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Issue 81 AUGUST 2012 WWW.SMEADVISOR.COM
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PUBLICATION LICENSED BY THE INTERNATIONAL MEDIA PRODUCTION ZONE, DUBAI TECHNOLOGY AND MEDIA FREE ZONE AUTHORITY
Startup culture
We look at the digital transformation inspiring entrepreneurs across the MENA region.
Growing pains
Balancing your limitations with the need to innovate and adapt for growth.
The complete breakdown of the strategies and tactics of working capital management
On your marks, get ready....
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Publisher Dominic De Sousa
n last month’s editorial my tone was one that encouraged more relaxation and preparation for the final quarter ahead. Well that was last month...Ramadan is drawing to an end and so too must the slower pace of business.
Group COO Nadeem Hood Managing Director Richard Judd richard@cpidubai.com +971 4 440 9126
It’s time to re-introduce the notorious long working hours and intensive pace that keeps the business hubs of this region on top – two factors afforded much criticism, but which be bestowed partial recognition for with helping regional businesses accelerate their respective economies out of a downturn.
EDITORIAL Senior Editor Mike Byrne mikeb@cpidubai.com +971 4 440 9105 Sub Editor Joumana Saad joumana@cpidubai.com +971 4 440 9115 Contributing Editor Aparna Shivpuri Arya aparna@cpidubai.com +971 4 440 9133 ADVERTISING Sales Richard Judd richard@cpidubai.com +971 4 440 9126 PRODUCTION AND DESIGN Production Manager James P Tharian james@cpidubai.com +971 4 440 9146 Circulation Manager Rajeesh M rajeesh@cpidubai.com +971 4 440 9147 Design Director Ruth Sheehy ruth@cpidubai.com Head of Design Fahed Sabbagh fahed@cpidubai.com +971 4 440 9107 Designer Froilan A. Cosgafa IV froilan@cpidubai.com +971 4 440 9107 Photographer Jay Colina jay@cpidubai.com +971 4 440 9141 DIGITAL SERVICES www.smeadvisor.com Digital Services Manager Tristan Troy Maagma Web Developer Abey Mascreen online@cpidubai.com +971 4 440 9100 Published by
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.
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Indeed statistics recently released confirm that the slow-down is being reversed across the GCC. The Dubai Chamber of Commerce and Industry study, based on data from the International Monetary Fund (IMF), verifies that the UAE will see a year-on-year growth of 4.5%, with Kuwait, Oman and Bahrain projected to grow year-on-year at a rate of 4.9%, 4% and 3%, respectively. You can read a more thorough overview of this report on page 58. Consumer confidence continues to rise and again this must be afforded a portion of the credit for economic growth. An index by MasterCard reveals optimism is strong in terms of economy, employment and quality of life. Confidence levels are being recorded at their highest in the region since 2009, with Qatar scoring top of the table. One feature of particular note this month is that discussing and advising on the area of cash flow. As SMEs the generation, maintenance of this flow can either be hard consistently track and consolidate – John Lincoln from du provides the ins and outs to successfully managing your working capital. We have also featured a new financing option that has recently arrived to the shores of the Middle East. Crowd funding has gained significant traction in the US and UK in recent times – we see no reason to believe it cannot also present itself as legitimate option for an alternative funding model across the MENA region. As we enter the final quarter of the year many of you will also be seeking to review your return on investment and more specifically in regard to your employee training programmes. In this issue we investigate how best to monitor and prepare your workforce for the busy period ahead. Opportunities for SMEs are something we always keep a close eye on – this month we present to you Hamriyah Free Zone Authority. In 17 years, it has quite impressively forged a path that has attracted 5,700 investors, from 140 countries and continues to promote entrepreneurship and economic development. For the full inside scoop check out pages 40-42. On a final note, in order to better the advice we provide, we have launched an SME Survey on our website, which will run alongside the nominations process for the SME Advisor Stars of Business Awards. Paramount to bettering your business is understanding the dynamics of the SME community in the region. Therefore, we will share all our results and present our findings with a thorough feature in the September issue of SME Advisor. We will also randomly select one lucky SME entry to present an award at the SME Advisor Stars of Business Awards on 28th November. Until next month...
Mike Byrne Senior Editor Talk to us: E-mail: mike@cpidubai.com
Twitter: @SMEadvisorME
Facebook: www.facebook.com/SMEadvisor
LinkedIn group: www.tinyurl.com/smeadvisorme
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Contents Issue 81 August 2012
Trade
20 | Growing pains Dr. Ashraf Mahate of Dubai Exports, underlines how SMEs can balance their limitations with the need to innovate and adapt for growth.
24 | Matchmaking Aparna Shivpuri Arya attended a buyers event organised by the Arab-Brazilian Chamber of Commerce in Sao Paulo.
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BANKING FOR BUSINESS
28 | SME 100
We take look at how banks like ADCB are continuing to support the future growth of these ranked companies.
OPERATIONS
30 | Cash flow
John Lincoln of du breaks down the best strategies and tactics of working capital management.
Management
34 | Corporate training Joumana Saad speaks to industry experts about why so many companies fail to see the return on investment from these types of programmes.
Cash flow The complete breakdown of the strategies and tactics of working capital management
EDITORIAL BOARD 08 | Introduction
We present the SME Advisor Editorial Board for 2012.
Shoptalk
10 | Trends and Updates A quick look at news and events that will impact SMEs in this region.
SME about town
16 | Events
A round-up of the key events being attended by SME leaders in the UAE.
CORPORATE LIFESTYLE
18 | Executive trends
We give you a glimpse at some of the latest products on the market.
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FINANCE
36 | Crowd-funding Joumana Saad talks to the founders of Eureeca.com, a new platform aimed at facilitating access to capital for SMEs and startups.
OPPORTUNITIES
38 | Moneysouq
This new personal finance exhibition aims to reach consumers with a unique marketing platform that combines on-site and virtual advertising.
40 | Setup made simple Rashid Al Leem, Director General of Hamriya Free Zone Authority in Sharjah, talks to Aparna Shivpuri Arya about what makes this free zone unique.
ENTREPRENEURSHIP
44 | A new generation
We take a closer look at the recent wave of Arab entrepreneurs who are looking to Silicon Valley for inspiration.
60 | Free job advertising
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Bayt.com’s JobsLite portal allows SMEs to advertise vacancies online to a network of over eight million job-seeking professionals.
62 | Consumer trends A recent index by MasterCard reveals consumer confidence in the UAE reaching its highest level since 2009.
TECHNOLOGY FOR BUSINESS
64 | Tech news
We highlight IT trends and tools that are reshaping business in the region.
LEGAL
48 | Sharia compliance Al Tamimi & Co. provides an overview on the methods that a conventional business may apply in order to operate on an Islamic basis.
Sign off
70 | What’s next? 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.
BUSINESS PIN UP
52 | Rouge Couture
Emirati entrepreneur and Co-founder Sara Al Madani talks to SME Advisor about her journey to become one of the region’s most known Abaya designers.
INDUSTRY WATCH
58 | GCC focus
A Dubai Chamber of Commerce and Industry study shows the UAE, Kuwait, Oman and Bahrain in the strongest position to witness robust economic growth this year.
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August 2012
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EDITORIAL BOARD 2012
SME ADVISOR
Amna Sultan Al Owais Deputy Registrar & Small Claims Tribunal Registrar, DIFC Courts
EDITORIAL BOARD The SME Advisor Editorial Board is an honorary advisory panel of experts comprising organisations and individuals who want to help regional business. The idea is to evolve the magazine through such sharing of ideas with key regional influencers. Over the next few months, we will conduct various interactive sessions with our board members, often including our readers, where we can collaborate and share ideas. The aim is to help the business community benefit from our panel’s expertise.
Dr. Ashraf Mahate Head of Export Market Intelligence, Dubai Exports, and Vice Chair of the Economic Policy Committee, Dubai Economic Department
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. He 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. 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.
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July 2012 SMESME ADVISOR Middle EastEast August 2012 ADVISOR Middle
Amna Sultan Al Owais joined the DIFC Courts in October 2006. In her role as Deputy Registrar, Amna undertakes judicial functions and other duties prescribed in Article 17 of the DIFC Courts Law No. 10 of 2004. Amna’s role supports the judicial bench and Registrar in the management and day- to-day administration of the DIFC Courts. In addition to her contribution to the Courts operations, planning and communications, she has a critical technical mandate, which includes case management and legal research responsibilities. Another aspect of Amna’s position at the DIFC Courts is focused on overseeing the Small Claims Tribunal, one of the busiest of the DIFC Courts. In this role, she coordinates all of the claims lodged and often undertakes consultation for some of the cases filed. Previous to her employment at the DIFC Courts, Amna was in practice as a lawyer for Hadef Al Dhahiri & Associates, in Dubai.
David Burns COO, British Business Group, and Director of Marketing and Corporate Communications, UHY
David is the Director of Marketing and Corporate Communications for an independent office of UHY, an international firm of auditors and accountants. His current UHY activities include the PR and marketing of four offices in the UAE and the business development for the firm in general. David is also the COO of the British Business Group in Dubai and the Northern Emirates, and is responsible for the overall administration of the group’s activities and an office based in the grounds of the British Embassy in Dubai. He has been involved with SMEs in the region for 35 years.
Alexander Blass
John Lincoln
President and CEO, Alexander Blass International
Vice President, Enterprise Marketing, du
Alexander Blass is an American entrepreneur and innovator who has travelled to over 40 countries and appeared in hundreds of media outlets, including several cover stories. He is the grand prize winner of the Daily Record’s Top Innovator of the Year Award. He presently serves as CEO of Alexander Blass International, an executive training and consulting firm. Alexander keynotes some of the world’s most prestigious conferences on topics including innovation, creativity, leadership change, business development and entrepreneurship. Examples include the Abu Dhabi Innovation Forum, the SME Advisor Stars of Business Awards in Dubai and the European Conference on Creativity and Innovation.
John Lincoln has over 20 years telecommunications experience in the USA, the UAE, Japan, Europe, India, Malaysia, Latin America and various other countries. He has extensive senior expertise in international telecommunications sales, marketing, business development and customer service delivery. John also has executive experience with general management, marketing, product development and revenue management responsibilities in both consumer and enterprise segments for both the fixed and mobile sectors. Additionally he has extensive large scale business development, M&A and operational project experience across the USA, Europe, Asia and Latin America. John has an MBA and MS in telecommunications from the Golden Gate University in San Francisco, California, USA.
Ghada Audi
Abdulmuttalib Al Hashimi
Head Of Disputes Resolution, Fichte & Co
Founder and Managing Director, Next Level
Ghada joined Fichte & Co in 2012 as Head of Disputes Resolution, from the DIFC Courts and Special Tribunal Related to Dubai World. Her practise areas include international commercial arbitration, mediation, as well as DIFC litigation, regulatory, compliance and insolvency. She has experience on three continents, having practised law in the USA, Germany and the UAE, enabling her to bridge business cultures and tailor legal solutions and strategies to multi-jurisdictional clients’ needs. She is a registered practitioner with the DIFC Courts in Dubai and is a member of the USA Bar in New York and Virginia.
Abdulmuttalib Al Hashimi is a UAE national entrepreneur, Managing Director and Founder of Dubai-based Emiratisation consultancy, Next Level. He founded the company in 2006 and under his leadership Next Level has helped more than 30 companies in the UAE on their Emiratisation recruitment and human resources needs. The company has so far helped employ at least 100 UAE nationals and around 200 international employees in various positions. Abdulmuttalib is a regular speaker in conferences, such as the GCC Nationalisation Conference, the UAE Career Fair in 2009 and the Abu Dhabi Business Round Table conference.
ADVISOR Middle July SMESME ADVISOR Middle EastEast August
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shoptalk UAE
DAFZA aims to strengthen ties with Japan
L - R: Nasser Al Madani, Assistant Director General, DAFZA with Daisuke Matsunaga, Consul General of Japan, during the event
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n continued efforts towards building stronger trade ties between the UAE and Japan, Dubai Airport Freezone (DAFZA) recently organised a networking event for Japanese investors and companies. The event attended by the Consul General of Japan and officials from Japan External Trade Organization (JETRO) and Japan Business Council (JBC) aimed at further strengthening relations with Japanese investors, and providing information on the highly advanced, modern facilities and services provided by the Freezone.
Speaking at the event, Nasser Al Madani, Assistant Director General of DAFZA said: “As the number one Free zone in the world, DAFZA offers a wealth of opportunities to companies operating within the Freezone that Japanese investors can hugely benefit from. The state-of-the-art infrastructure and facilities we provide ensure that we make every effort to make our tenant’s investment profitable.” Commenting on the event’s success, His Excellency Daisuke Matsunaga, Consul General of Japan congratulated DAFZA on becoming the number one free zone in the world, and said: “This event gave us a great platform to discuss strategic partnerships and allow the opportunity to exchange the technological knowhow and best practices that DAFZA offers being the fastest growing and the best free zone in the world.” In 2012, the UAE maintained its position as the largest market for Japanese products in the Middle East with the value of bilateral trade rising by 37.58% to USD 50.38 billion, compared to USD 36.62 billion in 2010. Exports to the UAE grew by 1.82% to USD 7,466.13 million, while imports grew by 46.53%t to USD 42,912.73 million in 2011. Asian companies in DAFZA represent more than 17% of the tenants while the Japanese companies represent more than 32% of the Asian sector. Currently, Japan is one of the 10 most active countries in the Freezone representing 45 companies working in service, commerce and industrial sectors such as Sumitomo, Toyota, Toshiba, Kawasaki and many others.
Law firms to offer registration and licensing services The Business Registration & Licensing (BRL) Division of the Dubai Department of Economic Development (DED) will expand its e-Services window by offering those services through law firms in Dubai by August 2012. The initiative will be a significant value addition for business owners and investors as it allows them to complete business registration faster and at their convenience. The initiative also reflects DED’s persistent efforts to enhance the UAE’s top rankings in the World Bank’s Doing Business Report for 2013 and promote the country as a globally competitive business hub. An internationally competitive and competent business registration system that offers added value and flexible procedures is one of the criteria against which countries are ranked in the report. Mohammed Shael, CEO, Business Registration and Licensing Division at DED, said: “DED has been utilising online platforms
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Representatives from various law firms in Dubai attend the workshop organised by the Business Registration and Licensing Deparment (BRL).
to offer an advanced, flexible, convenient and diverse suite of services to customers, reinforcing Dubai’s reputation as one of the best and competitive business destinations. BRL services are available through three main channels - the four DED branch offices in Dubai, DED’s strategic partners, and the website www.dubaided.gov.ae.” “The first phase of the new initiative has been successfully implemented to provide BRL services electronically across four law firms starting August 2012. The four law firms are Habib Al Mulla & Company, Al Tamimi & Company Advocates and Legal Consultants,
Holman Fenwick Willan Middle East LLP Dubai, and Ahmed Ibrahim Advocates & Legal Consultants,” added Shael. “BRL had organised a workshop on the business registration system for 14 representatives from law firms in Dubai. The objective was to enable law firms to use DED’s data and process BRL services to renew licences, issue initial approvals, reserve trade names and print licences for clients on DED’s website www.dubaided.gov.ae in their own premises,” said Jassim Abdel Rahman Al Awadi, Section Head, Development & FollowUp Sector in BRL.
Rising demand for ePay services
Representatives at the UAE pavilion during Africa Big Seven 2012 in South Africa.
UAE
UAE companies participate at Africa Big Seven exhibition
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E Hamad Hareb Al Habssi, UAE Ambassador to the Republic of South Africa, inaugurated the UAE pavilion at the Africa Big Seven 2012 exhibition, the foremost event for the food and beverage industry in Africa, which began at the Gallagher Convention Centre in Johannesberg on 15th July. Co-ordinated by Dubai Exports, the export promotion agency of the Dubai Department of Economic Development (DED), in association with the Abu Dhabi Department of Economic Development and Sharjah Free Zones Authority, the UAE pavilion at the three-day exhibition featured manufacturers and suppliers in the food, packaging and related sectors. “The UAE and the African continent have a long history of trade relations and new avenues are opening up to take our engagement to the next level. It is commendable to see government agencies from the various emirates in the UAE joining forces to make the most of this opportunity,” commented the UAE Ambassador. The annual fair is known for connecting suppliers throughout the food and beverage supply chain to importers, distributors and retailers in the fastemerging African markets. “The UAE food and beverage industry has world-class capabilities in all critical aspects, including manufacturing techniques, product diversity, packaging and shipping. With adequate knowledge of the promising markets and their dynamics, these firms can grow into leading exporters,” said Engineer Saed Al Awadi, Chief Executive Officer of Dubai Exports.“
The number of firms attending Africa Big Seven 2012 under the Dubai Exports umbrella has increased 30% compared to the previous year. It shows the growing confidence of UAE companies and their interest in Africa. Dubai especially being a logistics and trading hub can provide the best solutions for the high-growth African economies,” added Al Awadi. Trade between the UAE and South Africa grew by 7% from 2007, crossing AED four billion in 2011. South Africa and its neighbours also share a high trade complementarity with the UAE, indicating a strong potential for more UAE exports and re-exports to these markets. Plastics, electrical & electronics, and vehicles dominate UAE exports to Africa but food and related sectors are fast moving up, due to growing demand from an emerging middle class in South Africa and neighbouring countries. Halal foods, in which the UAE is a significant player, is a major growth sector in most African countries on account of their large Muslim populations. South Africa is also leveraging its strengths as a resurgent economy and gateway to the wider African region by upgrading infrastructure, improving the regulatory framework and opening up critical industry sectors. “South Africa is the centrepoint of emerging economic blocs such as the South African Development Community (SADC) and Sub-Saharan Africa as a whole. We thank Dubai Exports for giving our member firms an opportunity to address these potential markets,” stated Rashid Al Leem, Director General of Sharjah Free Zones Authority.
