This week I made the trip between Abu Dhabi and Dubai four times in as many days, shuttling between our regional hub in Abu Dhabi and hotels, conferences and interviews in Dubai.
On one occasion, I hitched a ride with a colleague, who goes back and forth every day, who bore witness to the challenges of Emirati high-speed travel. Drivers frequently flash their high-beam headlights to intimidate those not going “fast enough” in the fast lane and sometimes use the inside shoulder of the motorway to leave them behind.
The traffic between the two emirates is intense during morning and early evening rush hours, with the draw of the capital’s wealth creating more jobs in tourism, exhibitions, construction and development. But, it is not the road traffic that is most striking, but instead the shuttle diplomacy. The $3 billion Emirates Palace –- as seen in the new "Sex in the City" movie or earlier in action film "The Kingdom" - serves as a hotel, a meeting venue for the Abu Dhabi government and, lately, as a hub for world leaders.
In the morning, I saw the Prime Minister of Kazakhstan who was in town to meet with the Crown Prince of Abu Dhabi and his influential half-brother who is also owner of the Manchester City football club. By sunset, German Chancellor Angela Merkel and a much larger delegation arrived on the scene. The Central Asian leader stopped in Abu Dhabi for 24 hours to advance investments in his vast country, the latter was on the first leg of a four-state visit including Saudi Arabia, Qatar and Bahrain.
Both of these leaders were preceded by one who can be defined as a man with a more urgent matter: the Greek Prime Minister George Papandreou. With two "Ds" on his report card - a record budget deficit and debt - he invited attendees of the Arab Economic Forum to consider Greece when sizing up opportunities. Papandreou pointed to the tourism and technology sectors as obvious places to start.
These are the visits we know about. Equally intriguing are the others that are intentionally off the radar, which fit into the category as discreet but necessary.
The Gulf States are a magnet for attention as the UAE is home to the largest sovereign wealth fund, the Abu Dhabi Investment Authority. There are another seven funds that are helping broaden the economic base of the Emirate beyond hydrocarbons with investments in industrial groups that include trade offsets and/or technology transfers. In sum, it is an “I will invest in you if you, in turn, will invest in us” type of situation.
In light of the Greek debt tragedy and Angela Merkel’s five-month resistance to an EU led bailout, it is not surprising Merkel needed to pay a visit to these high-powered investors. Let’s not forget, sovereign wealth funds, with the Middle East members representing $1.5 trillion dollars, have been hedging their bets against the dollar in the past few years. They want to know if we are going back to where this process started a decade ago, at nearly one-to-one with the U.S. currency.
Merkel cannot overlook the interest these funds have in German industry. Daimler lists the Abu Dhabi-based fund, Aabar, as its largest single investor and the Kuwait Investment Authority as another. Seventeen percent of Volkswagen is in the hands of the Qataris and Deutsche Bank has its own share of Gulf investment. Strategic plays like these by the SWFs make the announcement of a $150 million deal for the German industrial giant Siemens this week look like small fry.
A few years ago, the leadership in Abu Dhabi put in place a multi-pronged branding strategy. This now includes hosting F1 racing, a flag carrier Ethiad with global ambitions, top-flight exhibitions, conferences and eventually a branch of the Louvre and Guggenheim museums.
One cannot contend with the style and touch in which they have been or are being developed. A whole eco-system (as in economic) has been built to support such activity. Room rates are finally coming down with the introduction of more four and five-star hotels and on that road trip from Dubai one can see development after development on the way.
A decade ago when the iconic, Burj al Arab opened in Dubai global celebrities made the sail shaped hotel a must stop visit on their itinerary. Fast forward to the year 2020 and we will recall time when different members of the global elite put the Gulf and specifically Abu Dhabi on their schedule. Despite the vast expanse inside the Emirates Palace hotel, the traffic these days is nearly bumper-to-bumper.
Mirror, mirror, on the wall, who’s the biggest tech company of them all?
To judge from the headlines this week, the fight is over and Apple has won. “Upstart Apple steals Microsoft’s crown,” says the Times of London. “Apple now bigger than Microsoft,” wrote the BBC. “Apple topples Microsoft’s throne,” crows CNNMoney.
