Page 296 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

278 Dubai & Co.

As more companies have placed regional head offices in Dubai,
the country’s commercial vibrancy and importance has increased.
Each firm that sets up in Dubai makes being there all the more
valuable for any other firm that wishes to do business with them.
A similar phenomenon occurs within expatriate communities: as the
expatriate base grows, more expatriates become comfortable migrat-
ing as well. These positive “network effects” have helped Dubai
build and maintain its lead as a hub despite the increasingly compet-
itive efforts of other GCC states to attract multinational firms.
Despite its strong appeal to many multinationals—and, ironi-
cally, somewhat because of its mass appeal—Dubai does have
meaningful drawbacks as a location for a regional head office. One
drawback is cost—the cost of doing business in Dubai is increasing
rapidly as more firms compete for space (office, residential, and
hotel), staff, and other business inputs. Firms can capture significant
cost savings in the nearby emirates of Sharjah and Ras al-Khaimah,
and even in the UAE capital Abu Dhabi. A second drawback is con-
gestion and traffic: rush-hour traffic in Dubai can be unbearable and
many workers commute for an hour or more each way. Wider roads
and public transportation are on the way, but the construction phase
itself makes getting around the city quite difficult. Some profession-
als strongly prefer Abu Dhabi as more “livable,” manageable, and
traditional. Even expatriates from socially permissive countries are
at times put off by the “party” culture in certain areas and the flashy
tourist attractions that some liken to Las Vegas.
An additional risk of being based in Dubai, especially if the
firm has no other offices in the GCC region, is that of losing touch
with typical Gulf consumers. Remember, Dubai’s population is
overwhelmingly expatriate, and the city’s social norms differ signif-
icantly from those of the rest of the Gulf states. Firms whose cus-
tomer base is largely outside of Dubai, and who benefit from being
close to typical or everyday consumers, need a strong presence
away from Dubai to remain grounded in the market.

SAUDI PRESENCE: ESSENTIAL FOR
CONSUMER GOODS
Saudi Arabia is, without a doubt, the core consumer market of the
GCC. The Saudi population is two-thirds of the Gulf total and yet