Friday, June 28, 2013

The Land of Bedouins lures Indian brands

Although the GCC region is fast becoming a haven for Indian marketers, there is still a long way to go before the Indian brands can reach a pinnacle and be ‘the’ preferred choice for Westerners and Arabs.

Zipping down Sheikh Zayed Road, one of UAE’s busiest, biggest motorways, with six lanes in each direction, I have always felt that life here is always on the fast lane. It’s the same feeling you get when you land at the Dubai International Airport in Garhoud for the first time. It is the place where tens of thousands of individuals of different nationalities mingle every day. It is also the place of luxurious serenity. As you step into the airport, the magnificence and the opulence around you can’t be ignored. With large duty-free shops and food courts, the wealth of amenities and services on offer, the Dubai International Airport is the pinnacle of luxury, reflecting the true warmth and generosity of Arabian hospitality.

The Dubai international Airport has recently overtaken Paris Charles de Gaulle and Hong Kong International Airport to become the world’s second busiest airport for international passenger traffic. This is as per the figures released by Airports Council International (ACI). At 4.8 million in February 2013, the Dubai International Airport is just behind London Heathrow, which recorded 5.6 million passengers in the same period. Charles de Gaulle Airport, meanwhile, recorded 4.7 million passengers. "It is extremely gratifying to see Dubai International leap up two places in the international passenger rankings in a single year. It is a clear signal that more people are choosing Dubai as their preferred hub not only for its extensive global network but the facilities on the ground too," Paul Griffiths, Chief Executive, Dubai Airports, said in a statement. Interestingly, just five years back, in 2008, Dubai International Airport ranked 20th in international passenger traffic.

The moment you reach the busy Business Centre freeway, a cluster of tall skyscrapers (all about 50 stories tall) start becoming vaguely visible in the distance behind a cloud of sand and smog. It makes you feel as if you’ve suddenly become an ant crawling through huge blades of grass. This is the financial hub of Dubai – home to the Dubai Financial Centre and other leading financial houses and banks from around the globe. And rising above the desert sands, off Sheikh Zayed Road, is the majestic Burj Khalifa.

My opening observation about UAE is simple – it is a country of ridiculous superlatives. From tallest building in the world (Burj Khalifa) to the largest mall in the world (Dubai Mall). From the biggest indoor scuba diving tank in the world (Dubai Aquarium) to the biggest natural flower garden in the world (Miracle Garden). In simple words, it is the land of mega shopping malls, mega skyscrapers and mega dreams.

A big part in putting UAE firmly on the global map has also been played by its homegrown carrier – Emirates Airline. In the early 1980s, UAE had no airline of its own. But all that changed on October 25, 1985 when Emirates, which was launched with seed money of just $10 million, made its maiden flight to Karachi. In FY2012-13 the carrier’s net profit rose by 52% to $622 million, as the carrier’s fast growth outpaced rising fuel costs. The carrier also logged a fantastic Passenger Seat Factor by carrying a record 39.4 million passengers, an increase of 16%. Emirates Airlines has been named the region’s most valuable brand for the fifth year in a row by global brand valuation company, Brand Finance.

Even as the Dubai-based Emirates Airline was reaching one milestone after another in its last 28 years of existence, another emirate was preparing to launch an airline. In 2003, Abu Dhabi launched rival Etihad Airways and declared it UAE’s national carrier. Etihad Airways, which was the poorer cousin of Emirates Airlines, has recently given Jet Airways a new lease of life by acquiring a 24% stake in the struggling Indian carrier for $379 million. "We are pleased to have reached this significant stage in India with Jet Airways and are certain the partnership will bring significant benefits and opportunities for global growth to both airlines," said James Hogan, President and CEO of Etihad Airways.

This deal is said to be game-changing opportunity for both the carriers. The Indian carrier will be able to expand its existing operations, introduce new routes between India and Abu Dhabi and will establish a Gulf gateway for flights to the US, Europe, Africa and the Middle East. The strategic location of Abu Dhabi lies in the global travel nexus, linking Asia-Pacific to Europe and Africa. Though it is early to say, but critics are already voicing their opinion on how the deal will see a number of fliers from India shift to Jet-Etihad, a bastion held by Emirates for many years now.

Today, this small Arab sheikhdom is everything that the rest of the Arab world is not. From a cluster of mud huts and Bedouin tents, UAE has become the land of extreme capitalism and grandioseness.

A tolerant, cosmopolitan, and culturally diverse, UAE has become a hot bed for expats who have come in droves to earn copious amounts of money while enjoying the benefits of a stable society. Unlike the rest of the Gulf countries, Dubai offers an unparalleled quality of life in a virtually crime-free, tolerant society.

