marketing to the arab world - cambridgeshire … to the arab world 1st february 2012 israel qatar...
TRANSCRIPT
Dr Marc Stephens
Marketing to the Arab world
1st February 2012
Israel
Qatar
Turkey
Saudi
Arabia
Iran
Algeria Egypt Libya
Syria Tunisia
Yemen
Lebanon
Bahrain
Jordan
Kuwait
UAE
Iraq
2 *Middle East and North Africa
2008-2009: consultant in financial sector 2010-11: started own training business
1987-91: worked in West Bank/Gaza
1981-84: lived in Abu Dhabi
1962-73: grew up in Kuwait
2007: worked in Jeddah on economic city
2
1 3
4 5
Over twenty years experience in the Middle East, including the Gulf, Levant and North Africa
3
Economic context
Getting started
Culture and values
Conclusions
Market research
0
40 80 60 0 20
Reliance on oil
UAE
20
40
80
60 Kuwait
Qatar
Saudi Arabia
Oman
Bahrain
Libya
Yemen Iran Syria
Egypt Morocco Tunisia
Lebanon
Jordan
Algeria
Per cap GDP: $30,000
Employment rate: 30-50%
Diversified
Large home population
Reliance on migrant labour
Oil has allowed Gulf countries to outsource the management and operation of large parts of its economy but at the cost of low employment for nationals
% of labour force
% of GDP
Source: IMF, World Bank, OpencCities www.opencities.co.uk
2 1
3 4
Per cap GDP (except Lebanon and Libya): $1000-3500
Employment (except Jordan, Libya): 55-65%
All others (except Lebanon, Libya):
Traditionalists
0
10
20
30
40
50
60
70
80
90
Egypt Jordan Morocco Tunisia Algeria Iran Bahrain Oman
%
* Source: The Road not Travelled – Education Reform in the Middle East and Africa, World Bank, February 2008
= % of labour force with secondary education or above
= % of unemployed with secondary education or above
www.opencities.co.uk
In the non-oil economies the problem is a surplus of graduates relative to what the economy can absorb
The Industrial Training Council in Egypt mounted a major campaign to encourage young people into work.
But internet chat rooms showed that university graduates were reluctant to take up job offers that they saw as ‘beneath them’.
Get up, get working, the train is : قوم و اشتغل قبل ما يفوتك القطر
leaving!
The increase in university graduates in larger, poorer countries has
raised expectations among young people that can be difficult to meet.
www.opencities.co.uk
7
Economic context
Getting started
Culture and values
Conclusions
Market research
8
Overall ranking (out of 181)
Best
Worst
*Libya does not participate Source: World Bank, Doing Business, 2009
The Gulf countries are the easiest countries in which to do business
9 *Earnings before interest, tax, depreciation and amortisation
Source: OpenCities
• Economic size
• Economic growth
• Size of specific sector
• Scale of reform
• Demand for foreign input
Size of market 1
• Logistical access
• Availability of key local counterparts
• Ease of establishing a business
• Language and culture
Ease of access 2
• Financial
- short term, long term
• Elements of EBITDA*
- earnings, costs, tax
Returns 3
• Number
• Quality
• Price
Degree of competition 4
• Economic
• Financial
• Legal
• Political
• Security
Risk 5
But businesses should look at a range of factors when deciding where in the Middle East to get started
10
Country Score Country type
Saudi Arabia
Kuwait
Oman
UAE*
Bahrain
Libya
Jordan
Qatar*
Iran
Egypt
C
C
C
C
C
C
A
C
B
A
8.8
8.3
6.7
6.7
6.5
6.3
6.3
6.3
6.2
5.9
Main conclusions
•Saudi Arabia and Kuwait are leaders in terms of market opportunity due to spend on education and lack of risk
•The Gulf as a whole is clearly a key market priority dominating the top of the table
•Libya offers real opportunity with low competition but requires local knowledge to identify and access
•Iran and Egypt offer opportunity but are highly bureaucratic and in Egypt’s case lack major resources
A = labour exporting; resource poor
B = labour exporting; resource rich
C = labour importing; resource rich Source: OpenCities, UK Trade and Investment
* Major spenders in the next 12 months
Example: for education Saudi Arabia and Kuwait offer some of the best prospects in the region, but Libya and Egypt can be interesting with the right introduction
11
Economic context
Getting started
Culture and values
Conclusions
Market research
January
February
March
April
May
June
July
August
September
October
November
December
January
February
March
2010
2010
Completed assignment as a financial sector consultant and started own business
First 3 staff arrived to help with set up; rented first house; first contract won; recruitment in UK
Second contract agreed; both to start in April; began discussions to start in largest bank
Two contracts started in a bank and a sovereign wealth fund; 2 more staff
Struggling to ensure quality cover at both clients
Lost one of first two clients due to poor performance. Big blow,. Started pilot in third bank
Rented second house; found a local partner
Preparation for largest bank in Libya
Started in largest bank in Libya in several cities including Misrata
More staff arrived; 3rd house; completed first contract; discussions on extension
Began in second sovereign wealth fund one hour outside of Tripoli
Started in insurance company but failed to win contract in Benghazi – luckiliy
Rented large office and took 4th house: mistake! Slow down in new business.
