Innovation overdrive

Great story in the Wall Street Journal last week: a former SAP exec, flush with $200m of venture capital backing, plans to overhaul the automotive business model. Why can't the car industry be more like the mobile phone industry, is the basic gist of his argument.

Shai Agassi has no experience of the auto market, but he does have a very clear goal: to change the way electric cars are sold. Car makers will sell the shell of a car (the handset), he will sell the battery and top-up power (the SIM card and call credit).

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Promises and lies

The difference between what a company promises, and what it actually delivers is known as the 'brand gap'. Here are some words of wisdom from Mark Stevens in Brand Week:

'Then there's clubby little Starbucks. The brand says, in effect, "Your home away from home. Your second living room. Your refuge from the rigors of the day."

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Speak, not strike

The UAE government says it will deport the workers rounded up after riots at a Jebel Ali labor camp. The Labor Ministry called the protests "uncivilized" (stones were thrown and police cars damaged) and that it won't tolerate illegal strike action.

The workers can't say they weren't warned. The authorities have always insisted on a zero tolerance approach to labor relations, and that they will listen to any legitimate complaints. It can point to progress on contract disputes, wage increases, working hours, accommodation, transport, and summertime breaks.

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Let them eat cake

The meddlesome Ministries are at it again. The UAE's Higher Committee for Consumer Protection, under the Ministry of Economy, is telling private business what they think constitutes a right and proper price rise. Water, rice, cement and fast food suppliers are affected.

The move is a response, reportedly, to a 30% price hike by Oasis water during the summer. Consumers complained and the Ministry felt it should act. Could they not have told consumers to buy another brand of water?

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Travel: good for business

In 1492 the Christian monarchs Ferdinand and Isabella won control of Spain, forcing the Moors to leave the Iberian peninsula after seven centuries of rule. Today, for UAE travelers wanting to get from Dubai to Madrid or Barcelona it must have seemed the Spanish were still holding a grudge. Despite the huge growth in Emirates and Etihad, and with Spain being one of Europe's busiest tourist destinations, it has been impossible to fly direct between the UAE and Spain.

That is set to change following a deal to allow the designated airlines of each country to operate unlimited weekly flights in each direction with any type of aircraft. The deal also includes cargo services.

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Swimming with sharks

There is research that gives you fresh insight, and there is research that confirms what you already know. A report this week from Zurich International Life which tells us expats in the Middle East are loathe to use financial advisors, is very much in the latter category.

While one in three expats say savings and investment is their number one priority, less than 10% turn to financial advisors for advice. Most prefer to take advice from family and friends, 38% work things out for themselves. Worryingly, just 2% of expat Arabs use financial advisors.

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Business lessons from comic books

A regular plot line in the comic book stories of Kipp's youth was the use of the 'congratulations, you're our one thousandth customer' device. The trick could be applied to pie shops, toy stores and football clubs, and the figure would change to suit the tale. The lucky customer would then be gifted a large cash sum/year's supply of pies, and be rescued from some terrible fate.

I say all this apropos of Air Arabia recently announcing it had carried it five millionth customer, a tidy figure given the airline has been running for only four years. The news was tucked away in a financial report, and while it would have made good reading for market analysts it seems to be a wasted marketing opportunity.

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Hit by inflation? Raise wages!

In 2005 public sector employees in Saudi Arabia were handed a blanket 15% increase in wages. The gift was not dependent on pay scale or performance; with the economy booming the Saudi government reckoned its huge number of civil servants, all Nationals, deserved a slice of the action.

Two years on and inflation in the Kingdom is running at a seven-year high. Rents in August were up a record 12.1%, with food product prices up 6.6%. Puzzled by this, the government has convened a special council to look at ways of tackling inflation. The panel has just recommended a pay rise for both private and public sector workers.

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Hare-brained 6-year cap on expats gathers pace

The Gulf states have possibly the highest reliance on foreign labor than any region on earth. It is estimated more than one third of the GCC population is made up of foreign workers. Every industry, from banking to media to construction to aviation is propped up by overseas talent.

The situation has led to much grumbling from GCC labor ministers. "In some areas of the Gulf, you can't tell whether you are in an Arab Muslim country or in an Asian district," Bahrain's Labor Minister Majeed Al Alawi told the media last month. He is now proposing a six-year limit on unskilled workers in the region, a proposal the UAE says it will support at next month's meeting of GCC labor ministers in Riyadh.

