presents
BUSINESS INTELLIGENCE FOR INTERNATIONAL TRADE www.tradeandexportme.com
Contents
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58 ADVISORY BOARD Key personalities sharing their expertise to ensure that we bring you the latest trends and issues in the field of trade. Finance 60 Plastic fantastic Marcello Baricordi, Visa’s General Manager for the UAE and Global Accounts Lead MENA, tells Rushika Bhatia about Visa’s attractive SME offer… Trade & growth 64 The Business of food Italfood owner Laura Clerici and Sales Manager Vineet Varma share the day-to-day realities of SME life.
In order to be relevant SMEs need to constantly be aware of market developments such as technological changes, socioeconomic factors and the like. p68
TRADE AND EXPORT MIDDLE EAST
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Strategy 68 Keeping your SMEs relevant Dr. Ashraf Mahate, Head of Exports Market Intelligence, Dubai Exports, on how SMEs can diversify their offerings and reinvent their business. VIP interview 72 On the move with RSA Logistics Abhishek Ajay Shah, Director of Operations & Business Development, RSA Logistics, shares key insights on the company’s growth agenda and trends that are shaping this prolific logistics sector… Event preview 76 Attend the 10th World Islamic Economic Forum Demonstrating a greater commitment towards becoming the Capital of Islamic Economy, Dubai is set to host
Foreign non-GCC investors are only allowed to invest in the Tadawul indirectly through mutual funds, corporate portfolios and swap arrangements. p80
one of the largest gathering in the Islamic Economic scene. We give you a preview of this landmark event. 78 A meeting with the trade titans We present a premier occasion that will see a gathering of highlevel and influential leaders from the global trade scene – Global Trade Development Week EMEA 2014. Legal 80 Opening up the Saudi stock exchange Acknowledged experts Abdulaziz Al-Bosaily, Partner, Al Bosaily Law Offices, and Saud Alarifi, Senior Associate, Clyde & Co., take a closer look at the current status of the stock exchange and the decision’s potential ramifications.
TRADE and export middle east
ADVISORY BOARD Trade and Export Middle East presents a dynamic group of industry experts and leaders as part of its Advisory Board. The following key personalities will help add value to our analysis and ensure that we bring you the latest trends and issues in the field of trade.
H.E Saed Al Awadi CEO, Dubai Exports, Department of Economic Development, Dubai
Dr. Adeeb AlAfeefi Director, Foreign Trade & Export Support International Economic Relations Sector, Department of Economic Development, Abu Dhabi
Khalil Saqer Bin Gharib Corporate Communications Director, Dubai Customs
Lakshmanan Sankaran Chairman, Regional Banking Commission (MENA)- ICC Paris
Moin Anwar Trade & Investment Commissioner (Middle East), New South Wales Government, Australia
Peter Fort CEO, Ras Al Khaimah Free Trade Zone
For more information, please visit www.tradeandexportme.com
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finance
Plastic fantastic: how a global payment solutions provider can help your SME
We’ve often argued that cash is the ultimate SME dream and have offered advice on a myriad of ways to liberate your business cash flow. In the following feature, however, we present to you a fresh perspective on managing cash flow, controlling your business spending, increasing revenues and improving cost-efficiency. Marcello Baricordi, Visa’s General Manager for the UAE and Global Accounts Lead MENA, tells Rushika Bhatia about Visa’s attractive SME offer…
Marcello Baricordi, Visa’s General Manager for the UAE and Global Accounts Lead MENA
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Businesses often argue that cash is king. How do you think a global payment solutions provider steps in and makes a difference? From our experience in working with small businesses around the world, we know that they have similar issues of growing their business, managing cash flow and meeting monthly expenses. Cash flow management is critical for any company to survive and electronic payments can improve cash management. Electronic payments can help improve areas such as managing payments, create efficient payment collections process, ease moving of funds and reduce administrative process.
A vast majority of small businesses today accept debit and credit cards. What are top reasons you attribute to this trend? Do you have key statistics on the uptake of POS systems within the SME retail industry? While cards are the generally accepted form of payment for everyday spends, retail and hospitality, a vast majority of small businesses today, trade with non-card payments. This trend is due to the dependence on cash and the perceived convenience that cash offers. There is significant value in terms of doing away with cash and Visa has been working closely with its member banks to tap this largely non-carded segment and get them to commence card acceptance.
How can global payment solutions provider – such as yourselves – help an SME in its quest for international expansion and growth?
For SMEs, networks and relationships are that much more vital to their success. In 2011, the World Travel & Tourism Council released their findings in a paper, Business Travel: A Catalyst for Economic Performance, indicating that the majority of executive respondents believe business travel to be essential in increasing sales (75 per cent) and developing supplier partnerships (70 per cent). Business travellers also estimated that 50 per cent of prospects became customers when an in-person meeting took place, compared to only 31 per cent when meetings were not conducted face-to-face. This is unsurprising, as culturally, this is how business relationships are made and strengthened in this region. It is clear that small businesses need to travel to achieve their growth ambitions. As a global company with a local presence, Visa believes it is essential to make travel as safe, efficient, and relevant as possible. Creating a bespoke travel experience for SMEs can be a trigger for economic growth. Visa has worked with local and international financial institutions to create products enabling efficiency and safety. Depending on their needs, SMEs can choose from a suite of features, including cards that come with travel insurance and even cards that provide immigration services.
Do you have any solutions that help ease the accounts receivables process? Accepting card-based electronic solutions offers small businesses many benefits. For instance, credit and debit cards are widely used all over the world; enable faster receipt of funds which improves cash flow, enhances working capital; creates convenience; reduces risk and processing time i.e. no hassles associated with wire transfers or letters of credit etc. A rising trend that we are seeing is being driven by innovation in the mobile space. The
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FINANCE
SME needs
Business travel to achieve their growth ambitions:
75%
believe it’s essential in increasing sales
70%
believe it’s essential in developing supplier partnerships
50% Source: Business Travel: A Catalyst for Economic Performance
evolution of smartphones & tablets to be used as mobile terminals to accept cards is a convenient & cost effective way to receive payments & manage receivables. Smartphones or tablets makes card acceptance portable and therefore easy to use.
