard, which enables the exchange of data between devices over about a 10-centimeter distance. (Image Corbis)

of customers in the Middle East have used their phone to send a text message, compared to the global figure of 86 percent. And 93 percent of Middle East users had used their phone to take a picture, higher than the global rate of 84 percent. Customers here are looking for phones that do more than “talk” – they want multifunction phones to communicate. In Qatar, statistics are hard to come by. But both major players – Qtel and Vodafone – have offerings of Android, BlackBerry, iPhone and the Nokia N9 and report that sales are brisk. What we do know is that Qatar’s current mobile phone penetration is 179 percent according to the latest statistics and there appears to be no end to the desire to acquire more phones both smart or otherwise. The Oracle survey also laid bare the fact that mobile customers in the region are fickle – 69 percent of users in the region would consider switching service provider, should they be offered better pricing and a better deal. This is of particular importance to this growing market.

In Qatar, both Vodafone, which now boasts more than 1.5 million subscribers, trades blows with homegrown giant Qtel for market share in terms of handset sales and customers. A recent offer for ‘pay as you go’ BlackBerry services from Qtel for as low as QR15 a month saw sales and connections climb. Vodafone hit back by reducing their monthly fees, but are still struggling to keep up as Qtel continues to roll out offers and recently entered into a high profile strategic alliance with RIM to bring innovative content to customers. Both companies go compete on other offerings, including iPhone, but Vodafone has seen the potential of the Android in Qatar and is pushing Samsung and HTC phones with attractive data packages. Vodafone’s 858 Smartphone is a budget friendly phone using the technology and priced at QR358 (compared to basic BlackBerry and entry level iPhones which start at QR700 and QR2000).“We are certain it will appeal to a wide audience,” Vodafone Qatar’s Omar Mufti said.

Realising the value of the mobile information market and Qatar’s thirst for fast and accessible information, Qtel has also stepped up efforts to provide customers with faster, cheaper alternatives. It pipped Vodafone by announcing plans for a 4G network. Qtel will deploy some 900 base stations across Qatar, touted to be the best penetration in the region. The service offers fast download speeds on mobile devices and a range of services, including high-definition (HD) video on demand, interactive gaming, Mozaic TV and high-bandwidth content. After October’s fiasco, both Vodafone Qatar and Qtel offered BlackBerry customers compensation when the network went down. It’s too early to tell whether sales of Android or iPhones increased in Qatar or globally, but for those few short days the BlackBerry ‘Empire’ had been silenced. For a company that extols the mantra of “helping people stay connected with their content”, the content was missing. Weakened, they endure, and the battle for mobile sector supremacy rages on. TheEDGE

ON THE PULSE

The implementation of ISO standards are important for businesses and organisations to compete internationally and deliver a highend quality products and services. Erika Widén explains further how ISO standards can meet the requirements of a business and the broader demands of society.

aving an ISO certification is important for any organisation. It is an essential tool for companies to measure their performance and provide a programme for continuous improvement not only for their products and services but also in the internal administration and management,” says Khalid Al Sayed, editor-in-chief of The Peninsula newspaper in Doha. “If there are any errors in the process, management can easily pinpoint what went wrong and generate corrective actions to resolve this. Some companies think that having an ISO certification is just a prestige but this should not be the case, rather ISO certification should be seen as an integral tool to help companies progress and achieve their goals and vision.” When a product, machinery, system or device functions properly and safely, it is

Khalid Al Sayed, editor in chief of Qatar’s leading English newspaper, The Peninsula, explains to TheEDGE how an ISO certificate should not be seen as a company prestige. The daily is the first in the media industry to be certified in the region.

due to meeting a certain criteria or standard. Standards have an integral impact to an organisation, ensuring certain characteristics such as quality, environmental friendliness, safety, reliability and efficiency at an economical cost. Nonetheless, there are a number of organisations that are unaware of the importance of standards. For example when an organisation’s product and service meet their expectations, standards are taken for granted. But when there is no attention paid to standards, it will be immediately noticeable when the outcome is of poor quality, unreliable or dangerous and does not meet the requirements of the client or consumer. The International Organisation for Standards (known as ISO) is the world’s largest developer and publisher of international standards, with the central secretariat in Geneva, Switzerland. Since its creation in the 1940s, there are now currently more than 18,500 available international standards. ISO’s standards range from the traditional activities, such as agriculture and construction, mechanical engineering, manufacturing and distribution, to transport, medical devices, latest information and communication technologies, and to standards for good management practice and for services. “ISO standards help companies embark into the path of continual improvement by identifying all related process and ensures that these processes are measured, monitored and analysed,” says Linda Ross, general manager of Qatar Quality Plus. Qatar Quality Plus (QQP) was established in 2007 under the guidance of HH Sheikh Ali Bin Jassim Al Thani. It is the leading management system consultant and trainer in Qatar and has assisted more than 275 companies towards various ISO certifications.

“Some companies think that having an ISO certification is just a prestige but this should not be the case, rather ISO certification should be seen as an integral tool to help companies progress.” Khalid Al Sayed, editorin-chief of The Peninsula. QQP offers a number of consultancy services to organisations of all nature and size in the area of quality, safety and environment. STANDARD BENEFITS “ISO standards are beneficial for a business because they clearly define TheEDGE

ON THE PULSE

Khalid Abdulla Saleh, manager of corporate quality and management systems of Qatar Petroleum, highlights to TheEDGE how ISO standards are not new to Qatar.

objectives and target, roles, responsibilities and authorities. In addition to an effective monitoring process they also increases staff productivity and efficiency,” adds Ross. Therefore, ISO enables an agreement to be reached on solutions that meet both the requirements of a business and the broader needs of society. The oil and gas industry has a number of ISO standards as legal requirements, including Qatar Petroleum (QP). “ISO provides uniformity and consistency in the practices that you follow, regardless of where you are located in the world,” explains S. Akhtar Ali, head of quality assurance for QP. “It is a benchmark. For example when you are going to manufacture equipment according to a standard of ISO, then you immediately know the criteria, the circumstances, the characteristics of the delivery code.” For a business, implementation of an ISO standard means that suppliers can develop and offer products and services meeting

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global specifications. In the industry of new technologies, standards are essential in the aspects of new terminologies, compatibility and their development into a marketable product. As a customer, knowing that a product and service are based on a standard provides a broader selection among the competitive suppliers. As a consumer, conformity of products and services at an international level gives assurance in regards to the quality, safety and reliability. COmmON CaTEgORIES In Qatar, the oil and gas industry must be ISO certified and Qatar Petroleum requires their contractors to be certified to an international standard. A number of industries are ISO certified throughout the nation and the most common ones are ISO 9001:2008 Quality Management System, considered as the foundation standard, which can be integrated with all other standards. ISO 14001:2004 Environment Management

System, which helps companies identify the environmental aspects and impacts and encourages identifying a suitable environmental management programme and OHSAS 18001:2007 Occupational Health and Safety Management System, which considers the health and safety of workers and employees. “ISO is not new to Qatar, it has become very common in any country and Qatar is developing very fast,“ says Khalid Abdulla Saleh, manager, corporate quality and management and management systems corporate quality and management systems of QP. “If we go back to our history the quality was there since before 1997 [a] decree was there to develop the system and to implement the quality standards in all sectors, not just the oil and gas industry and the government. It is important for all sectors, to develop and implement quality.” The primary benefit of implementing an international standard is to improve the

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processes within an organisation or small business leading to a continual improvement. The common myth of being ISO certified is the belief ‘We are perfect, we are certified’. The process of improvement is slow but steady; it is a continuous process, where new methods could be adapted based on market demands. Another prominent Qatari company, Alfardan Premier Motors, is also ISO certified and has improved upon existing processes by documenting a well-defined quality policy and management system, followed by all employees. “This in turn has help us embrace a culture that encourages creativity, seeks different perspective by pursuing new opportunities,” says Rabih Farid Ataya, general manager of Alfardan Premier Motors. The objective of our company is to fulfil the customers’ needs and expectations, achieve a higher customer satisfaction level by providing a timely, high quality services to customers, while giving a fair and consistent return to all related stakeholders.”

Head of quality assurance of Qatar Petroleum, S. Akhtar Ali explains how an ISO standard is a profitable benchmark for any business.

iSo bEnEFitS For a buSinESS 1. 2. 3. 4. 5. 6. 7.

