Tuesday, December 9, 2008

Trip to Dubai. Biz in the Middle East.

Although we started our Middle East branch 3 years ago,  I have not had a chance to visit there for an extended period of time.   Heaven Fresh sales have been growing steadily in the Middle East and we believe that it is the time for us to make a bigger move in that part of the world especially with all the uncertainty due to the financial turmoil in the North American and the European markets.

I took a 6 week long trip to Dubai in July/August to see the reality on the ground.  It was definitely a productive trip except that being outside in the blazing sun even for a little while was enough to give anyone a heatstroke.  So the first lesson that I learned was that July and August are not the best months to be in the Dubai.

There is an amazing construction boom in Dubai. The enormity of the construction projects can be judged from the fact that one quarter of the world's tall cranes are mounted in Dubai. Credit is very abundant and billions of dollars of investment are pouring into Dubai. The rulers of Dubai have turned this little city into Las Vegas of the Middle East and South East Asia. However, it's not just an entertainment center, it has also become a hub for transit trade. Ninety fiver percent of the imports into Dubai are re-exported to the rest of the Middle East, Africa, South East Asia and Central Russian states. This status of a 'central bazaar' is fueling the growth of UAE like a snowball now.

This rapid growth is also creating problems for the region, for example, infrastructure problems, high inflation and social issues among the local population that is in minority now.

From a micro-multinational perspective, I feel that we were lucky to get started there 3 years ago.  The cost of living there has gone up so high that we could not have established the office there today without investing 3 to 4 times as much money as we did 3 years ago.  One of the most fascinating things for me is that our online business is picking up there.

During my trip, I got a chance to meet with many business people and thoroughly study the market.  Based on my research, I strongly believe that a significant future growth of Heaven Fresh is going to come from the Middle East Business. Besides an abundance of petroleum cash, infrastructure projects initiated by many of the GCC governments are fueling the local economy.  On top of that, having a business presence in Dubai makes it relatively easy (and safe) to get a piece of the Iraqi reconstruction. I also met quite a few Canadians this time who are working in Dubai in various fields. I strongly suggest that any business thinking to expand outside of Canada and the US must look into setting up a base in the Middle East.