I was honoured to be part of a panel discussion at Dubai FDI’s Dubai Investment Week conference. Dubai has never been shy in talking about itself as a place to do business within the region, and rightly so, as Dubai has long offered global companies a secure place to set up operations. But the message that Dubai is a ‘hub’ is perhaps a bit misleading.
Whilst Dubai is arguably the region’s most established business centre, the emirate is not all things to all companies. The UAE’s diversification away from oil dependence has set the country on a path toward research and development, financial services, and technology, rather than heavy industry or manufacturing. There are some manufacturers in the UAE, most notably Emirates Global Aluminium and RAK Ceramics, both world leaders in their respective fields.
However it was the emergence of the Dubai International Financial Centre (DIFC), established in 2004, that set Dubai on its current trajectory. The Free Zone dedicated to financial services firms (with its Gate Building featured in Mission Impossible 4), aimed to replicate the success achieved by Dubai Internet City by attracting global giants. Whereas DIC attracted Microsoft, Oracle, IBM, and more, DIFC attracted Standard Chartered, Julius Baer, brokerages, private equity, and similar. Both Bahrain and Qatar have challenged Dubai’s number one status in the past, but both have since focussed on other areas of economic growth. And this has been good for the region as a whole.
As example, Saudi Arabia has the space and the population to support heavy industry. Qatar has dominated the MENA media industry with The Al Jazeera Media Network and The beIN Media Group (think The FIFA World Cup, Game of Thrones, and the BBC’s The Doha Debates). So stating Dubai is a regional hub may be true, as it has been the place international firms choose to settle, but putting the term hub in to context is important.
Probably the best example of Dubai as a knowledge base is the concentration of locally grown IT service firms. Amazon was founded in 1994, PayPal in 1998, so globally we’re used to seeing and using service companies that use the internet rather than creating a physical product. But in the GCC region the most important element of any online service, digital banking, hasn’t been popular. The GCC favours cash over credit and there has been a general mistrust of adding debit or credit cards to websites. But, with local banks pushing customers toward digital banking products, our mindset has changed.
Add to this a 2-1 rate of smartphone penetration and companies like Careem (similar to Uber) are able to flourish. Amazon recently paid $580 million in cash for the regional foothold souq.com would give it, and, Beehive, a peer-to-peer lending network, has the former CEO of the UAE’s largest bank as its Chairman. It doesn’t take much for a good idea to catch on in the UAE. The country has a population of less than 10 million people, most of whom are connected to the internet. With flying taxi’s and free-wifi in most indoor public places, Dubai’s Smart City initiative is becoming a reality as each day passes.
Doing business in Dubai is a lot like doing business in any other major city. The local population is very accepting of international cultures and English is the language spoken in most offices. In fact, the only real differences are the small cultural nuances unique to the Middle East. If you’re looking at a place in the region to open a branch office, or even establish a full presence, the name Dubai is always going to the first one on the list.
Image: Gulf News