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Issue 77 APRIL 2012 WWW.SMEADVISOR.COM

presents

EDITORIAL Publisher Dominic De Sousa

We’re just getting warmed up

Group COO Nadeem Hood Managing Director Richard Judd richard@cpidubai.com +971 4 440 9126

It’s been months of planning. Meetings to discuss key locations to target and sectors pinpointed that are influencing the market in 2012 – but we are almost there.

EDITORIAL Editor Mike Byrne mikeb@cpidubai.com +971 4 440 9105

Within the next four to six weeks we will be kick-starting the SME Advisor Success Series 2012. There will be four key dates to add to your calendar, spread out between now and December, with the all-important SME Advisor Stars of Business Awards and Summit 2012 as the additional fifth and pinnacle SME event of the year.

Sub Editor Joumana Saad joumana@cpidubai.com +971 4 440 9115 Contributing Editor Aparna Shivpuri Arya aparna@cpidubai.com +971 4 440 9133 ADVERTISING Commercial Director Chris Stevenson chris@cpidubai.com +971 4 440 9138 Sales Director Francis Morgan francis@cpidubai.com +971 4 440 9163 PRODUCTION AND DESIGN Operations Director James Rawlins jamesr@cpidubai.com +971 4 440 9108 Production Manager James P Tharian james@cpidubai.com +971 4 440 9146 Database and Circulation Manager Rajeesh M rajeesh@cpidubai.com +971 4 440 9147 Art Director Kamil Roxas kamil@cpidubai.com +971 4 440 9112 Designer Froilan A. Cosgafa IV froilan@cpidubai.com +971 4 440 9107 Photographer Cris Mejorada cris@cpidubai.com +971 4 440 9108 DIGITAL SERVICES www.smeadvisor.com Digital Services Manager Tristan Troy Maagma Web Developers Jerus King Bation Erik Briones Jefferson de Joya online@cpidubai.com +971 4 440 9100 Published by

We promise to bring even more this year than last – more guest speakers, more subject matter experts, more topics of discussion across a wider spectrum of sectors and more access to some of the key business minds in the region.

We will be bringing these road shows to as many of the emirates as possible so that we can inform and educate as many SMEs as possible in the UAE. Last year the SME Advisor Stars of Business Awards pulled in over 3,800 nominations – we will of course be aiming to better that and full details of all the categories for 2012 and how to nominate your business will be available soon at www.smeadvisor.com/events.

We have already held two golf days this year – one at the Els Club in Dubai in March and the second at Saadiyat Beach Club on Saadiyat Island in Abu Dhabi. The final will take part in October (once it cools back down). Stay tuned for more details on this next month.

Our sister publication, Private Sector Qatar, will holding similar style events in Doha throughout 2012 in an effort to reach out to the booming SME community. All details of past and future events and initiatives in Qatar can be found at www.privatesectorqatar.com/QSS. CPI will also be bringing you the SME Club Middle East. This will be an exclusive membership, dedicated specifically to supporting SMEs within the Middle East region. This unique online platform is not only designed to add value and save money on a variety of products and services but can also help extend client networks and generate new business opportunities through social events and forums. Look out for the full interview with the Director of SME Club, James Khoury, in the May issue of SME Advisor, where all will be revealed.

The cover page story this month is an interview with Oussama El Omari, CEO, Ras Al Khaimah (RAK) Free Trade Zone. He takes us through the various initiatives introduced for the emirate’s free trade zone and how SMEs are seeing the benefits of heading a little further north. For all the details see pages 36 – 39.

Also contained within the Opportunities section of the magazine, is information on the International Finance Corporation (IFC) and its initiatives in the region. We spoke to Mouayed Makhlouf, Regional Director, MENA, about how the IFC’s SME Toolkit is contributing to growth of the sector. The in-depth discussion is covered on pages 40 – 42.

We also targeted three SMEs that made it into the top ten of the Dubai SME 100 rankings – for the updates on how they were each evaluated and what gave them the edge, see pages 52 – 56.

Until next month…

Mike Byrne, Editor 1013 Centre Road, New Castle County, Wilmington, Delaware, USA

Branch Office PO Box 13700 Dubai, UAE Tel: +971 4 440 9100 Fax: +971 4 447 2409 Printed by Printwell Printing Press LLC © Copyright 2012 CPI All rights reserved While the publishers have made every effort to ensure the accuracy of all information in this magazine, they will not be held responsible for any errors therein.

Talk to us: E-mail: mikeb@cpidubai.com Twitter: @SMEadvisorME Facebook: www.facebook.com/SMEAdvisor LinkedIn group: www.tinyurl.com/smeadvisorme

CONTENTS Issue 77 April 2012

Human Resources 30 HUMAN CAPITAL

36

Companies need to keep the human element in their human resources strategies, says Hisham Fadda, Group Human Capital Director, Metito.

Business guru 32 SETTING UP SHOP John Martin St. Valery, Founder and CEO, Links Group, talks to Aparna Shivpuri Arya about giving foreign companies a helping hand to set up base in the UAE and Qatar.

Opportunities 36 LOW-COST OPTIONS

We take a look at why SMEs can’t afford to overlook RAK Free Trade Zone

Shoptalk 06 TRENDS AND UPDATES A quick look at news and events that will impact SMEs in this region.

14 SHELF LIFE New toys for you and your business. Like you need an excuse!

Trade 18 EXPORTING GREEN Dr. Ashraf Mahate, Head of Export Market Intelligence, Dubai Exports, and Vice Chair of the Economics Policy Committee, Dubai Economic Department, outlines how SMEs can tap into the green product and service sector.

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SME ADVISOR MIDDLE EAST APRIL 2012

22 INSURANCE Export credit insurance can help eliminate credit risk from the buyer side. Schuyler D’Souza, CCO, Export Credit Insurance Company, tells Meghna Pant how exactly this type of insurance works.

Finance 26 LIFE ASSURANCE Richard Taylor and Rupert Connor, Chartered Financial Advisors, Acuma Wealth Management, explain exactly what life assurance is and why you should consider investing in it.

Management 28 DIFFERENTIATION The first step in determining and developing a company’s competitive advantage is to turn to its customers for feedback, says Emma Murphy, Managing Director, Savoir Faire Consulting.

Ras Al Khaimah Free Trade Zone (RAK FTZ) offers businesses a quick and cost-effective entry into the UAE and Middle East.

Oussama El Omari, CEO, RAK FTZ, talks to Meghna Pant about how this free trade zone has aided SMEs to weather the global slowdown.

40 IFC INITIATIVES

We spoke to Mouayed Makhlouf, Regional Director, MENA, International Finance Corporation (IFC), about the role of IFC and how SMEs can benefit from their SME Toolkit.

Entrepreneurship 44 BUILDING A BRAND Nicole Rodrigues, Managing Director, Diva Modelling And Events, talks to Joumana Saad about starting a modelling agency and growing it to become a force in Dubai’s fashion industry.

Marketing 46 ADVERTISING In marketing, it’s not just about getting the message right, but making sure that message stays within legal boundaries, says Mark Hill and Fiona Robertson, media lawyers, therightslawyers.

48 MEDIA RELATIONS Sawsan Ghanem, Managing Director, Active Public Relations, gives her top tips to public relations professionals seeking to build better relations with the media.

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66

62

Legal 50 CURRENCY RISK As the Eurozone crisis continues to deepen, businesses should consider taking action to protect their position from the potential effects, says Melissa Forbes, Associate, Taylor Wessing.

60 TECHNOLOGY Gartner says enterprise IT spending across all industry markets in the Middle East and Africa is forecast to reach EUR 70 billion in 2012, a 6.3% increase from 2011.

Business pin ups

SME about town

52 DUBAI SME 100

62 INFRASTRUCTURE

Mike Byrne talks to three companies that made it into the top ten of the Dubai SME 100 rankings to discover what sets them apart from the pack.

Industry watch 58 CONSUMER CONFIDENCE A recent survey released by Bayt.com and YouGov shows overall sentiment in the region is less than positive for the present time. However, optimism for the year to come remains comparatively high.

66 ACCOUNTING 101 Dubai SME hosted a workshop on accounting basics and software to introduce SME owners to the latest standards and patterns. We bring you the coverage.

Technology for business 68 MOBILE MALWARE

Dubai International Financial Centre (DIFC) hosted a workshop on Dubai’s infrastructure and logistics sectors, as part of the annual DIFC Economics Workshops series.

As our handsets become more than just a way to make and receive phone calls, their appeal to criminals also increases. Jaime Blasco, Head of Labs at AlienVault, outlines methods of preventing malware from spreading.

64 ICT INVESTMENTS

Sign off

Dubai Internet City (DIC) held a session for SMEs on the value of investing in ICT, as part of the DIC Excellent Series.

70 WHAT’S NEXT? SME Advisor’s new Sub Editor Joumana Saad takes the pulse on key business trends in the region and gives an update on upcoming events to add to your calendar.

APRIL 2012 SME ADVISOR MIDDLE EAST

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shoptalk

trends & updates

Sharjah Media Centre participates at ITB Berlin

His Excellency Sheikh Sultan bin Ahmad Al Qassimi speaking at the event

Sharjah Media Centre acts as a bridge that connects Sharjah to the rest of the world via numerous local, regional and international initiatives, according to His Excellency Sheikh Sultan bin Ahmad Al Qassimi, Chairman of Sharjah Media Corporation.

His Excellency Sheikh Sultan bin Ahmad Al Qassimi’s comments came during his speech at a press conference organised on 8th March by Sharjah Media Centre in Berlin on the side lines of Berlin’s annual travel trade show; ITB Berlin. Sharjah Media Centre marked its maiden participation in the trade show under the umbrella of Sharjah Commerce and Tourism Development Authority.

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The press conference hosted more than 75 media persons from leading German media agencies, including a number of TV stations and the German News Agency. Three visual presentations were made during the conference highlighting Sharjah’s tourism attractions, its investment projects in addition to Sharjah Media Centre’s role as the government’s communication arm.

His Excellency Sheikh Sultan bin Ahmad Al Qassimi pointed out Sharjah’s unique proposition as a tourist destination with a rich and culture and history and inspiring architectural development. The German media later expressed that they were impressed with Sharjah Media Centre’s presentation

SME ADVISOR MIDDLE EAST APRIL 2012

and the Emirate’s development in numerous fields, particularly tourism and media.

His Excellency Sheikh Sultan bin Ahmad Al Qassimi, said: “The centre’s vision is to facilitate meaningful dialogue, which is achieved by leveraging our intimate understanding of the Emirate’s media and government relations to share accurate information on a timely basis. Through this approach, we will enable a balanced portrayal of Sharjah to the world.”

Elaborating Sharjah Media Centre’s achievements, His Excellency said: “Although very recently established, Sharjah Media Centre has proved its relevance through a number of achievements, most importantly; the inaugural edition of the Government Communication Forum, which is set to become an annual event that examines global best practices in government communication.

“The first edition of the forum was held in February, attracting many media professionals including eminent media-persons, and generated a body of work on the media, public relations and government communications landscape that will soon be made available to the community through the forum’s website.”

His Excellency also added: “Sharjah Media Centre revolves around a single pivot, namely

Sharjah. Our beloved Emirate stands out with its authentic spirit. Its intact heritage has been inherited over thousands of years and stands witness to our history with its unique architecture dotting Sharjah’s coast. Sharjah’s culture is also showcased through its 22 museums that hold valuables that cannot be found anywhere else.”

His Excellency Sheikh Sultan bin Ahmad Al Qassimi later talked about the various events and activities held through the year in Sharjah that act as a major attraction for tourists worldwide, such as Formula One Power Boat World Championship, Sharjah Light Festival, Sharjah Heritage Days, Sharjah Theatre Days, and Sharjah Biennial.

His Excellency then explained that Al Majaz Waterfront and the Chedi Resort in Khorfakkan, were developed by the efforts of Shurooq, Sharjah’s developmental arm. His Excellency Sheikh Sultan bin Ahmad Al Qassimi said: “The present foretells a prosperous future, God-willing, with numerous promising projects that have been established or are being developed.”

ITB Berlin is one of the most important international travel trade shows that hosts over 11,000 participants including the biggest travel agencies in the world and attracts more than 180,000 visitors.

Sharjah Media Centre has marked its participation in international exhibitions and trade shows, including the world-renowned World Travel Market in London and the Arabian Travel Market held last year in Dubai.

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shoptalk

trends & updates

UAE and Canada agree on new economic cooperation based on common interests His Excellency Sultan Al Mansoori, UAE Minister of Economy, who headed a high-level delegation to Canada, discussed with His Excellency Gerald Keddy, the Parliamentary Secretary to the Minister of International Trade of Canada, ways of strengthening and developing frameworks for economic cooperation between the two countries in various fields including science, investment, industrial and technological development.

HE Al Mansoori highlighted UAE’s interest to explore investment opportunities in Canada and the Province of Quebec. The Minister reiterated the need to continue to communicate and overcome the challenges in fostering co-operation and work towards strengthening the economic relations between the two countries, specifically in the areas of renewable energy, innovation, SMEs, and setting up joint projects.

HE Al Mansoori said that the UAE’s is largest export market for Canada in the Middle East and North Africa, with trade exchange between the two countries reaching USD two billion and volume of UAE investments to Canada reaching USD ten billion.

At the meeting, HE Al Mansoori stressed the importance of the visit

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to discuss the possibility of opening new channels between the two countries and build bridges of cooperation in various sectors and to highlight the UAE’s investment climate.

He also highlighted that the meeting will enable the delegation to further explore the investment opportunities in Canada.

He said that there are several areas for cooperation between the two countries, especially in industrial enterprises, trade and investment, and stressed the existence of solid foundations to build strong partnership relations between the UAE and Canada for the benefit of all stakeholders.

Gerald Keddy stressed the need for direct dialogue between the companies in the two countries to stimulate economic initiatives, set up joint projects to promote business and economic cooperation, and thus develop mutual trade between the two countries.

During the meeting, the heads of Canadian companies, who represent around 100 key enterprises – most of them having already visited the UAE – expressed their willingness to explore investment opportunities in various economic sectors in the UAE, and praised the economic growth and the superior infrastructure of the UAE. HE Al Mansoori requested information on key sectors

SME ADVISOR MIDDLE EAST APRIL 2012

offering investment potential, highlighting the importance of involving not only large businesses but also SMEs. The Canadian Minister welcomed the proposal and expressed his country’s desire to strengthen economic ties with the UAE through cooperation in all fields, particularly in the areas of energy, including renewable energy, mining and industries and SMEs. HE Al Mansoori also met HE Rick Whittaker, Vice President of the Sustainable Development Technologies Canada (SDTC), who briefed the UAE delegation on SDTC, its goals and the role it plays in terms of innovation and clean technology, the support for inventors and innovators in the SME community and the existing cooperation in the field of scientific research and development.

HE Al Mansoori called for a meeting between the Ministry of Economy and the Canadian side to discuss areas of cooperation and the Canadian side expressed their readiness to fully cooperate with the UAE in this regard.

HE Al Mansoori also met Derek Lin, Deputy Head of the Canadian Export Development Corporation and discussed ways to enhance trade cooperation and explore cooperation opportunities in the private sector in both countries.

The UAE delegation includes high calibre national companies and SMEs and will meet representatives of various economic sectors from Quebec, Toronto and Montreal to discuss the possibility of establishing joint projects and to identify investment opportunities in various vital sectors in Canada.

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shoptalk

trends & updates

Dubai Exports promotes greater focus on SME export financing strategies The Dubai Exports Academy, part of Dubai Exports, the export promotion agency of the Department of Economic Development – Government of Dubai, organised a seminar on financial strategy for SME exporters as a part of its programme of initiatives to enable SMEs in the UAE to begin and become proficient in exporting. An important aspect of exporting is efficient cash flow and management and export, which were the topics covered in this seminar.

The seminar was part of the knowledge-sharing initiatives of Dubai Exports Academy and Dubai Exports’ mission to enhance the export capabilities of local companies of all sizes. Speakers at the

seminar included the region’s leading insurers, export credit agencies and corporate advisories.

SME exporters attending the seminar were able to learn about the best approach to source finance, manage cash flows and secure credit through competitive insurance options ranging from plain bank financing to specialised export credit insurance and factoring.

“The Dubai Export Academy is an important initiative by Dubai Exports that seeks to enhance the knowledge and ability of firms in the country so as to make them competitive in global markets. The SME sector in the UAE has tremendous potential and capabilities, which can be successfully

deployed in foreign markets with the right kind of knowledge and support,” said Engineer Saed Al Awadi, Chief Executive Officer of Dubai Exports.

The importance of credit insurance as a vital lifeline for SME exporters competing with larger size companies for market share was also underscored by speakers at the seminar.

“Credit insurance is a powerful tool for SME exporters to significantly expand markets. Gaining a sound understanding of the workings of credit insurance will result in creating competitive advantage and also help to mitigate the risk of bad debts. It can also be used by SME exporters to lower the cost borrowing,”

Bahrain’s financial sector continues to grow The number of financial institutions registered in Bahrain continued to rise last year, reaching 415 by the end of January 2012, up from 403 a year earlier.

The Kingdom saw a number of successes in the last few months of 2011 as financial institutions such as Notz Stucki and Altaira Middle East set up in the Kingdom, increasing the number of institutions registered in the country to 415 as of 31st January.

Among the financial firms that have registered in Bahrain during the course of 2011 are Canara Bank, AMP Capital

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Investors and Deloitte Corporate Finance.

Bahrain, which hosted the first Euromoney GCC Private Banking Conference, has been a financial centre for over 40 years. The financial services industry in Bahrain employed more than 14,000 people at the end of 2010, of which two thirds were Bahrainis. Alongside the increase in the number of financial institutions, the financial sector in Bahrain continued to grow in the first half of 2011, expanding by 1.7% in the twelve months to June 2011, according to the Bahrain Economic Quarterly.

Shaikh Mohammed bin Essa Al-Khalifa, Chief Executive of the

SME ADVISOR MIDDLE EAST APRIL 2012

Bahrain Economic Development Board (EDB), said: “We at EDB are very pleased by the strong performance of the financial sector over the last year.

“That these businesses are choosing Bahrain as their base for accessing the Gulf economies and the wider Middle East is testament to the strength of the local Bahraini workforce, the quality of the Central Bank of Bahrain’s regulation and the access we provide to the strong-growing Gulf market which is now worth over a trillion dollars.”