Famed for its tax-free status, a lot of international brands have realized that setting up business here is inexpensive and more profitable compared to the western markets. Also there isn’t much red-tapism when it comes to setting up shop here. His Highness Sheikh Mohammed bin Rashid Al Maktoum, the Vice President and Prime Minister of UAE and the Ruler of Dubai, has just one message for the foreigners. "I don’t just want you to bring in your money to Dubai. I want you to bring your skills and your family and contribute to our economy and society. And I want you to be comfortable."

Living here is cheaper, and people from all nationalities and religious backgrounds live in complete harmony here. And that’s why all around you will see Europeans, Americans, Indians, Pakistanis, Bangladeshis, Filipinos, other middle easterners and other Asian nationalities crowding the city. With this overcrowd, one can be forgiven if you barely notice the local Emiratis who now form only 10% of the population in the country. But that’s a small price they have had to pay in order to bring their nation at par with the rest of the world.

All roads lead to the mall in this part of the world. So you will see local Emiratis, Arab expats, Westerners, Asian expats – all under one roof and shopping like it’s the last day of their life.

The western expats are flocking to the malls to shop for their own homegrown brands while at the same time enjoying the luxurious lifestyle that UAE offers. So from fast food brands like McDonald’s, KFC, Fat Burger to coffee chains like Tim Hortons, Starbucks; from clothing retailers like GAP, Nike, Zara to luxury brands like Louis Vuitton, Chanel, Dior, the Westrn expats enjoy a sunshine-filled lifestyle in UAE – drive shiny 4X4s, gorge on endless champagne, seafood and steak and pay no taxes. Little wonder that UAE ranked third in the "Expat Explorer," the largest global survey of expats commissioned by HSBC Bank International in 2012, just after Singapore and Hong Kong.

In his book, "The Emergence of a New Urban Brand ‘Dubaization’", Dr. Ali A. Alraouf, Assistant Professor of Architecture at the University of Bahrain states, "The contemporary urban scene of Dubai is characterised by the infusion of new privately-owned shopping malls, gated housing communities, theme parks, and headquarters of multinational establishments and corporations."

While western brands are making hay in the UAE sunshine, Indian brands too are slowly & steadily spreading their wings in the middle-east market. But, to be fair, mature markets are tough for Indian brands to crack. According to Sumeet Baruah, Head of Operations, Middle East & North Africa, Godrej & Boyce Mfg. Co. Ltd., "As an Indian company, which manufactures a wide range of Office, Home and Industrial products, the biggest challenge which we have faced in UAE and Middle East in general is a misplaced customer perception that goods manufactured by Indian companies are not of a very high quality and can be clubbed with the Chinese, etc, while the quality assurance only comes from the Americans and the Europeans." This general perception that Indian brands cannot compete on the global arena as they lack quality is hindering their growth in the overseas market. According to T. Chitty Babu, Chairman & CEO, Akshaya Pvt. Ltd. and Chairman of COC (Code of Conduct) & CRF (Customer Retraction Forum) of CREDAI National, India, "Vision, mission and long-term strategy are the key to successful Indian brands. At the moment to win in the global arena, the Indian businesses need to scale up their brand perception than only look into rapid profitability."

As countless international brands look towards the India market, what’s hampering the India’s growth on the global scenario? According to Satish Dave, Senior Director, TNS-Middle East, "For brand India to deliver, it needs to create an image of what India wants to stand for, and ensure that all goods / services that have the ‘Made in India’ stamp deliver against this promise. Indian brands cannot afford to be inconsistent; they need to be more assertive in developing an identity and in promoting themselves."

The last few years have witnessed a change of sorts. India has been on a mission to promote its own brand image in the global arena. In global sweepstakes, India is best known for IT services and very rarely can one associate Indian brands with manufactured or packaged goods. Sumeet Baruah of Godrej & Boyce states, "For Indian companies to compete well on the global platform there has to be long term vision in building infrastructure, production capabilities, building synergies, proper export promotion encouragement by the government to name a few."