The online payment services provided by Dubai eGovernment Department through the Internet and mobile phone for instant payment of government fees are experiencing increasing demand by the public with over AED two billion collected in the first half of 2012, representing a 21% increase over the previous year. ePay enables customers to electronically settle their dues for various Dubai government services in a secure manner. Over AED 2.07 billion through 1,641,556 transactions was collected through ePay on behalf of all the participating local entities by the end of June 2012. This compares to a total of AED 1.7 billion through 1,396,973 transactions in the first half of 2011. Dubai Customs, Dubai Electricity and Water Authority (DEWA), Dubai Health Authority (DHA), Department of Economic Development and Roads & Transport Authority (RTA) were the top five government entities respectively in terms of the electronically collected amounts, while DHA, DEWA, RTA, Dubai Customs and Dubai Police were the top three government entities respectively in terms of the number of transactions achieved. Ahmed Bin Humaidan, Director General of Dubai eGovernment said: “These results clearly indicate the favourable pace of eTransformation in Dubai as reflected by the increasing adoption of ePay as a preferred mode of payment to complete government transactions on one hand and the higher degree of confidence shown by customers in the efficiency and safety of this option on the other.” Bin Humaidan noted that payment through credit cards was still the customers’ top preferred option with the amounts electronically collected through credit cards exceeding AED 1.8 billion. He also noted that the use of direct debit option grew noticeably during the first half of this year with the amounts collected through this option growing to around AED 247 million through over 450,000 transactions. Meanwhile, a total of AED 3,215,442 through 15,645 transactions was collected through the Dubai eGovernment mobile payment gateway mPay in the first half of 2012. Currently, a number of government entities are participating in this service, which is done by sending an SMS to 4488 to inquire about and settle due fees or amounts. The service covers Salik recharge from RTA, payment of traffic fines from Dubai Police and payment of electricity bills from Dubai Electricity and Water Authority. Dubai eGovernment has previously introduced new updates and features on the mPay gateway including activation of the auto-payment/auto recharge of the government services provided by mPay regularly (daily, weekly, monthly or at a specific date for payment or recharge). The new updates and feature also allow control over the minimum balance and the maximum payment and recharge in addition to optimisation of the multiple accounts feature, which allow users to configure mPay to support multiple accounts for one government service.
SME ADVISOR Middle East
August 2012
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shoptalk QATAR
Qatar eyes investments in Turkey
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uring the seventh Turkish-Arab Economic Forum recently organised by Al-Iktissad Wal-Aamal Group, Youssef Hussein Kamal, Minister of Finance and Economy in Qatar, highlighted Qatar’s investment interests in Turkey. He revealed that 16 Qatari businessmen have invested in the real estate sector in Turkey and particularly in Istanbul. Kamal also said that the upcoming phase will witness further influx
of Qatari investments to Turkey, estimated to reach billions of dollars. The Turkish side asked to bring to the investors’ attention specific investment opportunities to facilitate the investment flow. Minister Kamal indicated that “Turkey’s geographic location-surrounded by Arab countries, Iran, ex-Soviet republics and Eastern Europe countries-render it a gateway to the future financial market. Our role is to
Global Entrepreneurship Week planned for Qatar Qatar will join over 100 other countries in participating in Global Entrepreneurship Week, a worldwide initiative that celebrates the innovators and job creators who launch startup businesses and drive economic growth. This will be the first year in which Qatar has had a formal Global Entrepreneurship Week campaign. First held in 2007, Global Entrepreneurship Week (GEW) is led by the Kauffman Foundation, a non-profit organisation that works to promote job creation, innovation and economic advancement through entrepreneurship. In 2012, Global Entrepreneurship Week will be held 12th to 18th November. Within Qatar, Global Entrepreneurship Week is being organised by the GEW Qatar Board, a group of local organisations involved in the promotion of entrepreneurship and economic development within the country. Participating organisations include Bedaya Center, Enterprise Qatar (EQ), Entrepreneurs’ Organisation (EO), ICT Qatar, Ministry of Business and Trade, Qatar Chamber of Commerce & Industry, Qatar Science & Technology Park (QSTP) and The Youth Company. Silatech is the official Host Organisation for Qatar, and chairs the GEW Qatar Board.
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support Turkey in its transition towards being a platform and an axis for the mentioned countries. He stated: “We as State of Qatar are ready to invest in these countries in collaboration with the Turkish government.” On his part, the Minister of Finance in Turkey, Mehmet Simsek indicated that the Turkish parliament ratified a convention allowing the acquisition of properties to countries deterring Turks from doing so on their territories without applying same treatment principle. He pointed out that the Arab region has huge natural resources, mainly oil and gas, while Turkey is endowed with demographic assets, showing hence great potentials of the Turkish-Arab economic integration. He admitted there are still a lot of reforms to be made, including the need to increase free trade agreements between Turkey and the Arab world. Finance ministers from Iraq and Tunisia Dr. Rafeh Al Issawi and Houcine Dimassi respectively went through the reforms conducted by their countries as well as the available investment opportunities. The second day of the forum comprised of five sessions, focusing on the Turkish-Arab relations post Arab Spring. Sessions addressed the following: banks and financial markets, investment opportunities in Turkey, Libyan post-revolution economy and Arab economies’ prospects in the post Arab Spring phase.
Dr. Tarik Yousef, CEO, Silatech said: “By combining our efforts together, we can create a far greater effect than our individual organisations would have by promoting entrepreneurship individually. Participating in Global Entrepreneurship Week gives us the opportunity to link with an established worldwide network to advance skills such as problem solving, creativity, and resourcefulness that are valuable to everyone, not just aspiring entrepreneurs.” In 2011, over 24,000 participating organisations hosted a broad range of over 30,000 events, activities and competitions, reaching over 7.4 million people worldwide. During GEW, the GEW-Qatar Board will be working with a wide range of organisations, in both the private and commercial sector, to provide a program of activities, workshops and seminars promoting entrepreneurship in Qatar.
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shoptalk EGYPT
Egyptian exports to Brazil surge
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rade flow between Brazil and Egypt reached over USD 2.96 billion in 2011, accounting for a 38.9% increase from 2010. Brazilian exports to Egypt amounted to over USD 2.6 billion during the same period, up by 33.3% from 2010; while imports from Egypt were valued at USD 344.72 million,
representing a huge 104% increase from the previous year. According to the Arab-Brazilian Chamber of Commerce (ABCC), trade flow between the two countries continues to register positive growth as Brazilian exports have already reached USD 595.2 million from January to April 2012, increasing by 3.62% from the same
period in 2011. Imports from Egypt reached USD 53.82 million from January to April 2012, up by 1.13% from the previous year. “The growing trade activities between the two countries underline the importance of Egypt as a key trade partner of Brazil. Capitalising on the phenomenal growth we achieved in 2011, we are looking forward to maintain the high level of trade activity between the two countries throughout 2012,” said Michel Alaby, CEO, Arab-Brazilian Chamber of Commerce. To promote and develop even more the trade relations between Brazil and Egypt, ABCC will hold an event in October with the participation of five to ten Egyptian companies of the food sector, to make business with Brazilian entrepreneurs. Meat (USD 195 million), sugars (USD 136 million) and ores, slag and ash (USD 126.9 million) were the top exports from Brazil to Egypt from January to April 2012. Brazil also exports other products to Egypt including live animals, paper and paperboard, cereals, vehicles, machinery and plastic. Fertilizers (USD 35 million) and rubber (USD eight million) currently top the list of imports from Egypt, along with glass and glassware, salt, sulfur and earth stone, among other materials.
BAHRAIN
Bahrain university to launch business programmes
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r. Talal Abu-Ghazaleh, Chairman of Talal Abu-Ghazaleh University College of Business (TAGUCB), announced the launching of the state of the art college that will offer undergraduate business programmes in international accounting, management and logistics beginning in September 2012. The programmes accredited by the Higher Education Council in Bahrain will lead to granting the degree of Bachelor of Science in Business Administration. The curriculum was developed by a group of international advisors in line with the highest international standards. Students will benefit from innovative teaching methods that proved to be very successful at the Talal Abu-Ghazaleh Graduate School of Business in Amman, which received the Best Educational Institute in Administration Award from the World Education Congress Asia Awards. TAGUCB faculty carry high academic qualifications and have experience in their respective fields. TAGUCB President, Dr. Abdul Waheed Khan, pointed out that the TAGUCB licence was granted by the Higher Education Council after a very thorough review and inspection of the facilities and the curriculum. He further stated that TAGUCB will be seeking the approval of the Higher Education Council to introduce an MBA programme next year.
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TAGUCB has worked closely with the Bahrain Economic Development Board (EDB) during the development and set up of the university, to ensure it matched the needs of Bahrain’s business community. The Bahrain EDB is a dynamic public agency with an overall responsibility for attracting inward investment into Bahrain, and is focusing on target economic sectors in which the Kingdom offers significant strengths. The EDB played an instrumental role in attracting over USD 300 million of investment from international businesses across a wide range of sectors in 2011. Kamal bin Ahmed, Minister of Transportation and Acting Chief Executive of the Bahrain Economic Development Board (EDB), said: “We are delighted that TAGUCB have chosen to establish a regional presence in Bahrain, reflecting the Kingdom’s commitment to establishing a leading platform for education opportunities in the region, its diversified business environment and position as the optimum location from which to access the trillion dollar Gulf market.” In 2010, the Talal Abu Ghazaleh Organisation (TAG-Org) announced that it has decided to set up its regional headquarters in Bahrain, citing its decision as being based on a number of factors, including its tried and tested legal and regulatory framework, the skilled local workforce and its advanced ICT infrastructure.
SME About Town
Dubai SME holds seminars on entrepreneurship
Over 100 people attended the three seminars, including entrepreneurs and SME owners.
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he seminars, organised as part of Dubai SME’s continuing initiatives to enhance SME competitiveness, were led by reputed experts in guiding and counselling organisations and businesses across the region. More than 100 people, including entrepreneurs and SME representatives, attended the seminars. “SMEs in the UAE operate in a highly competitive and diverse business landscape. A thorough understanding of the strengths and attitudes that win over customers and
sustain growth is therefore very essential. Dubai SME has a rich training and education portfolio, aimed to support SME capacity-building,” said Farid Karmostaji, Director of Entrepreneurship Development Division at Dubai SME. In view of the importance of negotiation skills in establishing and advancing a business, Dubai SME used one of the seminars to emphasise the power of non-verbal communication. Led by Dr. Mutasem Al Titi, a leading non-verbal communication expert in the Middle East, the
seminar showed how the right body language can help communicate with confidence and conviction in a negotiation. The power of excellent customer service was the focus of the second seminar, led by Anas Abu-Hamam, Managing Director and Co-Founder of the project management and consultancy firm Platinum CPD. The seminar drew an outstanding response from the SME community, indicating a high level of interest among them in integrating customer service as a key competency. Participants in the seminar were taken through the fundamentals of service excellence and ways in which SMEs can leverage customer service to close gap with large enterprises. “We thank Dubai SME for this inspirational seminar on the power of customer service. It was informative and will help our employees advance their skills and performance,” said Waleid Abdulkareim, Chairman of On Time Management, a Dubai SME member firm, which sent eight of their employees to attend the seminar. The third seminar was aimed to encourage entrepreneurs to apply innovative project management techniques for improved efficiency, problem solving and resource utilisation. Omran Zbeida, an experienced corporate trainer and certified programme development director led the seminar, presenting proven ways to plan and manage successful projects and the impact of such strategies on business expansion and bottom lines.
Speed networking for SMEs Over 100 professionals attended the event which was co-hosted by CPI Business’ SME Club ME. The group boasts one of the largest networks of women entrepreneurs in Dubai. Some of its members include the British Business Group and My Ex-Wardrobe, a 2011 winner of an SME Stars of Business Award. Heels & Deals changed things up by making the event a mixed affair. During the networking session, participants were allotted two minutes to talk to the person in front of them, and then gradually made their way down each table. Members who registered early for the event presented two-minute elevator pitches, educating attendees about their businesses. A wide variety of professionals from various industries attended the event, including owners, managing directors of SMEs, as well as prospective business owners. Launched in Dubai during the challenging economy of 2009, Heels & Deals has hosted nearly 3,000 women at their events. In October 2011, Heels & Deals expanded its local events to Hong Kong. In addition to hosting events, the group also has a virtual community in which members can exchange ideas and advice through its online portal.
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Participants were able to network in twominute rotations during the evening event.
To learn more about Heels and Deals and the group’s events, please visit: www.heelsanddeals.org. For more on the SME Club visit: www.smeclubme.com.
New social media site launched in UAE
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ntrepreneurs and media representatives recently gathered at Dubai’s MAKE Business Hub to attend the launch event for a new social media site born out of the UAE. GoMadInc.com, which stands for Go and Make a Difference, officially went live on 1st August and provides both social and business interaction on one platform allowing users one single access point to network with their social and professional connections. In addition to offering a multifunctional portal, GoMadInc has a financial model where its members are recognised and rewarded for their activity as well as an e-commerce section, ideas sharing platform and a group philanthropy initiative. The e-commerce aspect of GoMadInc.com encourages the sharing of entrepreneurial and innovative ideas and products. Functions such as MyStore and the Ideas Platform allow its members to buy and sell products and intellectual properties using their own networks. Members will also earn rewards in the form of GoMad Credits proportionate to their interaction within the site, which can be donated to charity, used to purchase from MyStore or exchanged for US dollars. “We value your time and the content you share,” explains GoMad Founder and CEO, Shabbir Adamji. “GoMad was born out of recognising the value of these two elements. As our company name suggests, we aimed to create a platform that makes a difference. Providing social media fans with a time-
saving solution where their network works for them is just one of the ways we are changing things.” Another area where GoMad plans to make a difference is in its philanthropy section where users are given the opportunity to donate their earned GoMad credits to its endorsed humanitarian organisation the United Nations World Food Programme (WFP) and its local partner the UAE Red Crescent Authority. Adamji explains: “We believe in the power of communities coming together, and the Internet has now opened up limitless possibilities to connect and share ideas and resources.” Adamji and the GoMad team have set a goal of raising over USD seven billion for humanitarian organisations over the coming years. According to Shabbir Adamji, Founder and CEO, “The responsibility is on the shoulders of mankind to make this world a better place for its future generations to come and to make a difference, using creative ideas, innovation and collaboration.” Primarily being a social media platform, GoMad incorporates the standard functions of current social media applications such as chat, status updates or alerts, with the ability to share, comment and follow online content including pictures, video links and to broadcast feeds. Users can also update and manage their social and professional profiles or avatars all in one place with one integrated list of contacts. Adamji has a clear vision for GoMadInc. com. “We are creating an online community that harnesses the power of the connection, nurtures entrepreneurial activity and allows people to shape their future.”
DSOA and SAP executives during the press conference announcing the joint initiative
SAP unveils IT training institute in UAE HH Sheikh Ahmed Bin Saeed Al Maktoum, chairman of Dubai Silicon Oasis Authority (DSOA), recently announced plans for Dubai Silicon Oasis (DSO) to host a ground-breaking training and development institute. Spearheaded by SAP MENA, a subsidiary of SAP AG and created to benefit the entire MENA region, the project will become the UAE’s first IT-specific education and development entity. HH marked the occasion alongside Dr. Mohammed Al Zarooni, DSOA vice chairman and chief executive officer, Dr. Werner Brandt, SAP CFO and executive board member, and Sam Alkharrat, SAP MENA Managing Director, praising the institute’s potential to boost the region’s burgeoning IT sector and enhance the employment prospects of its graduates. “The UAE’s Vision 2021 continues to serve as the fundamental framework for all Dubai-based entities,” said His Highness.” Dubai’s strategy is underpinned by technology, which is supported by innovation, research and science as key pillars for the development of a knowledge-based economy. Today, the signing of this agreement further enhances Dubai’s 2021 Vision into moving to an economy that is based on the development and creation of UAE’s local Emirati’s skills.” Plans for the training and development institute were initially discussed in March as a key part of a four-year additional investment plan by SAP to up-skill local talent and drive sustainable innovation and growth in the MENA region. “The institute is the direct result of addressing our market, customer and ecosystem needs, and will serve as a powerful engine to yield vital jobs, knowledge, innovation and infrastructure capable of progressively shaping MENA’s business future,” said Brandt. The training and development institute aims to certify 2,000 new consultants within the next four years, tripling the company’s existing consulting capabilities in the region, as well as accelerating and extending the localisation and Arabisation of SAP solutions to meet fast-growing regional industry needs. The initiative is also structured to shape the region’s IT future through co-creating and innovating solutions with partners, customers and independent software vendors in fields such as mobility, HANA, cloud, urban management, smart city functionalities, and Islamic banking. Furthermore, there will be strong links with the SAP University Alliances programme, which currently provides hands-on experience of key SAP technologies at 26 institutions across MENA, a figure set to double in the next four years, and the potential for collaborative participation in a network of global universities and research communities. Based at DSO due to its combination of technological resource, geographic convenience and educationally conducive environment, the institute is explicitly structured to support countries across the MENA region, and there is potential to establish dedicated satellite operations in key SAP markets such as Saudi Arabia.