The EDB holds responsibility for Bahrain’s Vision 2030 and National Economic Strategy, which

said Thomas Alexander, Director–Non Marine & Hull of Nasco ME Insurance Brokers.

Highlighting the strength and diversity of the SME sector in Dubai and its contribution to trade and the annual value-add in the Emirate, Bassam Azab, Head of Business DevelopmentGCC, Menafactors Limited, told the seminar that the working capital needs of this vital sector should a be a top priority.

The Dubai Export Academy was launched with the aim to enhance the exporting skills of UAE firms to ensure that they become successful in expanding into foreign markets. As the only Centre of Excellence dedicated purely to export related knowledge, it seeks to provide a unique combination of practical on the ground information of foreign markets with generic export related management knowledge.

are designed to drive the private sector as an engine of growth, support further diversification of the economy and ultimately elevate national living standards by creating greater opportunities for all Bahrainis.

An important aspect of EDB’s mandate is creating the best conditions for attracting foreign direct investment. Bahrain’s commitment to liberal economic policies designed to increase growth was reflected earlier this year as it was ranked among the world’s top 20 most economically free nations and the most free in the MENA region by the annual Index of Economic Freedom, published by The Heritage Foundation and Wall Street Journal.

shoptalk

trends & updates

Qatar’s ambitions in sustainable development at MIPIM 2012

Panellists at the Qatar Urban Forum

For the first time in the event’s history, Marché International des Professionnels d’Immobilier (MIPIM) staged a national pavilion for Qatar as well as a groundbreaking thought leadership event, the twoday Qatar Urban Forum. Only London, Paris and Germany have hosted similar pavilions at MIPIM. The venue was a showcase for Qatar’s pioneering investment in urban planning, which combines traditional methods and modern technology aimed at safeguarding both the environment and cultural identity.

The USD 5.5 billion Msheireb Downtown Doha, Msheireb Properties’ signature project involving the sustainable regeneration of the old commercial centre of the Qatari capital, received special attention from the pavilion’s 5000 visitors during the four days of MIPIM. Engineer Issa Al Mohannadi, CEO of Msheireb Properties, said: “Msheireb Properties returned to MIPIM in a major way but our involvement this year was distinguished as much by the quality of our ideas

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as it was by the scale of our developments. We are proud to have partnered with leading developers in the country to promote Qatar’s progressive vision and focus on sustainable urban planning.”

Visitors to MIPIM in 2012 were impressed by the imagination and synergies of Qatar’s development companies, as well as the depth of the insights shared by the global industry speakers participating in the first-ever Qatar Urban Forum. Realising sustainable urban development is one of the key challenges facing present and future generations, and Msheireb Properties is showing through initiatives like the pavilion and forum that it has a leading role to play in addressing this challenge.”

Titled Sustainable Architecture and Urban Development, the Qatar Urban Forum examined two issues at the heart of progressive urban planning – realising sustainability and the green agenda, and retaining cultural, heritage and national identity in the context of

SME ADVISOR MIDDLE EAST APRIL 2012

rapid globalisation and modernisation.

The stimulating thought leadership event was the setting for two keynote presentations and four panel debates with more than a dozen internationally renowned architects, designers and urban innovators.

Lord Richard Rogers, the 2007 Pritzker Architecture Prize Laureate, best known for pioneering buildings such as the Centre Pompidou, Paris, and the headquarters of Lloyd’s of London, opened the forum on the first day of MIPIM with a presentation titled Sustainability, Energy and Green Development, which explored the themes of many of his award-winning designs.

The recipient of the RIBA Gold Medal in 2005, Lord Rogers noted that Qatar had become a genuine world leader in sustainable building.

“The most important thing of my lifetime has been the recognition of the importance of the environment,” he said stressing that the human element needed to be brought back into architecture. Adopting sustainable approaches in urban design was one way to achieve that, he said.

Following the keynote, leading architects and urban designers Massimiliano Fuksas, Emilio Embasz, Emmanuel Blamont and Patrick Bellew considered the definitions of sustainability and a roadmap for implementing a sustainable vision for urban planning.

Fuksas, an Italian architect and visiting professor at the École Spéciale d’Architecture in Paris, and Columbia University in New York, called for a complete overhaul of attitudes towards the urban environment.

“To have a better life we have to change the system. Sixty per cent of people live in cities – we need a new concept of the city in order to live with less waste of land, energy and water.

The world today doesn’t need architects, it needs humanism.”

Technological innovation was seen as key to managing the environmental impacts of our expanding cityscapes in the second panel debate on day one, which welcomed the insights of Ken Yeang, inventor of the “bio-climate” skyscraper, Bill Dunster, environmental strategist and founder of ZEDfactory, and Yousef Al Horr, founder and chairman of Gulf Organisation for Research and Development, one of Qatar’s leading national institutes.

Will Aslop, Beatrice Gallilee, Mike Jenks and Emmanuel Blamont shared a spectrum of views on the relationship between urban planning and cultural identity, in a debate titled Bringing Identity Back: The Impact of Globalisation and Regionalism on the Art of Place Making in Cities.

British architect Will Alsop said modern cities were suffering from an “identity crisis” and called for planners to use history and culture as a source of inspiration to move forward.

The final and fourth session of the inaugural Qatar Urban Forum examined people’s emotional attachments to cities on the theme A City I Love: Ownership, Character and the Evolution of Cities.

SHELF LIFE

Green concepts Smart solutions Computer notebook vendor ASUS has announced a number of new offerings in its product lineup. The PadFone is a three-in-one combination of a SmartPhone, a tablet and a notebook when accessorised with the PadFone Station and PadFone Station Dock. The SmartPhone is optimised for Google’s Android 4.0 operating system and features a Super AMOLED qHD display, the latest Qualcomm Snapdragon S4 dual-core processor and an ultra-sharp eight-megapixel digital camera.

ASUS is also coming out with a a new Transformer Pad line up offering three distinct models to fit the unique needs of mobile media consumers.

New products include the Transformer Pad Infinity series and ASUS Transformer Pad 300 series.

The Transformer Pad Infinity Series is aimed to become the go-to tablet for HD mobile entertainment as it features a 1920x1200 Full HD Super IPS+ display and ASUS SonicMaster technology. The Transformer Pad 300 Series is designed for mobile web surfing and gaming platform with its NVIDIA Tegra three quad-core processor and high quality 10.1” 1280x800 IPS display.

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SME ADVISOR MIDDLE EAST APRIL 2012

Nissan has unveiled the Hi-Cross Concept at the 2012 Geneva Motor Show. The concept car is a roomy, seven-seat electric/petrol hybrid crossover that shows one proposal Nissan is exploring for its next generation of crossover models. It’s powered by a new hybrid drivetrain that links a 2.0-litre direct injection petrol engine with an electric motor to provide the power expected from a 2.5-litre engine but with the economy and emissions expected from a much smaller unit. The HiCross Concept showcases some new

style elements including a characteristic V-shaped grille flanked by distinctive lighting signatures provided by stylish new headlamps.

Nissan also previewed the e-NV200 Concept, its next 100% electric car following the multi-award winning Nissan LEAF. The concept is based on the original NV200 that, in Combi and Evalia versions, provides affordable family transport with seating for up to seven. NV200 was recently chosen as the base for the next generation New York “yellow”cab and will soon be a regular sight on the streets of The Big Apple.

Tablet trends Tablet users with a preference for keyboards should check out new BlackBerry Mini Keyboard, a new accessory for the BlackBerry PlayBook tablet. The keyboard is very portable and comes with a stylish convertible case that doubles as a stand for the tablet. It also offers an integrated touchpad that allows users to navigate and control the BlackBerry PlayBook as easily as using the touch screen on the tablet itself. When the keyboard is active, the PlayBook tablet’s virtual keyboard remains hidden, to allow full screen space for the user.

SHELF LIFE

Picture perfect Acer introduced its new HD tablet, the ICONIA TAB A700, which offers a Full HD experience in a highly mobile package.

Its key feature is its premium 10.1-inch Full HD display that delivers a very high resolution of 1920 x 1200 pixels, presenting bright, high-quality images and wide viewing angles. With this tablet, videos and games come to life and are further enhanced by Dolby Mobile 3+ with 5.1-channel home theater surround sound.

The new tablet is designed for the ultimate multitasker. It can handle many applications at fast speeds and plays HD videos more smoothly. It also boasts faster web browsing and

console-like gaming and a battery life that extends for all-day usability.

The ICONIA TAB A700 is equipped with the latest Google Android operating system, Ice Cream Sandwich, which combines with the interactive Acer Ring interface to make controlling the tablet a fun and user-friendly experience.

Acer’s tablet is scheduled for release in May 2012 and aims to become the a solution for getting the Full HD experience on the go.

Staying connected Sony has announced the Middle East launch of its new SmartPhone, the Xperia S. The new gadget offers connectivity between all devices whether SmartPhone, TV, laptop or tablet and PlayStation, and is ideal for consumers looking to share and enjoy content.

The user interface has been restyled to match the minimalistic design of the hardware. The home screen features a new colourful flow background making full usage of HD Bravia Reality

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SME ADVISOR MIDDLE EAST APRIL 2012

Display and dual-core processing power. It also comes with a 12MP camera with Exmor sensor that takes pictures in just 1.5 seconds from standby mode.

Sharp tools Some of Sharp’s printing products were recently recognised by Buyers Laboratory LLC (BLI), the independent provider of analytical information and services to the digital imaging and document management sector. Sharp’s MX2310 was awarded for the quality of its colour printing and received high marks for its connectivity and multitasking capabilities.

BLI described the Sharp RemoteFleet: Facilities Manager 2.18 solution as a top-managed print servcies tool. The software tracks metres regardless of function, including print, copy, scan and fax output, with breakdowns by page size, simplex and duplex, colour and monochrome.

Trade

Green Growth

Exporting Green

SMEs have been paying more attention to green products and services in an effort to build a more responsible image and reach new customers. Dr. Ashraf Mahate Head of Export Market Intelligence, Dubai Exports, and Vice Chair of the Economics Policy Committee, Dubai Economic Department, explains how SMEs can tap into this growing sector.

T

he traditional problem that faces all SMEs looking to export is to find growing global markets that are relatively easy to penetrate with low investment. As much as any business consultant would like to say that they have the answer to this problem, the reality is no such

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SME ADVISOR MIDDLE EAST APRIL 2012

market exists. However, SMEs need not despair because there are some sectors or markets which are very close to meeting the ideal solution.

One such area that is becoming extremely lucrative and one that SMEs can tap into, for both profitable as well as ethical reasons, is the green product and

service sector. Although, various estimates have been produced by different organisations the general view is that it is increasing each year and is projected to reach USD 3.5 trillion by 2017.

The attention towards green products and services has been greatly assisted by an increasing awareness about

Trade

Green Growth

the environment among consumers, governments and businesses. The latter have used the environmental concern to develop green marketing. This is essentially creating customer perceptions largely about the brand, but can also refer to the products or services based on the company’s practices and policies related to the wider environment issues.

Academic studies have shown that consumers value the green credentials of a company and are prepared to pay a premium price. This is also the case in a recessionary period and as such it has been a means of survival for many firms.

Due to both its ethical foundation and good business sense, many SMEs are becoming “green” even with their limited resources and rather tight budgets. The interesting trend in the last few years is the diversity of companies that are embracing green marketing.

Initially, green marketing was carried out by a few firms in food production or technology related areas such as solar power. Today, the market has changed considerably and even local grocery stores are adapting their business

Consumers are quick to spot companies that are seeking to use green initiatives as a means of improving their public image or generating additional sales without environmental concerns actually being the firm’s core objective. As such, SMEs cannot simply wear the green coat and need to be sincere to the environmental concern.

practices can go a long way towards enhancing productivity of employees.

The study showed that improving indoor air quality and installing energy efficient lighting can increase employee productivity by an average of 20%.

Furthermore, installing high-efficiency lighting can increase productivity by an average of 7%. Non-environmentally friendly work areas have also been argued to have an impact on an employee’s health, leading to sick days. Other studies have shown that the benefit through increased productivity and reduction in days lost due to sick leave is on average USD 45 per square foot, or an annual

SMEs cannot automatically assume once they have adopted the green credentials that consumers will then purchase their products. There is no guarantee for green products and they have to compete with conventional products.

towards green products and processes.

For instance, the range of products stocked tend to be organic and from nearby supplies so as to reduce the carbon footprint.

There are of course very good financial reasons for embracing the green revolution; it can help a business reduce its energy costs, reduce wastage and improve its brand recognition, as well as popularity. A study by Carnegie Mellon University shows that energy efficient upgrades and sustainable building

gain of USD 6,500 (in 2009 prices) per employee. The increase in productivity, together with savings in energy costs, represents a strong case for any SME to implement the green changes.

Embracing green solutions does not only reduce costs but, also make an SME more likely to increase or even start exporting. SMEs have benefited greatly from new green laws which have been enacted in a number of countries. These new laws clearly state the requirements a company must satisfy in order to sell their

products or services in the country. In most cases the new laws have been supported with actual financial support.

For instance the US government has allocated USD 20 billion in tax cuts for wind, geothermal and bio-energy. The UK government has set aside EUR 250 million to develop low-carbon vehicles.

The German government has promised a USD 67 billion subsidy to the car industry to develop green vehicles. Although, these policies are designed to primarily support domestic firms, in the process of doing so, they also benefit foreign companies. Foreign companies cannot not only export products and services that allow domestic companies to comply with the green regulations, but also seek long-term relationships.

SMEs from the region can look at green business as a means of examining alliances and joint ventures in overseas markets. Working together with foreign counterparts can deal with two of the major challenges that SMEs face; namely capabilities and local knowledge. In the case of the latter, SMEs seldom have sufficient information regarding the green aspects in overseas markets. Even if they have the knowledge they still face the problem of appropriately integrating local views regarding the environment into their marketing initiatives.

Secondly, international alliances allow for a coming together of capabilities and capacities. This is more so the case for SMEs who tend to have limited financial resources.

However, SMEs cannot automatically assume once they have adopted the green credentials that consumers will then purchase their products. There is

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Trade

Green Growth

no guarantee for green products and they have to compete with conventional products. In this sense, even though producers can charge a premium, they nevertheless need to provide value to the

footprint. Not all the processes or products can be immediately changed or modified and the SME may need to put into place a programme of small changes over a period of time. It’s important for an SME to realise

The changes can be greatly assisted through independent certification. There is considerable evidence to suggest that the final buying decision is impacted by the presence of an independent certification.

Dr. Ashraf Mahate

consumer. In fact, consumers are well aware of greenwashing and SMEs need to be very careful not to over exaggerate their green claims. Academic studies have shown that over claiming a green policy can have a negative impact on the demand of the SMEs products and services. Consumers are quick to spot companies that are seeking to use green initiatives as a means of improving their public image or generating additional sales without environmental concerns actually being the firm’s core objective.

that it cannot be completely green, but need to demonstrate their commitment.

Second, the company needs to select which of its products are appropriate for the green market. In some sense this decision is made by the products which already meet the green regulations set by many importing countries, or those that can be changed to meet these requirements. The changes can be greatly assisted through independent certification. There is considerable evidence to suggest that the final buying

In essence, the green marketing strategy is really about following three steps: to make a genuine effort to understand the environmental impact of a firm’s activities, take action that either avoids or reduces the negative impact and thirdly, to inform the customers through verification and appropriate labelling..

As such SMEs cannot simply wear the green coat and need to be sincere to the environmental concern.

So how can a SME become sincere to the green cause, while also enhance its business opportunities? In the first instance the SME needs to examine its processes and products to evaluate which of them can be changed, or at least modified so that there is less wastage and a lower carbon

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decision is impacted by the presence of an independent certification.

In essence, the green marketing strategy is really about following three steps: to make a genuine effort to understand the environmental impact of a firm’s activities, take action that either avoids or reduces the negative impact and thirdly, to inform the customers through verification and appropriate labelling.

Once a company can achieve this, the opportunities are huge. With greater concern for the environment your company has a better chance of reducing costs, increasing employee productivity and becoming international.

About Dr. Ashraf Mahate is the Head of Export Market Intelligence at Dubai Exports (formerly known as the Dubai Export Development Corporation), which is an agency of the Dubai Economic Department. Dr. Mahate is also the Vice Chair of the Economic Policy Committee with the Dubai Economic Department. He has written a number of journal articles, chapters in books and edited books in the areas of economics, finance and banking. He has also presented papers at major international conferences. Dr. Mahate has provided extensive consultancy services to various organisations in the areas of banking, economics and finance. He has been a director of a number of companies including a venture capital company and a private equity fund.

Dr. Mahate received his doctorate from Cass City University Business School in London (UK) which was ranked by the Financial Times newspaper as the 12th best university in the world for finance. He read Economics at University College London, followed by a Masters in International Economics and Banking at the University of Wales in Cardiff. Dr. Mahate is a professional educator and received his training at the Institute of Education (University of London).

He is a member of the Chartered Institute of Managers (UK) and a Member of the Institute of Commercial Management (UK). He is also a member of the Association of Certified AntiMoney Laundering Specialists (ACAMS).

Trade

Credit Insurance

SHOW ME THE MONEY Exporting can greatly help expand a business, providing the exporter gets paid! Schuyler D’Souza, CCO, Export Credit Insurance Company, explains to Meghna Pant how export credit insurance helps eliminate the risk of not getting paid by a buyer.

T

he word credit means different things to different people, from the acknowledgement of academic excellence, an individual’s personal contribution and dedication, talk time remaining on a mobile phone or a credit card that lets shoppers spend money that they don’t actually have. In modern day trade, export trade credit connotes the agreement to get paid for goods or services supplied to overseas buyers at a predetermined date, after the goods or services are delivered to the buyer. It plays a crucial role, while insuring exports against the associated risk of non-payment is of critical importance.

But, the essence of credit includes the elements of trust, and confidence that the buyer will pay. These two elements are very central to the sale of goods and services on

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SME ADVISOR MIDDLE EAST APRIL 2012

credit terms, because that is what creates the business relationship that is vital to successful trade. Trust needs time to grow, so for businesses just starting up, exporters are unlikely to offer credit immediately, and may insist on full or partial cash in advance, or cash on delivery as matter of prudence.

While, an insistence on cash terms has many drawbacks, it can also mean that cash discounts can be negotiated, and once a few successful transactions have given the exporter confidence in the buyer’s financial strength, the possibility of sales on credit terms can become a reality, leading to a host of advantages and some drawbacks too.

