Archive for the ‘Markets’ Category

Construction sector in Saudi Arabia this year:

• During the first eight months of 2011, domestic cement sales jumped by 28.6% compared to the corresponding period of 2010.

• Private sector imports of building materials financed through commercial banks (LCs settled and New LCs opened) increased y-o-y in August by 1.7% and 17.5%, respectively following annual increases of 39% and 15% in July. The growth in the new LCs opened indicates that imports of construction materials will continue its growth over the following months.

• The latest data published by Saudi Ports showed that discharges from construction materials increased 7.8% during the first seven months of 2011 compared with the same period in 2010.

Data from GulfBase.com

Donald Sull, professor of strategic and international management at the London Business School, write a nice little piece with some business cases:

Chinese appliance maker Haier Group discovered that customers in one rural province used its clothes washing machines to clean vegetables. Hearing this, a product manager spotted an opportunity. She had company engineers install wider drain pipes and coarser filters that wouldn’t clog with vegetable peels, and then added pictures of local produce and instructions on how to wash vegetables safely. This innovation, along with others including a washing machine designed to make goat’s-milk cheese, helped Haier win share in China’s rural provinces, while avoiding the cutthroat price wars that plagued the country’s appliance industry.

More examples in the full article (registration required).

The late C.K. Prahalad and his co-author Hrishi Bhattacharyya wrote an article on how companies can integrate three strategies — customization, competencies, and arbitrage — into a better form of organization since, in their view, many multinational business models are no longer relevant.

Excerpts:

During the high-growth years between 1992 and 2007, the globalization of commerce galloped at a faster pace than in any other period in history. Now, amid the chronic unemployment and anti-trade rhetoric of the post-financial-crisis world, some observers wonder whether globalization needs a time-out. However, the experience of multinational companies in the field suggests the opposite. For them, globalization isn’t happening rapidly enough. [...]

The problem is not globalization, but the way our current institutions are set up to respond to this new demand. The prevailing corporate operating model does not work well with the structural changes that have taken place in the global economy.

Most companies are still organized as they were when the market was largely concentrated in the triad of the old industrialized world: the U.S., Europe, and Japan. These structures lead companies to continue building their global strategies around the trade-offs and limits of the past — trade-offs and limits that are no longer accurate or relevant.

One of the most prevalent and pernicious of these perceived trade-offs is the one between centrally driven operating models and local responsiveness. In most companies, an implicit assumption is at play: If you want to gain the full benefits of economies of scale — and to integrate common values, quality standards, and brand identity in your company around the world — then you must centralize your intellectual power and innovation capability at home. You must bring all your products and services into line everywhere, and accept that you can’t fully adapt to the diverse needs and demands of customers in every emerging market.

Read the rest of this entry »

TradeFlow21 — AFGHANISTAN. The recent epochal events taking place in the Middle East and North Africa (collectively referred to as MENA), starting with Tunisia last December, have created a domino effect in the region.  The reverberation of this movement was felt by some of the most secure governments in the two regions, and one by one we have seen masses of repressed people follow the footsteps of the courageous youth of Tunisia.

Some have called this movement the “Arab Spring” or the “Arab Movement,” however, the “Arab Renaissance” is more befitting since for the first time in generations the overwhelming majority is willing to question the powers of authority.  Respective peoples are no longer willing to stand idle and take direction from one ruler or one family of rulers.  For so many years the gap between the have and have-not has grown in the two regions by leaps and bounds, thus making it more difficult, if not impossible, for the average person or family to grow and enjoy the financial security that only a handful have monopolized. Read the rest of this entry »

Excerpts from the World Bank new publication on MENA:

There are historic opportunities for greater openness and citizen participation in economies across the Middle East and North Africa (MENA) that, if strongly managed over the transitions ahead, could see a significant boost to economic growth and living standards in the medium term.
Read the rest of this entry »