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Hare-brained 6-year cap on expats gathers pace

The Gulf states have possibly the highest reliance on foreign labor than any region on earth. It is estimated more than one third of the GCC population is made up of foreign workers. Every industry, from banking to media to construction to aviation is propped up by overseas talent.

The situation has led to much grumbling from GCC labor ministers. "In some areas of the Gulf, you can't tell whether you are in an Arab Muslim country or in an Asian district," Bahrain's Labor Minister Majeed Al Alawi told the media last month. He is now proposing a six-year limit on unskilled workers in the region, a proposal the UAE says it will support at next month's meeting of GCC labor ministers in Riyadh.

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Win-win as Emaar seals Bawadi land deal

Two months ago, having been forced to scrap a land-for-stock deal in Dubai, critics were suggesting the end of the Emaar gravy train. With Dubai property contributing 85% of the company's revenues, and new land increasingly hard (and expensive) to come by, there would be tough times ahead while Emaar waited for overseas projects to come good.

This morning, the picture looks a whole lot healthier. Emaar has agreed to invest just over $1bn in around 63 million sqft of land in the Bawadi, Dubailand, development. At a stroke the company will double its Dubai land portfolio and secures prime pitch in the one of the emirate's biggest projects. Among other things Bawadi is envisaged as the longest chain of luxury hotels in the world along a 10km stretch which will add 51 luxury hotels and more than 60,000 rooms to Dubai, plus the world's biggest shopping strip.

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Win-win as Emaar seals Bawadi land deal

Two months ago, having been forced to scrap a land-for-stock deal in Dubai, critics were suggesting the end of the Emaar gravy train. With Dubai property contributing 85% of the company's revenues, and new land increasingly hard (and expensive) to come by, there would be tough times ahead while Emaar waited for overseas projects to come good.

This morning, the picture looks a whole lot healthier. Emaar has agreed to invest just over $1bn in around 63 million sqft of land in the Bawadi, Dubailand, development. At a stroke the company will double its Dubai land portfolio and secures prime pitch in the one of the emirate's biggest projects. Among other things Bawadi is envisaged as the longest chain of luxury hotels in the world along a 10km stretch which will add 51 luxury hotels and more than 60,000 rooms to Dubai, plus the world's biggest shopping strip.

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High-brow sponsorship

Sport has traditionally been the logo-carrier for Dubai business. Emirates has led the way with football, cricket, Australian Rules and sailing, but it is not alone. Dubal (golf) and Dubai Duty Free (tennis) have used sport to broaden their message; Abu Dhabi’s Aldar has opted for Formula 1, and a deal with the Spyker team.

Now Dubai Properties, the master developer the Vision Tower and Executive Towers at Business Bay, Al Waha Villas and The Villa in Dubailand, has inked a deal with the London Philharmonic Orchestra to be its principal sponsor over the next three years. The deal will see the company’s brand displayed as LPO tours France, China, Austria, Australia, Denmark and Scotland, as well as ‘home’ concerts at the Royal Festival Hall in London and at least one performance at Dubai Properties' Culture Village when the project is completed in 2010.

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Fantasy mall planning

Dubai Mall, Mall of Arabia, Mall of the Emirates, Mercato, Bur Juman, Ibn Battuta…Dubai might be many things, but it will soon be mainly a city of malls.

The challenge for each of them is to create a point of difference while retaining a mass appeal. Ski slopes, IMAX, ice rinks, aquariums and restaurants help; exciting new retailers are the money.

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How to win Friends, influence people

No one can argue that social networking sites aren’t on marketers’ minds. As it turns out, the Facebook craze has spawned at least two Arabic-language imitators, both of them out for a piece of the nearly $1 billion that advertisers are likely to pour into social networking sites, globally, this year.

D1g.com launched six-months ago out of Amman, financed by a Jordanian entrepreneur with a startup capital of less than $1 million. The site is run by Majid Qasim, formerly of Arabia.com. Another new venture, Faye3.com, is the latest winner of the Queen Rania National Entrepreneurship Competition. The site was developed by Sohaib Thiab and Hussam Hammo, who have since partnered with Maktoob Group, an operator of e-commerce sites that hopes to enter the social networking realm.

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DRC and issue of valuing land grant

I was counting the beans of Dubai Refreshments Co. (DRC), the Pepsi and Aquafina bottler that is listed on Dubai Financial Markets (DFM). The company’s financial statement for 2005 was published on DFM’s web site in January 2007. Auditors’ opinion was from PriceWaterhouseCoopers, Dubai. However, item 5 of the Notes on Accounts is worth a review.