The advantages for a buyer A reduction in capital requirements An improvement in cash flow

The opportunity to add value and sell goods at a profit before payment is due The prospect of growth without the impediment of immediate payment The advantages for an exporter Attractive terms of payment Developing and sustaining long-term relationships with good customers The downside risk is that if a buyer defaults on payment obligations or delays payment, it will adversely impact an exporter’s cash flow.

Minimise credit risk, maximise gain Exporting successfully involves a delicate balance between minimising the risk of nonpayment while maintaining a competitive edge. Exporting goods or services is a more intricate and complex process than trading domestically. While numerous parts of the sale process are common to both, there are many more issues and risks involved with exporting.

The two most important moments in any sales transaction occur at the beginning and the end. These are the negotiation of the sales contract and payment terms before goods are shipped or services provided, and the receipt of payments at the end of a transaction. The former will materially affect the fulfillment of the latter and, needless to say, without

Trade

Credit Insurance

payment there is no profit. Therefore, mitigating credit or non-payment risk associated with exporting goods or services becomes critical.

The most straightforward and traditional way to mitigate non-payment risk is to ask the importer or buyer to either pay cash upfront, or provide a Letter of Credit (L/C), which is confirmed by the exporter’s bank and can easily be discounted to obtain finance for that shipment (since payment risk is with the importer’s bank and not the importer).

However, both these options create impositions on the buyer, either to come up with cash upfront (and the financing costs involved with that), or incur the costs of setting up an L/C and tie-up bank credit lines.

The trend in international trade is increasingly towards exporters providing open account credit terms for up to 180 days. This involves a higher risk of non-payment. Moreover, the exporter’s bank will find it difficult to provide finance without security or investment grade guarantee.

In the current global financial landscape, open credit is difficult to obtain and exporter’s face pressure to offer this or risk losing business to a competitor. Hence, export credit insurance can provide maximum benefits to an exporter.

The most straightforward and traditional way to mitigate nonpayment risk is to ask the importer/buyer to either pay cash upfront or provide a Letter of Credit (L/C), which is confirmed by the exporter’s bank and can easily be discounted to obtain finance for that shipment (since payment risk is with the importer’s bank and not the importer).

Schuyler D’Souza

An export credit insurance policy covering commercial and/or political risks is an important tool as it helps an exporter to accurately assess a buyer’s ability to pay, and eventually compensates the exporter if the buyer fails to pay. In today’s times, it is a necessary precaution to take when dealing with high-risk buyers and/or countries, as it provides a safety net to exporters and their banks.

An export credit insurance policy covering commercial and/or political risks is an important tool as it helps an exporter to accurately assess a buyer’s ability to pay, and eventually compensates the exporter if the buyer fails to pay. In today’s times, it is a necessary precaution to take when dealing with high-risk buyers and/or countries, as it provides a safety net to exporters and their banks.

Banks and financial institutions may advance funds up to 80% of the invoice value against open

account sales, and the exporter certainly stands a better chance of getting its case for financing approved by a bank/trade financier, if the exporter has an export credit insurance policy in place.

Moreover, this is generally a cheaper form of trade receivables protection and financing.

How export credit insurance works Export credit insurance is a contract that protects exporters of goods or services against the risk of non-payment by their overseas

buyers. It covers commercial risks as well as political risks. Commercial risks include buyer insolvency and late payment or protracted default, which is the failure on part of the buyer to pay within a set number of days (payment due date).

Political risk involves non-payment on an export contract, or project, due to actions by an importer’s local government. These actions can range from subtle policy matters, like a change in licensing processes, to the full-scale nationalisation and expropriation of a business.

The distinction between political and commercial risk is sometimes hazy, and nowadays the two types of risks are more interrelated than ever before. Export trade credit coverage of sales to major buyers in both advanced and emerging markets is a rapidly growing business that export credit insurers write, only if they deem the customer creditworthy. But an increasing number of creditworthy companies are in risky regions, which shifts the focus from corporate credit to political risk.

The need for export credit insurance arises from the common practice of selling on credit. Outstanding payments from these sales generally represent around 40 to 45% of a typical company’s total assets. About 90% of the global trade is conducted on a cash basis, or with short-term suppliers’ credit of up to 180 days. In a competitive trading environment providing credit to buyers provides a more attractive proposition than demanding advance payment.

Furthermore, in international trade, buyers tend to be reluctant to make advance payment as there is a possibility that they may not receive the goods or services. Of course, foreign buyers can issue a Letter of Credit (L/C) through their bank but the costs involved tend to be

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Trade

Credit Insurance

can happen either because the customer (the importer) becomes insolvent or, because the customer fails to pay within the predetermined time frame.

In the UAE, export credit insurance is provided by the Dubai Government owned Export Credit Insurance Company of the Emirates (ECIE), the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), and global trade credit insurers – Atradius, Euler Hermes and Coface – who cover the risk of non-payment of UAE exports to over 170 countries, as well as to domestic trade of products and services.

Without such a facility, exporters would have to bear the consequences of nonpayment risk on their own and, restrict the growth of sales because of the potential increase in the probability of payment defaults which is currently at a high. relatively high. Therefore, more favourable terms of payment such as Documents Against Payment (D/P), Documents Against Acceptance (D/A), and Open Account (O/A), tend to play an important role in international trade to supplement product quality and pricing.

A business selling to a customer on open account terms effectively grants credit just as a bank does. However, because businesses are rarely able to take as many precautions as banks before extending credit, they face substantial risks of buyer non-payment. Around 25% of all business failures in major markets which are members of the Organisation for Economic Co-operation and Development (OECD), result from the payment default by customers. Growth in international trade accentuates the need for reliable business intelligence and protection against the risk of non-payment, as the opportunity to increase sales also increases the probability of such a risk occurring.

Apart from credit risk protection, export credit insurers provide services in related areas such as credit information and receivables management. For a nominal fee, clients can obtain company information, credit risk reports, or access to a credit insurer’s debt collection and management expertise, on a case-by-case basis. Credit insurers specialise in

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SME ADVISOR MIDDLE EAST APRIL 2012

In a competitive trading environment, providing credit to buyers provides a more attractive proposition than demanding advance payment. Furthermore, in international trade, buyers tend to be reluctant to make advance payment as there is a possibility that they may not receive the goods or services.

assuming credit risk and checking customers’ creditworthiness before, and monitoring performance after they are granted credit. As trade credit specialists, credit insurers can do this at a lower cost than individual exporters.

While more favourable terms of payment such as D/P, D/A and O/A increase sales, they also pose a much higher risk to exporters, given the higher probability of non-payment risk occurring.

Hence, due to increased non-payment risk, many exporters do not extend credit terms to their buyers and this has a corresponding impact on their export sales. A logical option available to exporters is to extend credit terms to their buyers after having put in place an export credit insurance program covering non-payment risk.

Export credit insurance is also known as foreign accounts receivable insurance, as already it protects an exporter against the failure of its overseas customer to pay debts, which

It is important to note that the most profitable and lucrative countries tend also to be the most risky as far as payment is concerned. Therefore, export credit insurance can enhance the confidence of the trading community by ensuring that exporters holding an export credit insurance policy get paid.

About Schuyler D’Souza’s industry background includes several years of strategic marketing and business development. Schuyler is an MBA in Marketing and Sales from the Narsee Monjee Institute of Management Studies in Mumbai, and a Post Graduate in General Management from Berufsakademie in Germany. He is a Certified International Credit Professional and a member of the Association of Finance, Credit & International Business Professionals.

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Finance

Life Assurance

Richard Taylor

However, it is important to note that any such plans can be instantly derailed if a catastrophe occurs for which you are unprepared for. Only once these foundations are in place can you really start to put in place plans for your future.

DON’T LEAVE IT TO CHANCE Life assurance and critical illness cover (CIC) can provide many benefits. In the first of a two-part series, Richard Taylor and Rupert Connor, Chartered Financial Advisors, Acuma Wealth Management explain exactly what life assurance is and why you should consider investing in it in order to protect yourself, your family and your wealth.

I

’m afraid this isn’t a particularly pleasant topic as it involves considering your own mortality, but it is a very important one.

As a financial planner, it is my duty to first deal with the unpleasant subjects or the “what ifs” – what if you die, what if you need medical attention, what if you become critically ill and so on. More specifically, what are the consequences of such events and what can I do to make such catastrophes survivable for you or those left behind.

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If we don’t worry about these things, and statistics show that most people left to their own devices don’t, who will? Unfortunately, these things do happen and they often occur without any prior warning.

Only once we have ensured that our clients are protected and covered in the event of such catastrophes can we move on to the more “enjoyable” aspects of financial planning: namely retirement and lifestyle planning, to ensure people live the lives they want to lead.

Introduction to life assurance Have you ever wondered why it is called assurance as opposed to insurance? It is because you definitely will die one day. You take out insurance to protect yourself against events which might happen, whereas assurance provides protection against certainties.

And this is one of the peculiarities with life assurance – every single one of us knows for certain that one day we will die, it is just a question of when and how. If this happens when most of us would like and expect (well into our old age and retirement), there are unlikely to be any significant repercussions).

However, should this occur unexpectedly and without warning, at certain stages in your life the repercussions can be devastating for those left behind.

And yet statistically, we are far more likely to take out insurance to protect our TV than our family’s quality of life.

Just in case life does throw you (or more importantly your family) a curve ball, life assurance can significantly ease the burden.

Different types and uses There are two types of life cover, Term and Whole of Life (WoL), which pay out on the policy holder’s death, and there is Critical Illness Cover, which pays out in the event of the policy holder being diagnosed with certain conditions.

Finance

Life Assurance

Term: Term covers do exactly what it says on the tin. It covers you for a certain period of time and does nothing but pay out a lump sum on death during that period. Term assurance is frequently used as low-cost cover to protect specific liabilities, such as mortgages and loans, and as a cost-effective means to protect a family’s future lifestyle should the main breadwinner die.

If you have a family and they are dependent on your earning for their financial security and lifestyle, then you have a very real responsibility to take out cover. If you don’t, you are gambling with your loved ones’ quality of life.

Whole of Life: These plans cover the life assured until death, whenever that occurs, and they also include an investment element that builds a surrender value throughout the life of the plan. WoL cover is frequently used as an effective means of mitigating expected inheritance tax liabilities on death. For example, if you know that there will be a GBP 100 thousand IHT liability on your death you can take out a WoL plan that provides GBP 100 thousand worth of cover.

Critical Illness Cover At the turn of the 20th century, the average life expectancy was 45 years, deadly diseases killed millions (TB, Polio, Flu and so on) and premature

If you have a significant inheritance liability (IHL) that your estate will be liable for on your death and you would prefer to pass on all your wealth to your beneficiaries, or you would prefer for your executors not to have to liquidate your assets to pay, then IHT is the preferred option.

Rupert Connor

Term assurance is frequently used as low-cost cover to protect specific liabilities, such as mortgages and loans, and as a cost-effective means to protect a family’s future lifestyle should the main breadwinner die.

death was a very real threat. However, significant medical developments over the last 100 years has meant that we are now living much longer and frequently suffering from a host of degenerative diseases – some fatal and some not, and some which mean we can never work again. For example, cancer is likely to affect one in four men and one in five women.

The life assurance industry has had to evolve to cope with these changes. And they came up with Critical Illness Cover (CIC), which covers the life assured in the event that they are diagnosed with one of a prescribed list of critical illnesses (for example, cancer, heart attacks, and so on). Each insurance company has a different list of prescribe illnesses and clearly, the more the better, although it may make the policy more expensive.

Why should you consider taking out life assurance?

You have family that depend on your earnings – this is by far the most important reason for taking out life assurance and CIC. If you have a family and they are dependent on your earning for their financial security and lifestyle, then you have a very real responsibility to take out cover.

If you don’t, you are gambling with your loved ones’ quality of life.

You have specific financial liabilities such as loans and mortgages. The sort of liabilities that you wouldn’t want to burden your survivors with if something happened to you, or you would like taken care of should you be diagnosed with an critical illness and be unable to work.

In summary Protection, as term assurance, CIC and WoL are collectively known, is a crucial aspect of personal financial planning and one which, if neglected, can lead to entirely avoidable hardship. If you have family that depend on you it is a must and thereafter it has its place in a variety of aspects of financial planning.

That said, it is seldom bought without the advice of a financial advisor, despite its obvious importance and this is often contributed to our dislike of considering our own mortality or simply thinking that “it won’t happen to me.” There’s also a myriad of options available to customers and it is for this reason that it is advisable to seek the advice of a professional.

Don’t leave it to chance – it can be relatively inexpensive and can provide huge benefits.

About Rupert Connor and Richard Taylor are independent financial advisors with Acuma Wealth Management. As qualified advisors in the region they help expats to get their finances in order, and maximise the financial opportunities available offshore and plan for future events.

Acuma Wealth Management offers three core services; wealth creation, wealth management and wealth preservation, which include retirement planning, pension transfers (SIPPS & QROPS), death tax and inheritance planning, life assurance and critical illness cover, group pensions and corporate benefit solutions, key man insurance and shareholder protection, and medical insurance.

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Management

Competitive Advantage

STANDING OUT A key measurement of success is the ability for a company to separate itself from the competition. To achieve this, you must first understand your customers to determine and develop your competitive advantage, says Emma Murphy, Managing Director, Savoir Faire Consulting.

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our competitive advantage is what your business does better than anyone else and is what makes you unique in the marketplace. According to Michael Porter, Harvard professor and author of Competitive Advantage: Creating and Sustaining Superior Performance, companies can achieve a higher profit over a rival in one of two ways: either provide an identical product or service at a lower cost or supply a product or service that is differentiated in such a way that the customer is willing to pay a higher price. Differentiation is

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SME ADVISOR MIDDLE EAST APRIL 2012

achieved when the company provides something that is unique and more valuable to customers than a low price; Porter views the two strategies…

A competitive firm needs to survive in the market and to achieve market share and profitability. The success of a competitive firm can be measured by both objective and subjective criteria. Objective criteria includes: return on investment, market share, profit and sales revenue; while subjective criteria includes: strong reputation with customers, suppliers and competitors, and high quality products or services.

Successful companies generate revenues not just by providing products or services, but by being differentiated from their competitors in a manner that lets them serve their valued customers better and more profitably.

Differentiation is at the heart of a strong strategy and the sharper your differentiation, the greater your advantage. Long term, a company’s strategic differentiation and execution matter far more to its performance than the business it happens to be in. Bain & Company research highlights that every industry has leaders and laggards, and the leaders are typically the most highly differentiated.

It is important to note that differentiation is not only about offering different product or service features. It is about identifying and understanding every possible interaction between the company and its customers and trying to identify how these interactions can be enhanced or modified in order to deliver additional value to the customer.

The competition for the customer’s attention is intensifying, and the customer is becoming more discriminating in his or her purchasing activity. In order for companies to survive in this competitive marketplace they need to ensure their entire business philosophy is focused on the customer. This quote from Sam Walton (founder of Wal-Mart) succinctly highlights the point: “There is only one boss - the customer, and he or she can fire everybody in the company by spending his or her money somewhere else.”

For SMEs, operating in the extremely competitive environment of the UAE, it is paramount that they understand their competitive advantage and continually work hard to improve and maintain it before the competition catches up.

Determining your competitive advantage Your company makes money because it serves a purpose and provides value to your customers. Why, in particular, does your business exist? Ask yourself why you started your business. Take a look at

Management

Competitive Advantage

what problems your business solves for people, those solutions are what keeps your business in existence. Consider the following questions: What are your strengths?

What are you best at relative to your competitors?

What are your company’s competitive advantages?

Are these competitive advantages necessary to be successful in your industry?

If you don’t have competitive advantages relevant to your marketplace, what can you do to develop these?

In addition, ask your customers to help so that you can get valuable feedback about what kind of value you provide for them. Consider the following questions to ask your customers: What are we doing that you like?

How do we help to meet your needs?

What are we doing that you don’t like?

In what areas could we improve?

Is there anything that you need that we are not currently providing?

When your friends are in need of what we offer, do you refer our company? Why or why not?

Developing your competitive advantage Companies with a sustainable competitive advantage in an industry learn to deliver their differentiation to the front line, creating a company that lives and breathes its strategic advantages day in and day out. In addition, they learn how to sustain it over time through constant adaptation to changes in the marketplace. The result is a simple, repeatable business model that a company can apply to new products and markets over and over to generate sustained long-term growth.

In order to be unique, developing a sustainable competitive advantage requires creativity and innovation and cannot be achieved through standard frameworks and techniques. Companies must consider two areas when developing their competitive advantage: Supply side – understanding the resources and capabilities through which it can create uniqueness to beat the competition.

Long term, a company’s strategic differentiation and execution matter far more to its performance than the business it happens to be in. Bain & Company research highlights that every industry has leaders and laggards, and the leaders are typically the most highly differentiated.

Emma Murphy

Demand side – deep customer insight into customers’ needs and preferences.

Sustainable competitive advantage considerations: How difficult will it be for competitors to match, offset, or leapfrog the expected advantages? Is it difficult to imitate?

How quickly do the resources depreciate?

Will my customers see a consistent, superior difference between my product or service and those of my competitors?

Does it build a company reputation and a recognisable industry position?

Can a unique resource be trumped by a different resource?

Can the activities involved in creating the competitive advantage be constantly improved?

Differentiation offers a more secure basis for long-term competitive advantage than low-cost which is highly vulnerable to external forces, new technology and strategic innovation. Companies who have

consistently achieved higher returns have focused on differentiation through quality, branding and innovation. For example consider companies such as: Apple, Virgin, Procter & Gamble, 3M and Google who have achieved a sustained competitive advantage over time.

In summary, to really excel at differentiation companies need to develop a deep understanding of their customers in order to develop a value proposition which really meets their needs and adds more value than the competition. It is essential to consider why the customer buys the product or service and then to discover the needs and preferences of those customers. The company must then be able to consistently offer more value than competitors according to its own capability and capacity to create uniqueness.

About Emma Murphy is the Founder and Managing Director of Savoir Faire Consultants, a management consultancy that specialises in supporting entrepreneurs and small business owners. Savoir Faire Consultants tackle issues that hinder growth and ignite new profit opportunities and support small businesses with the following: business planning, strategic planning and audit, market research and feasibility studies, strategic marketing, project implementation, employee training, knowledge management and change management.

