UAE companies going global
Over the past two decades, the UAE has grown from a rapidly developing oil-exporting country into one of the region’s economic powerhouses.
Aware of the finite nature of its oil reserves, the country has refocused its economic policy on diversifying away from oil-dependence – aided by political stability and progressive laws and regulations.
But as players on the global stage, most of the country’s companies still have a way to go. This week, the International Finance Corporation, an investment arm of the World Bank, said the Middle East and North Africa region accounts for only 2 per cent of global non-oil exports.
The two airlines fly the flag in cities around the world, their names appear on the shirts of top football clubs from the French club Paris Saint-Germain to the Abu Dhabi-owned English Premier League champions Manchester City; Bollywood stars appear in their adverts and they are adept at portraying refined style – the romance of travel – that has disappeared from many other airlines. They are strangers nowhere.
It is a similar situation with EGA. This joint venture, owned by Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, and Dubai Investment Corporation, was born after the merger of primary aluminium producers Dubal and Emal, which completed last month. The result is an aluminium superpower, one which expects to produce 2.4 million tonnes of aluminium a year – half the GCC’s output – once an expansion of its smelter in Khalifa Industrial Zone Abu Dhabi is complete. EGA says this will also take its value up to Dh55bn and make it the fifth-largest aluminium company in the world.
In 2012, Dubal sold 1,052,419 semi-finished aluminium casting products to clients in more than 57 countries, spread across Europe, North America and the Middle East. Meanwhile, Emal produces 800,000 tonnes of aluminium a year, supplying to 150 international customers – with its so-called sow and standard ingots traded on the London Metal Exchange.
EGA expects to expand this joint customer base and sell its product to more than 440 customers in 55 countries.
“We will continue to build on a successful track record, with global expansion of our operations and further development of the aluminium cluster in the UAE, supporting an estimated 33,000 jobs by the end of the decade,” says Abdulla Kalban, the chief executive and managing director of EGA.
So who will join them at the wold table? Here, The National highlights some of this country’s potential emerging businesses that are not yet world-leaders but are striding towards a coveted role on the global stage of business.
While Emaar and Nakheel made names for themselves in the 2000s, today there are some new kids on the block. Most notably, the property developer Arabtec has had a busy start to the year. This month the company announced a 121 per cent leap in first-quarter profits to Dh138 million. It was also awarded Dh26.6 billion worth of contracts in the first quarter of this year, 28 per cent more than the same period in 2013.
Its joint venture with Samsung Engineering, one of South Korea’s largest engineering companies, gives Arabtec better buying power and represents its international approach to business and diversification. The company has also partnered GS Engineering & Construction, another South Korean company, to build heavy infrastructure in the Middle East and Africa – including more than Dh2 trillion worth in the GCC alone.
The total value of Arabtec’s projects at the end of March was Dh215bn, including Dh26.2bn worth of projects still in progress worldwide, the company says.
It has branches in the UAE, Russia, Saudi Arabia and Syria and has announced plans to open an office in Baghdad, Iraq, and another in Belgrade, Serbia, as launchpads for further international expansion.
Last year, Arabtec won a Dh720m contract to build the St Regis Amman and the Residences at the St Regis Amman in Jordan, alongside a Dh5.7bn contract to build the country’s first themed entertainment resort – the Sea Astrarium in Aqaba. It has also recently won the contract to build a Dh4bn Abu Dhabi Plaza in Kazakhstan and a Dh147.6bn project to build 1 million affordable houses in Egypt.
It is also building Europe’s tallest tower, a 400 metre building in St Petersburg that will eventually house the headquarters of Gazprom Neft, the oil arm of Russia’s national gas company.
Hasan Ismaik, Arabtec’s chief executive and biggest single shareholder, predicts the company will have grown from a medium-scale regional player to a global leader in specialised segments of the construction industry within four years.
Although, according to the website ENR.com, Arabtec was ranked 187th among 250 contractors by revenue globally in 2012, Mr Ismaik says he hopes it will be among the top 50 to 70 companies this year and the top 10 by 2018, through mergers and acquisitions.
Just Falafel: food
While the UAE is hardly short on restaurant and fast-food franchises from all corners of the globe, it is rare for the country to export franchises of its own abroad. However, one restaurant, which began with a single branch on Abu Dhabi’s Hamdan Street in 2007, is doing just that.