Creates a more efficient, effective operation Increases customer satisfaction and retention Reduces audits Enhances marketing Improves employee motivation, awareness and morale Promotes international trade Increases profit

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KNOWLEDGE & EXPERTISE BUSINESS management • small business know-how • marketing and design • legal insight

ENTREPRENEURS ENGAGING across borders (P.78)

Jaywant Michael highlights the common pitfalls entrepreneurs conducting business around the Gulf region and the world must avoid and other nuances of of international trade and cross-border commerce they should be aware of.

ALSO IN THIS SECTION: •

Business Management: In the first of a two part series, London Business School business experts and researchers Jay Conger, Doug Ready, Linda Hill and Emily Stecker expound on their findings from a recent study on the ‘x factors’ that can turn a company’s high potential employees list into a strong competitive advantage. (P.76).

• •

Marketing and Design: Charles Vincent explains how electronic billboards are a versatile corporate communication medium and marketing tool. (P.80). Legal Insight: Aarij S. Wasti talks about the legalities of natural gas resources, economic investment and environmental protection in Qatar. (P.82).

BUSINESS MANAGEMENT

THAT SPECIAL SAUCE THE ANATOMY OF A ‘HIGH POTENTIAL’ EMPLOYEE

The world over, companies have long been interested in identifying ‘highpotential employees’, but few firms know how to convert top talent into game changers – people who can shape the future of the business. In the first of a two part series in the subject, Jay Conger, Doug Ready, Linda Hill and Emily Stecker identify the ‘x factors’ that can turn your highpotential list into a strong competitive advantage.

company’s ‘high-potential’ list of employees is one of its most valuable assets. Often, it is purposely shrouded in mystique. As a result, many employees wonder who’s on the list, why and how they can get themselves into this coveted group. Over the past 20 years, we have studied a variety of company initiatives to identify and develop high-potential leaders in order to learn what processes work best. We have interviewed human resource managers and other executives in a range of companies to gain insights about the experiences they provide for high-potential employees and about the criteria for getting and staying on their lists. We have also interviewed many of those who made it to a high-potential list. Our goal has been to discern the anatomy of a high-potential employee. THAT SPECIAL SAUCE Given that the identification, development, engagement and retention of highpotential employees are central tasks for managers and executives, we were surprised to learn that the ‘anatomy’ of a high-potential employee was not easy for many to articulate. They told us that their high-potential workers were clearly distinguishable from other employees. They also told us that the ‘special sauce’ that set top employees apart wasn’t simply better performance or behaviour that was more in line with the company’s culture and values. Indeed, what differentiated high-potential employees was rarely a result of an individual’s capacity to develop the skills from his or her company’s competency profile more effectively than their colleagues could, but rather something a bit more difficult to define. The premise is that organisations are filled with highly valued contributors, but that organisational success is often determined by a select few who deliver disproportionate value to their companies – a group whom we will refer to as ‘game changers’. Ultimately, we did discern the elements that differentiated these game changers from the value creators. Along the way, we discovered some important implications for those responsible for developing this cadre of nextgeneration leaders.

BUSINESS MANAGEMENT

What differentiates high-potential employees is rarely a result of an individual’s capacity to develop their skills from their company’s competency profile. BASELINE PERFORMANCE Definitions of high-potential employees vary only slightly by company, but most think of high-potential employees as the top three to five percent of the talent pool. This best captures how most organisations define what they’re looking for: highpotential employees consistently and significantly outperform their peers in a variety of circumstances. While achieving these superior levels of performance, they exhibit behaviours that reflect their companies’ principles and core values in an exemplary manner. Moreover, they show a strong capacity to grow and succeed throughout their careers within an organisation more quickly and effectively than their peers. Companies usually add people to their high-potential lists if the employees perform these three baseline activities well: Deliver strong results, credibly; but not at the expense of others. Making the numbers is a threshold metric, but not enough by itself. Performance is essential; but, if an employee’s success came at the expense of someone else, she was out of the running for high-potential status. In fact, an employee’s ability to perform with distinction while building trust and confidence among colleagues was deemed highly essential. This ability to influence a wide array of stakeholders seems to grow in importance over time. Master expertise beyond the technical. An employee at an early career stage can get noticed by mastering technical skills related to one’s function, but that expertise must broaden over time. Many companies task promising employees with first managing a small team, then offer them larger leadership roles, particularly positions that require influence without formal authority. Behave in ways consistent with the company’s values. Superior performance will get an employee promoted early in her career, but it is exemplary behaviour that keeps her in the running for ongoing high-potential status. This is not to say outstanding technical and managerial skills diminish in importance. But increasingly, they become a given. We repeatedly heard that high-potential employees can’t just ‘fit’ behaviourally; they need to go a step beyond and serve as mentors for others learn company values. THE X FACTORS While many workers might possess the above traits, these criteria are just the baseline for admittance onto a high-potential list. Other differentiators enabled some employees to become long-term high-potential employees. Based on the conclusions of our research in 45 companies, virtually all highpotential employees possess a core set of characteristics and behaviours that we have come to call the ‘x factors’. These factors distinguish this precious few from other smart, hardworking and trustworthy employees. Our x-factor list is not meant to be exhaustive; there may be other special factors unique to your organisation that have to

be met for employees to earn high-potential status. Yet, the following four distinguishing factors – culled from a wide array of companies – is important if only to cause you to reconsider how you’re identifying, developing and retaining your company’s best employees. • A drive to excel High-potential employees aren’t just high achievers. They are driven to succeed. They have tremendous ambition. They readily go that extra mile in order to advance. Each new opportunity is seen as a challenge to be embraced. Indeed, they thrive on these new challenges. This ambition, combined with behaving in ways that are in keeping with a company’s guiding principles, is a terrific starting point for identifying a game changer. • A catalytic learning capability High-potential employees are relentless learners and more. They possess what we call a ‘catalytic learning capability’. They constantly scan for new ways and ideas to approach problems. They actively seek out resources, information and people to help them. Most importantly, they have a habit of translating new learning into productive action for their companies. • An enterprising spirit High-potential employees are trailblazers. They are more than willing to take on challenges that force them to leave their comfort zones periodically, if that is what advancement requires. Given high-potential employees’ drive to succeed, one might think they’d be reluctant to take chances; but most seem to find the excitement and opportunity of new challenges outweigh the risks. • Dynamic sensors High-potential employees possess what we call ‘dynamic sensors’ that help them to navigate their organisations and their careers with a savvy that few others demonstrate. They have a feel for timing and an ability to quickly read situations and a nose for opportunity. They have a knack for being in the right place at the right time. They tend to be strong networkers and are well connected. WHAT COMES NEXT? Most of these x factors don’t show up in company leadership competency models. Quite possibly, that is because these four characteristics are more difficult to identify through hard evidence. In the next instalment of this two part series in the December issue, we thus look at how you can review your process to identify your company’s game changers and make the most of your highest-potential employees.

Jay Conger is the Henry R. Kravis Professor at Claremont McKenna College and Visiting Professor of Organisational Behaviour at London Business School. TheEDGE

small business know-how

CROSS BORDER BUSINESS

Entrepreneurs in Qatar wishing to expand across borders need to be aware of the common pitfalls of this kind of step. Jaywant Michael takes a close look at the details of international trade.

ue to the nature of the Gulf economies, almost all enterprises directly or indirectly depend on foreign trade. Entrepreneurs doing business in Qatar, like those in the rest of the Gulf Cooperation Council (GCC), need a good understanding of the principles of international trade. Some enterprises insulate themselves from directly doing business across borders by using import and export agents. Even in such cases though, it is advisable for entrepreneurs to be able to discern critical signals related to doing business across borders. It is tempting to pick-up a list of doâ&#x20AC;&#x2122;s and donâ&#x20AC;&#x2122;ts on the target country of interest and let it inform our decisions and behaviour. But, a savvy entrepreneur realises its limitations almost as soon as he begins dealing with his counterparts. This article only attempts to highlight some of the critical issues and principles entrepreneurs in Qatar need to be aware of when involved in cross-border business â&#x20AC;&#x201C; be it imports or exports. The principles and issues are generic, cutting across the size, form or industry of the enterprise. As an entrepreneur you need to evaluate and decide on how and whether these principles apply to your situation.