Emma has ten years experience working internationally in the UK, US, Australia, Taiwan and the UAE for top tier consultancies, working across a range of sectors including: government, oil and gas, telecoms, transport and health care. She is a certified PROSCI Change Management trainer, an active member of the Association of Change Management Professionals and Junior Chamber International. Emma is currently based in Dubai and can be contacted at: emurphy@savoirfaireconsulting.co.uk or +971 501348029.

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HUMAN RESOURCES

EMPLOYEE Management

Keeping IT HUMAN Companies too often approach their HR strategy with facts and figures and forget they are dealing with human beings, says Hisham Fadda, Group Human Capital Director, Metito.

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n today’s changing economy, the concept of human capital (HC) has shifted from an administrative function to one that resembles a strategic business partner who balances the needs and aspirations of business and its personnel. The HC mission is to focus on creating and fostering a culture based on mutual understanding, respect, ownership, engagement and performance.

Tools vs drivers With the advancement of technology and communications, the tools and processes used by HC professionals have become more accessible. They can easily be used to implement a comprehensive framework for the organisation to work within. In order to use such tools effectively they need to be streamlined with the company’s corporate culture and the community it’s operating in.

The trap that many companies can fall into is to subject the human element in the organisation to a host of procedure, techniques and tools, without giving due consideration that after all, and above all,

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SME ADVISOR MIDDLE EAST APRIL 2012

they are dealing with people from diverse cultural backgrounds, inspirations and objectives.

This is particularly true in countries where the majority of employees are expatriates and their initial objective is to seek fortune before they go back to their native countries. That puts a lot of pressure on the HC function to ensure that these people are still committed and integrated.

To subject them all to a set of standard tools and processes can only speed up their returning home.

Job description Attracting and retaining talent has always been a challenge given the competitive markets we are operating in and the dire need for highly professional and skilful individuals. In some instances, companies select what seems to be the right candidate, only to find out after a while that the selection was not the right one. Also, on the other hand, the candidate may not have selected the right company. It is a normal practice that HR professionals prepare comprehensive job descriptions, skill matrixes and wellstructured interview questionnaires to help them select the right candidate.

These may identify the technical fitness of the candidate but the purpose of the interview would weigh beyond.

A relaxed interview is an opportunity for both the company and the candidate to know each other and the interview should be conducted with that spirit. Get to know your candidate before you know your professional. Too many one-sided questions

HUMAN RESOURCES

EMPLOYEE Management

The trap that many companies can fall into is to subject the human element in the organisation to a host of procedures, techniques and tools without giving due consideration to the fact that they are dealing with people from diverse backgrounds.

can only tell you what the candidate wants to tell you and may therefore hinder your efforts to find the right match for the role.

Training and development Training and development is a continuous process with direct objectives of increasing knowledge and skills. It’s also an effective management tool to increase engagement, ownership and commitment. It opens the door for all employees to target their future careers by providing them with the required skills.

Appraisals Appraisal is an integral part of the employee’s development and engagement. You have to implement a comprehensive appraisal strategy aimed at encouraging high performance and

Hisham Fadda

its objective by both the appraiser and the appraised can turn it into a negative process, which defeats the whole

A relaxed interview is an opportunity for both the company and the candidate to know each other and the interview should be conducted with that spirit. Get to know your candidate before you know your professional. Too many one sided questions can only tell you what the candidate wants to tell you and may therefore hinder your efforts to find the right match for the role.

providing all what is required to equip staff at various levels with the right knowledge and soft skills.

Despite the fact that appraisals can be the most effective motivating tool, wrong application and understanding of

purpose. Most standard appraisal forms are about giving marks against criteria thus turning it into an interrogation with the objective of passing on a judgement. It is extremely important that the appraisal is conducted as a two-way

discussion to give the appraised the full opportunity to express their views and inspiration in a free environment.

Retention Retaining talent is one of the most challenging issues that faces any company. Unfortunately in many cases companies do not differentiate between retention and detention. They may be able to induce the staff to stay by bribing them with high unrealistic and un-sustainable packages. We have faced this in the past few years where companies resorted to a “price war” by tempting people to join them. Though it worked for a few cases, however, this was a temporary situation and during the downturn of the economy, where there was a huge turnover and people had to be terminated because they were unaffordable.

Though it is imperative to have a clear framework for the HC function reflected in a host of systems, procedures, tools and processes, the most important thing to remember is that systems are there to help people rather than pressure them to perform. Instead of dealing with staff as figures and formulas, HC professionals should be dealing with them as human beings. Always remember you are a driving force in these people’s lives and not just their careers.

About Metito is a provider of total water management and solutions in emerging markets. With over 50 years of operational experience, the company provides total water and wastewater management through customised and comprehensive solutions across the full spectrum of business, from clean to dirty water. Using the latest technological innovations, Metito endeavours to manage, treat and recycle water to the highest global standards for potable, irrigation and industrial uses, Metito also promotes environmental sustainability and consciousness throughout its business plans and projects. The company’s initiatives have been recognised by the International Desalination Association (IDA).To find out more about the company, please visit www.metito.com.

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Business Guru LINKS GROUP

MISSION POSSIBLE Setting up business in a foreign country is by no means easy. So if there is someone who can guide you, then the path becomes smoother. Aparna Shivpuri Arya spoke to John Martin St. Valery, Founder and CEO, Links Group, to find out how he has worked to help foreign companies set base in the region.

H

o w was the company s t a r t ed?

Links Groups is a company formation advisor.

We started in the region in 2002. We were an advisory and consulting business really aimed at helping foreign individuals or foreign companies looking to establish a foothold or a legal commercial presence in the UAE and Qatar. We have our head office here in Dubai; we have both serviced offices and an advisory office in Abu Dhabi and Doha.

Initially, in the early stages it was very much a question of a consultative approach to companies or individuals who required advice on how to establish. It soon became very clear that we needed to offer practical assistance, as well as advising these companies, particularly in relation to local partner services. By local partner services I mean sponsorship or local agencies that are required for the majority of licenses that are established on shore, rather than in a free zone.

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SME ADVISOR MIDDLE EAST APRIL 2012

Business Guru LINKS GROUP

It is important to find out how you build the connection between banks and SMEs. What can banks and advisors do to better brief startups to ensure that they have their financial accounting in order to get that foundation in place is the key.

Can you explain a bit more about local partnership?

The majority of companies are required to select a local partner, agent or sponsor.

In the case of an LLC, for example, the local partner must hold the majority equity share holding so 51% or more.

The unique thing about the Links Group model is that we offer that local partner service as a corporate nominee partner, rather than an individual national.

The main benefits of local partner being a company and not an individual to the foreign party are that firstly you are taking out the emotional relationship of dealing with an individual, from both sides. So as a corporate nominee partner the foreign company is complying with Companies Law. Whatever the commercial law is in the particular jurisdiction, like having a local partner holding the majority shareholding, the difference with Links is that it’s a highly structured board, that in effect becomes your local partner.

So from a corporate governance perspective, for transparency and so forth, this adds a number of benefits to the foreign party, not least of which is succession planning. Companies often worry about coming into the market and selecting a local partner and then wonder what would happen if the local partner were to die or change his mind. With a corporate entity, the contractual terms remain in place, so it gives more rigidity to the arrangement than having an individual national being the local partner.

Over this ten year period we have built up a portfolio of 250 companies ranging from branches of multinational companies or stand-alone limited liability companies

for multinationals down to single, sole traders, or micro startup businesses in some instances.

Are there any specific or specialised services that you provide for startups and SMEs? We operate within a network of what we call affinity partners, which are corporate service partners that can add value or benefits to these companies that have just started up; they might be in the financial services sector, banking and so forth. But the core business for Links is to advise

of coming in, landing with your briefcase and apply for licence; it’s about doing the correct market research, making sure the business plan is in place, and particularly for startups or micro businesses, having the correct advice on financial reporting.

It is much easier for that business 18 months down the road to secure funding if they have been reporting their accounts correctly from the beginning. In the past I think that has been lacking.

Do you work in partnership or coordinate with government agencies?

Yes we do work with investment agencies as well as Chambers of Commerce for example. Then it also depends on the nationalities of the companies that are coming in, for example, we have the UK Trade and Investment team, Commercial Attaches from the US and various Counsels to actually target specific companies to come into the market.

The core business for Links is to advise a company on the legal structures and make sure from a bureaucratic perspective that they are always licensed correctly, individuals have the correct visas and they have the right permits in place for that company to conduct its business.

a company on the legal structures and make sure from a bureaucratic perspective that they are always licensed correctly, individuals have the correct visas and they have the right permits in place for that company to conduct its business.

Do you consider it an easier process here in the UAE than on an international level?

When one looks at the processes; the ratings for setting up businesses in the UAE are improving but I think there is still room for those initial advisory services to be far stronger. This is not just a question

Let’s talk more about your own philosophy of management and running your own company.

As for me I’m running a service business and a service business is all about people.

We are very fortunate to have a strong, loyal and professional team here. We have very little attrition as far as staff is concerned. I think that is because it is a multicultural, international business. We represent a large number of nationalities, religions within the business, which gels very well. So personally my philosophy is that it’s all about people who are able to deliver outstanding service and I think

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Business Guru LINKS GROUP

that goes across the service sector. If one looks at the trading sector, for example; it’s about your product, but it still is also about your people.

We operate within a network of what we call affinity partners, which are corporate service partners that can add value or benefits to these companies that have just started up.

What is your key to success?

Tenacity and humour are the main ingredients. One has to offer something different. There is little sense in being repetitive in this market, where every product and service is available in abundance. Therefore you have to be outstanding and innovative, which can be delivered through training your staff and professional and personal development.

When we first established here, it was a transient market and people would leave after two to three years. However, that has changed and now people want to stay in this region. That is because infrastructure is now developed – good education opportunities, housing facilities, transport, communication, so it’s not difficult to attract high quality people to this market.

What challenges have you faced in setting up business in the region?

We started in UAE in 2002 and went into

the key. Your business plan has to be recognised by the banking sector. It is important to find out how you build the connection between banks and SMEs. What can banks and advisors do to better brief startups to ensure that they have their financial accounting in order to get that foundation in place is the key.

And secondly, it’s about people, whether its product or service; it’s all about the right people.

About John Martin St. Valery

There is little sense in being repetitive in this market where every product and service is available in abundance.

Therefore you have to be outstanding and innovative, which can be delivered through training your staff and professional and personal development.

Qatar in 2005. We went into Qatar with a slightly different model. Our core service is company formation and local partnership services, but we noticed that there was a need for ancillary services, such as serviced offices, resource management, marketing services and so forth. In Qatar, we went as a serviced office provider but we have grown.

From a funding or financial perspective, it is a little difficult to start in the region, from scratch. Also, having a right mentor, and to

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SME ADVISOR MIDDLE EAST APRIL 2012

be guided through what can sometimes be a maze, can be a little difficult. Even though a lot of institutions have been set up, there is still a long way to go for foreign companies to come in the market, unless they are funded.

Any advice for entrepreneurs in the UAE? Don’t cut corners, as much as it is tempting. Once you identify a gap in the market, initial business planning is

John Martin St. Valery is an entrepreneur who has been recognised as a corporate governance specialist. He has been involved in the establishment and ongoing local partner services of over 250 companies ensuring that the interests and assets of the foreign party are always fully protected while maintaining a strict duty of care for local partners involved. John founded Links Group in 2002. He spearheaded the growth of a partnership into the corporate structure that now exists. Living and working in the UAE and Qatar for over 13 years has given him insight into the commercial opportunities in this rapidly developing region. Today, John advises many group companies at board level, particularly in the areas of entrepreneurship, corporate governance and business development.

Links Group specialises in business services for companies and individuals establishing a commercial presence in the UAE and Qatar. As a 100% UAE national owned company, Links acts as a nominee shareholder/partner for foreign companies who require this service. The Links Group expanded into Qatar in 2006 and has continued to grow through its corporate headquarters in The Fairmont Dubai, as well as an office in Abu Dhabi. To find out more about Links Group and its services, please visit: www.the-links-group.com.

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UAE:Star Metropolis • Dynatrade Auto Service • Al Reyami Interiors • Arab Orient Insurance Company • Coral Hotels & Resorts and Corp Executive Hotels • Rotana Hotels and Resorts • CompuMe and I2 Egypt: Coral Hotels & Resorts • Al Khodeir Stationary • Misr October Industrial Co.• TNT KSA: Coral Hotels & Resorts • GroundLink Kuwait: Safir International Hotel Qatar: Doha Golf Club • DHL Express • Coral Hotels & Resorts Lebanon: FedEx Kinko’s • FedEx Express • LebHotels.com • Advanced Car Rental

Opportunities

RAK FREE TRADE ZONE

Trade for cheap T

ell us about the RAK FTZ and the role it performs. How many companies do you currently have?

The onset of a long-lasting global slowdown has led to companies from around the world cutting costs to increasing business performance. Ras Al Khaimah (FTZ) caught up with this trend by offering companies low-cost alternatives to business setup and

expansion. Meghna Pant spoke to Oussama El Omari, CEO, RAK FTZ, to discuss what it is that makes this free zone click.

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SME ADVISOR MIDDLE EAST APRIL 2012

The Ras Al Khaimah (RAK) Free Trade Zone (FTZ) was established in 2000 with a vision to achieve global brand recognition as a premium free trade zone and investment hub, where customers can find optimal business solutions for their needs. RAK FTZ offers many aspiring entrepreneurs and business owners the platform to enter the Middle East market.

The process of establishing a company at the free zone involves selecting a combination of business license, legal entity and facility.

Over the last decade, we have remained committed to extending competitive and affordable solutions for business needs

Opportunities

RAK FREE TRADE ZONE

across sectors. This success has been achieved through innovative business models. We have been able to consolidate our importance locally and internationally and today, we boast of over 5,000 active companies as our members across various fields and economic activities.

We perform the following roles: In the economy: RAK FTZ is an important contributor to the GDP growth of the Emirate. In 2011, we achieved impressive growth with the registration of 2033 new companies. This was a 17% increase over the 1,740 company registrations in 2010.

In the community: As a leading corporate player in the Emirate of Ras Al Khaimah, RAK FTZ recognises that the role of a major organisation within the community in which it operates extends beyond economic contribution, and we are committed to delivering corporate social responsibility objectives across a number of key activities.

RAK FTZ demonstrates its ongoing commitment by promoting, supporting, organising and participating in activities that nurture community spirit, promote a balanced lifestyle and help preserve the Emirate’s cultural and natural heritage.

In the workforce: RAK FTZ’s UAE National Empowerment Programme has been specifically designed to attract, recruit and develop the next generation of talented UAE nationals and provide a unique opportunity to experience the free zone’s professional working environment and business community. Through our CSR mandate we are on the lookout for talented and ambitious UAE nationals who have long-term career potential, and passion, that will make them the future leaders of tomorrow. Successful applicants are enrolled in one of three specialist training programmes. We have the Graduate Programme, Work Placement Programme and Summer Job Opportunities.

We also develop our Emirati employees by sending them to training courses, both local and international, and support them to pursue higher education. Currently, we have 55 Emiratis out of 238 staff,

RAK FTZ offers a quick and cost effective entry into the UAE and Middle East. Additionally, with the minimum amount of paperwork, investors can have their company established and running within a few days. It is also the first and only free zone to set up offices and promotion centres in the UAE (Dubai and Abu Dhabi) and internationally (India, Turkey, Germany and USA).

international promotions and liaison offices in India, Turkey, Germany and USA, that assist our clients abroad to promote RAK FTZ to foreign investors.

How does RAK FTZ distinguish itself from other free zones and attract new companies?

Oussama El Omari which represents 23% of our workforce.

In addition we have over 50% Emiratis in the management level in RAK FTZ. At the moment, our hiring focuses on UAE Nationals to reach our goal of increasing our Emiratis workforce by 15%.

What role does the RAK FTZ play for foreign companies that want to setup base in the UAE? Over the last decade, RAK FTZ has remained committed to extending the best and the most affordable solutions for business needs across sectors from around the globe. As we move ahead, the RAK FTZ plans to strengthen its position as a business hub, geared by helping SMEs connect to emerging market economies.

The RAK Free Trade Zone’s philosophy centres on attracting and maximising the growth of value-added, know-how based, technologically advanced, innovative businesses in RAK. We are eyeing closer partnerships with US-based companies. We also have

The RAK FTZ is one of the most cost effective incorporations available in the UAE. Additionally, with the minimum amount of paperwork, investors can have their company established and running within a few days.

RAK FTZ is worth a close look for a majority of startups or newcomers to the region, as it offers a quick and cost-effective entry into the UAE and Middle East.

RAK FTZ aims to become one of the largest, most effective and most environmental-friendly free zone in the Gulf region. RAK FTZ is also the first and only free zone to set up offices and promotion centres in the UAE (Dubai and Abu Dhabi) and internationally (India, Turkey, Germany and USA). No other free zones have this advantage until now.

What sectors or industries have you seen the most interest from?

RAK FTZ focuses on SMEs, which is reflected in the industries that constitute a majority of our clients; services, commercial, trading, information technology and consultancy.

The industry and sectors represented by our investors are as below:

What countries have you seen the most interest from?

We have investors from 138 countries. The most interest is from countries in India (43%),

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Opportunities

RAK FREE TRADE ZONE

the UK (14%), Egypt (9%), Pakistan (7%), followed by the US and Germany (6%). Aside from the top ten, the rest of the countries represent 2% and below.

How did the global recession impact your business and what strategy did you develop to soften the impact?

Some free zones in the region have been affected by the global downturn, especially those which have big industrial companies within their zone. With trade being low because of the downturn, some of these companies had to scale down production for their export or import requirements.

On the other hand, the downturn did not really have a big impact on free zones such as RAK FTZ, which are more focused on SMEs. With our business model of affordable cost and reach, and our promotion centres and business centres, RAK FTZ helped small and medium businesses grow even during the downturn. The fact that they also have smaller operational costs and the potential to grow made it easier for them to weather the downturn.

With RAK FTZ’s nurturing environment, the number of companies that joined the free zone did not slow down even during the downturn.

How did RAK FTZ perform in 2011 and what are your expectations for 2012?

RAK FTZ posted an impressive performance at the end of 2011: More than 17% increase in 2011, compared to the same period in 2010 2,033 registrations in 2011, which exceeded our total annual registration of 1,740 in 2010 Our renewals were also up by 16% compared to last year, with a total number of 3,776 in 2011 compared to 3,271 in 2010. These renewal numbers give us reassurance that we are doing a good job, as we are not only registering new companies but also retaining our clients.