In the past seven years, Just Falafel has grown into a global brand, with 56 restaurants operating in 18 different territories and rising. Aside from its 18 outlets in this country, the restaurant also has franchises in the United States, the United Kingdom, Australia, Canada, Turkey, Egypt, Lebanon, Jordan and across the Arabian Gulf. The company also has over 900 further development agreements in the works.
“From the outset the whole merit was that this is a food category that has been neglected and not represented in the retail environments of our modern times,” says Fadi Malas, the chief executive of Just Falafel. “And it is as much the national food of Egypt as sushi is the national food of Japan.”
He says the company owes its success to franchising to the internet.
“March 2011 was really the beginning of the digital media revolution, so we primarily focused on communicating our brand and our franchising opportunities, and educating people about this food category through digital media – primarily Facebook.
“If you compare us to other leaders in other food categories, they operate 40,000 or 50,000 stores, whereas for us its 55 stores. We’re looking to double in the next six to 12 months at least,” Mr Malas says.
“Although we’re growing very fast, we’re still very far from saturation.”
He says few other local restaurant brands have expanded internationally but he sees more doing so in the future. “Because, if you come up with a food category that complements the competition, it’s not just another burger or pizza or subway, then you’re really giving a new mix to the consumer choice.”
Coffee Planet: beverages
Between 2007 and 2012, this country’s coffee sector grew to be worth Dh448m, driven predominantly by international chains, according to Elizabeth Friend, an analyst Euromonitor International.
However, one brand attempting to stem the influx of foreign franchises and export a local one is Coffee Planet – a coffee roaster that supplies 175 petrol stations across the UAE. Coffee Planet machines serve up to 10,000 to 20,000 cups of coffee every day in petrol stations – which accounts for about half its sales. It has also franchised into nine other markets, including Oman, Malaysia and Pakistan.
The Dubai-based company recently partnered the Dutch Jumbo supermarket chain to sell supply coffee across 350 outlets and it says there is also interest in Germany and Belgium in bringing the brand there.
If they can make coffee here, they can make it anywhere. “We’ve brought the elements of quality, convenience and speed together,” says Robert Jones, the managing director.
“A lot of people in this country are in a rush, everybody is late and everybody expects good quality.”
Emirates Aquatech: fisheries
Abu Dhabi’s first caviar farm has the capacity to become the largest in the world, its co-founder believes. Its sturgeon and signature Yasa-brand caviar hit the shelves for the first time this month at Abu Dhabi’s the Market in Mushrif Mall.
The 56,000 square metre farm has the capacity to produce 35 tonnes of caviar and 700 tonnes of sturgeon meat a year, it says.
To reinforce its global presence, Emirates Aquatech gave exclusive marketing rights to Garamond International, a caviar company with offices in Barcelona and Abu Dhabi. This will help the company establish new customers once its production is surplus to UAE demand, it says. Eventually, Emirates Aquatech expects to meet 10 per cent of the world’s demand for Caspian caviar. The company spent years preparing for the launch; training staff, purchasing sturgeon and eggs from Europe and building a modern factory.
Ahmed Al Dhaheri, the co-founder and managing director at Emirates Aquatech says nothing will go to waste, allowing for a diverse range of products.
“This is where the environmental aspect of the project comes in. The skin can be produced in very different varieties of leather goods and the bones, the head, the tail can go into by-products as well.”
Strata Manufacturing, a subsidiary of Mubadala Aerospace’s communications technology and defence services, manufactures composite aerostructures – plane parts. Strata is based in Al Ain and about 35 per cent of its workforce is Emirati – a figure it hopes will rise to 50 per cent by next year. Of these employees, 85 per cent are women – defying a stereotype that Emirati women are uninterested in technical careers.
The company, founded in 2010, counts France-based Airbus as one of its key clients, as well as the Italian aerospace company Alenia Aeronautica and the Austrian company FACC. Strata expects to break even next year – boosted, it hopes, by more contracts to supply A380 parts. Strata hopes to sell 2,610 planes worth Dh2tn in the Middle East over the next 20 years – with 70 per cent of those planes meeting growth requirements. Internationally, up to 60 per cent of new aircraft will be for fleet replacement, it says.
Last November, the company signed contracts to supply Dh18.4bn worth of parts for the Boeing 787 Dreamliner and 777X.
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Published: May 29, 2014 04:00 AM