What kind of data protection measures are in place today to ensure complete confidentiality of business information? Visa has developed numerous resources including best practice guides, webinars and a website dedicated to consumer and small business security with simple, cost effective, easy-to-understand steps small business owners can take to greatly improve their security. Data security is fundamental to securing payments and maintaining customer trust. The best advice for small businesses is: be proactive. Don’t wait until you have had a breach or lost
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valuable data to take stock of your company’s data security practices. Make security a priority and start by taking common sense measures to make your cyber security as strong as the padlock you put on your store’s front door. Additional resources for small businesses: • Tips and Tools for Small Merchant Businesses: •Tips and Tools for E-Commerce Businesses: http://usa. visa.com/download/merchants/datasecurity-ecommerce-small-merchanttips.pdf
What happens in case of a cyberattack? What kind of remedial measures can businesses take? We know that hackers are opportunistic—they change tactics to find points of weakness and exploit vulnerabilities. Today’s criminals look for weaknesses across a company’s
of prospects became customers when a faceto-face meeting was conducted
system—in both payment areas and non-payment areas. For example, a hacker may gain access to a company’s non-payment area, then inject malware into the system to gain access to the payment area. This tactic highlights the impact that security issues outside the payment space can have on the payment side. It also reminds us that basic risk management practices such as using strong passwords and optimizing tools to detect malware are important across a company’s system. Once criminals get the data, they follow one of two strategies. They use the data for fraudulent use, like the ATM cash outs. They have a strong network of criminals, and are global and geographically distributed. Alternately they sell stolen credentials to other criminals. To maintain confidence of system users, Visa and other stakeholders have made enormous investments in data security and fraud prevention. To ensure we protect Visa cardholders, we employ multiple layers of security that work together to help us manage
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finance
Consider using encryption or tokenization to help secure payment data and minimize its value to data thieves.
fraud. From anti-counterfeit features, to network-based fraud detection, to data security standards to help keep sensitive information secure. At Visa, we describe our approach as a “Layered Defence.” We employ multiple, interconnected strategies that work together to create a strong defence. Keeping fraud rates at all-time lows at that scale is no small feat. What we’ve learned and applied over the years is that there is no single approach to security – there are many. If a business accepts payment cards, it is important to have security steps in place to ensure their customers’ information is safe. Their respective bank or payment services processor can help them prevent fraud. In addition there are free resources and general security tips available to learn how to keep sensitive information—beyond payment information—safe. Below are some quick tips that can help: Know the Who, What, Where of Your Sensitive Data Make a list of the type of customer and card information you collect and store—names, addresses, identification information, payment card numbers, bank account details and social security numbers. It’s not only card numbers criminals want; they’re looking for all types of personal information, especially if it helps them commit identity fraud.
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Ask yourself, where do you keep this information and how is it protected? Determine who has access to this data and if they need to have access. If You Don’t Need It, Don’t Keep It Once you know what information you collect and store, evaluate whether you really need to keep it. Businesses may not realize they’re keeping unnecessary data until they conduct an audit. Removing and destroying sensitive data from storage makes it harder for criminals to steal it. Work with your bank or payment processor if you are unsure what data to keep or delete and ask if they have any rules governing data storage that you should be aware of. If you’ve been using card numbers for purposes other than payment transactions, such as a customer loyalty programme, ask your merchant processor if you can use tokenization instead. Tokenization is a new technology that replaces card numbers with an alternate number that can’t be used for fraud When You Choose Tools or Services, Make sure they’re secure The payments industry maintains lists of hardware and software providers that have been validated against industry security requirements. Visa also maintains a list of service providers that have been validated against industry security requirements. If you outsource your payment application and/or network installation and maintenance, have a conversation with your third-party integrator or reseller about security and ask if the payment software installed is compliant with the latest version of the Payment Application Data Security Standard (PA-DSS). Isolate payment systems from other, less secure programmes, especially those connected to the Internet. For example, don’t use the same computer or point of sale system to process payments and surf the Internet.
If you use a computer at your business to handle cardholder data or facilitate payment card transactions, make sure you install an anti-virus programme and update it regularly. If your business has an outward-facing Internet protocol address (these are Internet-facing entry points to your network), it also is essential to implement a firewall and conduct quarterly vulnerability scans. Control or limit access to payment systems to only employees who need access. Make sure you implement remote access applications securely or eliminate remote access if you don’t need it so that criminals cannot infiltrate your system from the Internet. Take Advantage of Security Tools and Resources Work with your bank or processor and ask about the anti-fraud measures, tools and services you can use to ensure criminals cannot use stolen card information at your business. Consider using encryption or tokenization to help secure payment data and minimize its value to data thieves. For e-commerce retailers: We recommend that retailers verify the CVV2 code. A CVV2 is the three digit number on the signature panel that can help verify that the customer has physical possession of the card and not just the account number. For an additional layer of security, retailers can use services such as Verified by Visa, which prompt the cardholder to enter a personal password confirming their identity. For brick and mortar retailers: Retailers should swipe the card and get an electronic authorization for the transaction Retailers may also want to consider upgrading their payment terminals to accept EMV chip technology.
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FINANCE
EMV chip technology introduces unique dynamic values for each transaction, making account data less attractive to steal.