The exceptional growth in new registrations and renewals amidst the challenging economic climate reflects

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SME ADVISOR MIDDLE EAST APRIL 2012

With our business model of affordable cost and reach, and our promotion centres and business centres, RAK FTZ helps SMEs grow even during the downturn. The fact that they have smaller operational costs and the potential to grow makes it easier for them to weather the downturn.

investor confidence in our business model and re-emphasises the world-class standards, facilities and services on offer at RAK FTZ. The fact that this achievement came amidst a volatile business atmosphere is even more commendable.

We have a business model that works, and that is the reason we are growing. Hence, our plan is to continue to improve our system and services.

We are on the lookout for new trends in the market, in order to adapt and implement new initiatives that will benefit our existing clients and attract new investors.

In addition, Ras Al Khaimah, where RAK FTZ is located, has development plans in the future that would enhance the RAK airport, port, as well as infrastructure like roads, telecommunications, health, education

and renewable energy. These initiatives will further attract investors to the northern Emirate.

Our outlook for RAK FTZ in 2012 remains positive. We look forward to seeing growth in company registrations and renewals. We will continue our programmes to achieve our goals and, most importantly, to contribute to the GDP of Ras Al Khaimah. We are also focusing on research and studies on how to better improve processes, as well as sharing best practices with other free zones around the globe.

In 2012, we will also enhance our current focus on corporate social responsibility programmes. As one of the leading organisations in Ras Al Khaimah, we firmly believe that we have a great responsibility to the community that goes beyond our economic contributions.

Opportunities

RAK FREE TRADE ZONE

RAK FTZ offers the following advantages to businesses: • Cost effective alternative to Dubai • State-of-the-art IP-based telecommunication technology • Quick and easy registration process • 5,000 SMEs from 106 Countries • Value-added services: RAK FTZ offers a wide range of extra services that cater to the unique needs of its clients, including IT, marketing, creative, procurement, human resources and more.

These are designed to assist clients with the many different steps involved in setting up and running a successful business.

• Customised packages: Whether you need a business licence in order to distribute your products, offer consultancy services or look for an office, warehouse or land for industrial activities, RAK FTZ offers solutions to match client requirements.

• Award-winning service: RAK FTZ’s accomplishments have been recognised by a number of well-respected international business organisations, such as the World Free Zone Convention for Best Website Award, the Middle East Logistics Awards for Best Emerging Free Zone for three consecutive years, and the Supply Chain and Transport Awards for Industrial Area of the Year.

• International reach: RAK FTZ is the first and only free zone with international promotion centres in India, Germany, Turkey and US that provide marketing, sales, client support and administrative services.

• Ranked one of the top five Middle East free zones of the future: fDi Magazine ranked RAK FTZ fourth in the best “Middle East Free Zone of the Future” category, and third for the Best Economic Potential in the 2011-2012 ranking of 115 free zones in the region.

• Reputed clients and partners: RAK FTZ is home to large and successful organisations, as well as many local and international small businesses. Some of the well-known companies include Cisco, DHL, Dole, HSBC, Knauf, Emirates NBD, Hyundai, Cumi Middle East FZE - Murrugappa Group, Kotak Commodities – Kotak Mahindra Ltd, and Thrifty.

What initiatives have you taken to promote SMEs? It makes great economic sense for us to focus on SMEs, especially those looking to do business in emerging markets.

Flourishing SMEs encourage private ownership, which in turn, provides employment opportunities to the local population.

Because of our focus on small and medium businesses, RAK FTZ has partnered with several banks that have programmes to assist SMEs. These banks have their own solutions that are geared for SMEs to help them start their companies faster and minimal procedures.

Other solutions that we offer SMEs are the following: Our Mazeed Service Desk helps clients – especially those new in the market – to start their business operations

with minimum hassle. From finding out where to get insurance policy for employees, to printing business cards, setting up a website, buying furniture, finding a house, RAK FTZ assists clients through the entire process.

One of the most notable features that make RAK FTZ the hub for SMEs is the ease of registration. Additionally, we are set apart by our environment and value-added services, which are specifically designed to meet the needs of SMEs focused on operating in emerging markets.

Our slogan Home of Business says it all. When a client chooses RAK FTZ, we help them every step of the way. We offer them services that make them feel like they are in their own house.

We offer flexi facilities with low startup costs that are geared towards SMEs.

We offer SMEs networking opportunities and B2B meetings with other RAK FTZ clients that can help them with their business.

About The Ras Al Khaimah Free Trade Zone Authority (RAK FTZ) was formed by an Emiri decree on 1 st May 2000 – the result of an initiative on the part of His Highness Sheikh Faisal Bin Saqr Al Qasimi, Chairman of the Ras Al Khaimah Finance Department, to set up the Emirate’s first free trade zone.

It established itself across Ras Al Khaimah at various specialised sites – the aim being to provide separate environments that would suit the needs of different types of investors and industries. Currently, RAK FTZ has four fully operational “parks” – the Business Park, Industrial Park, Technology Park and Academy Zone – with plans to develop additional industry-specific sites in the future.

RAK FTZ also has business and promotion centres in Dubai and Abu Dhabi, to cater to the needs of existing and potential clients based in those cities, and international liaison offices (in Germany, Turkey, India, and the United States), to support its international marketing activities and provide certain customer services.

With transparent and investment friendly laws and regulations, lack of restrictions on profit and capital repatriation, a strategic location not far from Dubai’s business and financial centres, proximity to international airports and seaports and considerably lower costs of living in RAK compared to Dubai and Abu Dhabi all working in its favour, RAK FTZ has been successful in attracting investors and entrepreneurs looking for cost-effective, hassle-free and secure options for setting up a business in the UAE. RAK FTZ continues to improve its products and services and strengthen its positioning as a business hub geared at helping SMEs connect to emerging economies. Today, it is one of the fastest growing and most cost-effective free trade zones in the UAE, home to more than 5,000 active companies from 106 countries around the globe. Its reputation for affordability, flexibility and broad geographical reach has served it well, and it is rapidly emerging as the preferred business hub in the region, from which investors of all industries and origins can easily access and expand into key emerging markets – proving that it is, indeed, what its slogan states – The Home of Business .

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OPPORTUNITIES IFC INITIATIVES

TAPPING INTO THE TOOLKIT International Finance Corporation (IFC), the private sector arm of the World Bank, has been actively working on promoting SMEs globally as well as in the MENA region. Aparna Shivpuri Arya spoke to Mouayed Makhlouf, Regional Director, MENA, IFC, about the role of IFC and how SMEs can benefit from their SME Toolkit.

H

ow is the private sector important for an economy?

And within the private sector, what is the role of SMEs? The private sector plays a critical role in development and growth. It provides about 90% of jobs worldwide.

The role of SMEs in promoting economic growth and spurring job creation is becoming more prominent now than ever. Many countries are recognising the importance of this sector in the context of the current global economic slowdown and rising unemployment.

To give a few examples from across the globe, SMEs contribute to: 48% of GDP and 54% of employment in the United States 60% of GDP and 83% of employment in China 86% of GDP and 95% of employment in Chile.

A recent study by the World Bank shows that SMEs are the biggest contributors to employment across 99 developing countries surveyed. This study also shows that SMEs account for over 80% of net job creation and 67% of employment in developing countries.

In the MENA region, SMEs represent between 80% to 95% of all local enterprises, and account for up to around 40% of all private sector employment.

Supporting the SMEs, is hence, an integral part of the growth and jobs equation in the region.

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What is the role of IFC, its investments and advisory services, in SME promotion?

Recent events have deepened the development challenges in the region and brought renewed attention to the consequences of youth unemployment. The public sector can no longer be the main provider of jobs in the region – promoting private sector-led growth is critical. IFC is

helping SMEs through its investment and advisory services.

IFC investment services address market failures to finance SMEs through: Debt and equity investments in SMEfocused banks Risk-sharing facilities to encourage SME lending Trade lines to finance capital equipment and inventory imports and exports

OPPORTUNITIES IFC INITIATIVES

Mobilisation of private funding, equity and debt guarantees Build leasing and franchising Equity investments through private equity funds.

IFC advisory services provides training and tools to help SMEs improve strategy, products, marketing, sales culture and delivery channels, credit-risk management, information technology and governance.

IFC advisory works with governments to improve the business climate and remove the obstacles that prevent small firms from joining the formal sector where research shows grow more and hire more people.

The SME Toolkit, an innovation of IFC, helps over five million users a year across 32 countries, in 18 languages, to learn and implement sustainable business management practices and increase their capacity, access to finance and new markets. Through a network of global partners and local distribution partners, localised SME Toolkit platforms provides SMEs with online and mobile phone access to key business management information (news, how to articles), interactive tools, business forms in accounting and finance, marketing and sales, legal and human

A recent study by the World Bank shows that SMEs are the biggest contributors to employment across 99 developing countries surveyed. This study also shows that SMEs account for over 80% of net job creation and 67% of employment in developing countries.

(L-R) HE Younis Haji Al Khouri, Undersecretary of Ministry of Finance and Mouayed Makhlouf, Regional Director, MENA, signing the agreement in February 2012

Recent events have deepened the development challenges in the region and brought renewed attention to the consequences of youth unemployment. The public sector can no longer be the main provider of jobs in the region – promoting private sector-led growth is critical.

resources, business directory and so forth. A strategic partner since 2006, IBM strengthens and expands the Toolkit’s technical capabilities.

IFC’s Business Edge classroom business training workshops have been delivered to more than 150,000 people across Asia, Africa, the Middle East and Latin America.

Tell us a bit more about IFC’s programme in the Middle East and North Africa.

IFC’s immediate focus has been to restore confidence in the private sector, which is the

critical engine of economic growth and job creation. We have committed over USD 2.4 billion (including mobilisation) since January 2011, boosting investors’ confidence and demonstrating that the region has a longterm potential.

Assuming the political situation stabilises and new governments are supportive of private sector development, we expect to invest up to USD six billion, including USD two billion in mobilisation, in the Middle East and North Africa over the next three to four years.

IFC has signed several significant transactions recently including a loan to support the construction sector in Iraq (Lafarge), a transaction to improve access to high-quality generic medicine (Hikma), and one to help increase access to finance for SMEs (BankMuscat).

Our advisory work is fully integrated into many of its investments and initiatives.

Advisory services are helping companies improve their corporate governance, advice on public-private partnerships in infrastructure, help SMEs access credit, and improve the regulatory framework for private education.

IFC also works to make business more inclusive to women and the youth especially through access to finance, education, MSME and Business Edge training programmes.

An integral part of IFC’s strategy over the last five years has also been to develop regional champion investors in the GCC and mobilise them to enter developing markets in the region and outside.

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OPPORTUNITIES IFC INITIATIVES

IFC, working with partners, has launched four initiatives to help the region: Small and Medium Enterprise Facility - joint with the International Bank for Reconstruction and Development (IBRD), and the European Investment Bank (EIB).

An USD 550 million facility was created to help financial institutions increase access to finance SMEs through a combination of investments and advisory services.

Education for Employment (e4e) – a joint initiative with the Islamic Development Bank(IDB).

In April 2011, IFC and IDB launched the Education for Employment (e4e) initiative for Arab youth. It aims to bring public and private partners together to improve the quality and relevance of the skills students bring into the workforce, in order to increase their

a policy forum which supports policy work in the region.

MENA Fund: It will initially channel USD 300 - USD 500 million towards minority equity investments in diverse sectors in the Middle East and North Africa. The fund aims to restore investor confidence in the region, spur the return of foreign direct investment, and increase access to finance for SMEs, education and infrastructure sectors. The fund will be managed by the Asset Management Company. IFC will provide up to 20% of its total commitments.

What else does the SME Toolkit offer?

It offers business forms, how-to articles, community features and much more. The SME Toolkit (www.smetoolkit.org), helps entrepreneurs and SMEs in emerging markets learn and implement sustainable

Assuming the political situation stabilises and new governments are supportive of private sector development, we expect to invest up to USD six billion, including USD two billion in mobilisation, in the Middle East and North Africa over the next three to four years.

chances of employment. It is also helping demonstrate the viability of private sector investment in the employment-driven education sector. Jordan and Tunisia are the initial target countries.

Arab Financing Facility for Infrastructure (AFFI) - joint initiative by IFC, IDB & IBRD. Its aim is to provide financing and advisory assistance for infrastructure Public Private Partnerships, cross-border infrastructure projects, and other innovative infrastructure plans with the potential for regional impact. The facility includes several components, including an investment vehicle and a technical assistance fund. The facility includes several components, including a private investment vehicle, a joint IBRD, IFC, IDB technical assistance facility (TAF), a public sector window for financing by IBRD, and

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business management practices and increase their productivity, their capacity, as well as improve their access to finance and new markets.Through a network of global partners and local distribution partners, the Toolkit provides online and mobile phone access to key business management information, interactive tools, and educational resources.

Localised SME Toolkit sites include hundreds of free business forms, tools, and how-to articles, in addition to a global business directory, multilingual community forums and a host of other interactive features, as per the choice of the local distribution partner. Core content areas include: accounting and finance, human resources, international business, legal and insurance, marketing and sales, operations and technology.

How has the SME Toolkit done in the region?

In the MENA region, local distribution partners are financial institutions that have a vested interest in becoming the partner of growth of emerging entrepreneurs and SMEs, as this often develop SME banking departments or initiatives. In line with its commitment to promote SMEs in the UAE, and to alleviate obstacles for their establishment, the UAE’s Ministry of Finance signed an agreement with the IFC in February 2012 to establish an institution for registering mortgage capital assets. The institution will work on developing a system to organiae mortgage interactions electronically, and on addressing challenges facing SMEs in applying for bank credit.

The institution will be established in two phases, where the first phase will involve a study of the guaranteed lending schemes currently implemented in the UAE, in addition to developing a proposal for a new law regarding guaranteed transactions in line with global best practices. The second phase will involve the creation of an electronic guarantees record, in addition to creating awareness about this new programme and providing training sessions on the e-system.

Current partners in MENA include Riyad Bank in KSA, AlexBank in Egypt, and Qatar Development Bank.

About Mouayed Makhlouf is the Director of the MENA region at IFC. He is responsible for the institution’s investments and advisory programs in over 20 countries, which aim to support economic development across the region through private sector development. IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector in developing countries.

Established in 1956, IFC is owned by 182 member countries, a group that collectively determines the institution’s policies. IFC’s work in more than a 100 developing countries allows companies and financial institutions in emerging markets to create jobs, generate tax revenues, improve corporate governance and environmental performance, and contribute to their local communities.

EntrepreneursHIP Nicole Rodrigues

THE DIVA BEHIND THE BRAND Nicole Rodrigues started Diva Modelling And Events at a time when the fashion industry in Dubai was still in its infancy.

She recently sat down with SME Advisor Sub-Editor Joumana Saad to share her story about growing a small brand into a formidable modelling and events agency.

“Initially my stride was to create an institution that would protect rights of models, promoters and clients so there would be more clarity as to what was being done, how it was being done, where it was being done and what was not being done,” says Nicole. Part of Diva’s creed is reliability, longterm commitment and professionalism: three key qualities that she says are not always reflected from her competitors.

Walking through Diva’s headquarters, you forget for a minute that you are in Dubai.

Nicole Rodrigues

Diva Modelling And Events headquarters in Dubai

S

o, what’s a girl to do after fulfilling her dreams as a fashion model? Unless you’re Heidi Klum, it may not be the most realistic idea to get back on the runway after settling down and having a family.

Starting your own modelling agency would be fantastic, but that’s easier said than done.

Nicole Rodrigues has done just that in Dubai with Diva Modelling And Events, an agency that provides models, promotional staff, hostesses and entertainers, among other services. As Owner and Managing Director, Nicole has grown Diva into a top modelling and events agency in

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the region, working with a network of 15,000 professionals. She also manages Diva Holdings Company, a real estate investment fund that is today worth almost AED 100 million.

It all started with a holiday in 2003 that never seemed to end. Nicole, a former haute couture fashion model, visited Dubai with her husband and six-month old infant and instantly fell in love with the place. At that time, Dubai was still in the early stages of its real estate boom. They relocated when the fashion industry in the Emirate was not very developed and Rodrigues saw it as the perfect time to fill that void and start a modelling agency that could set standards.

Instead of flashy and colourful, you are surrounded by an all-white, chic Manhattanlike interior decor. Multi-cultural (and fashion forward) staff is are recruiting talent and planning the next big events and campaigns.

Nicole can be found in the middle of the commotion, as she makes final decisions on the pressing issues of the day.

Over the past few years Diva has become a key player in high-profile events, including Dubai Fashion Week, Dubai Motor Show, Dubai Air Show and GITEX, among others.

Events are an area where the company shines, as Diva is fully capable of using its own resources to put together major events in the region. It’s this unique blend of services that has enabled the company to boost its brand and visibility. Companies like Unilever, Valentino, Missoni and Philip Morris have all partnered with Diva when building their brands in the region. Last year,

EntrepreneursHIP Nicole Rodrigues

Diva Modelling And Events was awarded the People’s Choice Award as part of the SME Advisor Stars Of Business Awards. It was also recognised as member of the Dubai SME 100 rankings and the Arabia 500.

Nicole credits the company’s rapid growth to a number of factors. She is grateful to have been able to launch in Dubai, which she says has a great eco-system for growth for SMEs and entrepreneurs. However, her exposure to international markets as well as financial expertise in the family has also helped her become a better leader. “My philosophy is that one must be completely rounded in business; you can’t just be great at finance or great at strategy and marketing; you have to have all of it together to create a perfect combination.”

Her biggest pet-peeve; procrastination.

When asked about her long-term goals, she adamantly says that she only thinks in the short and medium term. “If there’s something

Nicole Rodrigues after recieving the People’s Choice Award at the SME Advisor Stars of Business Awards 2011

If there’s something I think I want to do in five years it’s on my agenda today. Procrastination, I fear, is what restricts a lot of growth in a lot of companies. Just do it. Stop thinking. People spend too much time saying ‘should I do it?’ We figure out the way as we go along.

I think I want to do in five years it’s on my agenda today. Procrastination, I fear, is what restricts a lot of growth in a lot of companies.

Just do it. Stop thinking. People spend too much time saying ‘should I do it?’ We figure out the way as we go along.”

For now, Nicole will be working to meet the goals she hopes to accomplish by the end of the year – including expansion into other GCC markets with the launch of Diva Bahrain, Diva Qatar and Diva Kuwait, as well as plans to expand into Turkey, India and Pakistan. The company has already extended its brand to spas, beauty salons, laundry services and there are plans in the pipeline to launch a line of body shapers.

