Page 270 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

252 Dubai & Co.

Tianjin, India, Germany, Australia, Latin America, and even
18
Vancouver. Its capacity is in excess of 50 million TEU. DPW’s expe-
rience on the global stage provides many lessons and may set a trend
for other Gulf-based businesses looking to expand. A first lesson is
how DPW’s success is founded on genuine competitive advantage
and superior skill in an area of relevance (port management) beyond
the Gulf market. Second, DPW began its expansion organically and in
nearby ports such as Jeddah and Djibouti: testing grounds that were
safe and natural extensions of its home market. Only after this more
modest expansion did the firm seek acquisition-driven entry to the
Far East, Western Europe, and the Americas. Third, DPW’s political
struggle in the United States illustrates how GCC-based firms need to
tread carefully when acquiring American assets and how the United
States needs a more nuanced understanding of the Gulf and busi-
nesses therein. Nobody likes debacles.
While Dubai has clearly taken the lead among GCC ports,
other countries are building their shipping and transportation
capabilities to compete for international traffic. Abu Dhabi’s Port
Zayed has larger covered and open storage facilities than Dubai’s
19
ports do, although its throughput is far lower. Port Zayed’s loca-
tion is also farther from the Strait of Hormuz, making it less conven-
ient for most major routes. And while Abu Dhabi has invested
heavily in its port information technology, Dubai enjoys a longer
reputation in the market for innovation and world-class systems.
Dubai’s Logistics City, which provides access to value-adding serv-
ices such as light assembly and connections between sea and air
links, is another facility the emirate uses to position itself as the
UAE’s premier shipping location. 20
Saudi Arabia, as part of its massive, $27 billion King Abdullah
Economic City project, plans to build the world’s tenth-largest sea-
port. SAGIA, the Saudi Arabian General Investment Authority, has
estimated that the country needs $100 billion worth of investment
in ports, highways, and rail transportation in the coming years. 21
Large-scale and well-managed ports in Saudi Arabia could pose a
serious competitive challenge to Dubai, as Saudi Arabia’s national
market is many times larger and therefore domestic (i.e., not for
reexport) volume would be much higher. If Saudi Arabia could also
serve as a viable relay point for goods to the broader region, its
proposition would be bolstered significantly.