SME ADVISOR Middle East
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CORPORATE LIFESTYLE
VIP status
The Bentley Continental Flying Spur has been named as one of the most luxurious cars on the market todya. It has a six litre trin turbo W12 engine that can deliver a mass of power to the car, as well as a sleek exterior and lavish interior appear. The Continental series has long been known from its values of prestige and power. This model is one of the most popular chauffeur cars in Dubai, and has a limousine feel on the inside with exquisite mirror-matched wood veneers that encircle the car’s cabin. The model also sports leather hides and signature brightware.
Executive trends We bring you a sample of the newest products being snapped up by the executive shopper.
One to watch
DOWN TO BUSINESS
The Pineider Country Ostrich Briefcase (2 Gussets Limited Edition) is a handmade luxury ostrich leather double gusse briefcase crafted in full quill ostrich. It is a ultra-luxury version of the Country 2 Gusset Leather Briefcase. The briefcase can be personalised as desired with name, initials, monogram or logo.
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SME ADVISOR Middle East
This new model from Patek Philippe’s 2012 Complications collection is an ideal timepiece for the on-the-go executive. Available in white gold, it contains a sapphire-crystal case back and 24-hour day and night indications for a total of 24 time zones. Bracelets are available in both white gold and leather. Designed with mechanical self-winding technology, the watch is also water resistant to 30 metres.
Power tools
In the desert, on safari, up a mountain or simply on the move, the Solargorilla, made by Powertraveller, is a portable solar charger gives your powergorilla juice anywhere under the sun. solargorilla is also a viable charging option for laptops under 40 watts and it can even charge your mobile phone, iPod, handheld games consoles and many more devices from the 5V USB output. The SolarMonkey Adventurer is a new offering from Powertraveller that is designed specifically for the outdoors. When adventurers finally stop after a day’s exploring, the Solarmonkey Adventurer can carry on charging itself and other devices efficiently in lowlight conditions thanks to the maximum powerpoint tracker (MPPT) technology within it and, when the sun finally sets, the internal battery can also keep your devices powered through the night.
Iconic design
The Grigori White Gold cufflinks by Faberge, are named after Grigori Potemkin, the brilliant and charming favourite of Catherin the Great. Each cufflink is composed of white gold, sculpted in an egg shape and carved with a fluent pattern, rimmed in white diamonds set at the center with a blue sapphire. This piece is set in 18 carat white gold and features round diamonds and sapphires.
Timeless elegance
The limited-edition Great Wheel Skeleton clock made by Dent could make for an elegant addition to any executive’s office or home. The first clock designed in this collection was presented to Queen Elizabeth II at Buckingham Palace. The piece is inspired by 18th century French design with its simple and uncluttered features. The Great Wheel itself has 288 teeth, which are a clycloidal tooth form, and makes just one revolution a day. All collections made by Dent are hand made in England.
Outdoor photo fun
Panasonic introduce a new addition of LUMIX DMC-FT4 to its rugged design FT series specially geared for active outdoor use. This camera is waterproofed to 12 metres with shockproof to two metres, freeze proof to -10 degrees Celsius and completely dustproof. The DMC-FT4 is equipped with built-in GPS system with over a million place name information, compass, altimeter and barometer for users who enjoy active outdoor adventures. It is also designed with extensive landmark information that covers 82 countries or regions. The photos and videos with the location names are automatically sorted in the virtual folder alphabetically in the camera allowing quick reach. Also, iA (Intelligent Auto) mode lets users take exceptional photos and videos. In iA mode, the camera’s multi-capable functions happen automatically, so that users can shoot without the bother of adjusting settings.
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Trade
Growing pains Dr. Mahate, Head of Export Market Intelligence, Dubai Exports, underlines how SMEs can balance their limitations with the need to innovate and adapt for growth. 20
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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 Char tered Institute of Managers (UK) and a Member of the Institute of Commercial Management (UK). He is also a member of the Association of Cer tified Anti-Money Laundering Specialists (ACAMS).
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Dr. Ashraf Mahate Dubai Economic Department (DED)
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he modern world of commerce is characterised by globalisation, whereby SMEs need to export to not only grow, but also survive. In this highly competitive environment competitors do not wait for national SMEs to grow at their own pace, but instead seek to eat into their market. Advances in information technology and telecommunications have greatly assisted firms in being aggressive, not only in domestic but also in foreign markets. Today, even the smallest of firms can create global awareness of its products or services in an affordable manner. At the same time technology has also allowed SMEs to locate their operations at the most optimal sites so as to capitalise on cost, economies of scale and scope and the ability to meet the urgency of customer demands. However, the same technology is also a source of competitive danger as customers can easily access scores of websites that can provide them with a complete assessment of the product or service in question. With such availability of information at great ease, SMEs that cannot, or do not, provide products or services that meet the quality and cost levels demanded by customers will be severely disadvantaged. Even if SMEs manage to achieve the required quality at a market acceptable cost, it does not imply that this advantage will hold for long. Continuous improvement
Continuous improvement and innovation in quality, price and services by competitors, both domestic and international, implies that the competition frontier is constantly raised. At the same time, the rate of globalisation has allowed new players to enter the market at any time and sometimes from the most unsuspecting of nations.
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and innovation in quality, price and services by competitors, both domestic and international, implies that the competition frontier is constantly raised. At the same time, the rate of globalisation has allowed new players to enter the market at any time and sometimes from the most unsuspecting of nations. These new players also tend to be recipients of increased productivity through being part of industrial clusters and
value chains. Then one has the issue of an ever increasing number of free trade agreements that provide trade benefits to companies in the signatory countries to the disadvantage of others. Under this globally changing environment, the success and survival of SMEs in their domestic and foreign markets requires for an unprecedented strategy that seeks to provide continuous global competitive advantage. Anything less simply implies that the SME risks losing market share, not only in overseas markets, but also their home territory. There is a distinct three-way divide between SMEs in all countries, namely those that see globalisation as an opportunity and develop strategies to take advantage of the changing situations. These SMEs have advanced manufacturing capabilities and are able to capitalise on the changes in communications, technology and production. Secondly, there are SMEs for whom globalisation poses new competitive challenges and threats from overseas firms. By and large, these SMEs have the potential to be globally competitive if they enhance their production capabilities to meet international standards. However, the question as to whether they upgrade their manufacturing capabilities depends on their ability to deal with the increased competition and willingness to invest. Those SMEs that do not adapt and upgrade their capabilities will most likely not survive in the long run. Thirdly, there are local producers with very limited capabilities. In general, these SMEs tend to be relatively small and service only local customers. Over time this group of SMEs may not be able to survive the foreign competition in their domestic market. This group of SMEs is most likely to suffer from foreign competition as their ability to attract customers through personal relationships weakens with the availability of better, faster and cheaper alternatives. In the long run, only two types of SMEs will remain; namely those who have taken advantage of the new opportunities and invested in their manufacturing capabilities to bring them up to international standards on price, quality, and delivery. In doing so, these SMEs will more likely have expanded way beyond their home market into new export markets, assisted by continuous improvements in their products and processes. The second group of SMEs will be those that do not invest in developing their capabilities, or seek to continuously improve their products and process. As a
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Trade
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result these SMEs will always be marginal players in the market on a tightrope between survival and failure. With such high stakes, it’s important for SMEs to aim for growth but the question that arises is how can they achieve this goal? There is no single magical formula that an SME can utilise to become a high growth company. What we do know is that one important factor to the success and the growth of SMEs lies in its ability to export across a diversity of countries. As such the SME needs to see the global marketplace as its target and to focus its products and processes so that they are capable of meeting the international challenges. In a previous article in this magazine, I have referred to these type of SMEs as born global as right from the start they are focused on the international market. International trade is not a gateway to growth simply because of the much larger consumer base but also the manner in which the firm has to operate. Academic evidence suggests that firms that export tends to be 30% more productive compared to those that have very little or no international trade exposure. The fact that a company is exporting implies that it is competing with
By and large, these SMEs have the potential to be globally competitive if they enhance their production capabilities to meet international standards. However, the question as to whether they upgrade their manufacturing capabilities depends on their ability to deal with the increased competition and willingness to invest.
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the best firms in the sector throughout the world. As a result, the SME itself is forced to enhance its capabilities to make inroads into global markets. Next, the pace of change in global markets is higher and hence the SME is required to be better than its competitors and hence innovation becomes unavoidable. Finally, the ability to service a large consumer base implies that the SME is able to exploit economies of scale and hence become globally competitive. Another important factor that determines whether an SME aims for growth is the strategic decisions that it makes. In an SME, strategic decisions are typically made by the owner(s), and hence they are typically affected by their intentions. In large firms one has the agency problem because owners are not involved in the day-today decision-making of the company. In the case of SMEs, one has an equally damaging situation whereby the growth objectives are often tied to the owner (also tends to be the manager’s personal goals). The personal objectives and the goals of the SME may not always be synchronised and hence growth becomes the victim. In other words, growth has to be a key intention of the SME if it is to take place in a well-planned and sustainable manner. This implies that growth is not simply a product of chance but clear management decision making process and choice. Of course, growth can take place even when not intended, however, this tends to be ad hoc with a higher
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levels of risks. Therefore, if the owners want the SME to grow, then it has to be a clear priority within the firm and decisions need to be based around this goal. In fact, the aversion to growth is an important reason to explain why many SMEs actually stagnate and decline. Once the SME has decided that growth is the key aspect of its strategy, then it has four options that are to extend into its current market (market penetration). The SME can then develop new products for existing and new markets, and identify new markets for its existing range of products. In doing so, the SME seeks to extend the product life cycle of its current portfolio of products. Finally, the SME can enter into new markets with new products. Of these four options the most appropriate growth strategies are those that focus on developing new markets and products. It is often argued that if one has a sufficiently differentiated product then entry into new markets is relatively straightforward. The key to a differentiated product is innovation. Of course, marketing can help create psychological differences, but they tend to be temporary as consumers realise the true benefits of the product. Just as growth has to be an integral part of the company’s strategy so does innovation. It’s not enough to have a cleverly crafted vision or mission statement that incorporates innovation. The company has to demonstrate innovation in its day-to-day operations. For instance, 3M encourages its technical team to spend 15% of their time working on innovative projects. Other companies such as Adobe have created an entire department devoted to innovation. For resource constrained SMEs both of these examples may be farfetched, but there is no reason why SMEs cannot take small steps towards innovation. The important point is that innovation within the firm makes it easier to constantly review its products and respond to the changing market environment. This is more so the cases if the innovation is focused on two areas namely production efficiencies and meeting customer needs in a better manner. So, what stops SMEs from being innovative and hence aiming for growth? Academic evidence has found that one of the most common barriers to innovation within SMEs is the need to deal with today’s issues. In other words, most SMEs tend to fire fight with day-to-day problems and have little time to think about their processes, products or even what their customers may actually demand. This implies that most SMEs tend to be followers in the marketplace, rather than leaders. Any innovation, however minor, is a risk as far as the firm is concerned. Innovation seeks to change the status quo and make the firm different from its competitors. However, this is a source of risk for SMEs who believe that there is safety in being the same. By being different there is a probability that an SME can fail and this is its greatest barrier. There is no reason to expect that all innovation will be successful, but as long as the SME listens to its customers and develops products that meet their needs, the probability of failure can be reduced. SMEs have only one long-term strategy, which is to aim for growth which itself calls for it to be innovative and export oriented. Of course, innovation has risks attached to it, but then the risk of not changing is far greater as the competitors will not be merciful with those failing to keep pace.
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Trade
The art of matchmaking In order to promote international business opportunities between the food sector in Brazil and the retail chains in the Arab region, the Arab Brazilian Chamber of Commerce (ABCC) organised a Food Buyers Event in Sao Paulo in July. Aparna Shivpuri Arya brings you exclusive coverage of the event.
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he event was organised by the ABCC in collaboration with Apex - Brasil, from the 9th-14th of July 2012. Ten big supermarket and retail chains from the Arab region were present at the event. The list included:
Aparna Shivpuri Arya CPI Business
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Choitrams,UAE Spinneys, UAE EMKE Group -Lulu,UAE Federal Foods, UAE International Centre Group for Food Stuffs, Kuwait Barakat International, UAE The Sultan Centre, Kuwait
SME ADVISOR Middle East
• Al Yasra Foods, Bahrain • Sons of Hamed Y Alessa Co, Kuwait • Babasons, Bahrain The Arab Brazilian Chamber of Commerce is the sole Chamber of Commerce in Brazil officially recognised by the General Union of Chambers of Commerce, Industry and Agriculture for Arab Countries. Founded in 1952, it strongly fosters trade, tourism, cultural and trade relation between Brazil and the Arab Nations. On the first day of the event, the buyers from the Arab region were given a brief overview of the food sector in Brazil and the role of the ABCC in promoting trade.
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On the 10th and 11th of July, business matchmaking sessions were held between the companies of both the sides. The ABCC had set up work stations for all the supermarket chains from the Arab world and each Brazilian company was given approximately half an hour to discuss their product. The enthusiasm in the Brazilian companies was palpable, with over 60 companies vying for the buyers’ attention. Flavio Silva, from Marfrig, one of the biggest exporters of beef to the Middle East, highlighted the importance of the Middle East market for them. He said that Lebanon, KSA and the UAE were their biggest markets. Talking about this event, he stated “We believe that retailers have a lot of influence, and that is why we are trying to tie up with them through this event. We would like to do direct trading.” Other participants were also quick to point out that, this event is helping them build a close relationship with the retailers in the Arab world, which has been difficult to build. “We understand the culture of the Middle East, where it is not only about price, but also about building a relationship,” said Flavio. The two-year old coffee company Café Fazenda Caeté wants to enter the Arab market with an exclusive product. “Our product is one-of-a-kind in the world; we hold the patent for it. It is grounded and roasted coffee, only it is an infusion, like a tea. It’s a convenient coffee for people who live alone, who need to be practical,“ explained Commercial Director Fernando Costa. The São Paulo-based trading company Energy, which exports sugar, one of the top export products, from Brazil already sells to all of the Arab countries, and has come to the matchmaking rounds looking for new deals. Priscila Ruiz, of trading company Argofruta, hoped to find an importer for her products in the Middle East. “We want to find a company that will buy from Argofruta and sell to [end] consumers. My company exports fruitslimes, mangoes, grapes and nowadays we export these kinds of fruits to Europe and Canada. We cannot export to a lot of countries, since the shelf life is short. We are interested in the Arab countries, because we got to know that Brazil is exporting a lot of fruits to the Arab region, especially KSA and the region is interested in receiving fruits, for hotels and so forth.” Talking to Eduardo Abud from Cafe Canecao, highlighted that the opportunity this event has given them is very important for them. And they are open to any country in the region. The business matchmaking sessions continued the whole day from 9:00am-6:00pm for two days, with the same number of companies turning up the next day as well. This went to show the eagerness of the Brazilian companies to trade with the Arab world. Suresh Kumar from Barakat, UAE, said he is very optimistic about Brazil. “We are into expanding our operations in the entire Middle East. We’ll be having a processing plant, for meat, seafood and poultry. As part of the expansion, I have come here to see, what we can bring in terms of meat, beef, lamb and also fruits. I have met a lot of suppliers and some of them will be able to give me support in beef and lamb.” Talking about challenges Suresh said that there are no such big challenges except that UAE is a small market and competition gets tough. So there is a price war.
There is great potential for expansion for Brazilian products in the Arab world. It is estimated that the halal market has represented approximately USD two trillion dollars in the last few years in the areas of food, cosmetics and other products.
Sandeep Khimnani, from Choitrams added freight and lead time to the challenges. Sandeep Khimnani, from Choitrams was full of praise for the ABCC for organising this event and getting a good mix of industries. “We have met diverse industries. As a group, for us, Brazil, other than meat and sugar is an unexplored territory and we want to see how we can find other products. Agriculture is Brazil’s strength and we are looking around to see potential and then based on those”
SME ADVISOR Middle East
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Trade Talking about their experience in this event, Naraynan Raman and Narayan Swami, from EMKE Group, were very optimistic about the Brazilian products. “The event has been very productive and very well-managed and we have got some good offers. We will now study the market and then we will get in touch with them. Chicken and beef products are doing very well in the Middle East. Actually all the products from Brazil are well known in the market. Sugar is also an important commodity, just like coffee. Brazilian products are value for money and they never compromise on quality. The ABCC is also closely involved, especially with halal issues.” Khushi Gurbani, from Babasons, Bahrain, said that his main purpose for coming here was to explore new commodities and this trip has helped him in understanding the Brazilian market. He was also optimistic about finding a couple of clients to moving to direct supply rather than agents. On the 12th of July, the delegation met up with the Brazilian Exporter and Producer Association for Chicken Sector (UBABEF) and the Brazilian Exporter Association for the Beef Sector (ABIEC). Beef and chicken are one of the major exports from Brazil to the rest of the world.
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In 2011, approximately 69.8 % of the meat produce was consumed by the domestic market, while 30.2% was exported. Brazil is the third largest producer of meat after the US and China. 36% of the foreign exports is to the Middle East market – with KSA (16%) leading the pack.