Revolution starts: scrambled to evacuate staff, close down houses and business
Picking up the pieces …
Diary of a start up in North Africa
!!!!
What prices are others charging?
What is the appropriate way to make business friends?
Who is the key person to talk to in my target customers?
How do I understand if the customer is really happy or not?
Who are my potential customers?
What products are other suppliers delivering?
What do local customers really need?
How many meetings should I expect before concluding an agreement?
How different are these people from us?
•Find a local partner •Make sure you choose the right partner •Get help choosing your partner!
For most businesses the most important decision will be the choice of a local business partner
How do I obtain a visa (tourist, business, work)
Can I rent accommodation in my name?
Is it a legal requirement to operate through an agent?
What are the taxes payable?
How do I repatriate profits?
Can I have my own bank account?
Do I have to register with police?
Difference between last date of entry and maximum stay
Can I travel where I like in the country?
Will I get relief for double taxation?
Sources of information
•UKTI •Local lawyer or accountant •Local agent •Local UK expatriate business club •UK nationals married to local nationals •Specialist trade partners
There are a number of technical questions that will require businesses to draw on a range of information sources
بداخل تدريس اللغة اإلنجليزية لرجال األعمال مكان العمل للمدراء و الموظفين
شركة ليبيا للتأميين
خاص وسري
16
Economic context
Getting started
Culture and values
Conclusions
Market research
… he’s got a safe pair of hands
straight off the bat …
he’s on a sticky wicket …
I hit him for six …
he bowled me a googly
I played a straight bat …
… she’s a sort of long stop
she was stumped
A word about language: a man from Mars could land in England and, by listening hard, quickly guess that this is a country that loves …
… cricket
… its good insurance in case you …
what’s the bottom line?
my aunt has a portfolio career
You need to build up your intellectual capital
Its time to invest in some gloves
Im indebted to her …
… hedge your bets
There is no accounting for taste
Have you got any leverage with him?
That player is a real asset in the team
she is a liability
Revising today will pay dividends tomorrow
His stock is high
You need to diversify
this is a linguistic import
He got it back with interest …
British English also uses many words from business and finance reflecting the central role of these activities in everyday life
0% 5% 10% 15% 20% 25%
Spirit
Agronomy
Body
Household
Economy
Elements
Arts
Science
War
Transport
Institutions
Games
Legacy
Arabic idioms also reflect a huge range of social, scientific, artistic influences with a concentration in the personal sphere and traditional economy
62% of idioms
•Arabic idioms reflect the relative importance of spiritual life and personal and local economic factors
•War, marine and other transport, law and administration, sport and non-Arab cultural influences are relatively weak influences
•Economic influences (ie the language of business and finance) represents less than 10% of cultural influence
British idioms reflect a relatively strong bias towards economic and legacy influences
0% 5% 10% 15% 20% 25%
Spirit
Agronomy
Body
Household
Economy
Elements
Arts
Science
War
Transport
Institutions
Games
Legacy
•British idioms reflect the dominant influence of business and finance on everyday life
•War, marine and other transport, law and administration, sport and British colonial legacy all play a major role in language
•Spirituality and the personal domain represent a proportionately smaller part of British culture
English
Arabic
Leadership and decision making
Staffing
Performance, pay and promotion
Investment in people
Legal compliance; audit culture; extreme hierarchy; no concept of productivity
Top heavy; male; patriarchal; duty to follow orders and not challenge
Recruitment is via social ties or first come first served;
•Static; egalitarian; pay and promotion based on tenure; limited sanctions
•Short hours
Learning stops with juniors; equal investment for all; seniors don’t need training
Value for tax-payers; customer service; on-going productivity improvements;
Delegated/organic, male and female, subject to challenge; flat structures;
Earned by merit, duty to challenge, fit to business needs
•Pay by value added; promotion based on fitness for position; sanctions
•Long hours
Investment based on return; lifelong
Accountability
•Perceptions of power
•Fear of mistakes
•Family obligations/ source of welfare
•Anti elitism
•No accountability
•Feedback seen as personal attack
•Social commitments
•No incentive to learn; pride and ego
•Team work unfamiliar
Dimension Traditional values Meritocracy Barriers to change
•No market discipline
•Service can be seen as debasing
Organizational culture in countries like Libya is based on social solidarity and vertical hierarchy and differs fundamentally from the values in market economies
Core Libyan culture is based on honor, piety and anti-colonialism
Globalization is forcing many changes to traditional culture
Resolution of these opposing forces is uncertain
•Pre-Islamic Mediterranean, nomadic and Berber culture are each important •Islamic piety shapes individual conscience and multiple social norms •Harsh experience of Ottomans and Italians shaped anti-imperialist values
•Images of western consumerism is fuelling appetite for goods •Competition from India and China is forcing firms to be more efficient •Exposure to western norms has increased demand for social/political freedoms
•Can Libyan society retain the best of existing social, economic and political arrangements while reforming and improving the worst? •Must the defense of existing political, social and economic status quo result in clash between repression and extremism? •Can Libya retain its anti-imperialist stance and integrate internationally?