Under the schedule of Property, Plant and Equipment, the Notes disclose "Factory buildings have been erected on land provided free of charge by H.H. The Ruler of Dubai."

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What Modesh did next

After seven years as the mascot/face/cartoon embodiment of Dubai Summer Surprises, Dubai Shopping Festival says Modesh will now become a year-round feature. DSF describes the yellow worm/spring as ‘the Mickey Mouse of Dubai’.

There has been talk for a number of years of how to extend the Modesh brand. DSF’s announcement seems more centered on having Modesh merchandise available year round. A theme park and animated TV cartoon series have been mentioned; as yet there are no firm plans. Both would make sense. Modesh has already taken to road on Gulf meet-and-greets, a TV series, made out of media central Dubai, would extend the reach. And a theme park, not necessarily on the scale of Disney World, would be a sensible next step for the already popular Modesh Fun City.

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Apple: winning friends, influencing people

As Apple has fans, it also has its detractors. Last week’s $200 price cut on the price of the 8MB iPhone (from $599 at launch two months ago, to $399 today) was seen by critics as a cynical gouging of early adopters. Price reductions on new technology are commonplace, but usually phase in after a year, six months at worst. ‘Taxing’ the first wave of buyers could undermine the brand’s fan base, sniped analysts.

That doesn’t seem to be being born out, judging from bloggers’ responses. ‘The wages of early adoption,’ is how one buyer explained it. They understand prices fall, and were well aware they were paying top dollar for getting an iPhone on day one, what they don’t appreciate is Apple’s high-handed attitude towards the cut. After receiving hundreds of emails complaining about the cut, Apple CEO Steve Jobs has since apologized and offered $100 credit vouchers for anyone who bought the phone in the past two weeks.

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Aramex on the green offensive

Logistics provider Aramex says it is to buy 10 hybrid electric cars by 2009 and will earn two per cent of its revenue from 'green services'. Critics will point out, with 33,000 vehicles in its fleet, such investment is small fry – and can someone please define ‘green services’.

The critics should lay off. As a stock market listed company Aramex is courting danger if it commits to too many strident new targets. Granted, 10 hybrid electric cars seems not much more than a gesture, but real cars are lot more tangible than promises to cut fuel consumption by 20 per cent, carbon dioxide emissions by 50 per cent, and leaded gas consumption by 100 per cent. All of which Aramex says it will commit to. It aims to be the world’s first carbon neutral global logistics operator.

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Poor public spending is a worse crime than direct taxation

Drip by drip the subject of direct taxation on income is being raised by Gulf states. Kuwait is the latest to crack. Its ruler used a local Arabic newspaper last week to point out the high cost of public services will eventually be met by a tax on personal income. Bahrain started a 1 per cent levy in June, the funds going directly to tackle unemployment.

Income tax, said Emir Sheikh Sabah Al-Ahmad Al-Jaber Al Sabah, was not a new concept concept and that it was the state’s right in return for services “but is also a contribution from the citizen to state development”. Oil is running out, the welfare burden is too great and diversifying the economy costs money. Direct taxation is a must, say economists.

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King Canute and the Saudi weekend

Don’t expect a Saturday afternoon spent watching the football in Riyadh any time soon. As Kuwait becomes the latest Gulf state to switch to a more business-friendly Friday/Saturday weekend, Saudi officials again dismiss the idea of a change. As the rest of the world relaxes, Saudis will continue to take Saturday as a work day.

“The proposal for changing the weekend is unacceptable in a country that is ruled by the Qur’an and Sunnah and takes them as its constitution.” So says Saudi Arabia’s Shoura Council deputy chairman Mahmoud Taiba. He also says the economic arguments for switching to a Fri/Sat weekend were baseless.

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Two tales of one city

This year’s Jeddah tourism festival bagged a total revenue of SR3 billion, according to Saleh Al-Turki, chairman of Jeddah Chamber of Commerce and Industry. About 135 private companies took part in the 45-day event, and hotels and furnished apartments in the city enjoyed 100 percent occupancy during the festival. Arab News says the city needs another 12,000 rooms to meet demand.

Elsewhere in the city, café workers claim they having to pay off a succession of municipality inspectors to stay in business. “If I don’t pay them off, the shop is closed and I end up paying a massive fine — much more than the actual bribe itself,” says one. Arab News has a lovely story featuring a shrimp sandwich and a yellowish cockroach.