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According to Dr. Antônio Camardelli, ABIEC, Brazil is the third largest producer of beef after the US and China. 36% of the foreign exports are to the Arab region, with Egypt and KSA leading the pack. Russia is the largest client for natural meat and Brazilian beef exports have grown by 11% from 2010 to 2011. Egypt is the largest importer of Brazilian beef (40%), followed by KSA (15%), Libya (7%) and the UAE (4%). To meet the requirements of the Arab countries, all the products are halal-certified, and all the companies have to get a halal certification and Brazil is the largest halal exporter in the world. However, as of now the average price of beef is down because of the financial crisis, since demand has fallen. According to Ricardo Santin, UBAEF, in 2011, the total exports of poultry from Brazil were USD 8.8 billion and this sector employs 3.5 million people. In 2011, approximately 69.8 % of the poultry produce was consumed by the domestic market, while 30.2% was exported. KSA again is the main importer in the Arab region (16%) followed by the UAE (5%). The price of chicken is determined by the price of soya bean and corn and therefore it is difficult to predict the price of chicken products. On the morning of the 13 th, the delegation visited the premises of FAMBRAS (Federation of Muslims Associations in Brasil) and the meat packing company Marfrig.
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SME ADVISOR Middle East
FAMBRAS is the most important Islamic entity in Brazil and is responsible for supervision and certification of Halal for all products as per the Islamic law. FAMBRAS has initiated a “Standard Halal Brasil” project to standardise the halal process to ensure that rules are followed and there is more transparency. There is great potential for expansion for Brazilian products in the Arab world. It is estimated that the halal market has represented approximately USD two trillion dollars in the last few years in the areas of food, cosmetics and other products. As production and exports increased, FAMBRAS created the Brazilian Islamic Centre for Halal foodstuff, which became responsible for application of the halal concept and the production system in Brazil. The group’s final appointment, this Friday afternoon, was a meeting with ABCC’s CEO Michel Alaby, at the organisation’s headquarters. Alaby spoke to each of the delegation members about their opinions on the visit, and asked for suggestions for eventual improvements in the future. The general assessment was positive, and the businessmen left Brazil with an optimistic outlook of turning the contacts made with suppliers into actual deals.
BANKING FOR BUSINESS
Unlocking potential We take a look at how financial players like ADCB are continuing to support the future growth of SME 100 companies.
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Joumana Saad CPI Business
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t’s been almost a year since Dubai SME unveiled the first batch of SME 100 companies. The initiative has become the key platform and catalyst in Dubai for identifying promising SMEs before grooming them to become bigger, better and sustainable enterprises; with the hope of graduating some of them to become large globallyoriented companies. Furthermore, the list has opened up new doors for the SME community at large, by providing them with a benchmark to work towards. A total of 1,092 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 a site visit to ascertain facts and evaluate the merits of each case.
SME ADVISOR Middle East
As part of the process for the SME 100, a number of UAE banks partnered with Dubai SME to help drive nominations and offer special benefits to the listed companies. These include designating them as a priority account with a dedicated relationship manager, preferential pricing, priority transaction processing at a preferential schedule of charge, high loan amount limits, low collateral obligations, reduced fees and charges on export transactions, as well as flexible repayment options. All in all, 800 SMEs were nominated by the various banks. Essam Disi, Senior Manager, Strategy & Policy Department, Dubai SME, tells SME Advisor that his team has facilitated around 50 requests so far for the ranked SMEs to avail the benefits based on their needs, and is also working with the banks to standardise and have a common assessment process across the banks. “The ranked SMEs
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Members of the SME 100 were honoured during an unveiling ceremony earlier this year.
The ranked SMEs resemble an attractive investment pool for investors. The net turn-over of the top 100 SMEs is estimated at AED 2.3 billion and their total assets are worth at AED 1.4 billion while their combined profit is AED 220 million.
Nilanjan Ray ADCB
resemble an attractive investment pool for investors. The net turn-over of the top 100 SMEs is estimated at AED 2.3 billion and their total assets are worth at AED 1.4 billion while their combined profit is AED 220 million,” says Disi. Abu Dhabi Commercial Bank (ADCB) is one of the banks who partnered with Dubai SME to provide support to the SME 100 companies. Nilanjan Ray, SVP and Head of ADCB’s Business Banking Division, tells us that the initiative was a “highly effective and beneficial process” for their SME clients. As a partner, ADCB encouraged their clients to nominate themselves for the ranking, and in turn the applicants were advised by Dubai SME throughout the whole process. “We have seen 17 customers of ADCB being included in the ranking in 2012. We have ongiong discussions with several other members of the ranking for initiating banking relationships,” says Ray. “Our association with several members of the list has reinforced our positioning with customers as leader in this segment, offering comprehensive banking solutions.” Ray also says that ADCB is planning on being on board for the next round of the SME 100 when it’s announced at the end of 2013. In addition, the bank is working with a number of other government organisations including the Khalifa Fund, in an effort to extend its services to reach more and more SMEs in need of financing solutions. ADCB was also among the banks who took part in the SME Friendliness Index, another major Dubai SME initative which was announced earlier this year. The index ranked various UAE banks on the degree to which they lend to SMEs, as well as the number of SME clients as part of their total customer base. The report incorporated input from the
banks as well as key decision makers from a large number of local SMEs. It’s main aim is to provide more clarity for both parties to make the lending process for SMEs more transparent. Dubai SME will also launch bebankable.ae in September which will act as a key online platform for SMEs to measure their readiness to receive a loan. Corporate governance has increasingly become a priority area for both the private and public sector in the UAE. This year alone, there has been a number of events, workshops, seminars and even a legal framework put in place to encourage the SME community at large to adopt some
SME 100 Quick facts
of the best corporate governance practices. Dubai SME was highly involved in drafting the Corporate Governance Code, and has presented a number of the SME 100 companies as shining examples in this category. Disi also says that Dubai SME has plans to include a new corporate governance category when it announces the opening next round of SME 100. He adds; “Many SMEs have started to adopt corporate governance practices and are considering new channels to finance their growth including attracting investors and IPOs.”
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OPERATIONS
John Lincoln provides the third and final part of his Cash is king series, in which he discusses the strategies and tactics of managing your cash flow.
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s a recap, in the first part of this “cash is king� series, I wrote on why you need a business plan and what the key elements those are required in a business plan before you seek funding. On the second part, I wrote on the different sources, strategies and tactics for the funding of a small business. This last and final section illustrates the importance for SME owners and managers to grasp the concept of cash flow management, or working capital management, as it is commonly known. John Lincoln du
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What makes up working capital?
Working capital are the items in the short term part of the balance sheet that includes cash, short term debt, investments, inventory, debtors (receivables), payables (creditors) and so forth.
SME ADVISOR Middle East
Keep in mind that current assets have a short life span and that they should be quickly transformed into other asset forms. For example, cash is used to acquire raw materials or supplies and these supplies or materials are converted into a finished proposition. These which are sold on credit are converted into account receivables and finally into cash when payment is received. What is working capital management?
Working capital is often referred to as cash flow management, cash management and or liquidity management. Therefore, the effective forecasting, budgeting, planning, tracking, reporting and management of your current assets and liabilities is what is referred to as working capital management. A small business owner or SME manager’s
About John Lincoln, is the Vice President, Enterprise Marketing, du. He has over 20 years telecommunications experience in the USA, Japan, Europe, India, Dubai, Malaysia, Latin America and various other countries. He has extensive senior expertise in international telecommunications sales, marketing, business development and customer service delivery. John also has executive experience with general management, marketing, P&L, product development and revenue management responsibilities in both consumer and enterprise segments for both
Importance of cash flow management
Before I dwell into the implications of why cash flow management is critical for a small business, it is important to understand these from a small business owner or an SME manager’s perspective. Your role as a principal in the business requires you to be a: • Cash seeker – you have to source the funding from investors or lenders • Cash budgeter – you have to plan and forecast your cash requirement • Cash disburser – you have to allocate and disburse payments appropriately and optimally • Cash collector – you have to ensure that cash is collected for goods delivered or services rendered • Cash retainer – you have to retain cash for funding the operational activities of your business
The net working capital is the difference between the current assets and current liabilities.
Current assets
Current liabilities
• Inventory • Sundry debtors (account receivables) • Cash and bank balances • Loans and advances
• Sundry creditors (account payables) • Short term loans • Provisions
and MS in Telecommunications from the Golden Gate University in San Francisco, California, USA. You can find John’s personal blog at www.johnlincoln.biz. He can be contacted via: john@johnlincoln.biz, and followed on Twitter: @lincolnjc. At present John is in the final stages of launching a book which explores how businesses can grow and achieve sustainability and which is scheduled for publication in September 2012.
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ability to forecast, budget, plan and monitor the liquid resources of an SME will determine whether the business will exist, survive or thrive. The monitoring and management of “liquidity” of the following aspects of your business is critical for the success of any small business. The fundamental principles of working capital management are reducing the capital employed and improving efficiency in the areas of receivables, inventories, and payables.
the fixed and mobile sectors. In addition, John has an impressive operational and management portfolio of established proven expertise in incremental business value creation and management of large multi-cultural teams in Vodafone Global in the UK, Japan Telecom in Tokyo, AirTouch and Pacific Bell (now AT&T) in San Francisco and Tokyo, Airtel in Delhi and other telecom and technology companies. Additionally he has extensive large scale business development, M&A and operational project experience across the USA, Europe, Asia and Latin America. John has an MBA
The fundamental principles of working capital management are reducing the capital employed and improving efficiency in the areas of receivables, inventories, and payables.
There are many reasons why cash flow management is critical for the existence of your business. The following points are areas that should be afforded constant and consistent attention. Manage risks - Your business might be earning a profit but you can be forced to exit or close your business if you run out of cash. High levels of investments in current assets - Investments in current assets form a significant part of small businesses overall investments. Therefore managing working capital optimally will determine if the business is going to exist, survive or thrive. Using current liabilities to fund a small business - Most small businesses fund the operational aspects of their businesses through the current liabilities. Managing it optimally will determine if you have a business or not. High opportunity costs - If you do not manage your working capital well, you might not have the requisite cash flow to take advantage of new growth opportunities, special discounts and increased demand. In other words, there is a huge opportunity cost if you do not manage your working capital well. Ability to fund the running of a business - Adequate working capital is required to ensure that your business is able to continue its operations and that you have enough funds to pay maturing short-term debt and ongoing operational expenses. Increase overall free cash flow - Optimising working capital results in availability of liquidity and thereby an improvement in your overall free cash flow, which can be used to pay dividends to your investor to pay off you debts and or reinvest in the business.
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OPERATIONS Reduction in expenses - Optimal working capital management will lead to a significant reduction in your inventory and borrowing costs, thereby further increasing your profits and liquidity for “upside opportunity” investments and debt reduction. Strengthened balance sheet gives increased stakeholder confidence – A strengthened balance sheet for your small business will mean that your suppliers, customers, lenders, investors and even your employees will have increased confidence in your business.
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Continual cash flow management is only as good as the information on which it is implemented. A recordkeeping system that provides information useful to making decisions regarding cash inflows and outflows is essential.
Before I discuss the strategies and tactics to optimise your small business cash flow management, it is important to understand the concept of “float”.
Activity management
What is a “float”?
A float cost is any delay in the process of converting materials, labour and services, to receipt of payment that involves cost. Similarly, any delay in making payments to your suppliers will also give rise to float. Note that this is advantageous to a small business (up to a point). In other words, a float is time lost between a payer making a payment and a beneficiary receiving value. Managing a small business cash flow
In simplistic terms, cash flow can be as simple as making sure that that a small business has enough profitable revenues. The primary reason a company often creates an environment of cash crunch is due to the lack of understanding of the “timing” element. Achieving higher sales revenues than expected is futile if you can’t pay your bills during the time it takes for the proposition to be crafted and sold in the market. There is no one single solution to managing a small business’s cash flow, but there are elements which deserve due consideration. Manage SME owners and management compensation
For some small businesses, the owner’s and management team’s compensation is often a large portion of the business’ expense. Especially in the developing years of a business, the owner’s draw can be a big burden on the cash flow of the business. That is why secondary incomes are valuable to the success of many small business ventures, especially in the early years. Manage your overheads
Day-to-day cash control
Deposit or withdrawal facilities
Money at the bank
Provision of information regarding bank accounts and positions
Receipts
Money transfers and collection services
Payments
Investment facilities
Short term investments and borrowings
Financing facilities
Cut out excess overhead expenditures. Good spending discipline should keep unnecessary expenditures to a minimum, but good cash flow management should help to virtually eliminate excess overhead expenditures. Bad spending habits are often picked up when cash is plentiful. Cash flow information system and processes
You need to ensure that your financial information is maintained, stored and monitored in a manner that allows you to make the necessary adjustments for your small business. Therefore develop a good information system. Continual cash flow management is only as good as the information on which it is implemented. A record-keeping system that provides information useful to making decisions regarding cash inflows and outflows is essential. Planning and forecasting capabilities, processes and systems
An SME owner or manager will need to be able to plan and forecast optimally your anticipated sales and expenditures; this is often overlooked. Rent, lease versus outright buy
Consider cash saving activities such as renting versus buying and used equipment versus new. Understanding cash flow peaks and troughs
Provision of bank accounts
Pooling and netting
You must know when your cash in and cash out peaks. Limit overdue accounts due to the business
A small business must limit the money that is owed to it. In other words, get people to pay their bills. Overdue accounts
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receivables can pull down a business. One way to address this problem is to keep credit current and at a minimum. This is often a bigger task than it may seem.
customers, but be cautions not to offer over generous payment terms. Automation and outsourcing
Manage your credit risk
Caution should be taken when credit is first extended to customers. Give incentives for on time and advance payment
Consider giving discounts for advance payments and incentives for payments made by the due date.
Consider your operations and manufacturing if automation is better than using your own versus labour. Other considerations include considering giving a part of your operations to subcontractors, versus manufacturing or servicing all aspects of the production or operations internally.
Tight inventory management
Keep a close eye on inventory. Product sales and inventory management are complex issues that can be likened to the “chicken and egg syndrome.” A business needs enough inventories to fill orders in a timely manner, but adequate sales are needed to minimise inventory. Inventory includes finished products held for future sales as well as raw materials held for future production. Both types of inventory represent cash that has been spent but that has not generated a return. Get rid of or sell inventory items that are just gathering dust at a discounted price.
LOW RES
Timely billing and collections
Maintain tight reigns on billing and collections. Because cash flow management is so closely tied to time (flows), the time lag between shipping finished products and receiving payment for them should be minimised. The time lag issue must be aggressively addressed by collecting payments and sending invoices in a timely manner. Consider daily, weekly or semi-monthly invoicing, rather than monthly or bi-monthly invoicing. Consciously structure the payment of your bills. Electronic deposits and delayed payment of bills can improve cash flow problems. However, there is often a fine line between delayed payments and late payments. Crossing that line and incurring additional costs for late payments is normally not a good cash flow management procedure. Discounts on bills should be evaluated; consider discounts that offer less than the amount you save by delayed payments. All non discount bills should be delayed as late as possible without compromising good relations. Do not hesitate to take advantage of credit offered by suppliers and feel free to negotiate for more favourable terms. Issue monthly paychecks for employees
Consider bi-weekly or monthly paychecks. Bi-weekly and monthly payrolls allow the business to hold onto money longer. It also allows for less frequent deposit of associated payroll and other taxes. Monitor your customers’ payment patterns
Monitoring certain customers may provide insight into their payment schedule. An SME should consider dropping or implementing new payment procedures for customers who continually pay late. Evaluate new customers from a cash flow perspective
When taking on new customers, consider implications on cash flow as part of the evaluation criteria, not just increased sales. Payment terms influence potential
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Optimally structuring payments to creditors
Monitoring certain customers may provide insight into their payment schedule. An SME should consider dropping or implementing new payment procedures for customers who continually pay late.
Differentiate your customers
Segment and differentiate your cash and quick paying customers, versus credit and late payers. Business agility to adjust
The business should have the capability, the willingness and readiness to make adjustments to the business and financial operations. In summary, cash flow management is one of the most fundamental issues that a small business will have to grapple with. Mismanaging or not understanding the timing of your cash flow will determine if your business will thrive or perish. Remember that money makes money. More importantly, money today makes money tomorrow. As an unnamed entrepreneur once famously said that “the fact is that one of the earliest lessons I learned in business was that balance sheets and income statements are fiction, cash flow is reality”.
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Management
Keeping tabs on training Businesses are increasingly looking for new ways to measure the return on investment of training programmes.
