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Posted on 30 December 2010 by Ceris Burns
You may have mentally deleted Dubai from your export wish list, but not so fast… Other Gulf States are making massive investments and will soon be crying out for cleaning services and products to meet demand. The shrewd exporter might do well to revisit the Middle East with a fresh pair of eyes and consider if he can take advantage of the opportunities out there . Ceris Burns, speaks with Mick Dalton past chairman of BIFM and managing director of Saudi based Musanadah Facilities Management about the outlook for British companies to export cleaning products and services to the Middle East.
Dubai in demise
Let’s face it, who really thought Dubai could carry on the way it was going? Isn’t it the norm that burgeoning resorts hit financial trouble at some point along the way? Boom is usually followed by bust. Dubai just did too much too quickly and developments have a habit of outpacing demand as developers become overoptimistic.
Despite this I would wager that the situation isn’t quite as bad as it seems and some exporters already out there positioning themselves as early entrants, would appear to agree. Dubai will be back, it’s just a matter of time, meanwhile the other Gulf Cooperation Council (GCC) states are forging ahead as Mick Dalton confirms.
I have had numerous conversations with British exporters who tell me that the Middle East is off their radar for the time being. What is the reality of the market opportunity out there?
The FM market in the wider GCC is currently worth US$ 4.2bn and is forecast to reach a value of US$ 9.75bn by 2014. The biggest pockets of growth are in Abu Dhabi, Qatar and Saudi Arabia followed by Egypt, Kuwait, Oman and Jordan. Dubai is quiet but it will be back so it would be prudent for companies to get a foothold in the wider GCC now.
Which countries offer the best opportunities?
Qatar and Saudi Arabia are at the top of the league with Egypt and Jordan closely behind. Dubai was the first off the block in development terms but other Middle Eastern countries can offer the same level of opportunity, they have just been taking their time.
Qatar is number two in the world of gas supply and as a result has no shortage of government funds to fuel growth. Wealth in Saudi Arabia has come from the oil industry and again significant funds are available. To give you an idea of the scale of current developments, in Saudi, US$ 330bn has been invested into new construction contracts over the last 3 months alone.
I believe that there are massive opportunities out here for cleaning and FM companies. Within the next three years these new construction projects will come to fruition and with just three international FM companies here at the moment, who will supply the demand for cleaning and FM? UK companies should be making a move now or they will miss the boat just as they did with Dubai. The big UK companies came out to Dubai when it was too late. The Arabs had already spotted the opportunity – they set up FM companies and flooded the market. In reality however the Arab companies do not provide a high quality cleaning service.
Which countries are easiest to trade with?
On a scale of 1-10 where 10 is the easiest, Dubai would score 10, Qatar 6 and Saudi 4. In both Saudi and Qatar employment is not without its challenges. You can’t employ staff until they have signed a contract and it is impossible for them to get a VISA without having a contract in place. Both countries also require a company to employ a certain number of locals. For this reason I would advise that the easiest way to set up over here is to do a joint venture. In this way your partner already has this point covered.
I understand that it can take ages to receive payment?
In Dubai and Abu Dhabi payment can take from between 6 months and a year. This doesn’t mean that you will then receive the full amount – after this period customers will negotiate what proportion of the payment to release and when to pay this to you. This approach is typical in the real estate market. Qatar is not quite so protracted with respect to payment whereas in Saudi it varies – property developers are typically bad payers while the government is pretty good.
Which cleaning products and services are in most demand?
There is certainly a requirement for professional cleaning and FM companies to move in. With respect to products, innovations taken for granted in Europe are desperately needed here. Robots for window cleaning, long range telescopic cleaning tools, the latest vacuum cleaners, ride on cleaning machines, specialist enzyme based cleaning products and chemicals, marble and metal cleaning products, colour coded products, micro fibre mops and more.
What are the biggest differences between the cleaning industry in the Middle East and the UK?
Salaries are much lower. In the UK there is a minimum wage whereas in the Middle East I can employ a cleaner for 1,000 AED Dirham per month (£170). Culturally it is very different, staff don’t understand the Western culture and many don’t understand English. Productivity is slower and poorer. Customers also expect a greater level of service but they are not prepared to pay more for this. Looking at the positives, cleaning is king just as it was in the UK back in the 70’s. The most important thing to most customers is that their building looks spotlessly clean.
What tips would you give to British companies considering setting up in the Middle East?
Firstly you should look for a good JV local partner. Set up camp, bring in staff but don’t just look locally – consider looking further afield, Thailand for example. Use your local connections to make it work and don’t expect to achieve a return on your investment in the first 18 months. There is a good support network available out here for cleaning and FM companies. The International Facilities Management Association (IFMA) is active in the Middle East and there is also an FM group on Linked in which is doing pretty well. In addition you will find MEFMA the Middle East Facility Management Association.
What are the most effective ways of marketing in the Middle East?
Don’t go knocking on doors as it doesn’t work out here. The Arabs use the word ‘Wasta’ which means network. Networking is key to marketing in the Middle East. It is very much about making use of local relationships and networks and helping each other. PR can also be effective – being seen at conferences, gaining valuable editorial coverage, winning awards etcetera.
To discuss how your company could take advantage of opportunities in the Middle East email Ceris at firstname.lastname@example.org
As published in C&M magazine November 2010.