Santander’s Director of Strategic Banking Alliances Richard Cuda discusses how lucrative exporting to the UAE can be – and how local knowledge and connections can be the difference between success and failure.
It’s no secret that opportunities for British businesses in the UAE are the best they’ve ever been. In 2015, it was the 11th most important market for UK exports, worth £6.24bn.
But the potential doesn’t stop there. In fact, between 2013 and 2015, the region was Britain’s ﬁfth-fastest growing export partner. And these opportunities show no signs of slowing down. That’s why the likes of Fortnum and Mason, Shell and Rolls Royce all operate in the region. For British businesses with hopes of expansion, there’s never been a better time to start looking East.
Demystifying the region
Opportunities in the UAE extend far beyond the obvious – for example, oil accounted for just 3% of GDP in Dubai in 2015. The UAE is a market that’s diversifying quickly – that’s why Santander is treating it as a major focus for businesses looking to expand.
After all, the eyes of the world are set to fall on the region in the not-too-distant future. With hosting duties for the World Expo Dubai 2020 and the World Cup 2022 next door in Qatar on the horizon, it’s no surprise that the UAE is growing quickly. The award of Expo 2020 alone is forecast to boost the economy by US$40bn.
Then there’s infrastructure. They are expanding the existing Dubai International airport and building the world’s largest international airport, Al Maktoum International, next to the Dubai 2020 site. The spend on Al Maktoum alone is estimated to be US$32bn.
With these projects come opportunities for British businesses. UK Export Finance (UKEF) has issued a US$2bn letter of interest – the largest ever issued by UKEF – for Al Maktoum International, indicating their support for British businesses who want to bid for contracts on the project.
Making it happen
Indeed, Santander works with UKEF to ensure that British businesses have the correct ﬁnancing, insurance and contracts in place to succeed in the UAE. Further, Santander works with local partners the British Centres for Business (BCB) in the UAE, Department of International Trade in country and Abu Dhabi Commercial Bank to deliver on the ground.
The UAE is a remarkably sophisticated market, and so understanding local nuance is crucial. With the help of Santander and its partners, British exporters can learn how to make their offering more competitive to those operating there.
Key to this is understanding what’s happening on the ground. That’s why Santander offers a variety of ways to connect with the UAE such as the Santander Trade Portal, webinars, Buyer’s Roadshows and Trade Missions, to give UK businesses the chance to make the necessary connections. In 2014, West Sussex-based PVL attended a UAE Trade Mission, where they discovered that no other companies were targeting the high visibility safety livery market in the region. If they acted quickly, they could have ﬁrst-mover advantage. PVL was recently named one of the Leap 100 2016 most exciting, fast-growth UK companies.
But it doesn’t stop there. Because the UAE is such fertile ground for British businesses, Santander has invested signiﬁcant resources in helping businesses target the right opportunities. In July 2016, our UK Buyer’s Roadshow allowed Birmingham-based Y International Ltd, the UK buying arm of LuLu Group International (the largest chain of supermarkets across the Middle East), to source new British exports for the chain. Two British businesses now have their products on UAE supermarket shelves.
Putting food and drink exports on the menu
British businesses have never been in a better position to move into many key markets, particularly food and drink. Given the local climate, few food and drink products are produced locally, so much so that the UAE imports 85% of its food and drink. There’s a huge appetite for confectionary, dairy, gourmet, organic and health foods from abroad.
Indeed, the size of the sector is an estimated £19.88bn (as of 2014) – and this is forecast to grow 30% to £25.81bn by 2018. But which British food and drink businesses in particular stand to beneﬁt?
Health foods, seafood and halal foods could be especially lucrative. Rates of obesity and a subsequent focus on healthy living is on the rise in the UAE, so organic, reduced fat and gluten-free foods are becoming more prevalent. Similarly, seafood is a long-standing staple of the Emirati diet, and the UAE continues to rely heavily on imports to supplement domestic ﬁshing. Finally, Muslims continue to be one of the fastest growing consumer groups in the world, so halal produce is a great opportunity for British exporters in the UAE.
Keeping an eye on the details
Whilst the UAE is ripe for British exports, expanding into an unfamiliar market is not without its risks. Savvy exporters need to do their research to make the most of what the region has to offer.
Firstly, there are multiple routes of entry into the UAE and businesses need to ensure they choose the relevant one for them and their business. That’s where the British Centre of Business (BCB), located in Dubai, and Santander come in – giving businesses the knowledge and conﬁdence to not only export to those countries, but also providing reputable, respected and trustworthy contacts with whom to do business. Businesses can also rest safe in the knowledge that Santander works with UKEF and other export credit agencies (ECAs) for extra piece of mind in expansion plans and ﬁnancial solutions.
Then there are the rules and regulations to consider. Legal and business procedures are markedly different in the UAE and unfamiliarity can easily be the downfall of a naïve business. To ensure they don’t miss a step, businesses should stay up to date with the latest consignment and certiﬁcation rules. Again, sourcing the correct business partners and advisors will be key to staying on top of the nuances of UAE regulations. That’s again where Santander can help through Trade Missions and Buyer’s Roadshows.
Finally, British businesses should be wary of the old misconception that they are dealing with an uneducated market. After all, the UAE has come a long way since the ﬁnancial crisis in 2008 and are knowledgeable and discerning buyers. ‘Made in Britain’ (and all of the prestige that it entails) is a unique selling point, so businesses looking to make quick money by ﬂogging low-quality goods will be caught out quickly and excluded from the market.
These are stark warnings, but nonetheless important points to bear in mind. The UAE is brimming with potential. And with proper connections, understanding and intentions in place, British businesses can reap the rewards of all that it has to offer. If they can do this, the pay-offs could be huge.
To ﬁnd out more, visit santandercb.co.uk/international