Speaking on a road trip in New Delhi on Thursday, Microsoft CEO Steve Ballmer said the software giant was still the most profitable tech company in the world.
So who is right?
Apple’s eclipse of Microsoft is based on one measurement of a company’s worth: Its stock price.
By market capitalization, which is based on stock price, Apple for the first time shot ahead of Microsoft with a value of $222 billion on Wednesday, about $3 billion more than Microsoft. (Both are still far behind the world’s most valued company on Wall Street – Exxon Mobil, with a market capitalization of $278.6 billion).
What about profitability? According to Factiva, Microsoft’s net profit margin is nearly 25 percent compared to Apple’s 19 percent (so, score Ballmer).
Who is bigger in terms of number of people it employs? No contest – Microsoft has nearly three times the number of employees with 93,000 (although Dell Inc. beats them both with 94,300).
But who sells the most tech products in the world – Apple? Microsoft?
Neither. By sales, the world’s number one technology company is South Korea’s Samsung Electronics (which took the mantle from HP earlier this year).
So do these 'bragging rights' matter anyway?
Beefcake’s restaurant in Cape Town is the kind of place where pink feather boas and waiters wearing bunny ears are more than welcome. The burger bar is a gay-friendly eating spot that also welcomes straight people. It’s situated in the heart of the city, which is regarded as the gay capital of Africa.
Over the past eighteen months, the city’s gay tourists have helped buffer the effects of the global economic downturn, says Mariette du Toit Hembold, the CEO of Cape Town Tourism.
She told us on a recent trip to Cape Town that the gay travelers are a "market that travels and is recession proof. The gay market travels regardless of world circumstances; it’s a high yield traveler. The spend per visitor is extremely good. Also, it is a traveler that is not as seasonal as other visitors are."
So while the ‘gay scene’ isn’t as big as it is in Sydney or San Francisco, some in the Cape Town hospitality industry do cater for an exclusive gay clientele. For example, the Glen hotel in Seapoint is a gay-only hotel and the owners are building extra rooms because business has been so good.
Also, during the summer, thousands of gay partygoers dress up in outrageous costumes for the Mother City Queer Project, which is regarded as THE party of the year by many in the gay community.
The property industry has also benefited from wealthy gay visitors – mostly from Europe – who buy second homes in sunny South Africa.
In some areas like De Waterkant, almost 50 to 60 percent of the residential properties are owned by foreign gay men, says estate agent Petrick Fourie of Leapfrog Properties.
One of his clients is Andy Mattar, a British man who has lived in South Africa for eight years. He is trying to sell his De Waterkant house for $1.1 million and is acutely aware that he and his partner have far more disposable income than straight families. No school fees or other family commitments to worry about, he says.
Cape Town is already a prime destination for wealthy gay men from Britain, Germany and the Netherlands. Now Cape Town tourism is trying to get more gay people from elsewhere in the world to visit South Africa. This is important for the local economy because tourism is down 43 percent from last year, says Mariette du Toit Hembold.
So ‘pink pounds’ or ‘pink dollars’ are welcomed by the hospitality industry, which is still facing some tough times as the global travel industry still struggles with the effects of the economic meltdown.
There is a hobby that one sees retirees or others with plenty of time on their hands partaking in: They strap long metal detectors on their arms and with headsets in place scan the sands of the U.S. in search of a treasure. The prize is a few odd coins or a diamond ring that some woman has unwittingly left behind.
While I find the “sport” odd at best, the image crossed my mind while in Kuala Lumpur this week. The queues to pass through airport security and passport control were efficient, but long. Businessmen from Europe, the U.S. and the Middle East have switched on their radars in search of growth, but unlike those combing the sands they don’t need a lot of patience to find it.
During my few days on the ground, Singapore and Malaysia both reported 10 percent growth in the first quarter. China and Indonesia are running at nearly the same pace. That is stellar by any measure and the real concern is not a double-dip recession but asset bubbles forming in some of these Asian Tiger economies.
Malaysia’s Central Bank Governor Zeti Akthar Aziz said convincingly that she has it all under control, in an interview in her headquarters at Bank Negara. This explains in part why the bank raised interest rates twice already this year. Across the Straits of Malacca, Singaporean officials said they too want to stay ahead of this growth spurt.