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Joumana Saad CPI Business
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August 2012
he summer slowdown in the UAE has many executives strategising to make better use of their employees’ time. One trend that is surfacing among managers is the implementation of corporate training programmes during these less productive months. Biz-ability is one company aiming to capitalise on this trend by offering training programmes tailored to be intense yet shorter on hours, as many employees would prefer to not spend their time at all-day events. Bev Mileham, General Manager at biz-group, says its training arm Biz-ability has seen increased demand from the business community during the summer, as they plan to better prepare staff for the busy season ahead. “Many companies have recognised that slower months of business such as the summer are a good time to train their staff as business operations are less frenetic and employees have more time to learn new skills. Following increased demand for summer training services, biz-ability launched the Light on Learning programme that includes intense and hands-on sessions to increase organisational performance and is a cost-effective solution to enthuse and energise employees during a sluggish business period.” Light on Learning offers a choice of 12 training modules, suitable for employees, supervisors, middle and senior managers. The sessions range from improving internal and external communication, to strategy setting and how to achieve better performance from both individuals and teams. Each session is conducted in two or four hour workshops and although intensive, biz-ability
SME ADVISOR Middle East
says the focus on one particular skill set coupled with practical work-based assignments improves knowledge retention and applicability for its clients. Despite the fact that companies continue to spend a lot of time and money training their professionals, many in the industry still question the return on investment for such programmes. Larger companies often offer these programmes to their employees with the intention of incorporating corporate social responsibility practices into their business culture, without an actual system in place to measure their effectiveness. A recent study by The ROI Institute finds that 60% to 90% of all job-related skills and knowledge acquired in training programmes do not end up getting implemented on the job. FranklinCovey Middle East recently hosted an seminar that addressed this very topic. The Knowledge Cafe event, which brought together human resources managers and directors from a variety of UAE companies, shed light on the reasons why companies are not seeing real results as a result of training. Historically, training was a much simpler process as it involved teaching employees specific skills that were to be used on the job manually. In today’s business climate, we are paid to use our minds as 70% of employees can be categorised as knowledge workers. These workers rely on their emotional intelligence to make the decisions that will impact business. During the event, Janne Rennie, Director of Delivery Effectiveness at FranklinCovey Middle East, raised the issue of follow up on the part of learning providers and
Jane Rennie, Director of Delivery Effectiveness at FranklinCovey Middle East, leads the discussion during The Knowledge Cafe seminar.
drastically evolved in this region. After evolving itself and expanding its range of training and learning services, the company made the top 20 of the Dubai SME 100, announced earlier this year. Mileham credits the rapid growth to the unique makeup of employees in this part of the world. “The UAE and Middle East have a very multi-cultural and dynamic workforce which requires the trainer to have a style and approach that is adaptable and sensitive to diverse cultural audiences. Our consultants have reported a higher level of engagement, enthusiasm
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businesses. She says that any organisation that provides training should be working with their clients in this area by offering post-session assessment and support. “We have to find the connection between knowledge and performance. The bottom line is that organisations train people because they want to impact their behaviour. Only when that behaviour becomes habit do you see real change happening.” Rennie points to time-management as one of the biggest challenges for the modern-day business, as employees spend a large proportion of their working hours on activities that do not correlate with the business’ overall goals and productivity. “We have to take a closer look at the things we do everyday in our jobs. Answering the phone and responding to e-mails and these type of tasks are part of our roles, but we need to be more selective with our time, as our attention is very easily diverted,” says Rennie. She also adds that most organisations who choose to do training usually stop the process and lose focus right after the courses are completed, and don’t have a plan in place that would asses the outcome or allow their professionals to implement the skills they learned. With attrition rates still a major issue for corporations globally, many HR professionals are asking the question: what if spend time and money on training, and they leave? Rennie says the real question they should be asking is what if they do not train them and these employees end up staying? The best practices she has seen among companies has been of linking overall objectives to the actual learning taking place. She also points out that incentives are not always financial and that employees today, especially younger professionals, just want to feel valued, and see training as a part of that. Another important fact surrounding the effectiveness of corporate training is that certain sectors like hospitality and tourism are more conducive to measuring its success. Dubai Ladies Club does extensive regular training in a number of categories for its staff, including a full customer service excellence programme. Madeleine Stocks, Wellness Manager for the club finds the training invaluable, and an effective way of changing and improving employee behaviour.” “We measure customerand staff satisfaction and feedback which are great indicators of change. We have quizzes and small in-house refreshers based on the trainings where we can assess the knowledge retention. Through observing daily operations post-training we are usually able to identify the results. Also a ageneral analysis of the attitude and motivation levels of the team can be good indication,” says Stocks. “The most significant change was reflected in the shift of an entire team’s confidence and attitude. I could see the change in each individual and to see it collectively as a team it was quite overwhelming.” In the case of SMEs, training is not always an option as many do not have a big enough budget. Also, with a smaller number of employees, its crucial for managers to look at who they select for training and what they want to gain out of the process. Professionals from smaller companies at the FranklinCovey event shared their experiences in this area. A number of them actually send a handful of employees to do training on stagnated schedules, and those employees end up sharing knowledge and skills with the rest of their team. Biz-group, an SME itself, has seen interest in its business grow over the years as the business landscape has changed
We have to find the connection between knowledge and performance. The bottom line is that organisations train people because they want to impact their behaviour. Only when that behaviour becomes habit do you see real change happening.
and a genuine desire to learn in this region, in comparison to trainings they have conducted in the West.” In terms of measuring return on invesment, biz-group implements a number of methods that depend on each type of training conducted. “ We use everything from measuring against key performance indicators, to 180 degree surveys, to getting feedback from employees’ line managers. For many of our long-term classroom training programmes, we require participants to complete real life assignments in the workplace.” Mileham stresses the need for executives and managers to change the old-school way of thinking about training, and look at the big picture to effectively measure success.” In any business activity, if you are not able to measure results or output, you cannot completely gauge the benefit of doing it. It is absolutely important to first establish effective measurement tools before embarking on any training programme and then ensure that corrective measures are taken post training. This is not only important for our clients but integral to our own team performance and motivation.”
SME ADVISOR Middle East
August 2012
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Finance
Wisdom of the crowd Tapping into a fast-moving global trend, Eureeca.com aims to bring the crowd-funding model to the MENA region’s entrepreneurs and SMEs.
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Joumana Saad CPI Business
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August 2012
hris Thomas and Sam Quawasmi are no strangers to the challenges of entrepreneurship. Friends for over 12 years, they come from a background in investment banking and venture capitalism. Chris left his day job at age 26, and has spent the last nine years building up a number of businesses in Dubai. They had always discussed working on a joint venture and played with a few ideas over the years, but nothing tangible ever surfaced. Then came the global credit crisis in 2008, and they watched as traditional funding options dried up overnight. Already very much plugged into the world of venture capital, the two men felt inspired by these drastic changes to start something that would help fill this void. “Throughout the process of building businesses and working with entrepreneurs, and angel investors and mentors, we found that the greatest challenge facing businesses these days is access to capital, certainly since 2008, after the credit crisis. We knew then there had to be a better way to raise the funds to get capital flowing back to new businesses,” says Chris Thomas, CEO of Eureeca. Over the last five years, a number of crowd-funding websites have emerged in the US and UK, generating interest and traffic. Websites such as KickStarter.com quickly became a mechanism for funding various creative projects, most of these being donation-based, where an investor
SME ADVISOR Middle East
would receive a token of appreciation, such as a voucher or t-shirt, for their financial contribution. Then came their Eureeca moment, when a proof of concept came into focus. A UK company, crowdcube.com was able to set up a crowd-funding website for businesses and find the right legal structure to do so in that market. At that point, they decided it was the right time to bring this model to the Middle East. As Chris and Sam spent the last year putting their ideas to work, they became even more assured by what was happening around them. In April of this year, President Barack Obama, signed into law, the Jumpstart Our Business Startups (JOBS Act), which legalised crowd investing as a product. The bi-partisan bill received substantial support, and the Securities and Exchange Commission (SEC) is currently coming up with the legal framework to regulate this new form of investing in that market. As a result, crowd-funding is expected to open up in the US by 2013, and many influential figures in the business community are hailing it as the way forward for SMEs to get much needed access to capital. After a year of hard work and detail tweaking, Eureeca.com will make its debut in September with ten companies. The startup is seeing a high level of interest from local UAE companies and expects to bring on board about 15 startups and SMEs per month. Essentially, the website will be an online marketplace where entrepreneurs
and strike agreements with various counterparties on equity basis and used several legal agreements with website designers, to own a share in Eureeca in exhange for service. Sam says that Eureeca’s journey is a great example of how entrepreneurs and SMEs can thrive on budget. “We worked hard to get to this stage, but there’s a wrong perception out there that in order to start a business you need hundreds of thousands of dollars to do so and that’s completely wrong
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and SMEs are invited to raise funds on the site by going through a three stage process. The first step will be to simply register and provide basic information about the nature of their business, followed by a detailed pitch, along with financial forecasts and other required information. The final step would take care of the legal aspects, in which compliance agencies would go through a validation process by running credit checks. After completing these steps, the member then gets listed on the site for funding, and at that stage will be allowed to interact with the crowd of entrepreneurs, investors and experts registered on the site. Investors can invest a minimum amount of USD 100, and each listed business has 90 days to raise the funds they require. Chris describes the platform as very social, tech-heavy and interactive, with tools such as video sharing and webinars. The niche online community aims to open up a new channel for these groups of professionals in the region to communicate and learn from one another. “Technology is not merely a place where you post your business online. We have the ability to create business plans and in house talks and businesses use the social element of our site to get their message out there, peer review, analyse business plans, assess quality of funding pitches, they can like, comment, share or introduce other members to the business itself,” he adds. Although a wide variety of new businesses will be able to join, Chris is expecting more established SMEs to be the real sweet spot for Eureeca. “Based on our research we expect a majority of business to be ongoing established businesses that are aged one to three years, business that are already successful and making money but can’t get access to capital to get to the next stage,” he says. Sam Quawasmi, Managing Director at Eureeca stresses the transparent aspect of the site that will make it resonate with entrepreneurs and investors alike. “Right now businesses are using social media to actually advertise the fact that they are selling equity in their business, but there isn’t a process or structure in place for this to take place. We provide that structure, to take place safely with transparency and it gives a lot of investors support and comfort and provides the business a level of comfort as well,” he says. As an SME, Eureeca faced obstacles in raising capital itself. The company was fortunate enough to persuade
There are many ways this can expand. Mark our words, crowd investing will be the de facto mechanism in which new and existing business raise funds globally; it will be a new asset class like stocks and bonds now.
because we’ve proved it otherwise, we were also luckily enough to crowd fund from friends and family and business can do the same.” Eureeca has been in discussions with various government agencies in the UAE and in the region, and its founders say support for the project has been strong in that arena. For Sam and Chris, the future for crowd-funding and Eureeca looks very bright, as they predict the industry to see exponential growth in the years to come. “There are many ways this can expand. Mark our words, crowd investing will be the de facto mechanism in which new and existing business raise funds globally; it will be a new asset class like stocks and bonds now,” says Chris. In the future, we’d like to find ways that allow investors to exit those investments and create a secondary market where businesses can come back and get future investment rounds on the site and use the site to communicate with their investors. We believe we’re very much plugged into the entrepreneurial ecosystem and with that we are aiming to help businesses grow.”
Global look at crowd-funding
Source: Crowdfunding Industry Report; Crowdsourcing.org
L - R: Eureeca’s founders Chris Thomas and Sam Quawasmi
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OPPORTUNITIES
A personal finance mini market
Moneysouq, a new exhibition launched in the UAE, aims to engage consumers by bringing together face-to-face and virtual marketing platforms.
Moneysouq’s launch exhibit in July 2012 at the Mall of the Emirates in Dubai
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hen it comes to personal finance, the last thing a customer wants is to be called by a sales person who is pitching offers on car insurance, loans or other finance products. Last year in the UAE, a ban was issued on the practice of cold calling by financial services companies. However, with the fast-changing demographic characteristics and the unique needs of these customer groups, companies are looking for a more effective way to interact with their target customers. There exists a disconnect between the company’s advertising efforts and the customer who is usually not aware or interested enough to take that message home with them. Jack Arazi is aiming to fill this gap with Moneysouq, a cross-country personal finance exhibition strategically located in shopping malls. The exhibition recently launched at the Mall of the Emirates in Dubai, and will
SME ADVISOR Middle East
make its way to Dubai Mall in September, and finally Abu Dhabi Mall in December. It will eventually move on to other Emirates including Ras Al Khaimah, Sharjah and possibly even Fujeirah, by next year. This concept is relatively new in the UAE, although it has been widely adopted by a number of Asian countries. The MoneyExpo held in Bangkok, is visited by about 50,000 consumers over just a few days every year, and is a highly anticipated event in that market. Arazi says he took inspiration from this business model, and saw the UAE as a perfect opportunity for such an exhibition. “The UAE is in a transitory place. The service industry always has to get their message across, so it’s important to do it on a constant basis. So, where better than shopping malls? Shopping malls are way of life in this country, we do our shopping, banking and socialising there. Also, we think culturally the face-to-face element is important here; we still
Exhibitors can use the Moneysouq mobile app for continued marketing.
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value the personal relationship, and the ability to refer back to that person in the future.” Moneysouq includes a wide variety of financial services companies, some specialising in lending, others in wealth management, commodities trading, forex and auto insurance. What makes this type of exhibition stand out is its virtual component. The Moneysouq mobile app is designed to keep the marketing machine going with an advertising campiaign that keeps interested customers up-to-date on all financial offerings. Once a potential customer downloads the app, they browse through the latest offerings from the exhibiting companies, and request a call back. This allows sales and relationship managers to spend their time more wisely by connecting with customers who are interested in the products to begin with. “There are alot of advertisements out there about companies offering this and that but there is no follow up. The follow up is always the barrier, one because if someone wants to go to the bank and talk to people, it’s always a process, we just wanted to make this app to make it much easier for everybody. There is a convenience factor, I can browse the products available and if I like it I can request a call back, by being registered the company will have my details and can contact me.” Arazi will plan to launch a marketing campaign specifically for the app, to generate more interest around the concept to the general public. Moneysouq has already garnered high interest and a large following through social media platforms. If all goes well, there may be plans to extend the business model to other industries including real estate, health, beauty and education and kids products. Arazi expects there to be real potential in all of those categories, as they remain very popular with consumers in the UAE. Moneysouq and its exhibitors are also aiming to improve the level of financial literacy, by opening up a dialogue with customers who would like to learn more about different types of financial products and how they work. With young consumers making up a major part of the UAE’s population, the platform will be able to adapt to their tech-savvy and mobile nature. It is important to note that a number of banks in the UAE have already implemented initiaitves in this area aimed at the youth, younger professionals and UAE nationals. However, getting these target customers on board for the long haul has been a challenge, as retention rates remain low across the board. Arazi pinpoints the UAE’s cosmopolitan nature and unique consumer needs as partly cotnributing to the customer loyalty issue. “It’s a new economy, and the financial organisations have to cater to different nationalities and transitory features. People come here for a few years on average, so they must adapt to their needs and put it different measures to make sure that you get your money back. If you look at Europe and other economies they have no where near the same level of young population. It’s defintiely something that needs to be developed.” Getting this brainchild of an idea off the ground was no easy task. Arazi, a former financial services professional, started World Souq Exhibitions just last year. He played with the Moneysouq idea for a while, working on the exact concept and mobile app for some time before zeroing in on the best potential venues to host the exhibition.
It’s a new economy, and the financial organisations have to cater to different nationalities and transitory features. People come here for a few years on average, so they must adapt to their needs and put in different measures to make sure that you get your money back.
Arazi says one key challenge was getting people upto-speed on the Moneysouq’s concept itself as it was still unfamiliar and new in the UAE market. “To launch a new product is always challenging, but especially in personal finance, it was difficult as its a very strict business dealing with numbers and statistics. It was a bit difficult getting the malls interested in the idea, but after seeing what its all about they love the concept.” After Moneysouq wraps up in the UAE, exhibitiors will be keeping tabs on the levels of customer interaction via the app, and overall business generated from exhibitions themselves. If the outcome is positive, Arazi says he would highly consider expanding his business to other markets such as Qatar and Saudi Arabia.
Quick facts Types of exhibiting companies n Insurance (car, health, travel, life) n Mortgage n Offshore tax n Wealth management n Foreign exchange n Pension planning n Credit cards
n Commodity broking n Commercial banking n Online payment systems n 14-20 stands available; size and position selected by exhibitor n Stands are customised with each company’s brand material
SME ADVISOR Middle East
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OPPORTUNITIES
The magnificent seven In a relatively short span of 17 years, the Hamriyah Free Zone Authority (HFZA) has forged a path that has attracted to date, over 5,700 investors, from 140 countries and it continues to promote entrepreneurship and economic development.
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parna Shivpuri Arya spoke to Rashid Al Leem, Director General, HFZA, to understand his vision and what makes this free zone unique.
Please give us some background about the free zone.
Aparna Shivpuri Arya CPI Business
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Sharjah is the third-largest of the United Arab Emirates. It is also rapidly becoming a major industrial base within the UAE as it is the only Emirate with ports on the Arabian Gulf ’s west coast and east coast, providing direct access to the Indian Ocean. One of the jewels in its crown is the Hamriyah Free Zone. Hamriyah Free Zone Authority was established by an Emiri decree issued in November 12, 1995. Its location gives the free zone a unique geographic and time zone
SME ADVISOR Middle East
advantage backed by a secure and fully convertible currency and a multi-access to neighbouring and global countries through land, sea and air. We are fast becoming one of the cornerstones of the United Arab Emirates industrial development. HFZA is challenged to provide competitive incentives and unique opportunities to establish a business in a tax free environment, full company ownership, exemptions from all commercial levies and repatriation of capital and profits. The free zone manages an area of approximately twenty two million square meters of prime industrial and commercial land and a 14 meter deep water port which includes room for expansion. We started with 67 companies and it was an empty land and I met with His Highness to understand his vision and
How has HFZA helped in consolidating Sharjah’s economic growth?