The fallacy of extrapolating competency and competitive advantage across borders: A common pitfall entrepreneurs must avoid is automatically extrapolating a competency or competitive advantage in one market and misapplying it across borders. It is important to spend some time to ensure universally shared value is being created in the new market as well. Focus on unique and sustainable competencies and competitive advantages that go beyond a mere price advantage. The linking of the Qatari riyal to the United States (US) dollar does create a unique set of issues to exporters and importers. The value of the competitive advantage across borders must be large enough to withstand the collateral consequences of being pegged to the dollar.

Cultivating cross border credibility and visibility: Cross-border credibility of your enterprise is critical whether you are involved in imports or exports. Financial credibility can be secured through banks and instruments like documentary credits and guarantees. But, credibility in other areas needs to be built especially when you have to break into a new market or grow your existing business across borders. While established credibility builders like product and service quality and reliability as a supplier is given, entrepreneurs need to build their credibility using referrals, testimonials, awards from industry, meeting international benchmarks such as ISO standards. All these can be effectively showcased using a quality online presence. Today, first impressions are created on websites

A common pitfall entrepreneurs must avoid is automatically extrapolating a competency or competitive advantage in one market and misapplying it across borders.

small business know-how

so a professional, user friendly and informative website is a sound investment for a Qatari business with cross-border ambitions. Finally, increasing visibility is another way of building credibility. Visiting and participating in trade fairs, membership in trade associations, attending trade related conferences could contribute to increased visibility. Mastering cross-border cultural and communication differences: Even as the Internet steadily obliterates cross-border access and communication barriers a great deal of diversity exists in our so-called global village. While a lot of these surface level cultural differences are mentioned in tourist guidebooks, the differences are critical for entrepreneurs since it goes deeper. Understanding and mastering these differences can help avoid friction. In the area of communication, it would include the legal language of business used and the dangers that come with translation. It could include how feedback is given and received, protocols of information disclosure, attitude towards conflict, and the attitude toward commitments made. In addition, negotiation styles, which are deeply rooted in cultural behaviours, can differ vastly and be a source of unintended consequences. A useful way to understand cultural differences in the way business is done in the country you wish

AN ACROSS BORDER BUSINESS TRUST BUILDING KIT Trust is built by providing evidence of competence and commitment and not mere talk and promises. Building trust across borders does provide an additional level of complexity, but the fundamentals of building trust remains similar to building trust domestically. Here are some trust building measures for your cross-border kit bag: Proof of competence from your company: Appropriate licences or certifications for professional staff. ISO certifications for processes and systems. Publications in professional journals by staff. Vibrant online presence including professionally appealing website, participation in online discussion groups, web-links placed on popular websites frequented by potential customers. Participation in industry conferences and exhibitions as presenter, speaker and exhibitor. Endorsement of competence by others: Awards to the company or staff for excellence. ISO registration and certification. Partnerships or strategic alliances with known industry leaders Referrals and recommendations from reputed companies and testimonials from satisfied customers – both domestic and across the border. Membership in professional associations – both domestic and cross-border. Provide a positive external image by: Well-positioned listings in reputed international and domestic trade directories. Construct and articulate a clear “benefits statement” of your offering. Do not compromise on quality promotional material – spelling, grammar, printing, paper. Show sensitivity to cultural factors. Orchestrate media coverage of company and its activities. If affordable , become involved in a cross-border charitable cause.

to trade with is to see what they have to say about Qatar’s business practices and culture. Maintaining ethical Integrity: Another area that needs the entrepreneur’s attention when involved in cross-border business is maintaining ethics in adverse conditions. Differences in interpretation of intellectual property rights, attitudes toward bribery and corruption, and the implementation of international sanctions can cause ethical dilemmas and pressures. When faced with extreme pressures from questionable cross border ethics it is best for the entrepreneur to seek commercial advantages that do not compromise the businesses core ethics. This could even mean walking away from a deal. It is not possible to be ‘over-prepared’: There is no such thing as being ‘overprepared’ when it comes to doing business across borders. Start by determining your cross-border objectives – both short and long term and weave your strategy to reach them. Even if you outsource legal needs, keep

informed on common international trade law, practices and conventions. A good beginning would be to understand the International Chamber of Commerce’s Incoterms 2010. Read trade publications, international newspapers, news magazines and financial reports to pick up trends that may impact your business. Organise your information systematically and remember, especially in foreign trade, the devil is in the detail. As an entrepreneur becomes more familiar and experienced in doing business across borders, it will be important to consider diversifying. Given the dynamic and ever-changing picture of global markets the reliance on a single or small number of markets must be reduced. Diversify to mitigate risks and increase your future potential of growth and success. Jaywant Michael is the executive director, centre for banking and financial studies at the College of the North Atlantic-Qatar. TheEDGE

MARKETING AND DESIGN

diGital diSPlaY

SIGNAGE AND ItS MArkEtING APPLICAtIONS

When digital signage or electronic billboards are mentioned, the bright and colourful outdoor displays in large cities immediately come to mind. But, as Charles Vincent explains, this affordable and versatile medium is increasingly being used with great effect in a variety of different marketing and corporate communication applications.

he modern marketing world is no stranger to digital signage and electronic billboards, the best most readily identifiable examples perhaps Times Square in New York City in the United States (US) or the Kabukicho District in Tokyo Japan, the skylines of which are both filled with a kaleidoscope of gaudy, flashing facades advertising every brand imaginable. In areas such as these, electronic digital signage can emit television programming, menus, information, advertising and other messages. But digital signs, which can comprise liquid crystal displays (LCD), light emitting diode (LED), plasma displays, and projected images are be found private environments such as malls retail stores, hotels, restaurants and corporate buildings. Indeed, as the medium evolves, simultaneously with consumer patterns and incorporating the emergence of new technologies such as 3D or near field communication (NFC) to cite but two examples, digital screens are constantly allowing corporate marketing and communication departments to disseminate

information in ever increasingly imaginative ways. Another attractive advantage of digital signage is that in most cases it allows for 100 percent control, interactivity and integration of content, in most cases from a remote desktop or central workstation far away from the location of the screen(s), even in another city or country. From here content can be changed, scheduled and monitored easily, allowing for great creative solutions and highly effective marketing campaigns, incorporating one or more combinations of computer generated, full motion video, photorealistic graphics, text and animation. Digital signage is a highly dynamic means of marketing and communication, as opposed to static billboards and posters, in a variety of locations and means. outdoor adVErtiSEMEntS As mentioned above this is the most well-known and common form of digital signage. Utilised on a large scale, centralised electronic advertising systems can be used to manage huge digital billboards New York or Las Vegas; so live feeds of information can

be implemented (such as stock markets) and used to allow the managing house to control advertising campaigns on a city- or even countrywide scale. ShoPPinG MallS Shopping malls are the next place where digital signage has increased in popularity and is also readily identifiable. Mall managers in essence work for their tenants and therefore need to bring footfall into their venue. By displaying upcoming events and general information, digital signage systems have become a direct link with visitors to the mall and can become an incentive to increase the frequency of visits through the month, while improving the consumer experience. Moreover, the malls can also collaborate with media houses in charge of monetising those networks by selling advertising space on those same screens. Indeed, in a “ready to buy” environment, malls and retailers are the most likely places to implement a good communication and build what is known as “the last 10 feet” of the consumer’s buying process. This is where digital media not only intervenes through a modern and surprisingly