When working with a merchant (in this case an SME), do you evaluate and discuss key risks and put together a risk management template? Visa collaborates with the broader payment community on innovative data security technologies and fraud prevention strategies to keep payments safe. No entity can protect the system by itself. That’s why we work to foster an environment of partnership, engagement and accountability across the industry. We work handin-hand with the broader payments community – from cardholders to merchants, financial institutions to service providers, regulators to law enforcement. Our collective success maintaining trust and confidence of consumers depends on our ability to work together, share information and coordinate our defences. Risk considerations would be similar, regardless of the size of a retailer. Visa has updated content on its webpages, security conferences and webinars which is targeted at merchants of all sizes. Visa provides acquirers and merchants alike an exhaustive list of information, whether it be best practices, guides, education, data security, encryption or risk tools and solutions.
As a small business in the trading sector, what are the costs associated with setting up a payment solution? As mentioned above, merchant relationships are owned by acquiring banks. A small business wishing to set up a Payment Solution for its business,
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needs to factor in the bank charges, which are usually structured as an upfront deposit, equipment rental and transaction based fees. Exact costs differ by type of service required and acquiring bank chosen.
Do you offer any customised solutions to suit an SME’s individual needs? For payment solutions providers such as Visa, who have strong local ties to businesses in the region while also capable of offering global solutions and platforms, providing targeted and relevant access is the next step to helping local SMEs achieve their goals. Our commercial payment solutions – such as the Visa Business card – are designed to meet the needs of small businesses. The Visa Business card is an easy way to separate company and personal expenses, manage business and travel spending, and simplify bookkeeping. Many business commercial card programmes also offer discounts and deals, which are not normally available to personal credit card cardholders, to help businesses save on essentials. For instance, Visa Commercial Offers features a wide range of business products and services from established merchants to help cardholders achieve costs savings. These programmes include discounts on business travel and accommodation, support services such as courier and office supplies as well as other professional products and services designed for SMEs. We are committed to creating commercial products and solutions that enable entrepreneurship and SMEs to prosper – through our commercial payment solutions like the Visa Business card and Visa Commercial Offers.
How do you see the benefits of company credit cards in terms of managing staff expenses and evaluating individual staff behaviour?
Managing outgoings on a business card allows small businesses greater control of business spending - you can track expenses by category; issue cards to key employee; set spending limits; and better manage your company’s cash flow. To further aid small businesses, Visa is introducing two new platforms: Visa IntelliLink for Small Business, which allows businesses to track and manage their expenses more efficiently, and Visa Payment Controls, which allows business owners to customise how, when and where their Visa Business Card and their employees’ Visa Business cards can be used by setting rules based on merchant categories and various other criteria.
Do you believe that ‘cleared funds’ have advantages that even cash doesn’t have? Access to funds whenever and wherever you need it gives businesses more malleability to scale up, increases revenue and cost efficiency. With a Visa Business Debit Card, businesses can conveniently access their funds from their checking account. On the other hand, Visa Business Credit Card allows businesses to take control of purchasing convenience with generous available credit. What’s better is that our commercial cards can be used anywhere that accepts Visa - that’s tens of millions of merchants worldwide.
For an online version, please visit: www.tradeandexportme.com/2014/10/ plastic-fantastic/
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TRADE & GROWTH
The Business of Food
Set up in the prestigious RAK Free Trade Zone, Italfood is committed to creating fresh, healthy and high quality cheese. With its simple, practical and traditional approach, the company has become one of the leading names in its sector. In the following feature, we speak to Italfood’s owner Laura Clerici and Sales Manager Vineet Varma, who share the day-to-day realities of SME life.
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TRADE & GROWTH
How did Italfood come about? Italfood was first founded in 1955 as Casearia Romano in the beautiful town of Lettere which is located in the southern part of the Gulf of Naples, Italy. The company has a rich history in supplying Fresh Mozzarella cheese in Italy for more than 50 years. The new generation of our artisan cheese makers built a new technologically advanced company in Gragnano and Milan and recently relocated to the UAE. So in the year 2010 Italfood FZC was born in the UAE, with a vision of providing our valued clients with high quality products and excellent service. Italfood has invested the main part of its capital in Italian high technology machines, in order to provide our clients the real Italian mozzarella cheese using milk from UAE milk farms. Our goal is to produce cheese according to Italian culture and technology, using fresh local milk to provide clients with healthy and high quality cheeses without any preservatives. Our production takes place every day in order to dispatch the products to the market within 48 hours only. This makes our cheese Healthy and tasty and it gives us an edge over our competitors. In few years Italfood FZC has increased its client base offering its products and services to the most important five stars hotels and restaurants in Dubai, Abu Dhabi and all GCC areas. Further to restaurants, the Company created a special line of products for retailers. The second step will be to export across all the Middle East, in order to fulfil our production capacity.
Which sectors are you catering to and what can you say is your USP? www.tradeandexportme.com
Our USP is our passion to create Italian Mozzarella cheese using only the fresh ingredients without any preservatives.
We deliver our freshly made Italian cheese to renowned 5-star hotel groups, pizza chains, café’s & restaurants all over UAE on a daily basis. You can also find our range of products at your nearest Spinney’s and Geant hypermarkets. Our USP is our passion to create Italian Mozzarella cheese using only the fresh ingredients without any preservatives, our commitment and our service.
Given the weather conditions in the Middle East where it is summer for most of the year, how do you go about the manufacturing and distribution process of your products? And what other challenges are you facing? Italfood is an ISO 22000 certified company and we follow the most stringent food production and delivery standards. We have temperature controlled vehicles which deliver our products right at our customer’s doorstep. So right from the time when the raw materials arrive at our factory till the time our cheese is delivered to our customers, the cold chain is never broken.
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TRADE & GROWTH
How do you think can the food trading industry benefit from the upcoming Expo 2020 in Dubai?
