By Mitchell Gadd
The ‘oasis’ of business opportunity in Qatar was outlined to Welsh exporters yesterday (May 15) who attended the latest leg of the UK Trade & Investment’s (UKTI) Export Week.
Jane Preston, an international trade and development consultant who has lived in the Middle East for 20 years, outlined the massive growth in the country, and how businesses can capitalise on that.
Just half the size of Wales and with two-thirds the population, Qatar is indeed experiencing massive growth. The country currently has the highest Gross Domestic Product in the world at US$173bn (2011) and highest per capital at US$98,900 (2012). But its growth is not just in economic terms. Since 2001 its population has increased 10-fold, largely due to the influx of foreign companies working on projects in the region (of its 1.9 million populace, only 300,000 are Qatari citizens, with many coming from India, Asia and, to a lesser extent, Europe).
A huge investor in the UK and exporter itself, Qatar has imports worth US$23.38bn, mainly from the United States, Italy and South Korea, with machinery, transport equipment, food and chemicals its main imports as it seeks to support large-scale infrastructure developments and its increase in population.
But the country is also going through a change in philosophy. Qatar’s 20-30 Vision outlines the adoption of a knowledge-based economy, characterised by research, development and innovation. In recognition of the finite lifespan of oil and gas, the country is seeking to diversify, looking at aligning its economy to sustainable development, renewable energies and promote a domestic capacity for innovation and entrepreneurship.
Its Emir, Sheikh Hamad bin Khalifa Al Thani, who was educated at Sandhurst, has placed great emphasis on sowing the seeds of a knowledge-based society, but maintaining a balance between traditionalists and those who are adapting to its philosophical change. “If you are going to do business in Qatar, you must bear in mind that there is a conflict between the traditionalists and those who want to move ahead very quickly – the progressive Qatari society,” said Preston.
The Emir is a “smart man… looking at the mistakes of Dubai” (as Preston put it) with a focus on sustainable development and by offering a carrot for companies to jump on board with its growth, but only under certain conditions. These conditions are outlined by the Foreign Investment Law no. 13, which pertains that investors can own 100% of a business based in Qatar and can benefit from ‘free zones’ (these are essentially designated areas where foreign companies can set up businesses, guaranteeing them a certain degree of autonomy over their enterprise and freeing them of red tape that exists outside the zones). However, this is only on the proviso that profits are repatriated back to Qatar.
For businesses looking to get a slice of the action, “preference is given to those who invest locally,” said Preston. “A lot of tenders will state you need to be in partnership with a national company.” It’s a way of the Emir keeping the local population happy. Another way of doing that is through the absence of taxes, and, although this also applies to foreigners, Preston warned that this indirectly takes place with high Visa and accommodation costs.
But the message is clear; the opportunity is massive. Not just in the traditional oil and gas markets, but across the emerging sectors and those in which the government is backing with huge investment.
Education and training presents massive opportunities with the county’s shift towards entrepreneurialism, and Preston was keen to outline a gap in the market for UK education providers to have the kind of influence that US education providers are currently enjoying.
Transportation is another area the government is massively investing in with the construction of a new Hamad International Airport and the huge expansion of Qatar Airways.
The new airport isn’t the only major construction project going on, though. Having won the bid to host the 2022 FIFA World Cup, Qatar is currently building five new sports stadiums. It is also building new education institutions (again, as part of its drive towards a knowledge-based society), while the Pearl-Qatar ‘island’ is still home to new projects.
The energy and utilities sector also provides an opportunity for those offering renewable energy and sustainable solutions, as well as storage services, to prosper. Indeed, Qatar aims for its new World Cup stadia to be the first that can be cooled by renewable energy.
Qatar also holds huge security and defense exhibitions annually, which provide a platform for overseas companies to showcase their credentials, while it is also investing heavily in developing media studios and support services in a bid to enhance its capabilities in the creative industries.
Preston was also keen to highlight the social and sporting interests of Qatar’s growing population. With a penchant for café culture, shopping, yachts and watersports, horse racing, shooting and fishing, businesses providing products or services to support that appetite could certainly do business in the country. But there were special mentions for the nation’s ‘fanatic’ interest in football (only set to grow with the World Cup coming in 2022), a love of cinema and cars – “Qataris will think nothing of having up to eight cars,” Preston exclaimed.
Preston also gave more general advice on doing market research. “All the gulf markets are highly competitive and are driven, so you need to really look at your USP and how you differentiate yourself from your competitors,” she said.
She also stressed the need to utilise trade missions as a route to market and a chance to meet potential partners and customers. “A visit to market is essential to get a feel for it,” she said, highlighting that the savings from not going out there will ultimately be spent on the mistakes made from not knowing your market.
There were warnings that, in the need to partner with an agent, distributor or licensee, make sure they are reputable (check their portfolio and seek legal advice) and also support your partner by keeping in regular contact with them and sending them materials. “Agents will work harder for the companies that kick them,” said Preston. “You can’t just go away and expect them to sell on your behalf, because they won’t. It really is a hand-in-hand relationship.”
Much of the focus of the day was on the real wealth in Qatar, as opposed to the financial “propping up” of Dubai by Abu Dhabi. It was clear that the huge GDP growth that the country is experiencing is opening up doors for exporters. But you also got the impression that Preston and Welsh Government advisors felt that, in experiencing this massive growth, Qatar has largely gone unnoticed in comparison to Dubai.
“Qatar has never had that focus like Dubai has,” said Huw Roberts, a Welsh Government senior business development manager for international trade.” There’s a really good opportunity for Welsh businesses.”