MARKETING AND DESIGN

Since their debut in wider retail common spaces the world over, digital screens have become more effective thanks to their increasing sizes but also by adding new techniques to display advertisements. tangible tactical medium, advertising, but also doubles in effectiveness as consumer also perceived the medium to be informative due its message and location. Since their debut in wider retail common spaces the world over, digital screens have become more effective thanks to their increasing sizes but also by adding new techniques to display advertisements. In some places, thanks to technology such as NFC, advertisement can change according to the gender of the person watching the screen. In terms of reporting, those systems can also give a detailed analytics on the footfall, viewing frequency, gender and even estimated age of the audience, detailed information useful to marketers that has only largely been possible using online advertising so far. WITHIN RETAIL Within the retail business itself, the point of such an installation is both to facilitate a rewarding experience for the customer and also for staff training. Screens can be installed to display ambient messages, music and videos. In franchised venues such as food retailers, some media houses have taken advantage of this technology to create in-house radio station thus scheduling music through the day alternated with advertisements for specific brands, thereby replacing the non-profitable external and onedimensional traditional FM radio. Digital signage and its newer applications can actually help retailers even further. In a fashion shop, mirror screens can permits customers to look at themselves while another

product is being displayed. With interaction becoming the key of such technology, the retailers of the future are also taking their first steps with virtual dressing rooms: by seeing themselves in different outfits, customers can change choices by the movement of their arms and avoid trying on many different outfits before deciding on the right color and shape of dress. Finally, before and after opening hours, those same screens can turn into tool for communication with staff reminding them of their tasks and duties etcetera. CORPORATE ENVIRONMENT A common issue often confronts communication professionals in the corporate environment and that is how to convey messages to different departments, located on different floors or even different geographic locations, effectively. Here again, digital signage can become a solution and assure that the president or chief executive officer or department head’s message or internal memorandum are displayed and read. Other screens located in public areas can welcome and entertain visitors with the corporate video while they are waiting for an upcoming meeting, thus reducing their perceived time. At last but not least, Qatar being in full development, oil and gas and construction companies often need to remind the appropriate measures of security on site and in several languages, which is where strategically place digital screens, in high risk areas or gathering points such

Features and Benefits of Digital Signage Savings Digital media eliminates the need to print and distribute static signs every time a message or campaign needs to be changed and thus saves on printing costs and processing time. Prominence A well-executed digital sign has the stopping power to get viewers’ attention immediately and then allows a great opportunity to influence their buying decisions even more easily, especially when placed at the point of purchase (POP). Simplicity Digital signage systems allow easy and immediate changing of content at multiple locations from one remote authoring station. It also allows the marketer to modify a specific advertising message quickly on displays in one venue, or on any screen anywhere via the Internet. Standardisation With digital signage there is no need to re-do the existing campaigns by repurposing existing creative content from TV, print or Web advertising for use on the system. Although the use of those ads should not be encouraged, it is a real, inexpensive benefit when starting to use this new media.

as canteens, are also highly effective communication tools. Organisation and Benefits Digital signage is a technology used to convey information, the output can be a small LCD screens, and a huge LED billboards or even touch screens. While a huge amount of screens can be aggregated and managed from a central point, any responsible digital signage solution company will always offer to create “groups” and “segments” according to their location and time zone for easy content management. TheEDGE

LEGAL INSIGHT

Qatar’s natural gas

reserve legal framework

By AARIJ S. WASTI

The State of Qatar has the third largest proven gas reserves in the world after Russia and Iran. Its reserves account for approximately 14 percent of the world’s total. Qatar is also the world’s leading producer of liquefied natural gas (LNG) and liquid fuels using gas-to-liquids (GTL) technology. Virtually all of Qatar’s proven reserves are located in the North Field. The North Field extends into Iranian sovereign territory where it is known as South Pars. It is estimated by the United States Energy Information Administration (EIA) to be the largest non-associated gas field in the world. Qatar has over 100 years of proven gas reserves at projected long-term production levels. Qatar began exporting LNG only in 1997. Qatar’s LNG sector is led by Qatargas Operating Company Limited and RasGas Company Limited. These are purely operating companies. They do not own the LNG facilities or the LNG itself. There are specific joint venture companies that own one or more of the LNG trains and the corresponding LNG. The following is a brief outline of Qatar’s legal/statutory and organisational framework for the exploration and production (development) of natural gas reserves.

NATURAL RESOURCES As per Law No. (3) of 2007 regarding the Exploitation of Natural Resources and its Sources (the Natural Resources Law), natural resources (including natural gas) are deemed the public property of the State. The Ministry of Industry and Energy regulates Qatar’s natural gas policy subject to the ultimate control of the Emir of Qatar. Pursuant to the Decree Law No. (10) of 1974 concerning the Establishment of Qatar Petroleum (the QP Law), QP manages upstream, midstream and downstream oil and gas operations on behalf of the Government of Qatar. QP acts as the State’s investment arm in the oil and gas sector. The right to explore, develop and produce petroleum is typically granted by way of an exploration and production sharing agreement (EPSA) or a development and production sharing agreement (DPSA) entered into with QP on behalf of the State of Qatar. A DPSA will be more usual where there is a mid/downstream component integrated into the development of the project. This will typically be the case for gas projects – and will be less usual for oil projects. The Tasweeq Law Decree Law No. (15) of 2007 established the Qatar International Petroleum Marketing Company Limited (Tasweeq) to market and sell “Regulated Products”. These comprise, for example, refined products, condensate, Liquefied Petroleum Gas (LPG) and sulphur. Crude oil and natural gas (including LNG and GTL products) are therefore excluded.

ECONOMIC INVESTMENT Qatar’s Investment Law Regulating The Investment of Foreign Capital in Economic Activities Law No. (13) of 2000 (Foreign Investment Law) imposes certain restrictions and prohibitions on foreign investment in Qatar. However, in many cases these will be irrelevant to investment in the gas industry. Article 12 specifically states that the Foreign Investment Law will not apply to: • Companies and individuals assigned by the State to extract, exploit or manage the natural resources by virtue of a particular concession or agreement except to the extent it does not contradict the provisions of the special agreement or concession contract; or • Companies incorporated by the government, or in which the government participates. Despite this, it will be usual for the government, typically acting through QP, to take a majority interest in a gas project. QP typically owns about 70 percent of the shares in each of the RasGas and Qatargas train companies. In Barzan, however, QP owns over 90 percent. As mentioned above, participants acquire rights via an EPSA or DPSA. The EPSA or DPSA requires an Emiri decree to give it effect. In general, different authorisations are not issued in respect of different stages of development. The EPSA or DPSA typically embodies the principal authorisation necessary for the exploration, development and production of natural gas. The terms of the EPSAs and DPSAs entered into by QP are not generally in the public domain. As noted above, natural gas is deemed the public property of the State and QP is entrusted with its management and development. There is little detail in the law as to how this is to be implemented. It is QP’s strategy to perform this function through EPSAs and DPSAs – the terms of which are sanctioned by Emiri decree. The State of Qatar typically derives value from natural gas development through: • A share in or right to offtake production (via QP); • Equity participation at the mid/downstream phase (via QP); and taxation There are currently no restrictions on the export of production, although standard export controls (through permits) may apply on certain products for safety, security and environmental reasons, and to ensure compliance with international obligations under treaties and conventions to which Qatar is a signatory.

LEGAL INSIGHT

BOYCOTT AND TERRORISM Law No. (13) of 1963, Regulating the Israel Boycott Office in Qatar (the Israel Boycott Law) prohibits goods being transported on vehicles/ships registered in Israel and any direct or indirect trade with people or entities located in Israel or holding Israeli nationality. The Qatari riyal, the official currency of Qatar, is pegged to the US dollar. There are no exchange controls in Qatar and payments can freely be made in foreign currency, apart from the Israeli currency, as per the Israel Boycott Law. Under Law No. (4) of 2010 on Money Laundering and Combating Terrorism, Qatar introduced anti-money laundering legislation imposing documentary requirements on large wire transfers and the import of large currency amounts. All suspicious transactions must be reported to the Qatar Central Bank. Subject to the terms of the individual EPSAs and DPSAs, the approval of the State is generally required prior to the transfer of natural gas development rights or interests. Subject to the terms of the individual EPSAs and DPSAs, participants are generally obliged to provide guarantees in connection with the performance of their obligations. It is possible as a matter of Qatari law to “mortgage” or “pledge” (depending on the translation) the right to receive a debt. It is also possible to assign contractual rights generally. In an EPSA or DPSA, it would be usual to see detailed provisions regulating any such right to pledge, assign or otherwise make a grant of security having similar effect.