A major challenge that SMEs face in the region is, of course, access to financing and loans. Nicole advises entrepreneurs to look

beyond just financing to raise capital. She says there’s a lot of accessible money in the local market if you have the right business concept, vision and plan in place. It’s just a matter of networking and pitching your plan to the right people. She was fortunate enough to have received a small sum of money from an angel investor when she was starting out, however, her warning to young entrepreneurs is to be wary of who they choose as partners and mentors. She sees great potential in them, but at the same time notices a lack of understanding among them on topics like finance, private equity, wealth management and venture capital.

“You don’t need to be a genius at one thing but more of jack of all trades today, a great rounded personality. You can’t be able to get your strategy, marketing, motivation;

you need to round yourself completely,” she says. That’s exactly why she started NM investments, a platform available for new business plans and people who want to raise capital. The firm also provides financial advisory services to talent who are not very finance savvy and want to manage their money responsibly.

Another important lesson Nicole says every entrepreneur needs to learn is to just how get outside of your comfort zone to understand your clients and customers. Dubai, with its unique population that comes from a variety of ethnic and cultural backgrounds, presents both major opportunities and challenges to SMEs who operate there. Not all businesses, she says, are able to understand their needs.

So many startups fail relatively quickly, partly due to their lack of understanding of how international markets work, and how exactly to implement them locally.

Despite having achieved great success in such a short amount of time, Rodrigues stressed that there is always need for improvement, both personally and professionally. She is currently enrolled in the Owner/President Management programme at Harvard Business School, and aims to complete it in 2013. “Life is constant growth.

I’m at 39 and I’m going to school. I do it to better myself. It opens up all these windows, we get so lethargic in our luxurious lifestyles and we stop driving ourselves and I think it’s important to always have focus.”

About Nicole Rodrigues is a serial entrepreneur. She has over 18 years of experience as an haute couture model, booker, manager, and agency founder and partnership maker. Nicole has a track record of forging strategic alliances with top industry players and sourcing and managing angel, mezzanine, and tertiary investment capital from global investors.

Nicole has partnered with large multinational organisations such as Unilever and L’Oreal in order to grow businesses and market share for organisations under her direction. She has managed and grown several startups to very profitable levels.

Nicole currently owns and manages Diva Modelling And Events, a Middle East-based modelling and events agency. Please visit www.divadubai.com to find out more about the company.

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Marketing

Advertising

GETTING YOUR MESSAGE OUT Do you know the advertising regulations in your country? Are you sure that you are not infringing any copyrights or trademarks?

Mark Hill and Fiona Robertson, media lawyers, therightslawyers, take a first look at some of the many issues that arise in relation to advertising throughout the Middle East.

L

aw? What law?

All businesses need to market themselves somehow. Whether it is a small campaign run through social media, or a large multi-platform campaign across numerous markets, the key is not just getting the message right, but making sure that you don’t make waves legally as well. So while we won’t be passing on our bright ideas for getting the brand message right, there are a few tips that we can provide in relation to the legal aspects of advertising your brand in this market.

Regardless of the jurisdiction that you are operating within, advertising regulations are there to reflect the cultural, social and moral norms of the particular society to which the advertising will be directed. In other words, it is there to reflect society’s inherent nature. So that is the very simple starting point for looking at advertising regulation in whatever country (or countries) in which your

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campaign will appear. Advertising regulation in every country around the world will simply find a different way to achieve this goal, depending on those cultural, social and moral norms. This is no difference here in the Middle East to anywhere else. While there is a range of things to consider, we are going to address some key issues: intellectual property rights (in particular copyright) and also the safe use of a third party’s intellectual property rights agency contractual issues making false or misleading claims sales promotions and competitions

to copy and otherwise use certain kinds of work.

In the UAE, these will include many things, such as audiovisual works and sound recordings – so films and music.

Copyright law plays a role in advertising in two key ways. First, it protects the work that you have made with the creation of the actual ads themselves. Second, it helps you to avoid infringing third party rights in relation to items that you include within the advertising itself, such as artistic works, photographs, extracts form books, songs or movies, brands, or even other advertisements.

Now a key question is what copyright protects. First and foremost, it does not protect “ideas” – it can only protect the physical manifestation of that idea. That means the manner in which the idea is expressed; dialogue, copy, layout, photography, music or any other aspect of the actual expression used in the ad. In other words, it is not the creative approach that is protected but what is actually said, performed, photographed, shot, or shown on screen or page.

What does that mean for my campaign?

So, copyright law prevents third parties from copying anything that has the benefit of legal protection. In other words, if an ad is based on a pre-existing work which benefits from copyright protection, or if it includes the copyright materials of third parties (such as photographs or extracts from books or movies or music) without permission, then you are walking straight into a potential copyright infringement. Practically, there are a few key things to bear in mind.

Somebody needs to take on the task of clearing any advertisement that uses or relies on any third party owned copyright materials. In other words, if you ever get into this kind of activity, you should have a copyright clearance programme. Second, this practical ownership responsibility has contractual implications. If something goes wrong, who has to take responsibility – the brand owner, the agency or the producers? This must be dealt with contractually; at the very least the parties should agree on a mechanism to ensure that they all have to sign off on this issue before the ad will proceed.

So what is copyright anyway?

The relationship between the agency and the advertiser

In creating advertising you need to be mindful of breaching someone’s copyright. As you might expect from the name, copyright is a right conferring on its owner an exclusive entitlement

A fairly frequent area of difficulty that we see is the mess that clients and agencies often get into when something goes wrong. The problem usually arises because there are no formal (or even

Marketing

Advertising

informal) contractual arrangements between the parties and so there are no terms dealing with the issue of copyright in the work that was produced by the agency for the client or even by a producer for the agency.

Take this as an example – the agency and the client have not been able to agree on the format of the ad but the client likes the characters which were created for use in the ad. In fact, it likes them so much that it has given some of the characters to another agency for them to prepare print ads using those characters.

This raises two problems. It’s likely that the agency has not been paid for the work it did in the first place (because the ad has not yet been cleared). Second, the agency thought it was

of commerce. Often the result will be “no permit is required” but it is always better to ask than to be found in breach of the regulations.

Remember that in certain countries in the Middle East (such as Saudi Arabia or the UAE), it is not so easy to run prize draws so you should be well prepared if you plan to run a campaign across the GCC, for example. You need time to get these permits in place – in some case you need several weeks to do so.

Pulling it all together

Mark Hill, Managing Partner

The point of all of this is that working with advertising is simply a matter of being practical and allowing creativity and innovation to flourish; while at the same time ensuring that you do so within practical boundaries. As with pretty much every

You must always be careful – it can be a dangerous game to use claims that are designed to create confusion and mislead customers into believing that your product is somehow better or more unique that it actually is.

agreeing to be paid for a specific job, namely the creation of characters only for use in a TV advertisement and not a print campaign. It is well known in the advertising industry that the client has to pay the right fee for the right job.

The problem is that generally nobody has considered the contractual position – who owns the copyright? There are laws which govern this but unfortunately this kind of a dispute takes you to a murky world of vagueness and uncertainty.

The worst thing is that this kind of situation is easy to avoid as the ownership and use of copyright materials is fundamental to the agency, or client relationship, and should be one of the key points which is dealt with at the start. Operating on unwritten or incomplete contracts is simply asking for trouble. “Good working partners” quickly cease to be “good” or in any way “working” when something goes wrong. So the answer is simple – get a proper contract in place dealing with at least the basic provisions that are critical to the relationship and including copyright ownership, approvals and use.

Advertising claims Making claims about your brand and product is usually a vital part of the process of advertising.

But you must always be careful – it can be a dangerous game to use claims that are designed to create confusion and mislead customers into believing that your product is somehow better or more unique that it actually is.

These are serious matters so be careful and ensure that you not only understand your product but your competitor’s products as well – it can be easy to inadvertently breach this law by claiming that your product is, for example, the only one that has a certain feature when your competitor may also have that feature.

Fiona Robertson, Senior Lawyer

other jurisdiction we have ever advised in, the rules are many, varied, and often vague. Let your common sense guide you and if you are still not sure, you could always ask a good lawyer.

Competitions and trade promotions A popular way to market a brand is to undertake a prize draw such as those that take place constantly in shopping malls across the region. It may surprise many to find out that the law in the Middle East can actually be more liberal than in many other jurisdictions around the world.

There are certain practical things that you need to do to obtain the appropriate approvals to run such promotions. Practically this can be difficult, with several government agencies often involved; depending on what you are doing and where you are doing it, you may have to approach consumer protection departments and chambers

About therightslawyers is a boutique TMT (Technology Media and Telecommunications) firm set up in the Middle East to cater exclusively for the creative industries, businesses that are driven by or reliant on intellectual property rights; including brand and other IP rights owners, companies facing counterfeiting and IP infringement issues, franchise operations, pharmaceutical and biotech companies, and technology, IT and telecommunications Industries.

For more information, please visit www.therightslawyers.com

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Marketing

Media relations

MAKING THAT CONNECTION Public relations professionals must face the facts. They need the media to get their message out to their clients and target customers.

To do this effectively, it’s essential to build a mutual respect, says Sawsan Ghanem, Managing Director, Active Public Relations.

M

edia provide a community service. They inform and update us and do this with a passion for their profession. Some people either don’t get this or decide to ignore this simple set of facts and seem to approach media in a manner and style that immediately irritates, or puts a journalist on the defensive.

In hearing some of the quite incredulous stories in my 12 plus years in PR, a few of us have come up with a classification system that is simple but accurate: it’s called the two camp league.

The first camp which we shall call PR’aucrats, follow the lazy approach of just forwarding or mass distributing any news, invites, interview pitches and more on behalf of their company to all media.

This camp is usually completely ignorant about journalists’ areas of interest and its relevance to their clients and target audiences.

The second camp which we shall refer to as arrogant delusionists, follow a similar approach to the PR’aucrats camp, but are guilty of thinking that any communications related to their company or their client’s company must be of interest to all media and in turn will be published by these minions who stand between them and a biblesized coverage report.

Unfortunately, both camps have failed in the most basic forms of human interaction in the professional world: understanding who they are communicating with and respecting the media profession, their interests and their time or lack of it. Think about it, if you worked in the IT industry and were approached by someone looking to sell you fashion design courses, what would you think of them?

If you really are serious about gaining the media’s respect, then you need to work hard at understanding them, their publications, topics and issues they love writing about. Provide them with

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Sawsan Ghanem information for that story in a timely fashion. Every company’s media outreach approach needs to be defined, targeted and mindful of each reporter’s preferences and interests. You need to keep in mind that media are your main target audience who need to engage with your brand and fully understand it. Why? Simple, they are your voice to your customers or key stakeholders.

Some rules of thumb: Do your homework; research and understand who your target media are. By doing so your approach will be more targeted and knowledgeable, yielding respect from the reporters and editors you approach from the outset.

Build relations with the reporter or editor who writes about your particular industry by monitoring their articles in real-time to understand their specific style and the angles pursued. This way, when you pitch them for content, you will have a better success rate. Also, reading an article for a particular reporter and then calling them with constructive

feedback shows you are really interested and read the news all the time.

Build a rapport on a personal level - don’t just call media when you need them for something.

Contact them on a regular basis for an informal chat and get to know what their interests, political leanings and hobbies are. This way you build a solid relationship rather than one based on needs.

Be responsive. It’s a two way relationship – if a reporter contacts you for commentary, direction or feedback, then you need to respond immediately.

This goes a long way in positioning your company top of mind with that reporter. In turn, when you approach the reporter for a pitch, or announcement, or commentary, they will be more willing to listen as you’ve supported them in the past.

Give exclusives: Every now and then if you have a big story to tell and want to make a big impact in a specific Tier one publication, pitch it to them as an exclusive.

Cultivating a relationship means you must be willing to compromise, to understand the other person. This means listening to them as much as talking to them. That may sound simple but in this industry it’s not always common practice. In a market with the largest concentration of PR Agencies and PR people, no wonder some journalists work so hard to keep us at arms length.

About Sawsan Ghanem is the Joint Managing Director of Active PR. She has lived in the Middle East region for the greater part of her life. Sawsan lived and studied in the UK for a few years where she gained her BSc in Chemistry & Management from Kings College, London University and MA in International Business, from Webster Graduate School (London Campus).

Sawsan began her career in PR over 14 years ago, when she caught the PR & Communication bug. She founded Active PR in the summer of 2003 along with Louay Al Samarrai.

Sawsan has in-depth experience in strategic PR campaigns, media relations, creative thinking, crisis management and more. She is the SMB Advisor Middle East winner [before the magazine was rebranded SME Advisor] in the category of Admirable Woman Entrepreneur (2008) and she won Arab Entrepreneur of the Year at the SME Advisor Stars of Business Awards 2011.

Legal

CURRENCY RISK

BETTER SAFE THAN SORRY As the Eurozone crisis continues to deepen, businesses should consider taking action to protect their position from the potential effects of the continuing drop in the value of the Euro and the possibility that one or more countries may drop out of the European Monetary Union, says Melissa Forbes, Associate, Taylor Wessing.

W

ith sovereign debt levels continuing to rise and concerns abounding about the ability of the European states to repay their debts, there is a risk that countries will begin to withdraw from the European Union and that certain member states will abandon the Euro and re-introduce their own local currencies.

Where a business receives payments in Euros it may wish to consider amending its contracts to ensure that it is protected against any potential currency conversion in the less likely event that a dispute arises between the parties as to which currency shall apply instead.

It may also be prudent to consider inserting a similar provision in agreements where payments are made in Euros; for example to a supplier or a service provider, which shall apply where the Euro as a currency ceases to exist. Even if the default currency falls in value (which would benefit a company’s position where it is obliged to make payments to other parties in Euros), there is the potential for uncertainty where there is more than one European jurisdiction that is connected to the contract.

For example, there may be a contract for the sale of products from the manufacturer in Germany to a purchaser in France and therefore, two European currencies that have a connection with the contract.

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Payments received in Euros For contracts where payments are to be received in Euros, you could nominate a currency to apply if the Euro no longer exists, or if a particular country pulls out of the Euro, or introduces a second local currency. Ideally,

you would choose a currency that is most likely to increase, or at least maintain its value over the term of the contract as the currency that the Euro is to convert to.

The calculation date for the conversion of the currency may be set at a time that is

Legal

CURRENCY RISK

reasonably, prior to the date, on which the trigger is to occur (i.e. the date on which the Euro may cease to exist, or the date upon which a member country of the European Monetary Union may begin to recognise a second form of currency as the legal tender for such country). The reason for this suggestion is that the Euro may decrease in value in the period immediately prior to the trigger date. By setting the calculation date reasonably prior to the trigger date it may reduce the risk of a potentially adverse effect of the currency conversion.

Where payments are to be made in Euros, the provision would ideally be drafted so that it is only to be exercised if the Euro disappears completely, rather than a particular country dropping out of the European Monetary Union or adopts a dual currency system.

Payments made in Euros Where payments are to be made in Euros, the provision would ideally be drafted so that it is only to be exercised if the Euro disappears completely, rather than a particular country dropping out of the European Monetary Union or adopts a dual currency system. This would allow your business to benefit from the currency drop that is likely to ensue where countries drop out or adopt a dual currency system.

Similarly, the conversion would ideally occur based on the prices at the time of expiry of the Euro rather than a certain period beforehand in order to allow your business to benefit from the currency drop that is likely to ensue in the period prior to the expiry of the Euro.

However, you need to consider the contract as a whole in order to ensure that your position is adequately protected under the contract. For example, the governing law and jurisdiction would need to be reviewed in order to ensure that the contract is subject to a legal system that is likely to enforce such a provision. There may also be a material adverse change provision or a force majeure provision in the agreement. If so, it would also be prudent to ensure that such provision is not drafted so broadly that it is triggered by the break-up of the Euro, a change of currency, or a drastic drop in currency value where payments are to be received in Euros.

Protection against a drop in the value of the Euro by use of derivatives Regardless of whether the Euro breaks up or not, it is likely that if the tensions

Melissa Forbes

keep mounting in Europe, it will result in a significant fall in the value of the Euro.

Mehdi Al Amine, Director, deNovo Corporate Advisors, suggests that foreign exchange derivatives could be used as a solution to protect businesses against the effect of a potential drop in the value of the Euro.

A foreign exchange derivative instrument such as the Option is a contract and an insurance, which allows a party to force its counterparty, the bank, to buy or sell a currency (in this case, the Euro versus the US Dollar) for a particular price.

For example, a company is expecting to receive a payment in Euros in one year and, at the time of entering into the agreement, the exchange rate of USD to Euros is USD 1.2750 to EUR 1. As Al Amine explains, the company could pay a percentage of the notional amount as a premium in order to buy the protection and, if the Euro falls, will force the bank in one year to buy the Euros for a preagreed level.

If the value of the Euro drops to USD 1.10, at the end of that one year period, the company will be protected from the USD 0.15 currency conversion loss per Euro that it would have otherwise incurred if it had not entered into the derivative agreement.

The cost of hedging the currency varies, depending on the exercise level of the option and other variable factors, but would usually be between 1-5% of the amount to be hedged.

Al Amine advises that “alternative and cheaper solutions are available where the business seeks only to protect itself against a strong depreciation in the Euro, which would correspond to a deepening of the Eurozone crisis, as opposed to a slight and manageable decrease in its value.�

A business that employs a prudent risk management policy will want to explore these solutions, given the uncertain times that we face in the Eurozone.

About Melissa Forbes is an Associate in the corporate department of Taylor Wessing. Melissa has advised on a number of cross-border and domestic corporate transactions including mergers and acquisitions, corporate re-organisations, private equity investments, joint ventures and divestitures. She has also advised on a variety of commercial matters relating to issues such as corporate governance, regulatory compliance, management incentive schemes, shareholder disputes, agency and brokerage agreements, licensing, company formations and de-registrations, as well as various commercial and property related disputes.

Melissa is qualified as a solicitor of both the Supreme Court of England and Wales and the Supreme Court of New South Wales in Australia. She can be contacted at m.forbes@taylorwessing.com.

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Business pin ups Dubai SME 100

A mark above the rest

With the release of the Dubai SME100 rankings list back in February, Mike Byrne decided to speak to three companies that were rated within the top-ten, but each from differing sectors, to see exactly what it was that set them apart from the pack.