OVER
300
We see great potential and are confident that the Expo 2020 would bring in a significant number of brands as well as customers from all parts of the world to the UAE. The food trading industry as well as the food manufacturing industry will greatly benefit and we hope to see a substantial increase in revenues.
food recalls are reported every year resulting in
325,000
hospitalizations
75M food-borne illnesses
5,000 deaths
HUGE EMPHASIS ON FOOD SAFETY Source: Food-Related Illness and Death in the United States, Centers for Disease Control and Prevention, Volume 5, Number 5, October 1999
DID YOU KNOW?
UAE
KSA
3.1% cagr
second largest food producer in GCC, accounting for 12.1% of the total production
largest producer of dairy products in the region, followed by the UAE and Oman
forecasted growth in food cosumption in GCC for the period of 2012-2017
Source: GCC Food Industry by Alpen Capital
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Are you looking at expanding your operations to markets outside the UAE? The Business opportunities in the UAE and the regional markets are of huge proportions. The UAE spans more than 83,600 sq. km (32,270 sq. miles) and is located in Western Asia on the Arabian Peninsula in the Arabian Gulf. With its strategic location between Europe and the Far East, the UAE is the obvious choice of location for multinational companies wishing to tap the lucrative Middle East, sub-Continental and African markets, with their combined population of 1.4 billion people. Dubai with a GDP growth of over 16.7 per cent per annum has become fastest growing economies in the world. In fact, during the past decade, Dubai’s growth was the fastest. The UAE is one of the world’s wealthiest countries. The third-largest proven oil reserves in the world. The fourth-largest gas reserves in the world. And these reserves will continue to provide energy for the UAE for more than 150 years. The import/re-export ratio makes the UAE the third most important reexport centre in the world after Hong
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TRADE & GROWTH
Currently, we are exporting our products all over GCC. Looking at the current demand of our products, in the coming few years we might set up another manufacturing unit in Qatar or Saudi Arabia.
Why did you decide to set up your business in RAK Free Trade Zone (RAK FTZ)? One of the main reasons that brought us to build our business inside the RAK FTZ was the possibility of having total percentage of ownership and a trustable “business partner� like the free zone authority.
Kong and Singapore. Dubai Ports are already the principal gateways of re-export and redistribution, along with channels in Kuwait, Jordan and Oman. World container port traffic is predicted to increase by 74 per cent to 92 per cent by 2010 and the container terminals in the Middle East and Indian Subcontinent will be areas of undercapacity, considering the predicted growth figures. Currently, we are exporting our products all over GCC. Looking at the current demand of our products, in the coming few years we might set up another manufacturing unit in Qatar or Saudi Arabia.
How do you see your company in the next two to three years? Italfood is a very dynamic company, always looking for new challenges. Innovation, research and development are the most important parts of our strategy. In the next two to three years we see ourselves developing more product lines. We will have more market presence in retail as well as the foodservice channels here in the UAE and we will certainly have a dedicated export division for markets of the Indian Sub-continent.
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How has RAK FTZ Authority assisted you in setting up and promoting your company? The RAK FTZ Authority assisted us in developing our project even though our business is really not common, since dealing with fresh food industry has been a challenge for both. At the beginning lots of services and standard procedures had been discussed and customized in order to allow our company to establish and develop its business.
What according to you are significant bottlenecks in the food trade sector? In our specific field you cannot develop the business without a deep knowledge of cheese processing and manufacturing procedures. The flexibility and the customization of the product and process are the key of success.
For an online version, please visit: www.tradeandexportme.com/2014/10/thebusiness-of-food/
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Strategy
Keeping your SMEs relevant AS THE FAMOUS SAYING GOES: THE ONLY THING THAT IS CONSTANT IS CHANGE, AND THIS PROVES TO BE TRUE EVEN FOR SMEs. WITH THE ADVENT OF THE DIGITAL AGE EVERYTHING AND EVERYONE MOVES AT A FAST PACE AND IT’S VERY HARD TO KEEP YOUR COMPANY RELEVANT. IN THE FOLLOWING FEATURE, DR. ASHRAF MAHATE, HEAD OF EXPORTS MARKET INTELLIGENCE, DUBAI EXPORTS, HIGHLIGHTS HOW SMEs CAN DIVERSIFY THEIR OFFERINGS AND REINVENT THEIR BUSINESS.
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Why do some business survive while others go out of business or are taken-over? This question has been extensively studied by academics and business practitioners. The terminology of their findings may differ, but all studies point to the same answer – an organisation needs to stay relevant to the buyer. It does not matter whether the buyer is another business or the end user. Relevance is not just about the product or service required by the customer, it also points to the price, delivery channels, service levels
and so on. It is not only important for the survival of an SME, it is also an essential factor for its growth towards the next stage of development. In fact, firms that are continuously relevant in the views of their customers are more likely to grow faster and become high performers. The only way firms can maintain relevance is through continuously reinventing themselves. Even when sales are high, profits are surging and the future looks bright and beautiful, an SME should innovate and regularly
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Strategy
A textbook example is Netflix which has radically changed the manner in which people rented movies.
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reinvent itself to keep its relevance in the market. As a matter of fact, if a business is doing well that’s the time when it should reassess its performance so that the ‘rot of compliancy’ does not set it. When sales and profits are high companies tend to feel that the good times will last forever and forget that their success was due to meeting customer needs. Business owners should bear in mind that customer needs are not static and evolve with a whole host of factors. Corporate history is filled with well-known examples of companies that became
complacent and in the process did not continue to meet the changing needs of their customers. A textbook example is Netflix which has radically changed the manner in which people rented movies and in the process took away business from Blockbuster which until then was the industry leader. At the turn of the millennium Netflix was a small company with a market valuation of US$ 50 million who was able to meet the needs of its customers. In response to the threat from Netflix, Blockbuster made a few cosmetic changes to its business model but
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Strategy
In order to be relevant SMEs need to constantly be aware of market developments such as technological changes, socio-economic factors and the like.