ENVIRONMENTAL PROTECTION Participants are obliged to comply with the framework of State environmental, health and safety laws and regulations. Generally speaking, industrial projects in Qatar must seek approval from certain regulatory entities, such as the Ministry of Environment. For example, under Law No. (30) of 2002 on Environmental Protection (the Environmental Protection Law) and the Executive Regulations pursuant to Ministerial Decision No. (4) of 2005, all plans for public and/or private development projects must be submitted to the Ministry for approval. Law No. (4) of 1983 Concerning the Exploitation and Protection of Aquatic Life in Qatar states that plant, laboratory and factory waste, sewage water, chemical and petroleum substances, ship oils or any other liquids that may cause harm to aquatic life may not be discharged into fishing or internal water without the written approval of the competent department. Abandonment and decommissioning obligations are not expressly addressed by specific legislation. Participants are obliged to comply with general requirements relating to pollution and protection of the environment under the Environmental Protection Law, in addition to any specific environmental requirements under the relevant contract and any applicable environmental regulations. The Environmental Protection Law requires that all organizations undertaking activities in the field of exploration, drilling, extraction, production, refining and processing of crude oil shall follow international standard specifications with regard to methods and ways of safe operation in all matters related to the storage and transportation of petroleum, petrochemicals and gas, as well as to the disposal of water and other dispensable substances while avoiding loss of petroleum or gas.

Note: All Qatari Laws (save for those issued by the Qatar Financial Centre (QFC) to regulate its own business) are issued in Arabic and there are no official translations, therefore for the purposes of drafting this article we have used our own translation and interpreted the same in the context of Qatari regulation and current market practice. This article should be used for information purposes only. It is not legal advice and should not be relied upon as such. If any reader requires legal advice, this should be obtained from an experienced lawyer, who can provide advice, which is tailored to the relevant facts and circumstances. For any information in respect of legal issues, please contact Aarij S. Wasti (aarij.wasti@ snrdenton.com).

TheEDGE

SUBSCRIPTION

SUBSCRIPTION FORM 2011 TheEDGE is Qatar’s dedicated monthly business magazine.

TheEDGE incorporates a mix of industry news and analysis, in depth features, special interviews with key business decision makers, economic insight and market activity reports, and tips for how you can improve your day-to-day business operations. TheEDGE is delivered straight to the door of the targeted business community. To ensure you keep up-to-date, with what is happening in Qatar’s business landscape, please fill in the subscription form (below) to receive TheEDGE on a monthly basis. Subscription is FREE (in Qatar). Forms are to be addressed to the Subscriptions Department at: TheEDGE Subscriptions Department Firefly Communications 11th Floor, Jaidah Tower PO Box 11596 Doha, Qatar

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TheEDGE

BUSINESS INSIGHT Inside the minds of leading business figures

JAIDAH GROUP AND CUMMINS SIGN HISTORIC DEAL (P.86) For many decades prominent Doha-based Jaidah Group and Cummins, a US-based energy product manufacturer, have been working together in Qatar. However, in October the two companies took their successful long-term business relationship to another level by partnering with one another when they announced a distribution deal, the first of its kind in the region. TheEDGE spoke exclusively to Cummins managing director of distribution for the Middle East, Rachid Ouenniche, about the initiative.

ALSO IN THIS SECTION: â&#x20AC;˘ GERMAN TOURISM AND MICE DELEGATION Recently a 40-strong delegation of top German travel sector professionals came to Qatar to investigate the potential of the countryâ&#x20AC;&#x2122;s tourism and especially business

travel and meetings, incentives, conferences and exhibitions (MICE). Rachel Morris spoke to a member of the delegation about their impressions of Qatar and the lucrative German travel market (P89).

BUSINESS INSIGHT

Qatar Energy Sector

Qatarâ&#x20AC;&#x2122;s Jaidah Group and international power company Cummins embark on a unique local distribution joint venture

TheEDGE

BUSINESS INSIGHT

Cummins is a fast-growing global Fortune 500 company listed on the New York Stock Exchange, has been a top performer in its category on Dow Jones for seven years, and is a designer and manufacturer of power generation equipment, power systems, gasoline engines and custom power supplies. For more than 30 years the Doha headquartered Jaidah Group have been distributing Cummins products in Qatar, but in 2011 the two companies took this close relationship to another level, launching a joint venture in response to the growing need for power generation in the country. Miles Masterson spoke exclusively to Cummins managing director of distribution for the Middle East, Rachid Ouenniche, about the deal, the first of its kind in the region and its implications for the power generation sector in Qatar. Cummins is an international company, but is based in the United States (US)? Yes, that’s right. We have been in existence since 1919 [and] about 60 percent of our revenue has been outside of the US over the last few years so we are a true global company even though we are based in the state of Indiana…We have a significant presence in China and India but we do have a presence in 195 countries today, so we are everywhere. We are mostly known for our diesel engines, but in the Middle East we are known for our power generation products. The reason is, in Europe and in North America there are many equipment manufacturers, so we are able to sell engines to them, but here in the Middle East there are not many. However, because we have a growing population there is a great deal of infrastructure that comes with that and there is a significant gap for certain places that have a demand for power. The grid cannot always support demand and that is where we come in. We are able to provide electricity or power through generators or built in power stations. In terms of generators, are those hydrocarbon petrol or diesel driven? They are diesel driven, but we are the leading company in emissions technology for diesel. We also have a lot of natural gas products as well. Are the majority of the components for the generators from the US? No, they are manufactured in the United Kingdom (UK) mostly for the generators, some are from the US. We have some manufacturers in India, as well but mostly all of the components are from the UK. How did the joint venture connection with Jaidah come about? The relationship with Jaidah goes back a long way. When we started talking with Jaidah about a joint venture, there was a lot of excitement on both sides because we couldn’t

“Cummins have been very successful in growing our business in the United Arab Emirates (UAE) and the idea is to take that experience and knowledge and replicate it here in Qatar.” pretend that we know the market here better than Jaidah. They were able to bring in the knowledge of the local market and helped get an insight into the country. Cummins brings a lot to the table as well obviously; the technical knowledge that we have built from the factories through to the supply chain is massive. We have been very successful in growing our business in the United Arab Emirates (UAE) and the idea is to take that experience and knowledge and replicate it here in Qatar. We believe Qatar is going to see a significant amount of growth over the next few years [and] we believe it is a recipe for success for both companies. What are the specific details ? Well it is a 51/49 percent venture with Jaidah having the 51 percent. Cummins will use its own management resources to manage the joint venture. We call it the Cummins operating system. So we will use Cummins tools and Cummins experience to manage the business. The board of directors will have an equal number of people from Cummins and from Jaidah, so it can be managed in collaboration. We are going to be looking into infrastructural projects where there is a need for power generation…designing and developing solutions for these projects. Some of them would want simply generators while some would want more complex solutions where we would design the whole project for them. Some of them might even want us to operate if for them. All they want is power; they don’t necessarily

care of what happens prior to that. So there are different levels of solutions that we can provide, depending on what the customers want and what capabilities they have in place. What kind of projects do you could think of that could be serviced by these generators? Any large project, especially infrastructure projects such as roads, and airports. Oil and gas – wherever there is a need for power, that is where we will come in. Additionally, there is a lot of equipment that is brought into the country with Cummins and when a service or product is needed Cummins Qatar will be able to supply the service or product and set it up on their site. We will also have a workshop where they can actually come in with their equipment and get instructions as to what to do. If it is off-site we can send in our team of technicians to diagnose the problem and fix it there. How operational is Cummins in other countries in the region? We have a presence in all countries, through independent distributors, except for the UAE and Lebanon, as well as Afghanistan where we have our own set up. We have our independent distributors that we have had relationships with for quite some time, such as Jaidah for example. Jaidah however, is the first joint venture that we are doing in the Middle East on the distribution side. We have other joint ventures in our parts of the business, but [on] the distribution side, this is the first in the Middle East, which is exciting. TheEDGE

BUSINESS INSIGHT

Are there any differences in terms of operating in Qatar compared to operating in other GCC states? Well, we don’t see any significant difference within our business between Qatar and the UAE. The similarities are that we believe we are going to see a wave of growth that is unprecedented, or maybe comparable to what we have seen in Dubai between 2002 and 2008. That is very exciting for us, for the Qatari economy and for everyone in the Gulf region. We believe the growth in Qatar will have a positive effect on the UAE as well because many of the large players in the market are based in the UAE. Due to what we have seen over the last few years those will most likely stay based in Dubai, but I do believe that Qatar will play a larger part than it used to in time to come. We look at ourselves as an engineering company; this makes it very easy to move around where it is needed, as we have built a capability to be mobile over the last few years. We are now seeing a slow down in Dubai, we might be able to move it all around to where needed in the Middle East; certainly Qatar will be one of the main areas that we are going to see a heavy presence of Cummins over the next few years. You mentioned filling the gap between the requirements and the demand, how do you see that going in terms of when a more stable electricity grid is put in place? Our experience has been that Qatar is a country that will continue to grow, the grid can be only built at one portion at a time so this means that it will take a long time, maybe three or four years for example to build up enough of the grid to close the gap but this country continues to grow at such an alarming rate which is great for us. So we feel that there will continue to be a need for these external power sources. The growth and demand has always been high in places such as the Middle East, this has been our experience. Will you take this opportunity to train locals? That is a great point, we have what we call a ‘people strategy’. If we think about Cummins