T

he Dubai SME 100 initiative was launched by His Highness Sheikh Ahmad Bin Saeed Al Maktoum on 14th March 2011. The initiative, aimed to identify outstanding SME performance and potential, forms a critical component of the Dubai SME five-year plan approved by the Economic Sector Committee in 2009.

“By ranking and recognising the top SMEs, we are opening several fronts. These top 100 SMEs have persevered to achieve major triumphs for their business models, innovations and brands over the years. They have become successful in their own right. Dubai SME’s role is to create a platform for evaluating these top SMEs. Investors, in particular will be interested to know who these promising SMEs are and perhaps invest in them.

Through Dubai SME 100, we hope to create an indirect pipeline of SMEs for a secondary SME listing market in Dubai. This will help SMEs gain additional external capital, new talents, markets and brand enhancements,” said Abdul Baset Al Janahi, CEO of DubaiSME, during the ceremony announcing the rankings.

The Dubai SME 100 ranking will act as a platform and catalyst to identify promising

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SMEs – to groom them to become bigger, better and sustainable enterprises; eventually graduating them to large globally-oriented companies. At its core, the ranking is aimed at: Celebrating Dubai’s top performing SMEs. Creating greater awareness of the importance of SME development.

Creating a national motivational psyche in the nation’s social and business community.

Encouraging SME role models to share best practices.

Marketing the capabilities of Dubai’s SME’s to regional and global investors.

Providing opportunities for SMEs to raise capital Creating a base of SMEs for a potential secondary listing of SMEs (IPO) that can attract equity capital for growth.

Providing development path for SMEs to graduate.

Creating a culture of transparency and corporate governance.

Unlike other rankings, which are based mainly or purely on financial indicators, the Dubai SME 100 ranking places a balanced emphasis on financial and non-financial dimensions that affect enterprise performance and development. The non-financial dimensions

cover innovation, international orientation, human capital development and corporate excellence. The ranking will also serve as a tool for helping SMEs identify capability gaps for improvement. This is the real long-term value that the rankings will bring to the table for SMEs.add of Dubai SME 100.

The basic criterion is that the applicant must be an SME based on the official definition of Dubai’s SMEs. In addition, it must have audited financial statements for at least three years, and be an independent entity registered in Dubai (under DED or the Free Zones). SMEs will be ranked only after they have submitted all relevant information voluntarily. Hence, the ranking does not necessarily represent Dubai’s top SMEs, but SMEs that have undergone the Dubai SME evaluation process for ranking.

Key facts and figures

1

A total of 1092 SMEs registered for the initiative, of which 196 SMEs applied to move on to stage two of the application and evaluation process. From these 196 serious applicants, the top 100 were selected and ranked based on complete submissions of financial statements, supplemented by either a management interview, or site visit, to ascertain facts and evaluate the merits of each case.

Of the 100 ranked SMEs, based on Dubai’s official SME definition, 15% are classified as micro SMEs, 52% as small SMEs and 33% as medium-sized SMEs. In terms of sectors, 62% are from the services, 13% are from the manufacturing and 25% belong to the trading sector.

The combined turnover of the top 100 SMEs based on their latest financial records is estimated at AED 2.3 billion. Their estimate total assets are worth AED 1.4 billion and the combined profit is AED 220 million.

Together, the top 100 SMEs in Dubai have 4,319 employees.

2 3 4 5

Business pin ups Dubai SME 100

Name: Dimensions Healthcare Dubai SME 100 ranking: #1 Sector: Health care

D

imensions Healthcare swept into the top spot and after speaking to its Managing Director, Dr. Omar Ghosheh, it’s clear to see why. Established in 2008, it has since become a leading healthcare informatics and consulting firm in the region, assisting both private and public sectors with transitioning and streamlining services and healthcare systems.

More specifically, it also deals with medical coding and revenue cycle management, drug databases and decision support systems, pharmacy benefit management, and eClaim solutions.

Since its inception, Dimensions Healthcare has blended healthcare information, technology and experience to build, implement and train to provide evidence-based solutions for healthcare providers. At present they serve 2,100 healthcare entities and 15,000 clinics across the UAE and Oman, with plans for expansion into the KSA market in the near future.

“Through our partnership with MedImpact International we are striving to implement the American system, whereby all systems will be streamlined; from solutions to enhance clinic management tools, to solutions for pharmacies to manage their inventory and so on,” said Dr. Ghosheh.

So what feedback did Dubai SME give to Dimension Healthcare after the results were announced? “Their feedback report is very thorough. As far as outlining where our strengths lay, they pinpointed our innovative strategies over the past four years – we have consistently strived to better our performance and services year-on-year and this was highlighted with

both our financial records and our in-house management style,” he says.

Dimensions Healthcare have also been instrumental with the implementation of the UAE government’s introduction of eclaimlink.com, whereby health claims can

“It’s the efficiency and innovative approach of this young staff base that drives our success with any project we undertake,” says Dr. Ghosheh.

So how is it exactly that Dimensions Healthcare can react so well to market demand, especially with the health sector presently experiencing a boom in the region? Dr. Ghosheh explains that they work very closely with policy makers and committees and in many instances offer close coordination through recommendations.

“We are continuously striving not only to complete current projects for the

“We may not have a huge number of employees but it’s a firm belief in quality over quantity – we promote and recruit young talent and nurture that talent and as more projects evolve then more staff is brought on board.”

– Dr. Omar Ghosheh, Managing Director, Dimensions Healthcare

be lodged electronically. It is part of the UAE’s wider green initiative of switching most of paper driven processes across to electronic and Dimensions Healthcare have dealt with the full process systems and processes involved. “There is a calendar in place for the phase out of paper and it is hoped by January 2013 the remainder of government departments will have followed suit,” said Dr. Ghosheh.

So what does he believe has been one of the major contributors to the companies accelerated growth and success? “I know this is rather cliché but its human capital.

We may not have a huge number of employees but it’s a firm belief in quality over quantity – we promote and recruit young talent and nurture that talent and as more projects evolve then more staff is brought on board,” he says.

Indeed, from talking to Dr. Ghosheh and from a glance at the staff in-and-around the office, there is a young vibrant feel to this company. He notes that with a staff of less than 50 in Dubai, most of this number are within the mid-to-late twenties category.

Dr. Omar Ghosheh

private sector, but also to assist with both the best practice policy implementation, and the practical follow-through, where streamlining the healthcare sector is concerned. To be involved with these policy makers and committees allows Dimensions Healthcare to serve the public interests in healthcare as best as possible,” he says.

APRIL 2012 SME ADVISOR MIDDLE EAST

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Business pin ups Dubai SME 100

Name: Intercoil International Dubai SME 100 ranking: #4 Sector: Manufacturing

I

ntercoil International was incorporated in 1974 and today the company’s core business is the production and distribution of (wholesale, retail and export) of PU foam, furniture and orthopaedic sleep products under two brands; Intercoil and Therapedic. Intercoil presently exports to all the countries in the GCC, North Africa and South Asia.

At present Intercoil has over 220 employees and 20 factory outlets across the GCC. Their products are distributed and sold through retailers. Accreditations include ISO 9001 certified by KPMG in 2000 and it is a member of the International Sleep Products Association (ISPA).

As well at the announcement of its top ten placing in the Dubai SME 100 ranking, Intercoil also achieved the Dubai Quality Appreciation Programme, instituted by the Government of Dubai and Dubai Department of Economic Development (DED). Held under the patronage of HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of UAE and Ruler of Dubai, the certificates were handed over at the Business Excellence Awards 2012 ceremony held April 4 th at Dubai World Trade Centre.

The award was received by Hassan Al Hazeem, Managing Director, of Intercoil International, from Mohammed Bin Rashid Al Maktoum. When Hassan spoke to SME Advisor he made it clear from the outset that this locally grown Emirati business places emphasis on preserving quality and maintaining its sense of social responsibility.

What is perhaps most striking about Intercoil is its capacity to provide products at both national and international levels. Upon receiving the Quality Appreciation certificate,

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SME ADVISOR MIDDLE EAST APRIL 2012

Hassan noted: “Business excellence models take a holistic view and audits the quality culture followed at all levels of the organisation. The Dubai Quality Appreciation Programme Award is a major milestone for

increase production through automation.

“Full automation is in place for the foam division, but the long-term plan is of course to utilise industrial technology to automate across all divisions,” he says.

So, how did Intercoil find the entire application process regarding the Dubai SME rankings? “What better way to evaluate your own business than to expose your strengths and weaknesses to a competition of this kind?

The application was thorough in terms of innovation, financial, performance and human capital. The process allowed us to take a look at all aspects of the business and to recognise

“We received comments regarding our exporting ability and our ability not only to maintain our high levels of output, but also on our innovative plans to expand and grow.”

– Hassan Al Hazeem, Managing Director, Intercoil International

us, but we cannot rest on our laurels; we need to sustain our amazing growth, through innovation and continuous improvement.

This recognition is a major impetus for our strategy augmenting our manufacturing capabilities and expanding our retail footprint across the region.”

Indeed their exporting capability was one of the main features highlighted in Dubai SME’s feedback to the company after the announcement of their high ranking.

“We received comments regarding our exporting ability and our ability not only to maintain our high levels of output, but also on our innovative plans to expand and grow,” says Hassan. So what are these plans for expansion and how best can they be achieved?

“Currently the main plant is here in Dubai but there are plans in place to shift full production to Ras al Khaimah (RAK). There are also plans to expand further into the untapped market in North Africa, including Morocco, Algeria and Tunisia, with original deadlines delayed because of the Arab Spring,” said Hassan.

Hassan also explains that the adoption and implementation of the latest technological advances has helped Intercoil

Hassan Al Hazeem

elements that may need refined – areas that we may have overlooked or become ignorant to over time,” said Hassan.

“It certainly gave us the initiative to propel the business, to promote better corporate governance going forward and, as we achieve a larger status, to maintain a standard of professional excellence and quality driven products,” he concludes.

Business pin ups Dubai SME 100

Name: Paramount Computer Systems Dubai SME 100 ranking: #9 Sector: Professional services

F

ounded in 1992, transformed in 1999, and re-invented in 2007, Paramount Computer Systems is a regional provider of technology and services for securing the information assets of enterprises. The company’s services range from the development of a security policy, security awareness training, through to the delivery of solutions that encompass perimeter security, secure content management, identity and access management, vulnerability assessment, risk, policy and compliance management.

In short, Paramount assists businesses in the Arabian Gulf Region, understand, monitor and mitigate the risks in their IT infrastructure. Its clients include banks and financial institutions, airlines and transportation companies, telcos, universities and large corporate entities in the region. With six offices and over 90 staff, it can boast partnerships with some of the region’s biggest IT security layers, including McAfee, EMC and Juniper.

So what motivated Paramount to enter a nomination for the Dubai SME 100 rankings? The company’s CEO, Premchand Kurup, explains that it was out of desire to see what the outside thought about his company. “Who better to judge you than your peers – it was this very reason that Paramount was first established – to have a company working for the customer that was also respected among both peers and the professional market,” says Premchand.

Having been placed within the top ten of the rankings list gives an obvious indication of the quality of services

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SME ADVISOR MIDDLE EAST APRIL 2012

Paramount provide, but what were the key elements outlined in the comments from Dubai SME? “We scored high with innovation and with an understanding of the direction the company is going

updates pertaining to outlined strategies and targets.

So, what is next for Paramount? “We will take the next three to five years to expand into other markets. We are

“We scored high with innovation and with an understanding of the direction the company is going as well as being commended for our willingness to allocate the necessary resources for continued growth and expansion.”

– Premchand Kurup, CEO, Paramount Computer System

as well as being commended for our willingness to allocate the necessary resources for continued growth and expansion,” he says.

“We place a lot of emphasis on human capital development, with training and education an important component built into every employee’s career path. We respect the need to maintain high employee morale by balancing processes with relationships, encouraging individualism as well as team work and continuing transparency from top to bottom. The hierarchy of the company is not strictly enforced and as far as approaching management, it’s well communicated that the door is always open,” says Premchand.

What is also rather impressive is Paramount’s mature corporate governance policies. There are regular and strict audit processes in place as well as quarterly reviews, where each department heads meets with management to give assessments and

Premchand Kurup

confident that with a careful planning and a solid strategy in place that Paramount can enter the more mature markets of Europe and the US and recreate the success we have here in the Middle East,” Premchand grins.

2011

Ranked #1 on the Dubai SMEs 100 list.

Recognized as the top performing SME by the Government of Dubai. Dubai has 72,000 SMEs.

and public sectors establish high standard healthcare systems.

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Providing payers with clinical and financial benefit

Systems

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serving pharmacies & Physicians

Tel No.: +971 4 236 4691 Fax No.: +971 4 236 4692 Website: www.Dimensions-Healthcare.com e.Mail: info@dimensions-healthcare.com

Drug Databases & Medical Coding

Drug Databases, medical coding resources and training.

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Industry watch

Consumer confidence

MIXED ATTITUDES A recent Consumer Confidence Index survey conducted by Bayt.com and YouGov, a research and consulting organisation, has shown that the overall sentiment in the region is less than positive for the present time. However, optimism for the year to come remains comparatively high.

O

verall, there is a tendency towards less positive sentiment at present across the region.

Only 26% of the respondents to the Consumer Confidence Index survey believed that their personal financial situation is better now than it was this time last year, and only 25% feel optimistic about the current economy of their country.

Regional sentiment This is not considered to be a good time for business (according to 37%), with 43% stating that now is a “bad time” to buy consumer durables. In terms of employment, almost half of respondents (49%) claim that there are “very few jobs” available, yet of those who are currently employed, 26% state that their company has more employees than at the same time last year. At 66%, the majority believe that their salaries have not kept pace with the cost of living.

There is definitely hope for a more positive future, as 52% of MENA respondents believe that their personal finances will become better in a year’s time. Also all countries expect that business conditions will improve within that timeframe.

Inflation continues to generate a negative outlook across the board, with the cost of real estate being badly looked upon in all countries. Only 23% of respondents are optimistic about the future growth of their companies in terms of employees, with all countries sharing a neutral opinion about their companies being able to keep up with staffing demands.

In general, there is little interest in purchasing a vehicle or property, however, those who are planning or considering a large purchase will buy

new. There is more interest in purchasing laptops and desktop computers than in any other major purchases, followed by furniture.

SME ADVISOR MIDDLE EAST APRIL 2012

In the UAE UAE respondents mostly feel there is no change in their personal financial situation, when compared to the same time last year; 43% believe their situation is the same, 28% believe that their situation is worse, and only 24% state that things are better. A similar balance is true with regards to the opinion of the

“Given the current climate in the Middle East and, to an extent, globally, it is to be expected that sentiments for the present are low and that there is hope for a more positive future. The MENA region presents a mostly unified front in terms of opinions and aspirations, with an especially positive outlook for future financial and commercial conditions.”

- Sundip Chahal, CEO, YouGov “The appraisal of the current situation is subdued across the board, in terms of economy, commerce and employment. This sentiment is echoed in most countries, however there is a considerably more positive outlook for the near future as people look forward to improved conditions all around,” said Suhail Masri, VP Sales at Bayt.com.

Source: YouGov 58

“Given the current climate in the Middle East and, to an extent, globally, it is to be expected that sentiments for the present are low and that there is hope for a more positive future. The MENA region presents a mostly unified front in terms of opinions and aspirations, with an especially positive outlook for future financial and commercial conditions,” said Sundip Chahal, CEO at YouGov.

country’s economy: 34% believe that it is the same as last year, 29% believe that it is worse, and 27% believe that it has improved.

Employment conditions are not considered to be too favourable, with 43% claiming that there are very few jobs available; 35% of respondents say that their company has less employees now than it did this time last year (28% claim that they now have more colleagues). Salaries are considered not to have kept up with the cost of living, according to a massive 70%.

As ever, there is considerable optimism for the future in the UAE, with 46% stating their belief that their personal financial situation will be better in a year’s time, while 45% hold hope that the country’s economy will also have improved. Business and employment conditions are expected to become more favourable by 46% and 31% of respondents, respectively. Despite this, only 23% are optimistic that their companies will grow in terms of number of employees, with 40% remaining neutral with regards to meeting staffing requirements.

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Industry watch TECHNOLOGY

IT Spending On The Rise According to Gartner, Middle East and Africa enterprise IT spending across all industry markets is forecast to reach EUR 70 billion in 2012, a 6.3% increase from 2011 spending of EUR 66 billion.

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ast year growth rates in the IT sector across the Middle East and Africa region were in doubledigit figures. As a consequence, 2012 will be hampered more, and top growth rates will be limited to those countries that didn’t exploit their economies says Peter Sondergaard, Senior Vice President at Gartner and Global Head of Research.

“Four forces of technology: cloud, social media, mobile and information, will equally impact IT organisations and technology providers in the Middle East. However, we believe that the market for cloud services, the lack of skills to deal with big data and the explosion in information could limit

changes in organisations in the Middle East,” Sondergaard added.

“Building industrialised IT capabilities will have CIOs across the Middle East increasingly turn to outsourcing of infrastructure and application environments. We believe that there will be substantial opportunities to drive down costs of outsourcing contracts that tend to be the most expensive globally.

CIOs will need to build sourcing and vendor management skills to ensure better prices,” said Mr. Sondergaard.

The banking and securities industry will be the fastest growing sector, especially in the Middle East and North Africa (MENA) countries. This market is largely boosted by the still sustained expansion of the Islamic

banking sector, due to the recent legislations in Qatar and Oman, as well as the new wind of legalisation from the Islamic parties after the Arab Spring.

“We see four major business trends in the Middle East and Africa region; the diversification strategies of governments to create sustainable and diversified businesses from an oil-based economy, the expansion strategies of local organisations across the region, the need for more security and the management of the impact of the Arab Spring,” said Vittorio D’Orazio, Research Director at Gartner. “To underpin those strategies, hardware and software will play a key role and are predicted to have the fastest growth rates in 2012, as well as in the following years,” he added.

The largest markets in terms of actual Euros will remain within the large governments (and state-owned enterprises), the banking sector and the large manufacturing and natural resources industries, which are also comprehensive of the rich energy sector.

