Arab firms to tread carefully

Is it necessary to go global and are there enough resources to go global? He was speaking at the second day open session at the Arab Strategy Forum held in Dubai yesterday.

The decision to go global should not be taken lightly because it involves risk and hardship, he said. However, the rewards can be great, especially when entering emerging markets. "Global means you are on your own," he said, stressing that a firm's transparency and governance have to be 100 per cent to survive against international competition. "Don't let glamour take charge," he warned. As for risk taking Alabbar said that he had always found that it was necessary to take risks in order to make his $100 work hardest for him.

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President of BT International, Francois Barrault made the distinction between an international and a global company. He defined a global company as one which "goes where the customers are" and one that operates on the assumption that the key to success is in working with local people and trusting them. BT recently opened an office in Dubai to better service its 500 customers in the region, he said.

Dubai World chairman, Sultan bin Sulayem also commented that demand from customers was a major factor in Dubai World's decision to go global. In addition, "the greater availability of loan capital in western markets, than in the Middle East, was a critical factor in the company's decision to invest in property overseas. Up to 80 per cent financing can be available and, while returns may be lower, appreciation is steady. In the Arab world you need a lot cash. You need more down payments but the returns are greater." He added: "We will go anywhere where there is opportunity and growth potential".

When asked about Dubai World's experience in the US, Bin Sulayem said that it was an unforeseen event and that "it would not deter us" from seeking future deals. "We look at opportunities in a purely business matter," adding that he did not think it was any harder to do business now than before 9/11.

Executive vice-chairman and CEO of Abraaj Capital, Arif Naqvi commented that growing confidence among Arab entrepreneurs had led to an increasing number of companies in the region preparing to compete globally. "These executives' ambitions have been supported by governments in oil-rich states who recognise that oil is a dwindling asset and that the future depends on diversification," he said.