“This is an exciting time in Qatar and Cummins feel very blessed and lucky to have this relationship with the Jaidah family. We view this partnership as having a very bright future.” in the Middle East we are developing a strategy for growth and we can get the best MBAs from the best schools all over the world and they would then be able to develop these amazing strategies for us to implement. The key to implementing and executing these strategies is people; if we can’t execute these ideas properly then they would just be a piece of paper on a shelf. So what we have done is developed a people strategy in parallel with our business strategy. It is an integrated part of our business now. What this people strategy is that we believe that local people are best suited to manage our business around the world. We think of Cummins as a global company rather than an international or a multinational. A multinational is a company that is based out of the US and managed from the US that has operations out across the world. A global company is a company that looks like a local company wherever you go in the world, if we are in Qatar it will look like a Qatari company, if we are in China, it will look like a Chinese company. Is that a long-term goal? That is our long-term goal, how we get there is part of that strategy which is a multi-pronged strategy. The idea is for us to find local talent and to develop that talent either here locally or in places where we have a strong presence such as the US or the UK. We have even taken people from high school as they graduate and put them into universities where we have manufacturers’ presence where they can interact with Cummins through internships for example and maybe graduate and work for Cummins

“We are going to be looking into infrastructural projects where there is a need for power generation…designing and developing solutions for these projects. Some of them would want simply generators while some would want more complex solutions” 88

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in those locations and bring in that knowledge to their local homes. The other thing we are doing is hiring people here and send them to work for Cummins in other places; we are also looking at recruiting where we do these massive recruitment efforts in the US or the UK. We are focusing on people from the Middle East to recruit as they graduate from universities and develop them, when we say develop them we don’t mean just primarily from an engineering point of view, we also looking into leadership skills, make them more familiarised with the Cummins culture and then one day they will be able to go to our global markets and run the business there. So that is our long-term strategy for the people of Cummins. That also fits into Qatar’s national vision? I was in the US about two or three weeks ago. I spent some time in Washington DC where we have an office which interacts with the government. We met with people in the US State Department of Commerce and we were trying to pitch the idea of some kind of collaboration to develop our business in the Middle East. We found that there are many efforts already being launched and we just connect to those so that we can take advantage of the work that is already being done. We have also connected with many local universities and they are all very excited about bring people from the Middle East to study in their universities in the US. We are also looking at local partnerships with universities here. Is there anything else you would like to add? The only thing I would like to add is for us, this is an exciting time in Qatar and we feel very blessed and lucky to have this relationship with the Jaidah family. We view this partnership as having a very bright future, so we are looking forward to growing our business together. We are hoping that this joint venture will possibly rub off into more opportunities all over the Middle East and other regions. We hope to replicate our success in other places.

BUSINESS INSIGHT

Events & Conferences

German travel industry group visit Qatar on fact-finding MICE and tourism sector mission In September a group of 40 German travel professionals visited Qatar to investigate the country’s tourism and business travel potential. What made the visit so important is that Qatar’s Tourism Authority actively courted these travel planners, meeting bookers and travel agents. Rachel Morris talks to delegation member Oliver Graue, editor-in-chief of influential German travel industry publication biztravel about Qatar’s European ambitions. atar has never courted the mass travel market others like Dubai and Egypt have sought. Its tourism strategy has been carefully defined – high-end luxury travel and the lucrative business travel market, especially the oddly named MICE (which is an acronym for meetings, incentives, conferences and exhibitions) market. There is good reason for this, the MICE sector is worth more than US$100 billion (QR364 billion) worldwide and more than 50 million trips are taken internationally in this segment. And MICE travellers are big spenders, many lying in the 35 to 45 year old age group with high disposable incomes. Currently Berlin, Vienna, Austria, Barcelona and New York are the biggest MICE destination players while Germany, the United States (US) and the United Kingdom (UK) are the biggest buyers. Companies tend to choose meeting locations based upon their core business values and relative expensiveness and price. They do not stray too far from their headquarters and need good reason if they have to. The incentives market is slightly more diverse with firms likely to send employees to more exotic long haul destinations. An increasing recognition that motivational programmes, including trips and cruises abroad, are important for staff retention means that the incentives market will increase in the coming years. And Qatar is not alone in realising the potential of this market. Singapore, which bears many similarities to Qatar in terms of size and ambitions, attributes one third of its tourism income to the MICE market. Internationally, according to Oliver Graue, Germany – with its strong industrial base and strong economic forecast – is one of the largest players

in this booming market. Indeed, in the travel industry, the German market is the biggest fish in a very wide but overfished sea. Germans are among the most travelled citizens in Europe with at least 30 days mandated annual leave each year and a decent disposable income, while other neighbouring countries are exercising restraint. Germans also flash the cash while travelling more than any other nationality. Last year Germans splurged more than US$90 billion (QR327 billion) on their travels despite the recession, propping up other smaller economies by eating out, buying clothes and visiting attractions. Travel agents are the most important factor in recommending a destination and Germany has more travel agencies than any other country, 10,370 in 2010 and revenue of EUR20.2 billion (QR100 billion) in the same period. It is a EUR45 billion (QR225 billion) travel market and within Europe, Germans do more trips than any other nationality, with as much as 64 percent for MICE events. At least half of the MICE planners operating in Germany send their clients abroad on trips. “The MICE market in Germany is one of the biggest. Every year, German companies buy meetings, congresses and events for more than EUR60 billion (QR300 billion). Of course, 85 percent of all events are situated in Germany or Europe. But for the international MICE destinations it is very important to have good prices for good quality, modern venues, high standard hotels and non-stop flights from different cities in Germany,” he explains. Graue, who gave a presentation while in Doha on Germany’s own MICE offerings to Qatar’s tourism professionals during the September delegation, TheEDGE

BUSINESS INSIGHT

says there is growing interest in Qatar as a destination but little knowledge of the country’s profile beyond it being a gas producer and host of the 2022 World Cup. “In general people know about Qatar as gas producer and important investor in Germany because daily newspapers write about this,” he explains to TheEDGE. “But until now there are only a few small operators that offer travel trips to Qatar, and when they do then it is only one part of a bigger trip to Arabian states. After winning of FIFA World Cup 2022 a lot of European people hear for the first time from Qatar as tourist destination – but we have to do something that it will remain in the heads of the people. Qatar still has no clear image in Germany – it is a very good chance to create a positive image from the beginning.” While the base maybe low, Graue believes Qatar has several selling points, which caught the attention of the travel professionals on the trip. The visit saw them tour the country’s key tourism infrastructure including the new Qatar National Convention Centre, The Pearl-Qatar and luxury hotels as well as the more traditional pursuits including desert safaris and Katara Cultural Village. He also says that Qatar can compete with its’ main counterpart in the MICE market, neighbouring Dubai, which has aggressively gone after MICE buyers and planners, especially the incentives segment. “The main selling point (for Qatar) is the combination of very modern and impressive architecture (Germans love this), traditional things and a very high standard of quality. And very important are also safety, non-stop flights, good infrastructure and the very friendly people,” he says. “German planners and bookers are always looking for new and interesting destinations. The participants should remember the event for a longer time and speak about it - so a fascinating destination is important. “Of course,” he continues, “Dubai is a location German MICE planners like. Besides United States, Dubai is the only non-European destination ranked in the top 10 MICE destinations of German companies in 2010. But lot of companies now know Dubai – and they are looking for countries that offer similar quality, high standard service and technology but other and perhaps better possibilities for incentives. Qatar could be such a destination, a very good alternative. And Qatar could learn from the mistakes Dubai has made.” But with the positives comes the potential downsides, especially in light

