Dubai magic for dragon economy expats

Building Brics: China's small businesses are presenting a lucrative opportunity for the UAE's banks, who are cashing in on a need for loans and yuan-denominated corporate accounts.

Many small Chinese firms are based at Dragon Mart, a shopping emporium that houses about 4,000 Chinese businesses. Paulo Vecina / The National

Qun Zhao's first-floor office in Deira is stacked to the rafters with treadmills, massage chairs and barbells in boxes and plastic coverings.

Top Sky Land General Trading - a wholesaler of gym equipment with a yearly turnover of Dh20 million (US$5.4m) - is the kind of small business that operates with little fanfare but which has thrived in Dubai.

Such businesses are presenting lucrative opportunities for UAE banks, too. As more Chinese firms arrive, the opportunities for the banks that service them are growing rapidly, says Pritam Mirchandani, the head of business finance at RAKBank.

The number of Chinese businesses has grown from a handful of clients when RAKBank first began targeting small businesses, to about 10 per cent of the bank's portfolio.

"This is one of our best segments, [it] has grown very fast," says Mr Mirchandani. "Most businessmen would go to China and buy from there. We saw there was a large number of such customers and they had a need for banking solutions, so we set up a very small Chinese business centre with about four Chinese-speaking staff members."

Until Industrial and Commercial Bank of China (ICBC) established operations in Dubai in 2008, no Chinese banks had a presence in the Middle East. But since 2010, banks including HSBC, Standard Chartered and Mashreq have all targeted Chinese businesses with yuan- denominated accounts.

Ms Zhao set up the UAE arm of her family business with her husband in 2001, the first unit of the company outside mainland China.

But she says she and her husband faced an uphill battle in convincing retailers that goods manufactured in China were of equivalent quality to those produced by western brands.

It was not easy, requiring offers of free home delivery, one-year warranties and access to service technicians to change minds.

"After one year, they felt it was very good - Chinese quality they can trust," she says.

Often the problems were relatively minor, such as failing to plug in equipment or removing security tags. But the first few years of dealing assiduously with customer complaints quickly presented another challenge: the language barrier, given Dubai's many expatriate residents.

"If students have good language skills, they don't become technicians," she says.

But from small beginnings, the company has grown to a staff of 30, with customers including Sharaf DG and Carrefour.

In many cases, their purchases from Sky Land's factory in Zhejiang province, just south of Shanghai, were the first they had made directly from a Chinese company.

"We felt that Dubai was an international city, so it can connect quickly with north Africa and south Africa," she says. The emirate's ease of shipping goods was also an attractive quality."

And compared with the difficulty of doing business in Europe - as a result of the continent's economic quagmire and difficulties in gaining entry - Dubai is seen as a more welcoming business destination for companies from China.

Many small Chinese firms - including Sky Land - are based at Dragon Mart, a shopping emporium that houses about 4,000 Chinese businesses and which is in the midst of an expansion drive that will see it double in size.