Noon expands into Asian markets as it sets up two offices in China

Noon, the US$1 billion e-commerce platform founded by Dubai businessman Mohamed Alabbar, is expanding into Asia, setting up two offices in China as it looks to broaden its offerings in the Middle East by including Chinese brands to its portfolio of products.

Noon has launched two commercial entities, one in mainland China and the other in Hong Kong, kick starting the venture's Asian operations, the company said in a statement on Thursday. The move aims to establish a network of Chinese brand owners, that will enable the company to sell Chinese products in broader markets across the region, it said.

“China’s booming e-commerce market has one of the most active marketplaces in the world. Noon is fully embracing the opportunity to work closely with leading Chinese manufacturers,” Mr Alabbar, said. “We’re also looking to partner with top brand owners and marketplace platforms to help us curate a wider and more diverse assortment of products for our customers.”

Noon’s move to China, the world’s second-largest economy, is significant as competition in the e-commerce space heats up across regional markets. International e-commerce giants such as Amazon have already established a foothold in the region and are improving their product offerings to woo tech-savvy Middle Eastern consumers.

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Kuwait's Alshaya invests in $1bn e-commerce platform Noon ahead of its launch

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The e-commerce market in the region is expected to be worth $48.6 billion by 2022, rising up from an estimated $26.9bn in 2018, BMI Research, a unit of Fitch Ratings said in a report earlier this year. Saudi Arabia and the UAE, the two largest economies in the Arab world, will remain the largest and fastest-growing e-commerce markets over the next three and a half years, according to the report.

A dedicated team with support from Chinese counterparts has already started work on the ground to meet with Chinese brands owners and sign partnership agreements. It is working with a financial services company to provide secure online money transfer and digital payment services to Chinese sellers. Noon plans to expand its logistics capabilities in China and the region to ensure fast delivery of Chinese brands to Middle East customers, it said without giving the details of how much it will invest in Chinese operations.

Noon will establish a permanent office in China to grow local partnerships, according to the company statement.

The e-commerce platform, is a joint venture project between Saudi Arabia's Public Investment Fund and a number of prominent Gulf investors led by Mr Alabbar, who is also the chairman of UAE’s biggest listed developer Emaar Properties. It is facing competition from souq.com, which was bought by Amazon last year in a deal worth $580 million.

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Company profile

Company: Zywa
Started: 2021
Founders: Nuha Hashem and Alok Kumar
Based: UAE
Industry: FinTech
Funding size: $3m
Company valuation: $30m

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Tips for job-seekers

Do not submit your application through the Easy Apply button on LinkedIn. Employers receive between 600 and 800 replies for each job advert on the platform. If you are the right fit for a job, connect to a relevant person in the company on LinkedIn and send them a direct message.
Make sure you are an exact fit for the job advertised. If you are an HR manager with five years’ experience in retail and the job requires a similar candidate with five years’ experience in consumer, you should apply. But if you have no experience in HR, do not apply for the job.

David Mackenzie, founder of recruitment agency Mackenzie Jones Middle East

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