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All That Glitters

UAE offers a lucrative but competitive market where canine cannibalism is the name of the game

Other than our immediate neighbours of the SAARC grouping, the United Arab Emirates (UAE) is perhaps India's most proximal export marketof significance. This proximity spells easy, relatively inexpensive accessibility for sellers from India and for buyers who have set up shop in the UAE. A merchant exporter's role is thus doubly difficult for, with the market within easy reach, manufacturers—even the smaller ones—would much rather export on their own than work through an intermediary. At least, that is what they think they should be doing to begin with. Until they try it out for themselves. And more often than not, get knocked around in the bargain.

You'd be lucky if you merely got knocked around and bruised a bit and didn't lose your pants, for it is easy, let me tell you, to suddenly discover yourself in a state of business nudity in this market which is notmerely competitive, but where canine cannibalism is the normal name of the game. With its 4 per cent customs duty (you should have felt the collective shudder of horror when the government raised the rate from one to four last year), there is no globally competitive consumer product that isn't attempted to be marketed in the UAE. And with its being a major re-export base for the somewhat less prosperous nations of the Arab hinterland, and being itself almost noxiously upmarket in its buying patterns, price and quality segmentation for most products range from the lowest on the scale to the glitziest and the best. Margins are razor thin, credit terms on offer are liberal and the recovery of monies is a task that calls for patience and perseverance.

Looming large is the unspoken danger that the buyer to whom you have been supplying goods regularly for many years could, after building up half a million dirhams of debt to you and 4 or 5 million to the market as a whole, winds up shop one day and vanishes on an airplane into the blue yonder. And you discover it a week later when the telephone at the chap's office isn't answeredand your salesman, despatched to investigate, meets with a sturdy lock on his door. That is when the writeoff of a doubtful debt tears a gaping hole in your P&L.

The existence of the expatriate in the UAE has at its core, a shade of ephemerality, a permanent temporariness even after being in residence for 20 years or more. Local laws do not permit the ownership of property. Obtaining local citizenship is also not permissible. Hence, with appreciating investments in real estate in their native countries, and in some cases even prosperous businesses that would provide a fallback in case a person decided to depart homewards, their sense of impermanence is abiding. As a result, a person's sojourn in the UAE is treated as a vehicle for the amassment of material wealth that would provide him financial security and a good life back home, 'whenever'.

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And it is wealth, its amassment and its often ostentatious exhibition that dominates all social transactions, be it an upmarket do that involves Dubai's bold and beautiful or a casual evening at home with friends. Phone bills, water bills, real estate prices in Delhi, Bombay and of course Kerala, the BSE and its bulls and bears, the exchange rate and its up-down movements. Less often, holidays in Europe, monthly rental rates in Majorca and Tennerife.

Shopping is next in priority. The malls and supermarkets are some of the best stocked in the world, unmatchable in the range and variety of products on display, since little is manufactured within the country, almost everything is imported and almost everyone is trying to sell there. The same goes for automobiles. Unlike Germany say, where Mercs, BMWs and Volkswagens dominate, or the US with its Fords, Chryslers and Chevrolets, the UAE has stunning range and variety and also the very latest, a result of the Joneses figuring forcefully and relentlessly in lifestyle-related decisions.

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Not to be missed is the holy tradition of eating out. The culinary diversity on offer is endless and quality is invariably excellent. Malayali, Sri Lankan, Pakistani and Baluchi cuisine cover the subcontinent. Italian, Mexican, Thai, Lebanese, Japanese and Chinese complete the array. Keeping the kilos within control is a tough and often losing battle.

The large majority of the resident population is from Kerala. A person like me who comes from that state can confidently walk into most stores and address the folks there in my native tongue and be reasonably sure of being understood.

The country's business cycle is so designed as to provide local resident citizens a steady income and an opportunity to continually enhance their assets. All buildings are owned by them and rented out to expats who form over 80 per cent of the country's total population. All businesses, whether trading or manufacturing, have to have a local majority partner who, though mostly silent and non-participative both in running the business and in sharing profits, has to be by law compensated with a sizable fee as the sponsor. A dozen sponsorships ensure each citizen all creature comforts. The system is smooth and surprisingly devoid of conflict and tension. All involved, the expat, the local and the government, seem happy with it.

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It is only of late that the region has started attracting meaningful investment in manufacturing assets, with the opening up of free trade zones in each Emirate. This is necessary in more than one way, for only this will ensure the continuing prosperity of this glamorous oasis on the northern coastline of the Arabian peninsula as the vast reserves of oil and gas that triggered the cycle of progress and prosperity begin to run out.

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