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“MICE travellers are big spenders, many lying in the 35 to 45 year old age group with high disposable incomes.” of the recent political instability in the Arab region, most notably in Egypt. This, he says has adversely affected countries like Morocco which was a popular destination for European travellers and MICE groups because of its proximity to the continent. “Many of the countries where they had a crises never have been MICE destinations at all for example Libya, Syria or Yemen. And sales in Egypt or Bahrain have been affected, yes,” Graue admits. “But German MICE planners can differ, they don’t see the region as critical in general. So, Morocco and Dubai are still very popular. And if Qatar promotes itself as a safe and peaceful country I have no doubts that it could succeed, too.” But Graue warns that it is baby steps ahead for Qatar’s fledgling tourism industry as it gears up for 2022, which is still more than a decade away from reality. He points out that Qatar’s existing hotel stock is very luxury heavy, and needs to diversify to offer the budget savvy Europeans options and play up Qatar as a transit destination, a good place to spend a couple of days and enjoy beaches, spas, shopping and culture. This is especially relevant given the scheduled 2012 opening of the New Doha International Airport, which when fully operational, will see 40 million passengers pass through each year. “I think you have to see this in a realistic way,” he says. “I don’t think that there will be a lot of German tourists who will stay in Qatar for one or two weeks or longer. But the 48 hours promotion [a Qatar Tourism Authority promotion, which encourages business travellers and those transiting on long haul flights to spend another two days in the country], that QTA promotes, is a good thing. Qatar Airways is getting more and more popular in Germany as transfer airline and many tourists like it to have a stop over. I think the number of these tourists could grow fast. But for this it is important to have a bigger choice of hotels: Not every German tourist wants to stay in an international five-star hotel. Local three or four stars hotels are popular, too.”

TRAVEL & LIFESTYLE BANGKOK BUSINESS TRAVEL INSIDER (P.92)

TheEDGE gives you an insight into one of Asia’s biggest business centres. Bangkok is filled with an exotic mix of rich history and culture.

ALSO IN THIS SECTION: • •

Doha al fresco: With the weather cooling, we look at the top places in Doha to enjoy the golden sun and sea breezes (P.93). The necktie in style: Ties are fashionable all year round – pick the most suitable one for smart and casual wear (P.94).

•

10 things: 10 prestigious brands that have gone to war with one another to remain dominant in the market (P.96).

TRAVEL

Business Travel Insider: Bangkok Though recently experiencing bad flooding, Bangkok is one of Asia’s biggest business centres. Victoria Scott gives you the low-down on this friendly, chaotic, thriving city. Getting there: Qatar Airways flies direct to Bangkok Suvarnabhumi Airport three times daily. Return economy fares start at QR2980 in mid-November. Modern and spacious Suvarnabhumi is the busiest airport in Southeast Asia. The new Airport Rail Link offers a high-speed train service to central Bangkok, an ideal way to avoid the city’s chaotic roads. Tickets cost 90 THB one-way. Currency: Thai Baht. Exchange rate (as of Oct 2011) 1QR = 8.5THB Where to stay: Siam Kempinski (www.kempinski.com/en/ bangkok) The Siam Kempinski is right in the heart of Bangkok’s shopping and entertainment district, and has excellent transport links. The hotel has brand ambassadors - the Ladies in Red – who are on hand to ensure your stay is as relaxed as possible. It also has a fully equipped business centre. A standard room costs THB 8,850.00 (QR1041) a night in November, including breakfast. Westin Grande, Sukhumvit (www. starwoodhotels.com/westin) This hotel might be right in the centre of town, but it aims to be a haven of calm and relaxation. The chain’s famous Heavenly Bed is designed to ensure a good night’s sleep, and its Executive Suites provide butler service and Club benefits. If you fancy running off steam, the Running Concierge who will lead you on an organised jog around the neighbourhood. A standard room starts at 6,300 THB (QR742) in November, with breakfast. The Mandarin Oriental (www. mandarinoriental.com/bangkok) With an enviable position on the Chao Phraya river and steeped in history, the Mandarin Oriental is an enchanting place to stay. All rooms come with butler service. For a delicious dinner

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with a view, head over on a complementary shuttle boat to the hotel’s restaurant on the opposite bank of the river, Sala Rim Naam. A standard room starts at THB 11,999 (QR1412) a night in November, including breakfast. Where to play: Dinner – The Mayflower (www.dusit.com/ dusit-thani) Dine alongside politicians, the region’s top business people (and even members of the Thai royal family) at this excellent Cantonese restaurant. Located in the Dusit Thani hotel, the hotel has six luxurious private rooms for hire, but the public area is just as lovely. Vertigo and Moon Bar (www.banyantree. com) Its name says it all – this isn’t a place for those with a fear of heights. Perched atop the Banyan Tree hotel, this open-air restaurant and bar offers great food and elegant drinks with a bird’s eye view of central Bangkok thrown in. Vertigo opens 6pm -11pm, Moon Bar 5 pm -1am, weather permitting. Splash your cash: Bangkok is world renowned as a haven for shopaholics. The MBK and Siam Centers are the place to go for top fashion at low prices. If it’s something special you’re after,

the Paragon Department Store in the Siam Paragon www.siamparagon.co.th is the place to head for designer gear. Culture vulture: The Grand Palace (www.palaces.thai.net) A trip here should be at the top of every visitor’s list, so if you can spare the time, go. Although the royal family don’t live here anymore (they live up the road in Dusit) they still use the palace for ceremonial occasions. The Grand Palace is open to the public everyday from 08:30 to 15:30. Siam Niramit (www.siamniramit.com) Theatre on a grand scale, the Siam Niramit showcases Thailand’s history and culture through music and special effects. A free shuttle service runs from Thailand Cultural Centre MRT Station to the purpose built theatre with its record breaking stage. Insider top tip: If you’re in the city at the weekend, the Chatuchak Weekend Market in Phahonyothin is a must. Its 8000 stalls make it the largest market in Southeast Asia. Selling just about everything including the kitchen sink, it’s paradise for browsers and bargain-hunters alike.

LIFESTYLE

A Guide To: The Ultimate…Al Fresco Doha

The weather’s a little cooler and yet the sun’s as golden as ever – now’s the time to get out and explore.

jostles with a host of 4x4s as it drives madly around the track following the action. Not for those of a nervous disposition, but great fun.

WATCH THE SUN SET AT DUKHAN This town on Qatar’s west coast is one of our favourite beach destinations. 60km west of Doha but connected by a super-smooth, almost empty highway; it’s an easy drive from the capital. Home to Qatar Petroleum, its beaches are generally clean and well looked after, and visitors can make use of its small mall with a supermarket, food outlets and toilets. Best of all, Dukhan is on the West coast, so it’s ideal for a sunset picnic.

TAKE AN EXHILARATING RIDE ACROSS THE DUNES Who wouldn’t love to drive over the ever-shifting sands of Qatar’s dunes, followed by a dip in the lovely warm sea? It’s a good idea to go with an experienced desert driver to show you the thrills and spills of dune bashing without risk to your own car. Inbound Tours www. inboundtoursqatar.com and Qatar International Tours www.qittour. com are two operators who can organise this for you.

GET BLOWN AWAY AT WAKRA FISHING HARBOUR Although only a short drive south of the airport, Wakra somehow manages to maintain a separate identity, and that’s why we like it. The sea breeze at the harbour means it’s always a few degrees cooler than inland. Here you can see fishing dhows up close, and if you’re lucky you might see fishermen landing a catch. You might also want to bring your rod and line along for some weekend fishing.

A PICNIC ON TOP OF THE HILL IN ASPIRE PARK It’s Doha’s only hill, as far as we know – and we love it. It’s a perfect spot to watch the sun go down with a little picnic – we often cheat and get a takeaway from Hyatt Plaza, directly behind the park.

