The Middle East Market SIS International Research

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This presentation covers demographics and cultural and societal influences in the Middle East market, as well as opportunities and barriers for growth. Booming markets include healthcare and automotive industries. Learn more in this presentation from SIS International Research.

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The Middle East Market SIS International Research

  1. 1. SIS International Custom Research Middle East Market September 2007 Presented By SIS Global Research Media, a division of SIS International 1
  2. 2. Presentation Contents Executive Summary Introduction: Economic UAE Snapshot •Demographics •Stability Report Qatar Booming Industries •Society Bahrain •Culture Opportunities Barriers Standard Research Disclaimer: SIS International Research Inc. makes no representations about the accuracy or completeness of the information provided in this 2 presentation. Users who base investment, strategic or marketing decisions on the information contained in SIS speeches & presentations do so at their own risk.
  3. 3. Executive Summary • Given opportunities and emerging economic factors, the Gulf region is being considered for investment & commerce. • Although major multinationals are in the region, global midsized companies ($200-800 million) are expanding in the region • US companies are generally slow in entering region vis-à-vis European ones • Region is currently stable, and governments investing heavily in infrastructure 3
  4. 4. GCC Market Gulf Cooperation Council, a customs union involving: • United Arab Emirates: Dubai, Abu Dhabi • Qatar: Doha • Bahrain: Manama • Oman: Muscat • Saudi: Riyadh, Jeddah • Kuwait 4
  5. 5. GCC Market Qualities Characteristics: • Young societies • Rapid economic growth – Strong non-oil businesses and private sector – Growth in some markets rivals that of China • Continuous inflow of foreign capital – Increased liquidity from oil revenues – Arab reinvestment of profits back into region • High standards of living – Wealthy countries – Consumer economies • Countries competing with each other • Economic link between Europe and Asia 5
  6. 6. GCC Population Excluding Saudi Arabia Year 2007 2010 2015 Total 11,769,011 12,993,249 14,979,888 6 Source: IDB Census Data 2007. Chart produced by SIS International.
  7. 7. UAE Demographics Population Growth: 2.39% Sex Ratio: 1.48 Males/1 Female 7 Source: CIA world factbook. Chart produced by SIS International.
  8. 8. Bahrain Demographics Population Growth: 1.4% Sex Ratio: 1.25 Males/1 Female 8 Source: CIA world factbook. Chart produced by SIS International.
  9. 9. Qatar Demographics Population Growth: 2.39% Sex Ratio: 1.85 Males/1 Female 9 Source: CIA world factbook. Chart produced by SIS International.
  10. 10. Social Snapshot: GCC • Significance of Family – Obligations & rules – Impact on the decisions one makes • Modern youth • Importance of Islam in commerce and daily life • Increasing familiarity with technology • Importance of honor and reputation 10
  11. 11. GCC: Stability Report • Stable • Oasis of stability in an volatile region • Business interests a major priority for GCC governments Analysis • Markets heavily reliant on tourism and FDI (e.g. Dubai) could be affected by regional war • Boycotts against branded products a possibility • Markets relying on Arab investment more resistant • Threats: political instability, terrorism, global economic downturns 11
  12. 12. Growth • Strategic business advantages – Achieve competitive edge • Location: Trading hub between Europe and Asia • Currently stable GCC market • High economic growth – Large consumer market – Pro-investment environment • Fear of falling behind competitors – Many multinationals have regional presence – Fear that neglecting region can impair longterm competitiveness 12
  13. 13. Economic Snapshot - UAE Economic Benefits Economic Obstacles • Remarkable growth & opportunity •Liberal overall, except for operating – 8.9% real growth in 2006 [CIA] regulations • Diversifying towards tourism, media & financial –Local sponsors services –Labor rules • Modern, English-speaking •Foreign ownership regulations • Strategic market: Gateway to KSA, other GCC markets –100% ownership only for … • Ranks 32nd most competitive global economy [World –professional companies Economic Forum] –branches of foreign companies – Most competitive Gulf economy –contingent on a local sponsor – Strengthening legal system by 2010 •Inflation from construction and housing prices – Most industries pay no federal corporate •Real estate supply fluctuations income tax •Insufficient urban transportation 13