kept its old store format. Today, Blockbuster is merely a memory in the corporate scene and Netflix is now a company with a market capitalisation of over US$ 27 billion. In order to be relevant SMEs need to constantly be aware of market developments such as technological changes, socio-economic factors and the likes. They also need to be able to track competitors both small and large so as to better understand how the industry is changing. Moreover an understanding of industry dynamics is not the only important factor that an SME should remember but also the ability to be distinctive especially in a crowded marketplace. This may mean that an organisation should enhance their capabilities so as to drive the business forward. Most SMEs are resource constrained even when sales and profits are high but nevertheless they need to ensure that they have a dedicated team or even a person that is able to benchmark the company with industry players. In the process the SME should be able to identify the leading edge changes that will shape the industry. The important aspect about leading edge factors is that their development starts many years prior to implementation. Therefore, a company needs to plan ahead and formulate change strategies even before the change is required so that it has the necessary systems and processes in place to make the transition. This invariably means that an SME needs to have a parallel strategy process to deal with the short term issues and a longer-term one that helps it make a transition to the next level of relevance. Taking the next steps… Once an SME has decided that it wants to be continuously relevant to its customers what can it do in addition to regular benchmarking, market scanning and trying to understand the market dynamics? Here are some points to remember as you move towards reinventing your business:
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FIRST
An SME needs to move out of its comfort zone and do whatever is needed to maximise value creation while keeping to the core values. Of course this could be risky and sometimes a little scary but then the old rule of “no risk no reward” prevails. In many respects it is easier for an SME owner to go beyond their comfort zone because unlike an employee they cannot simply say that, “that’s not my job.” For an SME owner everything is their job and in the process of owning and running their business they will have acquired new skills and opportunities which can be exploited with the same passion as their existing business.
SECOND
The SME needs to fully understand what the customer will want and how to deliver this and in the process rethink their customer base. This will require re-examining every aspect of the business from the product or service to the delivery channels. Take Snappy Snaps as an example, it started primarily as a photographic development laboratory. When digital photography became popular it has changed its products to service the needs of commercial, interior and personalised printing services to cater to professional photographers, businesses and individual consumer needs. Now the company offers a wide range of services from developing photographs to photograph restoration. In doing so it has reached out to a new market segment and has utilised new and more relevant delivery channels. The reinvention has been successful because the company was able to understand what the customers wanted and its product profile was able to adapt to meet these needs.
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Strategy
THIRD
Before any change is implemented a company needs to develop a well-researched and thought-out plan. An SME needs to remember that change involves an element of risk and therefore through careful planning this can be reduced but never eliminated. More importantly, a clear vision and an effective planning process will lead to a business plan which can be a guide to the success of the business transformation. A business plan for reinventing your business in many ways is like developing one for a new business. This means that the SME will have to start from scratch without any of the ‘hangups’ from the previous business model. In doing so the company can objectively look at its processes and procedures and see how it can be revised to make them more efficient and business friendly. Essentially a business plan allows the SME to cost the change and understand the financial implications of what it will take to beat the competition. It will also enable the SME to measure its performance with prior expectations to ensure that it is on the right track.
FOURTH
Timing is of critical importance and some organisations are fortunate enough because they can operate the new business alongside the old one. This means that they have enough time and resources to test the new business model and ensure effectiveness and make necessary adjustments. SMEs that do not have this luxury obviously need to test pilot their new business model through industry focus group meetings or other similar methods. Whether an SME can run parallel business model or not there will come a time when it needs to make a complete switch to the new business. However, letting go of the old business model requires them to develop an exit strategy.
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The importance of an exit strategy is to ensure that prior liabilities and relationships are taken care of properly and with honesty and transparency. At the same time the switch to the new business model will require the SME to train existing as well as new staff, negotiate with new vendors, build new partnerships, and so on.
FIFTH
An effective communication strategy is of utter importance. An SME needs to effectively relay the message of their transformation to their existing as well as new target market. In developing the new business model the SME will have created unique selling propositions that are better than its competitors and leverage this to a more value enhancing market. They would have to invest time and money in implementing a communication strategy. To date, social media is a huge part of most companies’ marketing plan and it has dramatically transformed the manner in which SMEs reach out to their audience. Social media channels allow SMEs to quickly and easily get their message across to their customers anywhere around the globe in an innovative and effective manner with minimal costs. Reinventing and being relevant also implies that an SME should use communication channels that best reach their target audience.
Dr. Mahate received his doctorate from Cass City University Business School in London (UK). He read Economics at University College London, followed by a Masters in International Economics and Banking at the University of Wales in Cardiff. Dr. Mahate is a professional educator and received his training at the Institute of Education (University of London). He is a member of the Chartered Institute of Managers (UK) and a Member of the Institute of Commercial Management (UK). He is also a member of the Association of Certified Anti-Money Laundering Specialists (ACAMS). He can be reached at ashraf.mahate@ dedc.gov.ae.
Being relevant as important today as it has always been. Being relevant implies that the company needs to be ahead of the game and understand the direction that the industry is heading towards and is ready for change.
For an online version, please visit: www.tradeandexportme.com/2014/10/ keeping-your-smes-relevant/
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VIP interview
On the move with RSA Logistics What started out as a family-owned business in 2007 is now one of the leading names in the logistics industry. We met the man at the forefront of this fast-paced success – Abhishek Ajay Shah, Director of Operations & Business Development, RSA Logistics. In an exclusive interview with Trade and Export Middle East, he shares key insights on the company’s growth agenda and trends that are shaping this prolific sector…
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Tell us about your company’s extensive raft of services. What differentiates you from other competitors in the market? We provide Third Party Logistics services, it’s as simply defined as that. There are two primary reasons why we stand out and have enjoyed tremendous success in the industry so far. First is technology; we’ve invested in technology – not just in back-end operational support systems but also in customerfacing solutions. We’ve created portals for our customers to get information on time, whenever they want it, however they want it. We’ve also created mobile apps to enhance transparency and benefit our customers, so that they are fully up-to-date. As a company, we are still very young, agile and nimble. This allows us to easily adapt to the needs of our customers. This is exactly what we have done in the case of technology. We have created tailor-made solutions. The second aspect is specialised training for our staff. As an SME, it
is crucial to take care of the bottom line, we have to be profitable to continue our growth. But, without enhancing the team’s skillsets and providing them with suitable tools to work with, it is impossible for the company to move in the right direction. We also invest heavily in health and safety training – we’ve embedded it into our culture. Additionally, we look at our staff’s career development by providing regular educational and training programmes across the different industry areas.