We can leave this to monetarists to sort out. In the meantime, chief executives and other investors want a piece of the action and those flush with surpluses are making commitments. In the span of a week in KL, two of the most prominent Middle East investors, the Prime Minister of Qatar, Sheikh Hamad bin Jassim bin Jabor Al-Thani and the Abu Dhabi development fund Mubadala signed on the dotted line.
Qatar committed to invest $5 billion in a series of projects from energy to real estate, matched by similar funding by investment funds in Malaysia. Mubadala wants a piece of the KL business district in the shadow of the Petronas Towers. The area could use a fresh capital injection - the Grand Hyatt has been a construction site for years with a completion date still unknown, according to one well-placed Malaysian.
Middle East investors feel very comfortable in Southeast Asia. The ties go back to the Spice Route days of the 15th century, when spices, palm oil and other products were traded between the two continents. That trade, in turn, planted the seeds of Islam in this corner of the world.
The vice-chairman of the well-known, Dubai-based merchant family, the Al Ghurairs, was on the ground in the city for a business forum where he is a board member. Communication is simple, says Essa Al Ghurair, one of the few from the region sporting a dish dash at the forum.
They speak the same business language. But there has been a dramatic shift which he acknowledges. Five years ago, Al Ghurair did not look east for growth. The natural inclination was to turn to Europe, and even more so across the Atlantic to the U.S. Today, the Al Ghurairs have invested in an Indonesian coal mine, amongst other projects.
I had a similar conversation with Bahraini banker Khalid Al Janahi, who took a break from a series of investment meetings to share his thoughts over a coffee. Simply put the growth is too good to pass up and unlike the German government’s new found effort to slow down speculative investments, the Asians are eager to engage those who have their radars of growth and, shall we say, opportunity, tuned in to the new land of opportunity.
As the tensions rose during the last-ditch negotiations between British Airways CEO Willie Walsh and the Unite union leadership representing the cabin crew, one of the most bizarre causes of a breakdown in communications was that communications breakthrough, Twitter.
According to media reports, weekend talks to prevent today’s walkout were going well until Walsh realized that Derek Simpson, Unite’s joint general secretary, was sending ‘tweets’ of the progress on Twitter – the public Web site where members post messages 140 characters or less.
So if you want to take a peek at the tweets that the airline claims helped sink negotiations, here they are:
So, a question – was the company right to be upset over public updates of the negotiations? Was the union right to keep people updated?
The Foreign Correspondent’s Association of Southern Africa organized a lunch with Jerome Valcke this week. Fifty reporters who work for non–South African media gathered at a Johannesburg hotel to ask the FIFA general secretary questions about the World Cup.
The most interesting things he had to say referred to the ticketing system. Valcke admitted that it was disappointing that more Africans hadn’t bought tickets. Only 40000 people from the rest of Africa would be travelling to South Africa for the World Cup, he said.
The reasons? He conceded that tickets might be too expensive for most Africans. The ticket prices are the same price as the 2006 World Cup in Germany. Also, FIFA has realized selling tickets over the Internet has been a difficult and complicated process for most Africans because Internet penetration is low on the continent. He said FIFA was looking at changing the whole ticketing process for the 2014 World Cup in Brazil.
He said 2.865 million tickets were available for this year’s World Cup and 90 percent of them have been sold so far. FIFA is concerned about illegal ticket touts making money out of black market sales of tickets.
So they are working with Interpol, which has set up a taskforce dealing specifically with this crime. Valcke says they are less interested in the lone guy outside the stadium gates trying to make a fast buck on his handful of tickets. Instead, they are concerned about crime syndicates hacking into their computers systems and stealing ticketing information.
He also touched on the controversy around the number of visitors expected to come to South Africa. Valcke said FIFA never said 450,000 to 500,000 football fans would come to South Africa, he said that number was an estimate put out by the South African authorities. Recently, that number has been significantly downgraded – only 150,000 to 250 000 foreign visitors are expected over the World Cup.
One journalist asked him how FIFA dealt with the negative image they have in South Africa because the football body is viewed as "bullying" and "taking over the country." Valcke was pragmatic, he said FIFA were the "gatekeepers of football" and so they didn’t have to be "nice" all the time.