Libya is/was a text book example of how traditional values are coming under pressure from globalization
Family and social solidarity are focus of traditional culture
Issue of rights and responsibilities in the family is contentious
Resolution of struggle within family will affect society
•Hierarchy of the extended family is core economic unit and main expression of individual self-worth •Seniority of males and older members is asserted within family (as in many businesses in West) •Traditional family structure protects its members but also punishes those who transgress its rules
•Many Libyan women are seeking greater equality, young people have higher expectations of freedom and independence, duties to remote family or clan members are diminishing •Traditionalists remain opposed to liberalization of the family citing social chaos and breakdown of social life as per the West •Struggles within family pit genders and generations against each other
•Women may have to choose between thwarted ambition if they don’t work and family conflict if they do •Changing expectations of young people leading to inter-generational conflict •Intra-family disputes are increasing as nuclear families turn inwards
The conflict between the traditional and the modern is taking place at the core of families
Government in Libya is an extended form of patriarchy
Public sector is also expression of revolutionary principles
Modernization of the public sector conflicts with existing values
•Leadership is exercised and passed on in ways that echo tribal governance •Support is ensured by rewarding and safeguarding family members of leader and their clients through access to key positions in public sector •Disagreement with or resistance to leader and his supporters is not tolerated
•Concept of peoples committees designed to prevent self-serving bureaucracy •Use of Arabic language in public places and banning of English in schools •Objectives include international solidarity not just efficiency
•Public sector reflects hierarchy and paternalism of Victorian family: values are social solidarity and hierarchy not meritocracy and empowerment •Government also uses the public sector as an instrument of social security •Western principles of recruitment, performance management, training, reward do not apply
The state is another forum for tensions between traditional and market concepts of governance
Core social values and politics undermine economic progress
But Libyans are conflicted about what to do
Can Libya retain best of social system while embracing innovation?
•Cultural values of social solidarity are antithetical to individual enterprise: rote learning and obedience trump innovation and creativity •Political control, corruption and ineffective administration weaken economy: education, health and knowledge economy are weak •Lack of efficient bureaucratic apparatus diminishes public sector reform efforts
•Market liberals demand social and economic liberalism •Traditionalists fear the disintegration of social order •Incumbent ruler has focused on eliminating the real threat: Islamic democrats demanding social and administrative rectitude
•Democracy not a pre-condition for economic progress, but leadership in wider interest and critical mass of competent administrators is price of successful reform •Western values not a pre-condition of economic success eg Asian model. Some evidence of Islamic work ethic developing •Different models of how Libya could develop: southern Europe, Asia, Africa.
Poor economic performance will not be tolerated any more than political dictatorship
26
Economic context
Getting started
Culture and values
Conclusions
Market research
•Oil has allowed Gulf countries to outsource the management and operation of large parts of its economy but at the cost of low employment for nationals
•In the non-oil economies the problem is a surplus of graduates relative to what the economy can absorb
•The Gulf countries are the easiest countries in which to do business
•But businesses should look at a range of factors when deciding where in the Middle East to get started
•For most businesses the most important decision will be the choice of a local business partner
•There are a number of technical questions that will require businesses to draw on a range of information sources
•Culture in countries like Libya is based on social solidarity and vertical hierarchy and differs fundamentally from the values in market economies
•But countries like Libya show how traditional values are coming under pressure from globalization
Conclusions
The region is diverse
Non-gulf is riskier but offers less competition
Hire an agent but draw on a range of information
The region is a complex mix of value systems
Thank you