Do you provide an end-to-end service to your customers? Our objective has always been to create a one-stop-shop solution for our customers. It’s not always possible as there are certain restrictions that come into play. However, we try to achieve this as much as we can. We are happy to offer our support whether it is supply chain management or end-to-end visibility,
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VIP interview
or working with partners our 0clients require us to, so whatever it takes for them to get the visibility they need.
How has being based in Dubai World Central (DWC) facilitated the growth of your business? We initially heard about DWC in 2005, when it was launched as the first multimodal logistics platform in the region. Multi-modal means that there is a meeting point between road, sea and air cargo. For any trade entity or logistics solution provider, it is very exciting to have such levels of accessibility. We signed our first lease in 2007 and became the first company to begin operations in March, 2009. The attraction was always that this was going to be home to the world’s largest airport. When you build such a large airport, you have to build a city around it and this brings in the need for infrastructure and invariably the need for logistics. From a logistics point of view, converting sea cargo to air cargo has
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Abhishek Ajay Shah, Director of Operations & Business Development, RSA Logistics
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VIP interview
With the launch of the new airport, the turnaround time from sea cargo to air cargo can be as short as eight hours.
always been a big market for this region as storage and labour costs are slightly cheaper here than in the Europe – and that is what really developed in the early 2000s. Manufacturing was done in the Far East, then brought and stored in Dubai, deconsolidated and value added and then air-freighted out to Europe, for example. But, since Dubai International airport was about 40-45kms away, it still had an 18-hour turnaround time. With the launch of the new airport, the turnaround time from sea cargo to air cargo can be as short as eight hours. These are the kind of benefits that we enjoy being based in Dubai World Central.
This was of course a big move for a family-owned business. How did you make the decision? We were the first to open in 2009 and it was a big step for a family business like us – we did suffer significantly for the first 18 months due to the downturn. However, we’ve worked alongside DWC as they’ve built customs gates, drafted the regulations and policies and so on. We received a lot of support from the authorities, which made the entire process a whole lot easier.
What are some immediate benefits you’ve enjoyed with the opening of the new airport? Do you find that regional and global markets are more accessible with the new airport? We’ve developed some new trade links. The time factor has improved – it takes lesser time. The fact that there are two airports means that there are more planes, more routes and it signifies that Dubai has a wider reach to the rest of the world.
How do you see the Expo 2020 impacting the logistics industry?
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History shows that the Expo has always played a critical role in the economic growth of a country. The amount of investment that has been committed to the Expo is very sizable. There are a lot of construction projects in the pipeline providing opportunities for everyone around, including the logistics sector. The Expo gives a large opportunity to grow our business. Currently, however, nothing has really broken ground; I believe everyone is in the planning stages and it will take some time before see benefits from the Expo we fully materialise.
Do you see the Expo bringing in an influx of smaller businesses that might compete for the market share? I think this has already started happening. We see a lot of businesses working here, who have come in to survey the market and begin their research. We’ve experienced some steep growth this year and we will see gradual growth from now on.
What are some key challenges you’ve faced in this sector? One of the biggest challenge we’ve faced in the recent past is the increased cost of operations. For instance, we try and provide accommodation for our blue collar workers and rents have just sky-rocketed following the Expo 2020 announcement. There have been tremendous hikes, which our company has no choice but to absorb. Whereas, in reality, the opportunities to benefit from the Expo aren’t really here yet, at this point of time. However, the cost impact has already been created today.
Being at the helm of a fastgrowing organisation, what do you see as your biggest challenge
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VIP interview
I’m pleased to say that we have indeed signed a joint venture agreement with the TALKE Group, which will provide a highly specialised chemical warehousing facility in Dubai.
in terms of managing and leading business development? Quality control is a major challenge, given that we have set the bar very high with our customers. Another area that requires special attention is idea execution – very often you might stumble across a brilliant idea but actually putting it into action demands a lot of time and effort.
You’ve recently entered into a joint venture agreement with the German chemical logistics specialist ALFRED TALKE Logistic Services. Tell us a little about that. I’m pleased to say that we have indeed signed a joint venture agreement with the TALKE Group, which will provide a highly specialised chemical warehousing facility in Dubai. The services offered primarily include high quality, responsible and sustainable storage solutions for Hazardous and non-Hazardous chemicals.
We are obviously moving into a new era of technology. How have you implemented this within your business to improve your offer to the customers? We offer several technological solutions to our customers – all stemming from our Warehouse Management System (WMS). Anything that goes in or out of our facilities is monitored by our WMS. This is at the core of our technological solutions. We’ve noticed that a lot of our customers request reports and want access to their transaction history. For instance, they want to know which products are expiring in the next three months so that they can push their sales teams to sell those. As a result, we decided to create a web portal in-house, which acts as a
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window between our customers and us. People can request new products, access inbound transaction history, enjoy automatic paperwork and invoicing, import documents, check proof of delivery and so on. Another portal that is in its Beta version is dedicated for images. In logistics, there is a set procedure where you have to click pictures of the containers – closed and open. Previously, it was a very cumbersome process. To ease the process, we have introduced a new mobile app, using which our staff can click and upload pictures directly on their handheld devices. These are technology innovations that are not only helping our team but also our customers by improving their overall experience. Finally, the third area we are working on is reporting. We have tried to create reports for our customers in different formats enabling them to keep track of their products. These can be sent on demand or weekly, and include details such as transaction history, batch numbers, expiry dates on products that have a shelf life, etc. Essentially, we are an extension of our customer’s own inventory management team.