WATCH THE CAMELS RACE AT SHAHANIYA You don’t have to limit your visits to Shahaniya, Qatar’s camel race track, to race days – turn up on any day and you’ll see camels and their robot jockeys being put through their paces by friendly stable boys. If you do want to catch a race, however (Fridays after lunch are generally a good bet) you can hitch a ride on the special bus for spectators, which

TheEDGE Getaway - Barberyn Reef Ayurveda Resort

If the rat race is getting you down, and yoga classes and the odd lie-in just aren’t cutting it, it might be time to try something a little more radical. Look no further than the Barberyn Reef Ayurveda Resort in Sri Lanka. Set right on the beach, it’s a traditional exotic getaway with a medicinal twist. The resort practices Ayurveda (which means “the complete knowledge of long life” in Sanskrit) an ancient holistic approach to health that encompasses herbal medicine, massage and diet. The resort has 75 rooms, mostly without air-conditioning (recommended in Ayurveda) but you’ll have the fresh sea-breeze to cool you down instead. The resort is set up for solo-travellers, so if you’re on holiday alone, you won’t feel left out - but equally, couples are welcome. Yoga and meditation are practised daily, and the resort’s doctors will prescribe you a personalised treatment programme including a special diet, herbal mixtures and a wide variety of other treatments, including acupuncture. One recent visitor enthuses’ about afternoon tea and biscuits on the beach, accompanied by some locals – tortoises and lizards – and says the yoga was so good “it was worth the price of the holiday alone”. We’re packing our bags. http://www.barberynresorts.com/english

A double air-conditioned room costs EUR100 (QR494) a night in November, full board, including yoga and transport to and from the airport. The Ayurvedic treatment plan is an additional EUR65 (QR321) per day per person.

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LIFESTYLE

GEttING It IN tHE NECk For some, the necktie is a symbol of conformity, but in an ever-more casual world, we at TheEDGE believe that today, the rebellious embrace the necktie. Here’s how you can too.

tie rack. They help accumulated wrinkles disappear, are the best space solution, and gives you a better look at your choices at a glance. ThE RIGhT WIDTh Ties seem to be getting skinnier and skinnier, and this is the way to go if you’re wearing a slim suit. The rule of thumb is that the width of the tie at its widest point should be equal to the width of the jacket lapel at its widest point. We like the tie that measures 7.6 centimetres (the classic three inch) at its widest point, a modern and sophisticated choice.

GO BRIGhT Liven up your corporate look by picking a tie that packs a punch in a bright colour. The confidence to step away from the crowd will certainly differentiate you (in a good way) from your colleagues. Think of your tie as the one piece of your suit that can have colour and wit. If a bright tie isn’t your thing, go for a statement shirt instead.

Reverse It: Try tying the skinny length longer than the wider length. Warning: This is for the trendier business look. Tuck It: It’s a little Sinatra, so who are we to criticise? Tuck your tie between your third and fourth shirt buttons.

PICK PATTERnS Preppy stripes are always popular, but we also like the new dotted ties – pin-dotted, that is, where the circumference of each dot is around half a centimetre. If you go with pindots, stick with classic navy, red, grey and black, and pair with subdued shirts and suits.

rEad it: What Color Is Your Parachute? 2012

ACCESSORISE SMARTLy Some guys can pull off rings, necklaces and bracelets (and their surname is usually Soprano), but most can’t. But anyone can wear a tie bar, a nod to 1960s American style and a surefire way to dress up your shirt and tie. Look for a classic, impossible-to-messup silver version, but also consider gold or something a little more embellished. DRESS IT DOWn Many stylish men are keeping the tie on, even when they’re wearing a pair of jeans or a denim jacket. It’s not too polished or buttonedup and gives your look an edge. Skinny ties are also very popular right now with good reason – not too mainstream and not too traditional, they give off a cool, urban energy. hOW TO KnOT IT Twist It: Milanese businessmen twist the skinny length of the tie at the knot so it runs consistency beside (instead of behind) the wider length.

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STORAGE SOLuTIOnS The best way to store your ties is with a

The numbers behind this popular employment self-help book are staggering: WCIYP is the best-selling book of its kind in the world. Twenty thousand people purchase it monthly, there are more than eight million copies in print and it has been on the New York Times paperback best-seller list a total of 288 weeks. The first edition of the book was self-published in 1970 it has been republished almost annually to become the reference for job-hunting throughout the world. Built on the undeniable foundation that most people will be looking for a new job at least a half dozen times in their lives, this book is more relevant than ever in these tough times. Everyone from high school or university graduates to top executives should read it at least once. At Virgin Megastore for QR81

tiMEX

INtELLIGENt QuArtZ The Intelligent Quartz technology platform launches a robust, sophisticated series of timepieces. Designed for seasoned travelers as it displays the time in 24 major cities around the world and includes a season setting indicator. In addition to its nightlight, date feature, water resistant 50-100 metres and genuine leather straps with croco pattern. Its new technology allows an array of information. At Marzooq Al Shamlan & Sons for QR600 up

10 TEN THINGS

Apple vs Samsung When Apple decided that Samsung’s Galaxy line looked an awful lot like their iDevices, they immediately filed a trademark infringement suit. Samsung returned the favour and counter-sued – in the United States (US), Seoul, Tokyo and Mannheim in Germany – claiming infringements of 10 of its patents. Interestingly, Samsung manufactures Apple’s A4 and A5 chips, LCD displays, flash memory and other components. Let’s see how this one plays out in court… Powerade vs Gatorade Its sports drink against sports drink, as Pepsi’s Gatorade cheekily pitched itself as the product that contains ingredients that “other sports drinks don’t”. This swipe at Coke’s Powerade ended up in court, where Judge John Koeltl got Powerade to change their labels and found evidence of misconduct on Coke’s behalf. Naturally each brand claimed the verdict as a victory.

brand

battles Here are some of the more noteworthy battles in the big, bad world of competitor branding.

with MSG”. Campbell’s fired back in an advertisement showing a can of Progresso with the headline, “Made With MSG”, and a can of Campbell’s with the headline, “Made With TLC”. Things turned ugly quickly, but then both brands changed tack and decided to focus on their customers rather than each other. The FDA (and parents) vs fast foodS Cereals have recently come under the microscope of the Food and Drug Administration as Cheerios, Frosted MiniWheats and Smart Choices all received warning letters about their “healthy for you” claims. Christian Louboutin vs Yves St Laurent Christian Louboutin’s iconic red-soled shoes are famous the world over, but YSL also happens to make the occasional red-soled shoe. When Louboutin slapped an injunction on the fashion powerhouse, YSL countered that they have been selling red-soled shoes since the 1970s. Louboutin sued for millions, and YSL counter-sued. In this case, Louboutin lost.

Domino’s vs Subway In these troubled economic times, it is no surprise that advertising has become more aggressive, as brands battle for a smaller slice of the pie…or baked sandwich in this case. Domino’s advertised that consumers preferred their oven-baked sandwiches over Subway’s, the results of taste test conducted by (cough) Domino’s. Subway sent Domino’s a cease and desist letter, citing objections to the test’s methodology. Domino’s president responded by setting fire to the letter on national television. When Domino’s legally backed up their claims, they continued to air their commercial.

Donald Trump vs Timothy O’Brien In 2005, The New York Times editor Timothy O’Brien published a book titled Trumpnation: The Art of Being The Donald. The selfdeclared billionaire was outraged to learn that O’Brien estimated his net wealth at no more than US$250 million (QR910 million). Considering this statement to be slander, Trump slapped O’Brien with a libel lawsuit seeking US$5 billion (QR18.2 billion) in damages. Trump’s lawsuit was dismissed by the court in 2009.

Progresso vs Campbell’s They called it ‘The Soup War’, with Progresso taking aim first with an advertisement claiming, “Campbell’s has 95 soups made

Apple Inc vs Apple Corps Apple Inc has a long, ugly history with Apple Corps, the company that owns Apple Records, The Beatles’ record label. Unsettled

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by their shared name, Apple Corps took Apple Computer (later to renamed Apple Inc.) to court in 1978 for trademark infringement. The two companies settled the case, but Apple Corps simply would not Let It Be, taking Apple Inc. to court again in 1986, 1991 and 2003. Coca-Cola Company vs. PepsiCo Coca-Cola Company’s subsidiary, Energy Brands, produces ‘enhanced water’ products, including Vitaminwater. Naturally, it did not take long for PepsiCo to create a competitive product. In 2006, the Coca-Cola Company took PepsiCo to court over the packaging of their version of enhanced water, SoBe. The companies reached a settlement, with PepsiCo agreeing to repackage SoBe. Netflix vs Blockbuster Online video distribution company Netflix became an instant success after its launch, causing a steep drop in profits for videorental company Blockbuster. In order to compete, Blockbuster released its own online distribution system, prompting Netflix to file a patent infringement lawsuit. The dispute lasted a year, after which both companies refused to discuss their settlement and Blockbuster closed hundreds of stores in order to focus on its online business.