Generally speaking, when we trace back to 600-700 years, we are strategically located in the Gulf and we have good communication with our neighbours, for example, India. Even the locals here are driven by trade. Free zone is a value addition and the beauty is that the business activities are diversified- trade, commercial, services and industries and we give licenses to all. Those who want to go for small industries can do that and those who want to trade can also set up here. So we follow the same rhythm as the Emirate and trade is a very important factor for Sharjah. Most of the global brands have their representation here which shows that UAE is important to them. You see faces from different parts of the world, and this gives you a sense of inspiration. And we have also withstood the uncertainties in the region. The Arab spring has not affected us specificallyhowever uncertainty is everywhere and it’s more economic than political but at the end of the day life has to go on and the governments here are doing a good job of networking and promoting business opportunities. Being quality conscious and ISO certified, Hamriyah Free Zone procedures for setting up a company are easy and well streamlined. The simple procedures and formalities involved make it possible to obtain a license within 24 hours of submitting all requisite documents. Opportunities are endless at the free zone. If you are looking for quality, efficient facilities and services, reliability and cost effective solutions, your choice should certainly be Hamriyah Free Zone – Sharjah. If you are establishing a Free Zone Establishment (FZE) or a Free Zone Company (FZC), the minimum capital requirement is AED 150,000 or USD 41,000, but there is no minimum capital required when setting up a branch of a foreign or local company. We also have a port, so companies can get their raw material directly here. This is added value to our customers who can see the process and know what is happening at every stage of the business cycle. A further advantage for investors is the free zone’s proximity to rich natural-gas reserves. The gas field is just 30 kilometres away, and the Hamriyah Free Zone Port already has a large Liquefied Natural Gas (LNG) terminal. Such readily available resources are supported by a number of free zone enterprises that specialise in the recycling of scrap steel, aluminium, used tyres and other raw materials. Overall, the Hamriyah development represents a highly cost-effective and attractive free zone opportunity to investors. What makes HFZA stand apart from the other free zones?
The important step that we took was the integration among the industries. We found a way to link the SMEs, the micro and the big companies together. This means we have provided offices for these startups, built distribution centres and warehouses. We also started clustering the companies and I came up with a concept called “zoning the zone”, so companies from the same industry were put together
because they understand each other’s language. And this is unique to HFZA and has brought a lot of companies here as it saves communication and transport costs. HFZA has formulated explicit policies and designed special programmes to strengthen the SME sector, officially called the Hamriyah SME Zone, an array of business incentives that includes 100% ownership, full repatriation of capital and profits, no taxes or commercial levies, a 25-year long lease agreement and highly developed infrastructure to encourage SMEs. Hamriyah SME Zone offers seven strategic clusters comprising of the Oil & Gas Zone; Timber Land; Maritime City;
Rashid Al Leem
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HFZA has formulated explicit policies and designed special programs to strengthen the SME sector, officially called the Hamriyah SME Zone, an array of business incentives that includes 100% ownership, full repatriation of capital and profits, no taxes or commercial levies, a 25-year long lease agreement and highly developed infrastructure to encourage SMEs to develop further.
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we started pushing ourselves in this direction of being a business hub. Service is the driving force for us, so red carpet treatment is given to all the companies.
Petrochemical Zone; Construction World; Perfume Land; and Steel City complimented by E-Office packages. This innovative approach has already attracted hundreds of SMEs from across the globe. Also, we have introduced an online visa facility to facilitate investors by reducing time, effort and cost has been introduced recently. Through this system investors would be able to have access to manage their applications, employees and other services offered by HFZ Visa Department while
Snapshot of facilities n Access to 14 meter deep water port and seven metre deep inner harbour n Land lease for 25 years renewed for similar period n Pre-built warehouses, factories and office units for lease n Executive office suites in the International Business Centre for lease n On-site accommodation for investors’ personnel n Transportation via
road, three sea ports and Sharjah International airport n Highly developed infrastructure and telecommunications links n Abundant and inexpensive energy (Electricity: USD 0.05 per KWA, Water: USD 8.17 per 1000 Gallons) n Liberty for personnel recruitment and economical workforce n Affordable cost of living
SME ADVISOR Middle East
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OPPORTUNITIES His Highness wanted this to happen. As a result, all the three service providers are together and the customer has the support in a very efficient way. We see this as a big benefit. We have sea-port; airport and all customers are using this for their goods and services and for their travel. Does HFZA promote corporate social responsibility (CSR)?
sitting in their offices or home. The online visa facility has reduced the normal visa time to two to three working days while an urgent visa can be issued in five to six working hours and is also in line with HFZA green initiatives which will reduce the paper work and its consumption. What has been your marketing strategy?
First of all, I always believe in face-to-face interaction. Trust doesn’t come with online marketing alone. We do not have a tangible product, but we offer a service. We needed to build trust and know the expectations of our customers, to facilitate their business environment and to highlight the various incentives as best possible.
What does the future hold for HFZA?
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At the end of the day, customers are the most important factor. When you deal with one leadership it gives you some sense of satisfaction. So if I am an investor in the free zone and I have to deal with the port, or customs, then dealing with the same decision-makers makes the work flow much easier.
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So, we had to start from the beginning and help them realise that HFZA was a step in the right direction. We still follow this approach since we know that companies need time to consider all their options before making any commitment; such a decision cannot obviously be taken lightly. Now that you are handling the port, HFZA and customs, how do you see the synergy between these three entities?
At the end of the day, customers are the most important factor. When you deal with one leadership it gives you some sense of satisfaction. So if I am an investor in the free zone and I have to deal with the port, or customs, then dealing with the same decision-makers makes the the work flow much easier.
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We believe social accountability is a strategic practice and key to organisational success as it contributes to both a healthy bottom line and long-term sustainability. HFZA therefore initiated Hamriyah She-Q Club and Hamriyah Green Team as two of our not-for-profit, non-formal forums, which focus on shared learning, continual trainings, field environmental campaigns and workshops for community development programmes in the areas of safety, health, environment and quality. At our recently conducted Free HSE Awareness Training Programme for HFZA investors labour and workforce community, qualified speakers, trainers and presenters briefed members and participants on the importance of working safely in confined spaces. Statistics reveal that globally, on average, two employees do not return home each week due to confined space accidents. With this in mind the Hamriyah Green Team conducted the Second Hamriyah Heat Stress Management Campaign 2012 in an effort to educate all workers, particularly those working outdoors, about the dangers of heat-related illnesses. By involving, engaging and working closely with QHSE professionals from HFZA companies, business leaders at the free zone, and the HFZA grass roots community, in every aspect of our CSR activities, we strive to ensure that our sincere efforts towards sustainable development are on the right path.
SME ADVISOR Middle East
We are working on a logistics city, which started three months back. This will be mainly a warehousing facility built on green-building certification. Phase one of it will be completed by year end and it will be the first warehousing facility in Sharjah that will be green building certified, which will be a milestone. I am proud to announce the registration of 700 new investors from 80 countries. With 5,700 companies from across 140 countries now operating out of Hamriyah, I believe, the measure of our success lies not in the numbers but in being hands-on with the emerging social concerns and priorities of both our internal and external stakeholders, and making a significant, visible difference to the HFZA community.
Incentives of setting-upshop in HFZA 100% foreign company ownership is allowed 100% import and export tax exemption 100% exemption from all commercial levies 100% repatriation of capital and profits allowed n 25 year leases available, which are renewable for a further 25 years n n n n
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Entrepreneurship
Creating a startup culture Young Arab entrepreneurs look to Silicon Valley for inspiration as the MENA region undergoes a digital transformation.
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Joumana Saad CPI Business
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he start of the Arab Spring brought to the forefront many new realities of a region going through a major social and political transformation. The embracement of social media among the region’s youth has been one of the most popular topics covered in the media and addressed by the business community in recent years. What many have not uncovered is the rising number of young individuals who have felt empowered by recent trends to launch their own startups, a great deal of them technology or web-related that tap into market and consumer demands. The MITEF Enterprise Forum recently held its awards ceremony in Dubai for its annual Arab Business Plan Competition, which recognises exceptional startups and business ideas throughout the region. The forum’s chairman Hala Fadel says the key mission of the competition is to promote a culture of entrepreneurship in the region. “You can start your business from anywhere, in Egypt or Palestine; it doesn’t matter where you’re located. We receive such a large number of applications from these places despite the situation there. The more we have people like this, the better the future of this region.” She added that overall interest in the competition itself has steadily increased since it was launched years ago. “We launched with 500 applications in 2005 and received 4,500 this year, so, we are achieving what we wanted to achieve which is inspiring people; the pool is wider the success stories will come.”
SME ADVISOR Middle East
One interesting aspect surrounding the business ideas proposed by the finalists was that many of them are actually targeting consumers and users in markets outside of the MENA region. A few of the finalists have actually been pitching their products and ideas as far as Silicon Valley, and have plans to relocate to the US to push their startups to the next level. Hind Hobeika, Founder of Butterfleye, a Lebanese startup, is one driven entrepreneur who has big plans ahead of her. After winning first place of the 2012 MITEF Arab Business Plan competition (worth USD 50,000), she says she is planning to use the prize money to get her product manufactured, so that she can present it to target customers at an upcoming test panel, which would in turn, give her valuable feedback. Butterfleye is a creator of swimming goggles that are electronically enhanced to track a swimmer’s performance. The product includes a heart rate monitor that continuously and instantaneously tracks the heart rate of an athlete during the activity, and gives him a real-time visual feedback. Butterfleye allows swimmers to monitor their performance closely and track their progress over time. Hobeika says her biggest challenge since starting up her business has been working on the actual physical product, as necessary materials and components for the product were not easy to find in the region. “I’ve had to reach out to external resource my engineers based in France, my designers based in the UK and I’m prototyping in the US. This takes too much time and comes with a lot of
Butterfleye has created electronically enhanced swimming goggles that track performance.
uses artificial intelligence to help users reconnect with people from their past in an intuitive and practical way. “The whole point of Vira is that it sits on top of all of your social networks, it brings all of your contacts together, organises them and analyses them to determine how important each person is to you,” says Tala Nsouli, Product Manager of Vira. There has been a few social platforms that have touched on this concept, but more in the way that LinkedIn provides relatively random suggestions to its users. “The differentiating factor is its intelligent nature, it gives you a context behind the suggestion, it suggests you reconnect with someone for a reason, it detects updates and gives you a context of why you want to reconnect and goes as far as suggesting what to say to them. It’s important not to flood the user, with notifications, it’s already too overwhelming, it would have about a few recommendations for day, it’s personalised,” says Nsouli. Qabila Productions, first runner-up of the competition, drew its inspiration from the Arab Spring, and specifically
Hind Hobeika, Founder of Butterfleye, was named first place winner of the 2012 MITEF Arab Business Plan competition.
Egypt’s transformation during that time. The company’s business model is based on crowd-sourced media projects, which heavily rely on social media platforms like Facebook. Qabila, the Arabic word for tribe, has a message that resonates with the newly-empowered youth in that country: be your own voice. “The greatest thing that we’ve succeed in is the philosophy behind Qabila. We make sure we bridge intellectual need of society especially with Arab youth being critical with entertainment; we involve our fans from the ideation to the production. Qabila has created a unity spirit, a tribe style collective effort gets the message out,” says Perihan
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costs, but the system is actually working, and I encourage other entrepreneurs to do the same when developing their ideas,” says Hobeika. Hobeika’s inspiration came from the fact that she herself is a swimmer and until now, there is no performance measurement tool on the market in this category. By developing something unique and practical, she has stood out among the crowd and has already generated a lot of support and interest abroad. The former CEO of Arena, who is the founder of the largest association for swimming in the US sits on Buttefleye’s board of directors. The real challenge for Hobeika will now be to effectively market her product and get actual customers on board.“We’ve received amazing feedback so far, and I’m supported and pushed by so many people. We’re working as fast as we can to get a product into their hands so that we can have real feedback. Our goal is to sell the product and put it on the market. It’s the biggest swimming market and health awareness market so that’s where we want to sell first,” she says. Vira is another finalist that has its eyes set on the world’s entrepreneurship capital. The team has already established relationships in Silicon Valley and has plans to move there to work on its concept further and finally apply for a patent for its product. The startup has developed a mobile application that acts as a personal assistant which
You can start your business from anywhere, in Egypt or Palestine; it doesn’t matter where you’re located. We receive such a large number of applications from these places despite the situation there. The more we have people like this, the better the future of this region.
Abou-Zaid, Talent Management Director for Qabila. “We share our resources with our audience and sometimes they contribute ideas. Other times they contribute production.” The company’s main revenue stream is production as it has been commissioned from governments and other companies to create unique crowd-sourced videos and content that serves a purpose. Their biggest project was national elections campaign for the government in Egypt, and the company is also currently working on similar projects in Libya. “We also have companies that want to speak to the youth, so they come to use instead of going through advertising agencies. Qabila also has a number of TV channels, and Qabila academy, a business-toconsumer service that trains individuals who want to become professional media producers. The Arabic e-Content gap is a major topic of discussion among region’s media companies. The most recent Arab Media Outlook 2011-2015, published by Dubai Press Club highlights fast-changing consumer trends which have been
SME ADVISOR Middle East
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Entrepreneurship
Perihan Abou-zeid (centre) and the Qabila Productions team receive the first-runner up prize.
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shaped by both technology and recent developments in the region. Looking at the results of the survey, it’s clear why a young SME like Qabila would be garnering such a strong following. The survey points to the fact that traditional media in the Arab world have failed to effectively engage with their audience and readers, and these consumers in turn have largely tuned out, using mostly social media to get their news and communicate their ideas and opinions. Acadox of Saudia Arabia, is another finalist that has capitalised on these trends to develop a cloud-based system that manages students’ academic and social activities. It’s
It used to be very hard to even share your thoughts and ideas about starting a business. Nowadays, this is changing and a lot of movements are being done to enhance the entrepreneurship eco-system.
a program integrates various aspects of platforms like BlackBoard and Facebook with an Arabised interface which manages student activity in all aspects including coursework academic progress, interactivity with their student and faculty manager. Currently focused on universities and colleges in the region, the officially launched just this year and has already received independent subscriptions from 2500 users from 104 universities in the region. Acadox has also signed two Saudi universities who will implement the platform on their campuses. Mustafa Nablusi, the company’s CEO and Co-founder, shared his story of starting Acadox with his colleagues, while still an undergrad at King Fahd University. During that time Mustafa and his team wanted an educational experience that helps them learn in the same way they interact with their world. Like many other students they didn’t read the instructions for a new gadget or tool - they turn it on and figure it out. They found traditional course tools “increasingly irrelevant” for today’s students. They also found out that the instructors are in need for new ways to engage their students classes through a learning environment that puts the students in control and in touch with each other.
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SME ADVISOR Middle East
After investigating their business idea further, they came up with the Acadox concept, but had to put it on hold due to their heavy course loads. However, as the need for such a product became more and more apparent to them, they decided that it was the right time to make the jump and go full-time with the business. “We dropped our PhD’s and decided that this was what we were going to do. We wanted to participate in the MITEF competition to bring our business to the next level. We realised that these problems are being faced by students everywhere, so we thought of creating an online platform that would really help these students. Once we became incubated as a result of being winners of the KAUST Seed fund programme, we decided it was a golden opportunity to start.” Nabulsi admitted that starting a business in a place like Saudi Arabia posed some challenges. First, the country’s startup culture is still developing, which made it difficult for Acadox to attract the right talent, while at the same time stay abreast of new web technologies surfacing. However, Nabulsi says things are slowly changing, as the country opens itself up to entrepreneurship opportunities. “It used to be very hard to even share your thoughts and ideas about starting a business. Nowadays, this is changing and a lot of movements are being done to enhance the entrepreneurship eco-system. We noticed this in Saudi Arabia with several initiatives to support startup businesses,” says Nabulsi. There are still many challenges, especially in the tech startup field, but we are hoping to be part of the success stories that will change people’s mindsets regarding these type of ventures in the Middle East.” In addition to MITEF, there has been a growing number of organisations dedicating to supporting and promoting entrepreneurship in the MENA region. TechWadi, is one non-profit organisation started by ArabAmerican professionals in Silicon Valley, to build bridges with the Arab world. The group aims to reach highimpact entrepreneurs in the region through conferences, networking events, workshops and mentorship programmes. Seed Startup in the UAE is another key group that targets the digital entrepreneur with its competitive programme and seed fund. Participants chosen for this programme receive direct funding and mentoring and are positioned on a fast-track to for future funding from venture capitalists and angel investors. In the end, it’s competitions and organisations like these that are reaching many aspiring entrepreneurs who have no other form of support. While organising the competition, Fadel says her team decided on a campaign that called on aspiring entrepreneurs in the region to be the next Steve Jobs, or Bill Gates. She says that while there are a number of success stories that have come out of the region, the bar can and should be raised much higher. “To some extent we already have some small Big Gates in the region, we have the founder of Zawya, founder of Maktoob that was sold to Yahoo!, as well as Marka VIP that has just been funded, but at what point will these success stories reach a level that the average Arab would know about them? I think this would be the main question, to what extent will we be able to do this? This will no doubt take time, but for now we are focused on changing culture and promoting entrepreneurship. We are currently presenting at high number of universities in the region to get the word out.”
Legal
Getting your house in order Al Tamimi & Co. provides an overview on the methods that a conventional business may apply in order to operate on an Islamic basis. Structuring business arrangements
First, the company should review and amend its business arrangements to ensure compliance with Sharia principles. Its liabilities must also comply with Sharia standards, which prohibit earning or paying interest. All the facility arrangements the company has undertaken with any financial institution must be Sharia compliant. For instance, conventional property financing will have a prevailing interest rate, a term, and non-payment penalties, while the company retains ownership of the property. Islamic financing for that property will commonly require an ijara model under which the property is owned by the bank and leased to the company. Business loans and arrangements also need to be assessed for Sharia compliance, and any conventional facilities converted. This review will not only include outstanding facility arrangements, third-party guarantees, and corporate credit cards, but business-to-business arrangements that impose penalties, fines or interest. Compliant investments and debts
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Husam Hourani Al Tamimi & Co.
Dena H. Elkhatib Al Tamimi & Co.