The "India story" has seen a profound shift in gear, all thanks to some astute cross-border acquisitions by Indian companies like Tata, Airtel, Godrej Consumer Products Ltd (GCPL), Bharat Forge, Welspun. Adds Dave of TNS, "Big global Indian brands are more likely as a result of acquisition while some Indian brands have been acquired by MNCs and been globalised!" But the pertinent question still remains – why have Indian companies not been able to successfully build their own brands overseas instead of operating under the guise of acquiring global players? According to Brand consultant Ramanujam Sridhar, Founder CEO, Integrated Brand-comm, "The appeal of Indian brands is limited to the Indian diaspora there. The Arabs are not much interested in Indian brands in UAE or Gulf. Only Indian travelers or expats are the consumers of Indian brands. For instance, Titan is a big brand in India, but as it initiated to establish its stronghold in Europe, it didn’t succeed. Reason being the market cost, promotional cost and hence the appeal remains limited. The challenge for Indian brands is far greater in global markets than in domestic market. In my view, the brands which cater to the Indian diaspora in the global markets are the ones that have a greater chance of success. In UK for example, the indigenous populace is fond of Indian curry or pickle, but these are generic products and the people there don’t have any specific liking for any brand."

But still Indian companies can’t stay away from the middle-east region because of the vast opportunities that can be derived here. A case in point is the Tata Motors-owned Jaguar Land Rover, which on May 13, 2013 has opened a new $1.5 million engineering test centre in Dubai to conduct extreme hot weather vehicle research, development and testing. Commenting on the development, JLR MENA (Middle East and North Africa) Managing Director Robin Colgan said, "The new facility will be crucial to the company’s continued success as every model for the European and MENA markets will be certified here in Dubai following thorough testing before going into global production."

Two international events that can spell tremendous opportunities for the Indian marketers in the Gulf region are FIFA World Cup 2022 in Qatar and World Expo 2020 in Dubai. Strategies formulated and implemented today can help Indian marketers to reap benefit in the years to come. Though Qatar will be hosting the FIFA World Cup 2022, Dubai is still engaged in the bidding process for World Expo 2020, which in all likelihood it will win, considering that the event has never been held in the middle-east. Marketers from all across the globe are gearing up to get a share of a pie during these world events. The UAE is bidding to host the World Expo 2020 in Dubai under the theme ‘Connecting Minds, Creating the Future’.

The Arabian Travel Market 2013, one of the most popular annual travel and tourism events in the region which was held in Dubai from May 6-9, 2013, too supported the positive forecast for industry development and performance in the gulf region this year. Mark Walsh, Portfolio Director, Reed Travel Exhibitions, highlighted the World Travel & Tourism Council (WTTC) Economic Impact 2013 Outlook. "The regional tourism map is now incredibly diverse with travel and tourism directly contributing $76.6 billion to GDP in 2013, which is forecast to rise by 4.2% this year alone as ongoing investment into the sector and infrastructure development in key markets supports the dual long term goals of driving visitor numbers and moving towards sustainable economic diversification," said Walsh.

A report by Oxford Economics reveals that 277,149 jobs would be created in UAE between the period 2013-2021; 40% of which would be within the travel and tourism sector. This vindicates the Economic Impact 2013 Outlook on UAE. "The UAE has long been a role model for regional tourism development, and recently released figures from the WTTC show that tourism in the Emirates is growing significantly faster than the world GDP growth average, contributing an impressive 14% to the UAE economy in 2012, – compared to the global trend of 9% – and expected to rise by 3.2% in 2013," Walsh further added.

Looking at these numbers and the growing economic activity in the Gulf region, it would be suicidal on the part of Indian marketers who are looking to put their brands in the global map to ignore the GCC market. The growth of a number of regional destinations, in particular the UAE, Oman, Qatar and Saudi Arabia, coupled with ongoing expansion of its airline route networks, and a healthy economic outlook is a marketers dream. And any Indian marketer worth his salt would cash on to this opportunity and create India’s first truly global brand.

"Appeal of Indian brands is limited"
Ramanujam Sridhar, CEO of Brand-Comm shares with T2C’s BACHAN THAKUR the real state of Indian brands in the international markets and points out the challenges that made-in-India brands face while establishing themselves globally

How Indian brands are doing in the GCC market?

The appeal of Indian brands is limited to the Indian diaspora there. The Arabs are not much interested in Indian brands, be it UAE or any other Gulf country. Only Indian travelers or expats are the consumers of Indian brands. Thus, the challenge for Indian brands is far greater in global markets than in the domestic market. In my view, the brands which cater to the Indian diaspora in the global markets are the ones that have a greater chance of success.

What challenges do Indian brands face in order to establish themselves globally?
A brand becomes big once it goes beyond Indian acceptance. For instance, for Arabs or Europeans, Indian brands become accessible through advertisement – which tends to be expensive and the volumes of these brands don’t justify the large advertising budgets. Kellogg’s took 10-15 years to establish itself in India after a lot of advertising, branding, selling the concept, et al. Being a global brand, it put in humongous effort and advertising to become a well known brand. But on the flipside, I am quite apprehensive if any Indian brand has that kind of resource to go global from advertising, branding and communication point of view.

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