He said they weren’t taking over the whole of South Africa, "just a little bit of it."
I love visiting the U.S., but while traveling there I sometimes get a little concerned about its future. I find myself managing down my expectations - preparing for long lines at the airport, overpriced fares for flights and train rides, and spotty mobile phone service. Meanwhile, travel in China gets more efficient and affordable by the day. And I can talk on my cell on the subway uninterrupted.
On a recent subway ride in Hong Kong I kept my phone in my pocket as my traveling companion was U.S. Commerce Secretary Gary Locke. Secretary Locke is in China for several days with a delegation of American executives from the clean energy sector. He's here to promote U.S. technologies, hoping the Chinese will adopt American wind turbines and solar panels.
China is throwing a mountain of money into sectors like green energy in the belief that it is laying the groundwork for superpower status. Beijing has already overtaken the U.S. in renewable energy investments. It's earmarked billions on new airports, rail lines and highways – an ambitious investment in infrastructure that’s an order of magnitude more than anything being committed to rebuild the U.S. Sure, China is starting from a lower base, but it's moving ahead faster than a speeding bullet train to become a more efficient, competitive rival to America.
In a decade, which country will be the better bet - the U.S. or China?
The world is still trying to size up the validity and effectiveness of the European Union $1 billion support package for Greece and future emergencies on the Continent. Even though Greece’s gross domestic product is relatively small at $324 billion, the potential contagion has been enough to rattle markets from Hong Kong to Wall Street.
While that drama was unfolding, coupled with the week-long hung parliament saga in Britain, real business was being done with an Islamic twist.
One of Britain’s foremost brands, Harrods, was swept up over the last week for $2.3 billion dollars. The seller was Egyptian Mohamed Al Fayed. The buyer: the investment vehicle of the Emir of Qatar, Qatar Holding. Qatar likes - some would say loves - the UK market. He has stakes in J. Sainsbury, Barclays Bank, Canary Wharf, and is now the owner of the property currently housing the U.S. Embassy in Mayfair, West London.
On the other end of the globe, Qatar-based Gulf Petroleum said it plans to invest $5 billion in an oil and gas complex in Malaysia. The two governments have been talking for the past couple of years and now believe the timing is right to proceed.
And if that was not enough, we should keep an eye on the President of Brazil, Luiz Inacio Lula da Silva who added Qatar to his agenda after a planned visit to Russia. It is worth noting that Brazilian oil giant Petrobras’ off-shore discoveries are garnering plenty of attention by would-be investors like Qatar. Rather quietly, Brazil’s exports to Qatar are up by two-thirds in 2010 versus the same period last year.
There are two sides to this story. Outbound investments by what we can call Brand Islam and inbound investments into a rapidly growing market of more than one and a half billion people in the Muslim world.
With regards to the former, it is not surprising that Gulf sovereign funds in particular are hunting for investment opportunities. Oil has hovered around $80 since the start of 2010 and it continues to generate healthy cash flow that needs to be deployed.
While big-name brand purchases in the West will always garner more than their fair share of media coverage, the quieter business and political diplomacy by the major players in the Muslim world, often amongst themselves, is even more intriguing. Someone kindly emailed the Qatar-Malaysia energy piece, but it is not the first item people in the business community are talking about.
Meanwhile, marketing teams are looking for the best way to reach out to the Muslim consumer market. While I often talk about the potential of a broader Middle East market of 300 million consumers or more, the reality is companies need to look to South and East Asia for the real numbers.
Today the Muslim market represents over one-fifth of the world’s population. Rapid expanding birth rates will translate into greater market share over the next two decades. Obviously, this is not a “one size fits all” market. A consumer in Jakarta behaves quite differently from one in Jeddah. There is also a huge wealth gap between these countries of the Ummah, or "the community of believers." Per capita income in Qatar ranks near the top of heap worldwide; Yemen is near the bottom.
The more one digs into this market, the more layers of complexity are uncovered. The market for Halal foods is growing rapidly, but again, the taste vary widely from Europe to Asia. That sector though remains simple to tackle versus say Islamic banking where scholars today are still seeking common ground for the rapidly growing market.
The top-line numbers are impressive and are worthy of not only our attention in the news sphere, but in the business community as well. Now back to the EU and long-term debt!
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