How do you see the company moving forward in the next couple of years? Our biggest strength, as a company, has been to create assets across different industry verticals such as automotive, building materials, chemicals and food. We have specifically built facilities for these different verticals. Our growth strategy is continued towards investing in these assets and will be CAPEX heavy –investing in trucks or frozen food for example. Plus, in Kenya, we are currently building facilities for FMCG cargo.
For an online version, please visit: www.tradeandexportme.com/2014/10/onthe-move-with-rsa-logistics/
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Event preview
Attend the th 10 World Islamic Economic Forum DUBAI WILL HOST THE 10TH WORLD ISLAMIC ECONOMIC FORUM (WIEF) AT THE MADINAT JUMEIRAH CONFERENCE CENTRE FROM OCTOBER 28 TO 30, 2014. ORGANISED UNDER THE THEME, ‘INNOVATIVE PARTNERSHIPS FOR ECONOMIC GROWTH’, THE FORUM HOPES TO ATTRACT MORE THAN 2,500 PARTICIPANTS FROM 140 COUNTRIES.
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The 10th World Islamic Economic Forum (10th WIEF) will be convened in Dubai, United Arab Emirates – a cosmopolitan metropolis that has grown steadily to become a global city and a business and cultural hub of the Middle East and the Gulf region. The 10th WIEF is a high level platform for leading global government leaders, captains of industries, academic scholars, regional experts, professionals, corporate managers, policy makers, innovators, business leaders and investors to network and
discuss opportunities for business partnerships in the Muslim world. The Forum will address a myriad of current economic and business related issues with the objective of generating innovative and creative solutions to transform the global economy and promoting business collaborations. The Forum is expected to attract more than 2,500 participants from all around the world. It is in collaboration between the WIEF Foundation, Dubai Chamber of Commerce & Industry and Dubai Capital of Islamic Economy and
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Event preview
will be held at the Madinat Jumeirah Conference Centre Dubai on October 28 to 30, 2014, with an arching theme ‘Innovative Partnerships for Economic Growth’ which seeks to position Dubai as a leader of global halal industries. The WIEF is the largest international gathering of heads of government, economic experts and stakeholders to share experiences and knowledge about Islamic economy since its launch in 2004. The event will offer a global platform to form
innovative partnerships based on the seven pillars of the Dubai Capital of Islamic Economy initiative launched in 2013: Islamic finance, Halal food industry, Halal tourism, Islamic digital economy, Capital of Islamic art and design, Centre for Islamic economy standards and certification, and International centre for Islamic information and education.
For an online version, please visit: www.tradeandexportme.com/2014/10/attendthe-10th-world-islamic-economic-forum/
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SPECIAL ATTRACTION: Marketplace of Creative Arts (MOCAfest)
The power of creative industries to enable economic empowerment and social enterprise will be highlighted by Dubai as it hosts the seventh edition of Marketplace of Creative Arts (MOCAfest), the arts and culture festival of the World Islamic Economic Forum (WIEF), from October 28 to 30, 2014, at the Madinat Jumeirah. As a prelude to the event, MOCAfellows, its Artist residency programme for 15 selected emerging talents, will also be held from October 24 to 26. With the 10th WIEF offering a major opportunity to form innovative partnerships based on the Dubai Capital of Islamic Economy initiative, the two events are of considerable significance, especially since Islamic art and design is a key pillar in the Dubai Capital of Islamic Economy initiative. A platform for a wide range of arts, from music, cinema, visual arts, literature, poetry, dance and many more, MOCAfest hopes to achieve its tagline, ‘Bridging Business to the Arts’, in bringing together the creative and business world, providing them an opportunity to learn from one another. Featuring calligraphy, photography, graphic design, fashion, live installation, film festivals, music and poetry recitations, visual arts exhibitions and workshops, MOCAfest will also put the spotlight on the arts and culture of the Gulf region. Transcending the realm of a performance festival, it will host networking sessions, masterclasses and artistic collaborations to explore the potential of the creative industries to drive socio-economic growth.
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Event preview
A meeting with the trade titans Is your company part of the trading sector? Are you looking to extend your reach to global markets? Do you want to rub shoulders with the who’s who of the region’s business VIPs? Attend the Global Trade Development Week 2014 and take your business to the next level!
The largest international trade event for business and government leaders, Global Trade Development Week EMEA 2014, is all set to be held in Dubai from October 27 – 29 at the prestigious Emirates Towers. The event will attract a gathering of influential business and government leaders, entrepreneurs and academics from over 70 countries. Global Trade Development week will feature over 120 speakers, panellists and workshop leaders. The event will open with a Ministers and Trade Leaders VIP plenary, followed by four concurrent summits that cover ‘Global Free Trade and Special Economic Zones’, ‘Trade Finance and Industrial Development’, ‘Corporate Real Estate Leaders’ and ‘Global Customs and Trade Facilitation’. The trade exhibition runs alongside the summits and includes leading governments, banking,
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commerce, economic zones, ports, customs, technologies suppliers & consultancies. “It is time to set a new course for the global economy. The UAE looks forward to hosting a full programme of events that tackle today’s most challenging trade and development issues. The UAE is honoured with the presence of such high-level individuals who are experts in their fields,” said His Excellency Sultan bin Saeed Al Mansoori, UAE Minister of Economy. Speaking on the importance of the location of the event, HE Al Mansoori explained, “Global Trade and Development Week comes at a special time to Dubai, where the nation is rapidly developing across all sectors, as to prepare for the hosting of EXPO 2020.” Global Trade Development Week EMEA brings together over 600 high-level delegates from the areas of trade, development, economic zones, trade finance, industrial development, real estate, global customs and trade facilitation; with representatives from across Africa, Americas, Asia Pacific, Europe and the Middle East. Andrew Keable, Managing Partner and Founder of the KW Group, the organiser of the event, said: “Dynamic trade development plays a critical role for economic growth and accordingly each nation sets ambitious goals, yet there is limited opportunity for trade leaders to meet and collaborate outside
their various sectors. Global Trade Development Week addresses this challenge providing an essential platform to link business and government leaders from across key sectors to exchange ideas, experiences and to seek solutions to drive forward global trade.” For full details of the programme, exhibition, workshops, site tours and networking receptions, please visit the event website at www.kwglobaltrade.com.