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slam is a way of life; it encompasses all aspects of an individual’s life including social, economic and political. This phrase is often used when describing the broad scope of the religion. But this phrase fails to demystify the statement because a conventional view of life is not contrary to that of Islam. Rather in some instances a conventional model may be used to serve or further Islamic principles. Examples include the conversion of banks to Sharia compliant banking institutions, and the use of conventional banking services and products to provide Islamic wealth management. However, it is important to note that, from a UAE legal perspective; there are no specific laws or regulations that govern corporate Sharia practices. Although there may be national laws that apply in some sectors, this article only provides general guidelines. Although a conventional business and an Islamic business may be fairly similar, there will be a few key differences demanded by Sharia law. These include; • the structure of business arrangements (loan agreements, business-to-business contracts) • the structure of investments and debts, • business sectors in which the company is involved which may be banned under Sharia (alcohol, gambling and so on), • any licensing requirements, • the appointment of a Sharia board or a consultant to assist with compliance, and • Sharia-specific internal controls or constitutional documents
SME ADVISOR Middle East
A company needs to ensure that its investments are in accordance with Sharia standards, which may be a fundamental change to its risk management. Many company assets (such as savings accounts, stocks, bonds, mutual funds, stock in trade and so on) may have attributes inconsistent with Sharia principles. Investments and debts are not limited to the financial sector, but extend throughout the value chain. If a company owns grocery stores which sell alcohol or pork products, these products must be removed from the shelves and the entire stock discarded. Any profits or funds related to these products may not be accrued, and the funds may not be mingled with the company’s receivables. Reviewing business sectors
Taking a holistic approach, a company must ensure Sharia compliance within the various business sectors in which it operates or participates. Sharia prohibits engaging in any business that involves pork, alcohol, gambling, pornography, among other activities. A practical example is a company or a subsidiary which owns a restaurant. The restaurant may not serve, own, or distribute any alcohol or pork products. In the event that the company sells the restaurant’s alcohol stock, then the company may not be considered Sharia compliant until the products are discarded. Any resulting funds may not be utilised as working capital or create a benefit to the company. This becomes more intricate and complex as companies engage in multiple activities and projects that have underlying profit centres (for example, airlines
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Legal About Husam Hourani left Jordan to join Al Tamimi & Company 15 years ago. He has been Partner for 11 years and Managing Partner for the past three. He also heads
up the banking and finance team at the firm and is recognised as a Leading Lawyer for 2012 by the Islamic Finance News Awards. Under Husam’s leadership, Al
Tamimi & Company were named “Middle East Law Firm of the Year 2012” by both the Corporate Counsel Middle East Awards and Finance Monthly Global Awards.
Dena H. Elkhatib is a qualified US attorney with a particular interest in banking and finance, corporate commercial and wealth management.
She advises on an array of matters within from the perfection and registration of securities, wealth management structuring, cross border financial transactions,
establishing financial institutions, advising relating to financial compliance, and working closely with local businesses incorporated in DMCC.
sell alcoholic beverages). This may also be a concern for entities with shareholdings in other companies that may engage in prohibited activities. Even if the shareholding is minimal, the business must be Sharia compliant. This extends to a company’s marketing practices. As an example, raffles and other marketing plans may be considered gambling under Sharia law. Licensing under Sharia
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The company must be compliant with all licensing and regulatory requirements within the jurisdictions in which it operates; the UAE Commercial Companies Law, Federal Law No. 8 of 1984 (Companies Law), does not specifically regulate Sharia compliance. Rather, the same Companies Law applies to both conventional and Sharia-compliant corporations. This is
A company should consider the appointment of a Sharia board or a Sharia consultant to aid in the transition and review of the company and its activities. Although not compulsory, it is in the company’s interests since a Sharia board will identify even minor elements of its internal operations or asset management that require modification.
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contrary to the regulation of financial institutions licensed by the UAE Central Bank which has specific requirements for Islamic institutions. The company needs to incorporate any additional or varied regulatory requirements within the new Shariacompliant model and provide the necessary training for employees to ensure proper and adequate compliance. However, beyond Islamic financial institutions, the option to adopt Sharia compliance will often be an individual choice. A Sharia board or consultant
A company should consider the appointment of a Sharia board or a Sharia consultant to aid in the transition and review of the company and its activities. Although not compulsory, it is in the company’s interests since a Sharia board will identify even minor elements of its internal operations or asset management that require modification. Currently there are no global or regional standards governing Sharia-compliant companies.
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Codes for compliance
The company may elect to indoctrinate the Sharia policies in its corporate structure. This may include the development of internal policies that are drafted according to Sharia standards, or imposing guidelines and restrictions within its Memorandum and Articles of Association. For instance, the Memorandum and Articles of Association may restrict borrowing practices to ensure that all lending (including shareholder loans, guarantees, acquisition of subsidiaries, and so on) will be undertaken in accordance with Sharia principles and standards. Succession and wealth planning
Finally, a business owner has Islamic wealth management options, even if the business is in a jurisdiction that does not support the division of inheritance in accordance with Sharia law. There are various mechanisms that may be used to divest wealth in accordance with Sharia law, Islamic financial planning and estate and succession planning, respectively. There are options pertaining exclusively to a corporate structure that provide the greatest flexibility for the distribution of wealth while at the same time preserving the daily operations of the company. Shares in the business may be distributed in accordance to any desired percentage, including in accordance with Sharia principles. The business owner may maintain control over the new corporate entity through various mechanisms, including statutory reserves, controlled voting, sale of stock restrictions, voting restrictions, and guidelines for the management of the company in the Articles of Association. Using a corporate structure, the business owner has the flexibility to retain control over the assets during his lifetime. Further, the corporate structure will continue to exist after the business owner dies, ensuring that his beneficiaries retains their respective inheritance. The conversion of a conventional entity to a Sharia compliant entity requires great attention to detail. Business owners are advised to initiate the process with a Sharia consultant who is not only familiar with the business model, but with the relevant jurisdictions’ laws and regulations. A Sharia consultant will assist in outlining specific procedures for the conversion and oversee the process, thus reducing risk. First Published in Islamic Wealth Management Report 2012, Volume 3
BUSINESS pin up
The Abaya engineers Rouge Couture aims to bridge the gap between tradition and high fashion with its edgy designs proving popular with young female shoppers.
S Joumana Saad CPI Business
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ara Al Madani is a woman of two worlds. At a very young age, the Emirati entrepreneur and fashion designer has made a name for herself in the UAE. The fashion house she co-founded, Rouge Couture, specialises in unique Abaya and Jalabya designs that blend traditionalism with the fast-changing nature of high fashion. Looking through the aisles at Rouge Couture’s boutique in Dubai, it’s obvious why the brand has managed to stand out from the crowd. You cannot help but be somewhat surprised with its youthful and vibrant retrolike atmosphere. Mannequins sport mix-matched styles both black and colourful, that are modest yet edgy.
SME ADVISOR Middle East
Sara herself has managed to perfect this look, and her dynamic personality can be seen in many of the pieces on display. “It is risky to mix these elements together; not a lot of people can do this and be successful and you can easily cross the line and destroy both images. What people like about our designs is that we mix them very well together where it stays a traditional piece which is still modest, but it can grow as fast as the trends are,” says Sara. Now that her brand has seen some global exposure, she says more Western retailers and fashion designers are becoming more and more intrigued by the reinvention of Abaya wear. “They were very shocked, as they couldn’t believe how stylish our fashions could be.”
BUSINESS pin up
L - R: Rouge Couture founders Sara Al Madani and Apple Wang
The past few years for Sara have been anything but ordinary. Sara and business partner and best friend Apple Wang, started Rouge Couture in 2008 out of a small shop in an Ajman industrial area. At a very young age, the two women felt inspired to harness their passion into a joint venture. After selling some of their belongings, they invested their time and money into the business. They were then able to put Rouge on the map by opening a flagship boutique in Dubai in 2010. Despite the team’s challenging start, Sara says it’s their strong partnership that has carried the brand to success. “What I like about my partner, is that when I’m weak she’s strong and vice versa; there were so many times we could’ve given up but we didn’t, so taking that extra step, is what made me here right now.” Since then, the fashion house has quickly expanded and now operates out of branches in Dubai, Sharjah and Ajman. There’s no question that the Abaya business is one of the most popular picks for Emirati women today. What differentiates the Rouge brand, Sara says, is the brand’s quality and unique styles, offered at an affordable price range. She says that too often, so many potential customers are priced out, as Abaya retailers aim for the big spenders.
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My main target is to show the Western world how the Arabic tradition is beautiful and how it can be mixed with any type of fashion and an Arabic woman can be part of the fashion industry with what she’s actually wearing, rather than what’s underneath.
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Looking back at the beginning of her journey, Sara says the biggest obstacle she and Apple have faced was the challenging environment the young women faced when they were just starting out. “We felt like we were two women in a man’s world back then. Now, the whole environment has changed so much and we have so many institutions and initiatives that offer us so much support.” They currently serve as ambassadors to the Sharjah Business Women Council, where they mentor other young women who aspire to launch their own businesses. Last year, Sara was nominated for the SME Advisor Stars of Business Awards, and she took home the award for Emirati Entrepreneur of the Year. Shortly after, she was invited to showcase Rouge’s latest fashions at a major fashion show in Paris, its biggest show to date. “It felt like I was on the edge of glory. They handpicked traditional designers for the Middle East. Experience wise, it was great; I saw and learned things I’ve never done before. Everything happened like a chain reaction and each new award or event would open new doors for us.” With a strong footing in the UAE and GCC markets, Sara has her eyes on the Western frontier. She plans to expand to do more fashion shows abroad and market the company’s collections to global retailers and buyers. As of now, Rouge is working with eight markets, and aims to triple this number in the near future. “My main target is to show the Western world how the Arabic tradition is beautiful and how it can be mixed with any type of fashion and an Arabic woman can be part of the fashion industry with what she’s actually wearing rather than what’s underneath.” One of the biggest milestones for the brand came earlier this year when Sara and Apple were asked to design an Abaya and dress for Madonna, while she was touring in the UAE. “It was beyond a pleasure, because not a lot
BUSINESS pin up of people were able to give her something. The pieces had her personality in it, and for us to design them made it a real achievement in that area. We gave a traditional piece to her, someone who is famous for always making her own traditions,” says Sara. News of the specially-designed piece put Sara and Rouge Couture in the spotlight, as many were curious to know what type of style the Material Girl would actually wear. Some of the brand’s top-selling pieces have been centred around celebrities with previous collections inspired by
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It’s a pleasure to be at this stage at a young age. It gives you a place in society and lets you know that you are someone who is recognised. I feel proud of myself when I do interviews and travel abroad.
Lady Gaga and Alexander McQueen. Sara admits that some of the brand’s marketing campaigns have caused a bit of commotion on the local fashion scene. One campaign depicted fashion forward Abaya-clad women performing very male-oriented jobs, while another labeled Fashion Creates Jealousy, aimed to turn some heads, with half-beaten, arrested models posing for their mug shots. Sara, however is completely aware of how and when to push the envelope and is not afraid to make some noise to help get the brand more exposure. When asked how she feels about being an example for Emirati entrepreneurs, Sara says she is honoured to fill that role. “It’s a pleasure to be at this stage at a young
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age. It gives you a place in society and lets you know that you are someone who is recognised. I feel proud of myself when I do interviews and travel abroad.” She can’t help but feel like she is an ambassador to some degree, in terms of educating others about her country’s true identity and culture.“The word Emirati shocks some people as they don’t how a woman would be able to be an entrepreneur in our country or region; they don’t know how the country has changed and developed. This is a great opportunity for me to sit down with them and discuss these things.”
Over the last few years, Sara watched as more and more Emiratis have become interested in entrepreneurial opportunities. Some have tried to buy their way to the top, while others started from the bottom. Sara is an advocate of the latter, and says it was the road of hardship that taught her the important lessons along the way. The future of Emiratisation looks bright in her eyes as she sees a few great role models inspiring the rest of the crowd. “Each new entrepreneur that comes out gives the rest a lot of motivation to do the same. For those unsure of where to start, I want to tell them that there’s so much help out there for them; the government is giving these individuals everything they need from funds to contacts, to education, so take a chance, grab it and go with it. It is a pleasure that I’m part of it and I just hope other locals will also take a chance instead of just letting them pass them by, or having it as just a thought.” Sara says there’s a misunderstood perception among the youth that you need a lot of money to start a business, and she says her company is a great example of how two young people with great ideas and limited resources can turn their dreams into reality. However, she points out the journey of any real entrepreneur is always a long one, with obstacles and lessons to be learned along the way. “You can’t just wait for fruits to appear. Plant a seed first; you can buy the fruits ready, but planting a seed and waiting a bit is more rewarding. It takes time but it’s worth it in the end. A pocket full of hope takes you further than a pocket full of money; this is a quote I live my life by and that’s why I’ve been successful at what I’m doing now.”
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Industry Watch
Strong economic outlook for GCC A recent Dubai Chamber of Commerce and Industry study shows the UAE, Kuwait, Oman and Bahrian in the strongest position to witness robust economic growth this year.
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ccording to the latest International Monetary Fund (IMF) data combined with data from national authorities, the UAE will see a year on year GDP growth of 4.5% in 2012, while Kuwait, Oman and Bahrain will record a year on year growth of 4.9%, 4% and 3% in 2012 respectively. Also, the continued upward trajectory of oil prices should strengthen the fiscal and current account balances of GCC countries, although to different magnitudes. In Saudi Arabia, Kuwait and the UAE, larger fiscal surpluses and greater accumulation of reserves are projected. As such, for the GCC as a whole, IMF projects that fiscal and current account surpluses will stand at 13.1% and 22.2% of GDP in 2012 respectively. The study further states that regional growth is supported by its ongoing expansionary fiscal policies. This is the reason why Saudi Arabia, according to its 2012 budget, is expected to raise spending by an additional 2.4% this year on top of a 23% increase last year, while Qatar and Kuwait Main highlights of non-hydrocarbon growth and inflation
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are also expected to increase spending in their 2012-2013 budgets. Higher allocations to current public spending, notably on wages, such as those recently announced in the UAE and Kuwait, will boost domestic demand and non-hydrocarbon growth. Focusing on the developments of UAE economy, recent announcements indicate a general increase in consolidated public spending. On the one hand, the UAE government has announced increases in federal wages and pensions in addition to an AED ten billion fund to be used to pay down debts of low income UAE nationals. On the other hand, the Abu Dhabi Executive Council (ADEC) has ratified its investment strategy pointing out the need to finalise a number of projects, such as the Khalifa Port and the development of the Khalifa Industrial Zone. Added to that, the UAE government has recently allocated additional AED 16.8 billion (USD 4.6 billion) in support of Aldar through property purchases and debt cancellation. Dubai’s economic prosperity and stability
Contrary to the above investment pattern, Dubai’s primal target remains its commitment to fiscal consolidation. According to Dubai Department of Finance, the emirate’s fiscal efforts resulted in an estimated reduction in spending by 4.4% of total public expenditure in comparison to the 2011 budget, while the infrastructure, transportation and economic development sector took up 41% of total public expenditure. Last but not least, the 29% of the total public expenditure will be allocated to the social development sector, including areas of health care, education, housing and culture. Moreover, Dubai’s GDP growth projection for the first quarter of 2012 was over 4%, whereas according to available estimates, it grew by more than 3% in 2011 and by about 2.5% in 2010. In its conclusion, the study suggests that the UAE can provide the GCC region business patents and a strong research and development culture, while the issue can be addressed through investing in human capital by increasing education levels in the education sector; developing new financing schemes and instruments in the financial sector and optimising the exploitation and use of natural resources in the environment and enhancing technology and knowledge with the aim of entrenching innovation in technology, research and development.
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Industry Watch
FREE JOB ADVERTISING FOR SMEs Bayt.com’s JobsLite allows smaller employers to advertise vacancies online to over eight million job-seeking professionals.
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mployers seeking to sample the benefits of state-of-the-art hiring need look no further than Bayt.com’s latest employer offering, JobsLite. Bayt.com, the region’s number one job site, is offering employers access to JobsLite entirely for free, allowing them to post job adverts online that will reach the leading site’s database of over 8,250,000 registered professionals. JobsLite will empower smaller employers with very limited hiring budgets to advertise to Bayt.com’s vast database of professionals for free and with many of the same tools, technologies and functionalities that are available to Bayt.com’s community of blue-chip clients who use Bayt.com’s full-tier Premium Job Posting products. The product is designed to add value to the regional job market by enabling employers who could previously not afford
In addition to being able to post up to five job listings per account, each of which will be valid for 30 days, employers using JobsLite will be able to access Bayt.com’s state-of-the-art proprietary Applicant Management tool.
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to advertise positions to do so and thereby further provide added career opportunity to the region’s professionals and increased transparency and momentum to the regional recruitment landscape in general. In addition to being able to post up to five job listings per account, each of which will be valid for 30 days, employers using JobsLite will be able to access Bayt.com’s state-of-the-art proprietary Applicant Management tool. They will also have extended access to applicants after jobs expire, and the ability to partake in smart filtering of applicants using a version of the site’s highly popular, industry-leading InstantMatch tool. Bayt.com is particularly renowned for the depth and breadth of its professional candidate database and its strengths across industries, job roles and career levels. In fact, employers can close vacancies from entry level to senior executive and C-suite. Employers using JobsLite will have the benefit of publishing their jobs online on the region’s most trafficked jobsite and using industry-leading tools and technologies to target the most relevant jobseeker traffic. Bayt.com’s JobsLite provides a viable solution for employers with budget limitations, particularly SME employers and startups, and it empowers them to swiftly migrate online. “JobsLite is representative of Bayt.com’s continuous efforts to contribute to the region’s job market, which is an integral part of our corporate mission. We are always seeking innovative ways to create more career opportunities and help jobseekers find their dream jobs. Likewise, we want to make the candidate-seeking process as simple and accessible as possible to employers of all sizes and from all industries, which is why Bayt.com’s 100% free JobsLite facility is a vital tool for employers with budget limitations who need talent but cannot otherwise have effective access to the job market,” said Suhail Masri, Vice President of Sales, Bayt.com. “JobsLite, and other features on Bayt.com, empower professionals across the region to lead their lifestyle of choice, primarily through facilitating better careers and more job market transparency and opportunties.” To find out more about JobsLite, please visit www.bayt.com/en/ecom-job-postings.