  14. 14. The Dubai Market • Stable • Current and future banking & financial hub • Regional headquarters for many companies • Internationality, openness • Large Tourist and Expat market 14
  15. 15. Abu Dhabi • Capitol & Largest emirate • Significant oil reserves – 10% of the world’s output [FDI Magazine] • Diversifying – Targeting Arab investment – Encouraging private enterprise • Limits on foreign ownership 15
  16. 16. Key Industries: UAE • Consumer industries – Automotive – Retail (e.g. Mobile phone) • Real Estate & construction – Significant demand for housing • Tourism services and accommodation • Transportation infrastructure • Media • Information Technology • Consulting Services 16
  17. 17. Economic Snapshot - Qatar Economic Benefits • 7.1% growth in 2006 [CIA] – Due to liquidity from oil and the growing non-oil sector • Diversification – Towards a knowledge & technology based economy – Gov’t invested $130 Billion into industrialization policy [Qatar Financial Center] • Aggressive investing policy abroad • Liberal business environment – Few restrictions on corporate remittances Economic Obstacles • Inflation caused by housing prices and construction costs • Time required to start-up a company • Similar ownership regulations as in UAE 17
  18. 18. Key Industries: Qatar • Education services – Universities • Technology – Science and Technology Park • Media Services • Financial services • Consulting Services 18
  19. 19. Economic Snapshot - Bahrain Economic Benefits • Saudi money • One of the fastest growing Arab economies • Liberal economy – 25th Freest economy in the world, according to the Index of Economic Freedom 2006 – Tax free • 7.8% real growth 2006 [CIA] • Effective diversification from oil – Banking & service economy • Free-trade agreement with US Economic Obstacles • High unemployment 19
  20. 20. Key Industries: Bahrain • Islamic banking • Construction & Real Estate • Media • Tourism services – Saudi tourist hot-spot 20
  21. 21. Future Regional Economic Snapshot • GCC Common Currency Plan 2010 for all GCC members – ECB has already consulted on this planned currency union – Economic Benefits: • Limited Foreign Exchange risk, attracting foreign investors • Controls on inflation • Increased competitiveness resulting from integration • Increased international trade • Facilitation of trade among existing trading partners (e.g. EU, US) • Longterm Regional Economic Threats – Threats of political instability, terrorism and global recessions 21
  22. 22. Booming Industries 22
  23. 23. Real Estate & Construction Real Estate • About 25% of world’s cranes in Dubai, according to Gulf News • Housing demand in UAE exceeds supply • Residential & commercial rental prices on steep rise • Ownership restrictions [e.g. freehold system] exist • Major developers – EMAAR – Dubai Properties – Nakheel 23
  24. 24. Developments • Dubailand • Universal Studios • The Palm • Business Bay • Sports City • Media City • Ski Dubai • Knowledge Village 24
  25. 25. Automotive Market • Significant Demand – Due to lack of transportation alternatives, climate – Wealth – Inexpensive petrol • Reselling and exporting • According to Nissan, Middle East market is strategically important • Major sales markets for GM and Toyota 25
  26. 26. Healthcare • Healthcare costs and insurance premiums on the rise • Dubai Healthcare city is to open in 2010 for treatment & research – Mayo Clinic Middle East – Harvard University collaborating with project – J&J, AstraZeneca, & many others are establishing strategic partnerships 26
  27. 27. Banking & Finance • Islamic (Shari’ah) banking niche market – Islamic finance industry worth about $1 trillion dollars – Grew at least 10% each year during the past 10 years – More resistant to fluctuations in finance market – Several listings on London Stock Exchange – European banks already involved: HSBC & BNP Parisbas – High-net worth individuals (HNWIs) • Currently stable • Financial centers: Bahrain & Malaysia • Credit card ownership to rise by 51% by the end of 2007 [Lafferty Group] – High profitability per card in GCC region 27
  28. 28. Retail • Retail spending in UAE estimated to reach $7.6 billion by 2009, according to AME • Mall culture • Ubiquitous foreign brands: – Carrefour, Starbucks, Borders, Zara, H&M, Body Shop, Bally, Aldo, Toys R’ Us, Ikea, etc. 28
  29. 29. Information Technology & Media • Local governments updating IT infrastructure • New developments require IT infrastructure • Bahrain attracting media – MBC • Dubai Media city – CNN – BBC – Reuters – AP 29

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