Page 172 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

156 Dubai & Co.

print. Protection of intellectual property rights is also to be
strengthened.
As deregulation takes root, international firms will be able to
enter the GCC markets more directly than ever before. One poten-
tial effect could be that multinationals that thus far have been
averse to joint ventures due to a global practice of company-owned
outlets will now enter these markets. Wal-Mart, Target, and the
Home Depot, for example, might consider the GCC nations viable
markets once they are able to have majority control of their stores in
the region and can implement their sophisticated distribution and
inventory-control systems. Global firms could also start making
acquisitions of local firms in order to access the market more
quickly and aggressively. As many family-owned conglomerates
will be looking to sell businesses that are underperforming or out-
side their core competency, multinationals are apt to find attractive
acquisition targets if they look for them carefully. Increased atten-
tion to the region by global investment banks will help multination-
als identify acquisition opportunities more easily.
Another and potentially farther-reaching implication of dereg-
ulation could be its impact on the relationships between multina-
tional firms and their local distributors or agents. Being able (at
least in theory) to enter the market themselves allows multination-
als to push their distributors and agents to perform better. Simply
providing market access through one’s regulatory status will have
no value, and local firms will need to position themselves as truly
value-adding partners. This change, while possibly making some
local firms uncomfortable, will likely raise everyone’s level of per-
formance and ultimately benefit GCC consumers.
The creation of free zones—pioneered by Dubai and the UAE
and now present in other GCC countries—has had a deep impact
on the viability of high-engagement market-entry strategies. In free
zones, international firms are able to fully own their businesses and
can repatriate all profits to the home office, often tax-free (though
profits may ultimately be taxed in the home country). Besides the
benefit of full equity ownership, free zones typically provide a full
suite of support services, including office space, telecom infrastruc-
ture, meeting areas, and even on-site support for visas and other