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Industry Watch
UAE consumer confidence climbs A recent index by MasterCard reveals consumer confidence reaching its highest level since 2009.
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he results of the latest MasterCard Worldwide Index of Consumer Confidence, show consumer confidence levels in the UAE reaching a score of 86.0. Consumers in the UAE are very optimistic in their attitudes towards all five indicators measured. When compared to the previous edition of the index released six months ago, consumers are most optimistic about the economy (89.1 versus 84.4), employment (88.9 versus 82.2) and quality of life (88.6 versus 89.3). All indicators of consumer confidence were rated as positive, including regular income (86.2 versus 85.7) and the stock market (77.0 versus 69.0). The survey also highlighted that female respondents (88.2) tend to be more optimistic about their prospects for the coming months than their male counterparts (84.0) and that consumers under the age of 30 (89.5) are more optimistic than respondents over the age of 30 (85.0).
Consumer confidence results:
Source: MasterCard
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“The consumer confidence score for the UAE is at its highest since 2009, highlighting that the positive performance seen in key sectors like retail and hospitality is trickling down to impact consumer sentiment. The UAE’s continued growth has led to consistently high scores in the last couple of years,” said Eyad Al-Kourdi, Vice President and Country Manager, UAE, MasterCard Worldwide. Across the Middle East, the level of consumer confidence is very optimistic at an average of 83.5, and this sentiment is reflected across all five indicators. When compared to the previous edition of the Index released six months ago, respondents in the Middle East are most optimistic about regular income (89.8 versus 91.3), employment (85.5 versus 85.5) and the economy (84.4 versus 86.5). Consumer sentiment
MasterCard Worldwide Index of Consumer Confidence
towards quality of life (82.9 versus 87.6) and the stock market (74.9 versus 77.8) is also positive. The Middle East’s aggregate score of 83.5 also remains higher than that of Asia/ Pacific (57.2) and Africa (76.1). The MasterCard Worldwide Index of Consumer Confidence is based on a survey conducted between 24th April 2012 and 10th June 2012 among 11,367 respondents aged 18 to 64 years in 25 countries within Asia/Pacific, Middle East and Africa. Now in its 20th year in Asia/Pacific and its ninth year in the Middle East and Africa, the Index is the region’s most comprehensive and longest running consumer confidence survey. The Index is based on a survey which measures consumer confidence on prevailing expectations in the market over the next six months, based on five economic indicators: economy, employment, stock market, regular income and quality of life. The index score is calculated with zero as the most pessimistic, 100 as most optimistic and 50 as neutral.
Technology for business
Green screens Acer presents the latest additions to the V5 series displays, six new LCD monitors showcasing slim, space and eco-conscious design. of the monitor inclination. Plus, a specially designed quick-release mechanism that makes the stand easy to assemble or disassemble simply using a coin. Depending on configuration, the V5 displays can be equipped with a DVI port or HDMI port supporting HDCP, allowing the processing and displaying of high definition signals providing instant connectivity to the most popular digital devices. The V5 Series also reproduces natural and realistic colours, rich text and top quality digital imaging thanks to excellent contrast ratio of 100 million to one through the Acer’s Adaptive Contrast Management (ACM) system, a technology that dynamically adjusts the contrast ratio of the input image to achieve an ultra-sharp on-screen image - and a brightness level of up to 300 cd/m2, that offer a significant improvement in gradation and detail with dim or bright images. Rapid response time of five minutes ensures the smoothest reproduction of even the fastest videos or animated presentations.
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vailable in six format sizes, the new Acer V5 series displays are perfect for users with limited space, looking for an up-to-date display with uncompromised performance packed within a simple, elegant design that makes them perfect for intensive daily usage in any setting. Built with dependable functionality, comfortable use and superb multimedia enjoyment in mind, the new V5 series displays are designed with an elegant black glossy bezel and a glossy arm with a new rectangular base. The transparent power button with its blue-lit icon is discreetly integrated in the bezel for a streamlined look. To provide an optimal viewing experience, all models are equipped with an easy-to-use adjustable functionality that allows for fine-tuning
Efficiency facts
Securing your Wi-Fi connection New software from Web security specialists Blue Coat Systems allows companies to restrict employees’ use of devices while logged on to corporate Wi-Fi. The software, which works with Blue Coat’s ProxySG Web filtering equipment, seeks to fill a gap that exists between company-issued PCs, and employeeowned cellphones. Companies with high security requirements, such as government departments and banks, see mobile phones as a risk because they could be used to leak documents or send confidential data over insecure channels, said Sasi Murthy, director of Web security at Blue Coat. “A lot of users are trying to send large datasets over the Internet using Dropbox and Yousendit, but these are not secure,” said Murthy. “Now, organisations have the ability to extend applicationlevel control to mobile handsets.” Basic allow or deny control is offered for applications such as YouTube, eBay, Gmail and business-networking site LinkedIn. More complex controls exist for apps like Twitter: As well as allow
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or deny, network managers can switch on or off the posting of messages, sending e-mail, account login and profile management. “When we recognise new apps, we identify them and push the controls to all new users,” said Murthy. “Every month our Web app team adds new apps to our system.” Because the system runs on the corporate network and not on mobile phones, the security policies don’t affect what users can do when they are on the mobile network or other Wi-Fi networks. “This is not about getting on to the device; we’re working on that, but this is about what you can do on [the company] network,” said Murthy. The use of employee-owned handsets in the workplace, commonly known as “bring you own device” (BYOD), is increasing, according to an analyst who tracks the industry. “In my rough, unscientific surveys, I’d say about
60% of clients in North America are planning or have BYOD,” said Ken Dulaney, an analyst with Gartner in San Jose, California. “It depends on the company. Some of them are in businesses where they are not too worried about information leaking out. Those that need more security, such as financial, health care and the government, need mobile device management tools.” Pricing for the system begins at USD 48 per user per year for up to 100 users. That drops to USD 29 per user per year for organisations with between 100 and 5,000 employees. The ProxySG Web filtering appliance costs USD 6,500 for the basic model. Blue Coat is a big player in the Web security and filtering business. It says 97% of Fortune 500 companies use its systems, as do many major banks and U.S. government agencies.
Source: IDG, CNMEonline.com
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Technology for business
Efficient business tools Lenovo announced the Lenovo B475e and B575e laptops for SMEs and home office users.
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tarting at just USD 349 and featuring the latest AMD E-Series Accelerated Processing Units (APUs), the new Lenovo B475e and B575e laptops offer users a great mix of performance and style at a budgetfriendly price. “SMEs often find themselves in an IT budget dilemma, trying to find the right balance for them between quality and price,” said Jack Lee, General Manager MEA, Lenovo. “We’re making the buying decision easy with the extremely affordable Lenovo B475e and B575e laptops that deliver great performance in a modern design.”
Business tools With the 14-inch Lenovo B475e and 15.6-inch B575e, SMBs and home office users can keep their business running at peak performance. Equipped with dual-core AMD’s E-Series APUs, users can expect great performance and long battery life of up to 6.5 hours. With the USB 3.0 port, users can transfer data to an external storage device at lightening speeds of up to 5Gb per second to save time and work efficiently. The Lenovo B475e
and B575e are also energy efficient, an important consideration for small businesses on a budget or that are simply looking to help reduce their carbon footprint. The Lenovo B475e and B575e make it easy for users to monitor the condition of their PC with the Lenovo Solution Center. By consolidating several control panel views into a single, easy to use dashboard, users can effortlessly check their laptop’s performance, hardware and security all in one simple place – an ideal tool for small businesses that need to manage their own devices. Both PCs also offer specific services designed for small businesses, including in-home or office support, which delivers repair actions to your PC quickly and conveniently to minimize downtime on critical business operations. Accidental Damage Protection can help users avoid unexpected repair costs from common mishaps like drops and spills, electronic surges, or LCD screen damage. The Lenovo B475e and B575e feature a classic, simple design, which exudes elegance and professionalism. Both laptops also feature a finger-friendly, comfortable keyboard designed to reduce mistyping – a must-have for users who spend long hours on their PC.
Pricing and Availability The Lenovo B475e and B575e laptops are now available from business partners and on www.lenovo.com. Pricing for both models starts at USD 349.
Archiving made easy Oracle has unveiled a new LTO-5 tape library targeted at SMEs and remote offices that can scale from 45TB to 900TB capacity using data compression. The Oracle StorageTek SL150 tape library actually replaces three previous models – the SL24, SL48 (both entry-level libraries) and the SL500 (a midrange product) — because it can scale from 30 tape cartridge slots to 300 slots and from one to 20 tape drives. “We wanted to design a product with great scalability that was very simple to operate and offered users tremendous savings,” said Tom Wultich, Director of Tape Systems Product Management at Oracle. The new tape library is the first using LTO-5 half-height cartridges to come out of Oracle since the company acquired StorageTek in 2009 when it bought Sun Microsystems in 2009. Sun acquired StorageTek in 2005. “This is the first tape project we kicked off after being acquired by Oracle,” said Wultich, formerly of StorageTek. “We’ve done really well in the high-end library space, and so we really wanted to
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refresh our lower-end offerings.” As the name suggests, half-height LTO-5 cartridges are more compact than full-height cartridges and can hold 1.5TB of data versus 3TB in the full-height version. While the tape library hardware may be StorageTek, the SL150 runs on Oracle’s Fusion Middleware Software, which offers a simplified management GUI that can be managed over Ethernet via a web browser. “This library has a beautiful touch-screen panel,” Wultich said. The SL150 is also designed to allow users to install it themselves. It can grow in 2U (3.5-in high) increments, Wultich said. “The target user for the new SL150 is, above all, looking for just a handful of things, headed by simplicity, scalability and reliability,” said Mark Peters, a senior analyst at research firm ESG. “The unique engineering of the SL150 is beguilingly straightforward, yet has ample capabilities for its
intended users who will no doubt be pleased that this junior thoroughbred comes from the proven Oracle StorageTek stable.” Oracle did not offer pricing information for the SL150.
Source: IDG, CNMEonline.com
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Technology for business
Management solutions Sage Software reaches out to SMEs by providing insight on its latest offerings.
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he UAE’s SME segment is currently faced with challenges to manage their businesses more effectively and efficiently, according to Sage Software, a leading supplier of Enterprise Resource Planning (ERP), Customer Relationship Management (CRM) Solutions to medium and large organisations. Looking to address this challenge, the company hosted Sage Customer Day, an event aimed towards helping SMEs get better insight on Sage’s current range of products. Sage threw the spotlight on its solutions and software add-ons for Sage CRM, Sage ERP X3 and Sage Accpac ERP, the latter being offered with modules Sage Accpac Alerts, Sage Accpac Intelligence, Gulf Utilities for Payroll. “The UAE has ably positioned itself as a major player in today’s global markets. With key efforts being made to recover from the recent economic gridlock, businesses today, particularly the SME segment, have detailed an increasing need to effectively and efficiently manage their operations,” said Vikram Suri, Managing Director, Middle East & India, Sage Software. “Sage remains committed towards helping UAE businesses address this growing need by leveraging our wide range of products and the key benefits and advantages to be gained from using them. Sage Customer Day also serves as a strategic platform for our
customers to meet our core team of experts and discuss issues and challenges across today’s business sector.” The sessions at the event catered to both ERP and CRM solutions, teaching and raising awareness among users and potential customers with new tips and tricks to help improve management and operations of their businesses.
In addition to this, Sage Customer Day also allowed participants to meet and interact with Sage Core team leaders while also availing the special pricing of Sage Software offered during the event. n Sage Accpac Intelligence is a solution that helps users quickly gather essential data needed for operations and strategic planning via reports made for Microsoft Excel. n Sage Accpac ERP Alerts is a module that delivers automated processes that reduce delivery cycle time and accelerate revenue. n Sage ERP X3 is a solution that offers multi-currency, multi-country and multilegislation functionality features to address the complex requirements of mid-sized and large businesses. Sage ERP X3 focuses on cost and time savings, full interoperability and customer experience improvement. n Sage CRM solutions give users a 360-degree view of their business or organisation—allowing them to effectively manage, retain and service their customers. n Gulf Utilities for Payroll offers users a comprehensive, flexible and fully integrated HR solution that meets the basic needs and the legal requirements of companies operating in the region.
Customisable storage solutions Western Digital unveils WD Red NAS, a new line of SATA hard drives specifically designed for home and small office storage systems. Compatibility-tested with top NAS box manufacturers and optimised for power and performance, WD Red hard drives are now shipping in 3.5-inch 1 TB, 2 TB and 3 TB capacities. The WD Red line features NASware™ technology, designed to improve reliability and system performance, reduce customer downtime and to simplify the integration process. This new product line addresses the unique environment of NAS and the growing demand for affordable, reliable and compatible storage that reduces customer total cost of ownership. WD Red hard drives also feature 3D Active Balance Plus, an enhanced balance control technology, which significantly improves the overall drive performance and reliability. In an exclusive for WD Red customers, WD is offering free premium 24/7 dedicated support and a three-year limited warranty. The addition of WD Red expands WD’s Power of Choice client hard drive solutions. With distinguishable colors, the Power of Choice storage solutions are clear and easy to identify:
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WD Blue (solid performance and reliability for everyday computing), WD Green (cool, quiet, eco-friendly), WD Black (maximum performance for power computing) and WD Red (home and small office NAS). The four colors enable quick selection of the best WD drive for customers’ application or usage requirements. WD Red hard drives integrate seamlessly with WD NAS solutions and are qualified to work with a wide array of WD OEM partners. An updated list of WD Red-qualified products and manufacturers is available on the WD website at www.wdc.com
Availability and pricing WD Red hard drives are available now at select resellers and distributors. Manufacturer’s suggested retail price (MSRP) for the WD Red 1 TB drive (model #: WD10EFRX) is USF 103.50, the 2 TB drive is USD 127.00 and the 3 TB drive is USD 184.00. WD Red drives are currently available across the Middle East.
SIGN OFF
Back to the drawing board 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.
S Joumana Saad CPI Business
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oon enough it will be business as usual in this part of the world, as companies begin make their plans for the next year. Overall, it has been an eventful summer, compared to previous years, as many companies announced new partnerships and ventures. During a recent press conference, SAP and Dubai Silicon Oasis Authority announced a new joint venture to open the UAE’s first IT-specific training institute at Dubai Silicon Oasis. The USD 450 million initiative will aim to significantly drive job growth by certifying 2,000 new consultants within the next four years, tripling the company’s existing consulting capabilities in the region. The institute will offer a variety of programmes tailored specifically to young graduates as well as SAP partners and clients, many of them being SMEs. Meanwhile, other companies have used the downtime to train their professionals. I recently spoke to Bev Mileham, General Manager at biz-group, who says the company’s training arm biz-ability has seen an increased demand from the business community during the summer, as operations are more frantic and employees have more time to devote to skill learning. Despite, the fact that so many businesses are implementing corporate training programmes, recent research by The ROI Institute shows that 60%
SME ADVISOR Middle East
to 90% of all skills learned from such programmes are never applied on the job. Many in the HR industry have woken up to this reality in recent years, and are currently exploring new ways to maximise the return on investment of training (to read more about this topic in our feature story, please see page 34). Looking ahead to the official start of the fourth quarter in September, there will be no shortage of important events to choose from. What’s more interesting, is the rising number of SME-specific conferences and networking events that are being planned for the upcoming months in the region. This clearly shows the governments’ and private sector’s commitment to empowering SMEs to drive innovation and job growth. CPI and SME Advisor will have you covered in this area, with a number of Success Series workshops and networking evenings starting in September. Our biggest event of the year, the SME Advisor Stars of Business Awards & Summit will take place on November 28th in Dubai. Interested SMEs can check out the forum agenda and nominations process by visiting www.smeadvisor.com/ awards2012/. Dubai Knowledge Village will host the World @ Work Summit 2012 on 6th September. The summit will bring together executives and professionals and will focus on the latest global developments, research, trends and best practices in key
workforce areas of leadership. Sessions will also address issues surrounding talent management, employer branding, workforce planning and social media. Speakers will include senior executives and representatives from adidas, LinkedIn and biz-group. Businesses in the IT and ICT sectors are already preparing for the region’s biggest technology trade show. GITEX Technology Week 2012 will descend on the Dubai World Trade Centre from 14th to 18th October. This year, the spotlight will be on SMEs, as the new SME Zone will make its debut at the show. The zone will be a key platform for the ICT sector’s SMEs to showcase their offerings and engage with a high concentration of influential investors. Also new to GITEX, is the Africa In Focus exhibit which aims to amplify the importance of the continent’s burgeoning economic potential. In the past year, there has been growing interest from visitors from Africa to expand and participate in the annual trade show. Industry players are also excited about ITU Telecom World 2012, which will happen alongside GITEX in Dubai. A leading platform for highlevel networking, strategic debate and knowledge-sharing for the global ICT community, the event is organised by ITU, the United Nations specialised agency for ICT companies. This marks the first time Dubai will host the landmark event.
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