Enterprise IT Spending by Vertical Market in MEA (Billions of Euros) Sector

2011 YR

2012 YR

2013 YR

2014 YR

2015 YR

Banking and securities

11,849

12,721

13,338

13,932

14,590

5.3

Communications, media and services

9,718

10,415

11,045

11,620

12,303

6.1

Education

1,878

1,998

2,075

2,142

2,218

4.2

12,371

13,130

13,638

14,119

14,666

4.3

Healthcare providers

3,037

3,261

3,404

3,512

3,615

4.5

Insurance

4,148

4,438

4,607

4,746

4,906

4.3

10,834

11,266

11,643

11,904

12,208

3.0

Retail

3,127

3,261

3,328

3,425

3,540

3.1

Transportation

3,255

3,500

3,642

3,743

3,858

4.3

Utilities

3,906

4,178

4,328

4,459

4,583

4.1

Wholesale trade

1,549

1,658

1,707

1,763

1,812

4.0

65,671

69,827

72,755

75,365

78,300

4.5

Government

Manufacturing and natural resources

Grand Total

Source: Gartner (January 2012)

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SME ADVISOR MIDDLE EAST APRIL 2012

2011-2015 CAGR (%)

Technology SME about town for Business BUSINESS ANALYTICS for SMEs DIFC workshop

FOSTERING VITAL INTEGRATION Dubai International Financial Centre (DIFC) hosted a workshop focused on Dubai’s infrastructure and logistics sectors as part of the annual DIFC Economics Workshops series. demographics and rapidly growing urbanisation are driving increased infrastructure spending, while high oil prices have provided the required financing in the Gulf countries.”

Dr. Saidi added: “But infrastructure investment requirements From left to right: Dr. Nasser Saidi, Chief Economist, DIFC; Mohsen Ahmad, Director of are growing as a result Operation Development and Stakeholders Relations, Dubai World Central; and Mohammed Al Muallem, Senior Vice President and Managing Director, DP World, UAE Region of the Arab Spring. We will need to focus on new approaches to infrastructure and logistics he workshop addressed various investments through greater private sector facets of the topic including participation, financing through local currency Dubai as a logistics hub, debt and Sukuk issues, as well as new regioninnovative project financing options, wide institutions. The time has come to create an key elements to facilitate regional Arab Bank for reconstruction and development integration, and infrastructure and to address the multiple economic, social and reconstruction opportunities in the MENA region. The event also provided environmental, challenges facing our region and the aspirations of its youth.” a platform for financiers and business The event opened with a session titled leaders to network, share knowledge Dubai – the region’s trade, business & and discuss the latest trends and logistics hub, which discussed how Dubai’s developments in infrastructure and investments in infrastructure and logistics logistics in Dubai and the region. have transformed it into the region’s trade, Speaking at the event, Dr. Nasser Saidi, tourism and business hub, allowing MENA to Chief Economist at DIFC said: “Dubai’s integrate into emerging global supply chains. investments in infrastructure and logistics The second session titled New financing have enabled it to diversify, achieve greater options during changing times for the MENA openness and transform its economy, region, highlighted the alternative options changing its position in global economic for financing infrastructure in the MENA geography. Dubai’s infrastructure assets region, the role of Islamic Finance and the and its multinationals should be leveraged role for private participation. Transformational to allow the greater integration of Arab investment in infrastructure and logistics with countries into emerging global supply new financing options can not only improve chains. The Arab region’s young population

T

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SME ADVISOR MIDDLE EAST APRIL 2012

interconnectedness and facilitate trade, but also enable businesses to integrate into the global supply chain. In particular, the GCC and MENA countries need to be integrated into the emerging New Silk Road global supply chain.

The changes in financing options for the MENA region’s businesses was among the points of discussion, with the sectors of focus highlighted. In addition, the session identified the changing trends in the post-financial crisis world, and the changes post Eurozone sovereign debt crisis. The speakers also touched upon the role of Islamic Finance as an additional source of financing, including current growth and its ability to provide access to untapped funds. An overview of the potential benefits of regional infrastructure integration, alternative sources of project finance, and innovative instruments used in other regions and their suitability for the MENA region were all points identified in the session.

Speakers also discussed the issues involved in financing, from a financial institution’s perspective, and the main challenges faced when financing infrastructure projects in the region. The discussion also aimed to identify how an integrated MENA region can play a central role in the larger global network, and the possible avenues for integration with emerging markets such as China and India.

This session was followed by another one titled Infrastructure: expanding horizons through regional integration. This topic focused on the regional economic integration and how it can benefit from integrated infrastructure. Similarly, integrated infrastructure projects can enable and drive regional economic integration.

During this session, key elements required to facilitate such integration were identified, including finance, key players, authorisations and permits, and resources such as raw material and human capital, while regionspecific requirements were touched upon.

The workshop concluded with one final panel discussion titled MENA infrastructure – opportunities for reconstruction & the role of emerging market economies. It mainly focused on the fact that the Arab Spring and reconstruction requirements are a major opportunity for massive infrastructure investments that would foster economic growth and integration of Arab countries into new, emerging global supply chains.

Technology SME about town for Business BUSINESS ANALYTICS Series for SMEs DIC Excellence

Implementing excellence UAE-based SMEs are beginning to realise the value of ICT investments, such as lower operating costs, improved human resource efficiency and business effectiveness. In many cases, these investments lead to increased revenue generation, says John Lincoln, Vice-President Marketing at du.

“Investments in ICT are of paramount importance to increase an SME’s productivity. A minimal 10% increase in a SME’s productivity can sometimes determine whether the business remains competitive and sustainable,” said Lincoln. “A non-optimal selection of a solution or a provider can have negative consequences for an SME, which can be further compounded due to its limited financial and human resources. As most SMEs do not have the necessary in-house ICT expertise to undertake related projects on their

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SME ADVISOR MIDDLE EAST APRIL 2012

own, it is imperative that an SME selects an ICT partner that is reliable, knowledgeable and offers the best value for money,” he said.

Lincoln was the keynote speaker at the Dubai Internet City Excellence Series on the Art of ICT Investments for SMEs. He has over 20 years experience working in telecom with technology startups from concept development to market launch to holding senior positions in very large and established companies.

Majed Al Suwaidi, Director at Dubai Internet City and Dubai Outsource said,

“SMEs today seek to make the right investments in ICT to churn out profits for the long term and increase value in business. While the levels of ICT awareness vary for identifying an optimal solution, it is essential that SMEs consider the total cost of ownership taking into account its specific needs and invest wisely to generate returns for business.”

SMEs contribute a majority of the GDP in most countries and are also the largest job generators in the global economy. Recent studies carried out by du, in association with Frost and Sullivan, showed that 98.5% of the UAE businesses are SMEs. Companies in the UAE spend about AED 9.8 billion for their ICT needs and SMEs account for 50% of the expenditure.

Dharmendra Parmar, General Manager of Marketing at FVC and business partner of Dubai Internet City, said the session “highlighted the relevance of IT in an organisation irrespective of their size of the business. It also pointed out the importance of new age technologies like cloud [computing] and on its usability in business.”

Piero Ricotti, Managing Director of Tecnosistemi and President of the Italian Industry and Commerce office in UAE, said the DIC Excellence Series adds value to the SME community and its business partners. Ricotti said there’s “an increased focus on these companies by major technology companies. These businesses need to be advised on the right usage of technology and its impact on the longevity of their business.”

The Excellence Series hosts monthly sessions that tackle key topics relating to business, best practices, case studies, personal growth and more. The event invites business partners across TECOM Investments to gain insights from experts across different fields and understand the impact of implementing best practices and cuttingedge methodologies on the corporate bottom-line.

The next module of the series will be held in April and Hari Krishnan, Chairman and Founder of UniPropitia, will lead a session on Demystifying entrepreneurship.

SME about town

Accounting workshop

Getting connected Dubai SME, the agency of the Department of Economic Development mandated to develop the SME sector, hosted a workshop on accounting basics and how to choose efficient accounting software, to introduce SME owners to the latest standards and patterns in accounting.

T

he workshop, held under the umbrella of www.smeconnect.ae, the networking and knowledgesharing platform launched by Dubai SME for startup businesses and entrepreneurs, was attended by over 40 SME owners including Emirati men and women.

“SMEs that commit to a culture of transparency and compliance from their early years will have strategic advantages in future. They will always be better placed to attract capital and business, thus growing into bigger enterprises.

Efficient accounting and reporting is a strong indicator of the transparency and competence of a business,” said Abdul

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SME ADVISOR MIDDLE EAST APRIL 2012

SMEs on the key metrics of enterprise competitiveness and potential. The networking platform is enabling SME owners to meet, promote their business and be part of a series of events and informative forums,” added Al Janahi.

The workshop, held at the Business Village in Dubai, covered a broad spectrum of topics related to accounting, starting with basic concepts, to the emerging trends in financial reporting standards. Accounting types and processes as well as key considerations in choosing accounting software were also discussed during the workshop.

“Accounting is an effective tool to evaluate a company’s past performance, present condition and also future prospects.

A proper accounting system is essential for SMEs, not just for large enterprises. It helps SME owners to have a clear idea of the worth of their business and better manage cash flows,” said Dinesh Singh, CEO, Quantum Auditing, who led the workshop.

Dubai SME launched the networking platform to guide investors and entrepreneurs on setting up and growing their business in Dubai. The website provides guidelines and references to help entrepreneurs through the entire life cycle of their enterprises to achieve growth, promote social responsibility and manage profits and revenues.

A special section for training programmes that help entrepreneurs enhance the performance of their projects through knowledge and learning is also

“Through SmeConnect.ae Dubai SME aims to build awareness among SMEs on the key metrics of enterprise competitiveness and potential. The networking platform is enabling SME owners to meet, promote their business and be part of a series of events and informative forums.”

- Abdul Baset Al Janahi, Chief Executive Officer of Dubai SME

Baset Al Janahi, Chief Executive Officer of Dubai SME. “Through SmeConnect.ae Dubai SME aims to build awareness among

part of the website. In addition, the site includes a special section on events and important occasions relevant to various business sectors.

Technology For Business Mobile Malware

HANDHELD LOCKDOWN As our handsets become more than just a way to make and receive phone calls, their appeal to criminals also increases. Business executives in particular have become targets due to the valuable data they carry on their phones. Jaime Blasco, Head of Labs at AlienVault, outlines ways you can stop and prevent malware from spreading.

T

he mobile phone is unrecognisable in comparison to its original brick form of the 80s. Instead of a yuppie status symbol, now it’s considered by many as a necessity with practically every handbag and pocket hiding these modern miracles of technology.

While battery life used to be considered the key feature, today it’s a mix of memory capacity, browser speeds, megapixels, touch screen quality, HD ability, playback, sleek design and available apps.

Hardly anyone thinks about how secure the device is when making a decision between an iPhone, BlackBerry or Android device.

course, having the physical device stolen is a major inconvenience, but that is just one way criminals are monetising mobiles. Mobile malware, once theoretical, is now very much a reality and a growing threat.

As our handsets become more than just a way to make and receive phone calls, their appeal to criminals also increases. Of

For the business user, accessing the corporate network and viewing emails using their mobile devices, criminals might have

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SME ADVISOR MIDDLE EAST APRIL 2012

access to data that can prove lucrative in the right hands. For VIPs it could be a little more personal as the mobiles broadcast their locations via GPS. Even for the man on the street, with the introduction of mobile payments apps, there’s more to lose than just the contact list and photos.

Malware on SmartPhones is used by criminals to make money. They steal information including contact details, emails, personal data or even financial information; they hijack browser sessions – interfering with online banking transactions and circumventing one time password (OTP) security procedures; even certain apps can have a malicious undertone, for example sending SMS messages to premium rate numbers.

A worrying trend is that, increasingly, attacks are becoming more targeted and it’s executives that are firmly in the criminals’ sight, due to the valuable data they’re carrying on their phones. Using a combination of SMS and social engineering tactics, hackers can spoof the phone number of a friend or a colleague to send an SMS, asking the victim to click on a suspicious link which opens up the phone to attack.

Malware Infections Rising To prevent malware from spreading, we’re seeing a number of approaches from some of the mobile operating systems. Apple and BlackBerry have introduced security

Attacks are becoming more targeted and it’s executives that are firmly in the criminals’ sight, due to the valuable data they’re carrying on their phones. Using a combination of SMS and social engineering tactics, hackers can spoof the phone number of a friend or a colleague to send an SMS asking the victim to click on a suspicious link which opens up the phone to attack.

protocols, in tandem with a meticulous acceptance process for apps offered via their stores.

Technology For Business Mobile Malware

The picture is less secure for Android.

Perhaps because it currently has the highest market share, the mobile operating system provides attractive returns for criminals.

Another theory is that due to the openness of the platform and the existence of other markets from which to download apps, it’s easier to infiltrate. Whatever the reason, the stark reality is that it attracts the most malware.

That said, as market share moves and rogue programmers perfect their code, it would be foolish to think that any particular operating system will remain infallible indefinitely.

STEP 3 Prevent infection There are a number of elements that can help minimise malware when used together.

Antivirus software for mobile phones is available to download, however it’s argued that they can be ineffective.

Settings on the phone can be changed to prevent installation of content that isn’t from trusted sources.

Just like spam mail, be careful following links sent from contacts within the address book.

Only use bona fide marketplaces, such as the

Users should regularly check which apps are actually running on their phones. Anything suspicious should be deleted. Indicators that malware is present can also include decreased battery life (because there is something running in the background on the phone) or an increase in data use (as the malware transmits data from the phone).

The most successful form of attack against malware is a defensive stance and in this everyone has a function to perform.

As they’re on the front line, phone users themselves must understand the risks, and the criminals’ tactics, if they’re to practice safe phone use:

About

STEP 1 Are you already infected?

It can be difficult for the end user to know if they do have any malware on their phones, but there are a few basic factors that can be indicative. Users should regularly check which apps are actually running on their phones.

Anything suspicious should be deleted.

Indicators that malware is present can also include decreased battery life (because there is something running in the background on the phone) or an increase in data use (as the malware transmits data from the phone).

STEP 2 Block activity To prevent premium rate number scams, it’s important to check your bill regularly for anything out of the ordinary and contact your provider and block this type of number.

Installing anti-virus software as standard Looking for, and deploying tools that can manage mobile devices in much the same way as traditional PCs. Thinking about device encryption capabilities to avoid data leakages resulting from device loss or left, and perhaps a solution that can remotely locate and destroy AWOL devices.

Restricting and controlling what can and can’t be done on the phones (where possible).

If you can’t stop it then create and communicate security policies that govern what data can, and can’t, be accessed and stored. It is also essential that users understand why this is so important.

Unlike viral desktop programs, phones aren’t spreading infections from one to another or to other devices, so the spread of the threat is reduced. You have to either download a rogue app, or click on a bad link, to inject malware onto the phone. But that could change. If we don’t get a grip on malware now, tomorrow we could be facing an epidemic as it’s only a matter of time before criminals create malware that can and does jump between devices.

Today, while we still have the power to stop mobile malware, let’s work harder and smarter to unmask the secret assassin.

Jaime Blasco

Google marketplace, to purchase and download apps. Of course the free ones, while attractive, could offer more than you bargained for.

Check the apps permissions before its downloaded and ensure you restrict them from conducting any unwanted activity.

Regardless of whether the handset is corporate or personally owned, organisations should encourage their workforce to practice the security steps above.

For businesses issuing staff with phones, they should also consider:

Prior to working with AlienVault Jaime Blasco he founded a couple of startup companies (Eazel, Aitsec) that focused on web application security, source code analysis and incident response.

Jaime’s background stems from a number of years working in vulnerability management, malware analysis and security researching. Recently he ran a cyber warfare conference for the head of defence in Spain demonstrating attacks in real time and showing how to defend against them.

He’s also a regular contributor to Hakin9 and InSecure magazine.

AlienVault is the creator of OSSIM, the de facto standard open source SIEM and OSSIM powers the AlienVault Unified Security Management (AV-USM) Platform. AV-USM has five essential security capabilities built in; asset discovery, vulnerability assessment, threat detection, behavioural monitoring and security intelligence; to dramatically reduce the cost of visibility that is required for regulatory compliance and effective threat management. The privately held company is headquartered in Silicon Valley. For more information visit www.alienvault.com.

You can find out more about Jaime’s work at labs.alienvault.com or follow him on Twitter: @jaimeblascob.

APRIL 2012 SME ADVISOR MIDDLE EAST

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Trends & Events

Time To Network

SME Advisor Sub Editor Joumana Saad takes the pulse on key business trends in the region and gives an update on upcoming events to add to your calendar.

A

s the weather heats up in our part of the world, so has the events scene for businesses and professionals. In March, we got a snapshot of the trade and logistics sectors in Dubai at the DIFC’s economic workshop focused on integrating MENA markets into the global supply chain. We heard from economists, financial officers, legal experts and representatives from Dubai World Central and Dubai Ports World.

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SME ADVISOR MIDDLE EAST APRIL 2012

The general consensus was the current volatile situation in the Middle East, although unfortunate, presents a major opportunity for investments in infrastructure. The question remains how to put words into action and develop concrete channels of financing for businesses in the region, as governments cannot afford to do it on their own.

Dubai SME successfully wrapped up its Young Entrepreneurs Competition 2012 at WAFI. The four-day exhibition, which covered most of the mall space, featured over 700 projects on display conceived by 2,500 students from secondary schools and universities across the UAE. HH Sheikh Hamdan Bin Mohammed Bin Rashid Al Maktoum, Crown Prince of Dubai, awarded AED two million to the top 100 projects.

We successfully wrapped up our second CPI Business Golf Day on 19 th April. The event was held at the Saadiyat Beach Golf Club in Abu Dhabi. These events bring together an exclusive group of UAE business executives to meet up and enjoy a relaxed day of golf. Our first event was held on 29 th March in Dubai.

Coverage from both days can be found at www.cpidubai.com/golfdays2012.

To register for upcoming golf days, please visit www.cpidubai.com/ golfdays2012/registration.php.

Dubai Internet City (DIC) will host an event on Demystifying Entrepreneurship on 25 th April at Building 3, Thuraya Hall in DIC. The session will focus on how SME owners can recession-proof their businesses, identify opportunities for new ventures and learn to become innovators.

Hari Kesavan, Chairman and Founder of UniPropitia, will be speaking at the event.

UniPropitia, is a UAE-based company that provides training and guidance to aspiring entrepreneurs, as well as help with funding to entrepreneurs who have already set up their businesses.

As the Dubai government promotes its drive towards good corporate governance, executives will be paying close attention to the topic as Taylor Wessing, hosts a seminar on 25 th April titled Corporate governance and the benefits for your business.

Representatives from the law firm, as well as Dubai SME and Hawkamah, the Institute for Corporate Governance at DIFC, will be attending to discuss the significance of the Corporate Governance Code.