Global Trade Development Week - Quick summary The EMEA Edition is hosted in Dubai under the Patronage of His Excellency Al Mansoori, Minister of Economy. The event will feature 600 G&C Level Trade Facilitation, finance & development leaders, 70+ nations and 120 speakers. With two international editions each year in APAC & EMEA, The Global Trade Development Week programme of events gathers government and private sector trade leaders across trade facilitation, customs, development, finance and investment. The ambitious programme of events includes a Ministers and Trade Leaders Plenary, four major trade summits, site tours, networking receptions and trade exhibition.
For an online version, please visit: www.tradeandexportme.com/2014/10/ameeting-with-the-trade-titans/
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LEGAL
Opening up the Saudi stock exchange The recent decision by the Council of Ministers to open up the Saudi stock exchange (the Tadawul) to certain nonGCC investors can have a profound impact on regional trade and greatly diversify market holdings. Here, two acknowledged experts, Abdulaziz AlBosaily, Partner, Al Bosaily Law Offices, and Saud Alarifi, Senior Associate, Clyde & Co., take a closer look at the current status of the stock exchange and the decision’s potential ramifications.
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LEGAL
Many non-GCC foreign investors have been waiting eagerly for more access to the region’s biggest and most liquid market - and the long-awaited move could finally come to pass. The Saudi Arabian Council of Ministers in its meeting held on 24 of Ramadan 1435H (corresponding to 21 July 2014) passed a decision which paves the way for the Capital Market Authority (the CMA) to open the Tadawul to certain investors, at a time it sees fit and pursuant to the regulations to be issued by the CMA. The Chairman of the CMA issued a statement commenting on the Council of Ministers decision. According to this, the CMA, once the statutory procedures are completed, will work on the publication of draft rules for qualified foreign financial institutions’ investment in listed shares, to enable concerned and interested parties to provide their comments and observations on these rules for a period of 90 days after publication. The CMA will review all comments and observations by the end of this year and will assess the readiness of Tadawul for such a move. In addition, the CMA will coordinate with the relevant government parties prior to the adoption of rules. Based on the above, the market will be opening up during the first half of 2015 for qualified foreign financial institutions wishing to invest in companies listed on the Tadawul. At present, the Tadawul trade is largely dominated by local retail investors who account for around 90 per cent of volumes traded while foreign investors represent just less than five per cent of the total. For the month of July 2014 the value of shares traded by Saudi investors was SAR 114.41 billion (93.20 per cent) for buying, and SAR 117.11 billion (95.41 per cent) for selling. The value of shares traded by investors from other GCC member states was SAR 3.10 billion (2.53 per cent) for buying, and SAR 2.13 billion (1.74 per cent) for selling. By contrast, the value of shares traded during the same period by foreign investors
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LEGAL
Foreign non-GCC investors are only allowed to invest on the Tadawul indirectly through mutual funds, corporate portfolios and swap arrangements. was a mere SAR 5.24 billion (4.27 per cent) for buying, and SAR 3.51 billion (2.86 per cent) for selling. Foreign non-GCC investors are only allowed to invest on the Tadawul indirectly through mutual funds, corporate portfolios and swap arrangements. Such arrangements put licensed local firms in position to trade on the market on behalf of a foreign client however such arrangements have proven to be a relatively expensive and inconvenient option. Swap arrangements were first introduced by the CMA in September 2008 which back then was widely seen by financial institutions as a first step towards opening the Saudi market to foreign investors. The CMA will issue a set of draft rules this month and given that the CMA is understood to be a conservative regulator, it is expected to adopt rules similar to other major emerging economies that have opened up their financial markets. Given that the CMA’s policy is to attract long-term investors rather than short-term speculators, the CMA is expected to link eligibility of the qualified foreign financial institutions to factors such as the value of assets under its management, the value of its investment in the market and the number of years they have been in business. It is likely that there will also be ceilings for foreign ownership of Saudi Arabian companies. Unlike other Middle Eastern markets such as United Arab Emirates
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and Qatar, Tadawul is not on the MSCI Emerging Markets index as yet, however the opening up of the Tadawul to qualified foreign financial institutions certainly would increase the likelihood of Saudi Arabia’s Tadawul being included in the MSCI Emerging Markets index in the near future. Tadawul’s total equity market capitalization at the end of July 2014 reached SAR 2,100.25 billion (USD 560.06 billion) making it the Arab world’s biggest market and therefore the opening of Tadawul to qualified foreign financial institutions is one of the most keenly awaited economic reforms from the world’s top oil exporter. Further information If you would like further information on any issue raised in this update please contact: Abdulaziz Al-Bosaily, Partner E: abdulaziz@albosailylawoffice.com Saud Alarifi, Senior Associate E: saud.alarifi@clydeco.com Clyde & Co accepts no responsibility for loss occasioned to any person acting or refraining from acting as a result of material contained in this summary.
For an online version, please visit: www.tradeandexportme.com/2014/10/ opening-up-the-saudi-stock-exchange/
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seabury report
THE NEW GATEWAY TO THE GULF