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Dubai doesn’t need to be all things to all people

Private developers have warned they may not be able to build low-cost housing unless the Dubai government facilitates cheaper land. With land prices rocketing the best returns are on office blocks, hotels or top-end villas. According to property services company Asteco, at Dubai Waterfront near Palm Jebel Ali, land valued at Dh90 per square feet in 2005 surged to Dh210 per square foot this year - a 130 per cent increase in just two years.

As Dubai steps up its Urban Development Framework (an Australian company was this week appointed to head up the consortium to plan the project) the onus is on the to build a ‘sustainable city’ for 2020 and beyond. Low-cost housing (or the ability to attract and satisfy low income workers) is seen as a vital part of the plan.

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Sharjah’s Phoenix opportunity

Sharjah’s main cargo port has officially re-opened following the biggest oil terminal fire the emirate has ever seen. Friday’s late night blaze had forced the closure of the port for around seven hours on Saturday, with the fire engulfing two oil reservoirs as well as hundreds of barrels of oil products. Eyewitnesses said the flames reached a height of 200 meters.

While the fire and resulting upheaval cannot be said to be good business, there is a long term opportunity for the managers of Port Khalid to get the business ahead of the game. Taking a positive spin, they might want to point out the speed in which the blaze was brought under control, and the low casualty rates. Just three people were treated fro smoke inhalation, none were serious.

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Borse Dubai: Rich, unloved

The Financial Times reports that Magnus Böcker, chief executive of OMX, has expressed deep misgivings about a possible takeover bid by Borse Dubai. And that was after he met senior executives from the Dubai exchange.

His main gripe is concerns about the transparency and regulation of a market owned by just one shareholder and feared this could undermine OMX's credibility. Despite tabling $4bn bid, higher than rivals Nasdaq, the Dubai is struggling to find favor.

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The devil in the discount

The first five weeks of this year’s DSS have generated $74m in revenues. Visitor numbers are up and the organizers expect a record outcome for all involved.

All of which is excellent news. Maintaining forward momentum for a 10-year-old product in a city as changeable as Dubai is no mean feat. The organizers have to contend with the twin threats of local ambivalence and international competition. The figures seem expected; they’re not, every penny and visitor could have gone elsewhere this summer.

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Veiled opportunity

Arabian Business this morning picks up a story from Reuters on the difficulties faced by niqab-wearing women job seekers in the Gulf. It says applicants are regularly rejected from customer-facing positions, and highlights the retail and banking sectors.

"No one takes women with niqab in the retail sector," says 22-year-old Aysha Obeid, a UAE national, who unsuccessfully applied for jobs at two retail outlets. She is now looking for back office administrative jobs where she believes she may have more chance of being employed.

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Learning to fly

Emirates customers can now select and secure their preferred seats on their flights at the time of booking, when they purchase their tickets online. The service, previously available only to First and Business travelers, is now open to all. This should mean fewer queues, less stress at check-in and a more engaging process for customers. It is also a reward for planning ahead.

The move is in step with other leading carriers. “Travelers increasingly demand the convenience of organizing their itineraries via the Internet,” says Ghaith al Ghaith, Emirates Executive Vice President for Commercial Operations Worldwide.

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Barclays shy of Gulf investors

Barclays interminable pursuit of ABN Amro rumbles on. Today, media reports say the Dutch bank has taken a neutral stance on Barlays bid, recommending neither Barclays nor rivals RBS.

The chase was enlivened last week with news that Barclays had turned to Chinese and Singapore investors for help. China State Development Bank and Singapore's Temasek Holdings agreed to provide up to $18.76 billion to juice a new, $93.1 billion counter-offer composed of 37% cash. The deal will see the China Development Bank take a 3.1% stake in Barclays, with Singaporean investment fund Temasek taking 2.1%; both will take a greater slice should the deal go through.

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From first to third

For a time it had all looked so promising. With the FIA concerned about maximizing the viewing figures for the opening race of the F1 season, and the incumbent Melbourne GP unable to push back its start time, Bahrain was suddenly slated to take pole. With Abu Dhabi joining the calendar in 2009 the odds had looked good for a two-week swing through the Gulf next year. Extra publicity, more time with the teams, better marketing opportunities.

A week on and it has all fallen in a heap. Melbourne will continue as race one, Malaysia is at two, Bahrain at three. It is no disaster but, if no one even remembers who came second, third really is anonymous.

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