An April web exclusive published by Vanity Fair (written by A.A. Gill), “Dubai on Empty,” depicts the emirate in a highly unfavorable light. To invoke the nasty vigor of Gill, it is highly distasteful and reeks as if there’s some unspoken vengeance. Bemoaning a “cautionary tale” of all encompassing greed in Dubai, Gill argues a doomed future for Dubai is a fait accompli. TradeFlow21 does not disagree that there are serious issues to be dealt with, but we urge readers to not be taken in by the bleeding headline and gushing story. As Gill says, “Dubai has been built very fast.” And that’s part of the problem. Too much has happened too fast. Similar to our experiences in China, TradeFlow21 recognizes what many in the Western world have long forgotten, that economic growth, especially the kind we’re witnessing in select economies, is a bumpy ride. Gill claims, “Dubai suffers from gigantism—a national inferiority complex that has to make everything bigger and biggest. This includes their financial crisis.” Are the Western bankers and executives not culpable for some of this hedonism and grandeur? Rather than slam an entire emirate (state), TradeFlow21 seeks to work in practical ways to bridge businesses, students, travelers, and all parties that can help make the world a better place now and for posterity.

Excerpts of an op-ed in the WSJ by Andrew Kohut, president of the Pew Research Center:

When Chinese President Hu Jintao visits Washington next week, he will be greeted by an American public that looks to Asia—rather than to Europe—as the region of the world most important to U.S. interests. This marks a major change from the 1990s, when Americans still considered Europe more important than Asia, even despite concern about Japan’s supposed ascendance. [...]

A new nationwide poll by the Pew Research Center finds Americans considering Asia more important by a 47% to 37% margin. In 1993, the balance of public opinion was the opposite: 50% considered Europe most important, 31% Asia. Questioned today about their interest in news from various countries, 34% of Americans say they are very interested in news from China, while far fewer say the same about France (6%), Germany (11%), Italy (11%) and even Great Britain (17%).

[...]

Americans are wary of China’s trading policies. While most welcome increased trade with Canada, Japan and European Union countries—as well as India, Brazil and Mexico—Americans are divided about trade with China. Forty-five percent see it as a good thing, 46% as a bad thing.

While there is alarm, there isn’t quite panic over China’s growing economic power. A Pew Global Attitudes survey last year found that although 47% of Americans consider China’s growing economic power a bad thing, larger numbers of Western Europeans see it that way. Read the rest of this entry »

The Dubai Exchange rallied 10.4 percent yesterday in the wake of a $10 billion credit line from Abu Dhabi, coagulating some of the recent hemorrhaging.  A portion of the funds will reportedly be used to meet a $4.1 billion bond payment owed by Nakheel–a real estate subsidiary of Dubai World.  Though seen as a positive step in restoring fiscal balance, the process, in the view of one market analyst, “is far from over.”  (See Financial Times coverage and also read TF21 Managing Partner Lew Nescott’s take on the viability of Dubai.) 

Hats off to Rothschild for its successful M&A advising in the Gulf; and it looks like the investment bank is far from finished. Rothschild recognizes Saudi Arabia (the Gulf’s largest economy and one that is poised for sustained solid growth) and Qatar (which is forecast to grow over 9% this year and a whopping 35%-plus next year thanks to an expansion of LNG capacity and exports) as the two places it most desires to grow its business. See clip from Reuters below.

clipped from www.reuters.com Rothschild busiest in Mideast M&A DUBAI (Reuters) – Rothschild ROT.UL has been the Middle East’s busiest advisor on mergers and acquisitions so far in 2009, data shows, underlining the growth potential for independent investment banks in the region. “Our strategy is long-term driven, our view remains that we expect this to be one of the fastest-growing regions,” said Michael Helou, co-head of investment banking in the Middle East for Rothschild. “The crisis didn’t change our plans, it’s been almost business as usual,” Helou said, adding that Qatar and Saudi Arabia are the regional markets where the investment bank sees more opportunities to expand its presence.