Thoughts On How Covid-19 Is Changing Business In The UAE & The Hot Sectors Just Now
11th June 2020
Whilst many businesses have been severely affected by COVID-19 and the global restrictions put in place; there are of course businesses which have been cleverly able to adapt their ways of working to help with the sudden requirements for large quantities of specific products to combat the virus.
To give you just a few examples... The Arab Fashion Council launched #thread4cause to encourage Arab designers to produce Personal Protective Equipment (PPE) over their usual couture - designers around the world are using their fabric scraps to produce masks. Ford, the car manufacturer has collaborated with 3M to develop new Powered Air Purifying Respirators (PAPR); with UAW to produce face masks; with Joyson Safety Systems to manufacture reusable gowns; and, with Thermo Fisher Scientific for the production of Covid-19 collection kits for patient testing. And, distilleries and breweries are now producing sanitizers.
Businesses are all adapting to new ways of operating, whether it be with staff working from home; having meetings via video conferencing rather than in person; or, needing to redesign their commercial premises to ensure their employees are protected sufficiently.
I've had conversations with a number of entrepreneurs over the last few weeks who are racking their brains to think of products and services which will be in demand post Covid-19. They are trying to anticipate what the future working world will look like and come up with that golden nugget of an idea which will take the world by storm.
However, keeping the economy alive right now is critical for governments globally. The UAE is no different. It launched stimulus packages and assistance to companies on both federal and Emirate levels early on to assist businesses through the crisis in order to stay in operation rather than go under. Results from business activities in the UAE in May show that new companies are still opening up - 764 in fact, which included some new Gateway Group clients! Over the past couple of months, inquiries that Gateway Group has received from budding entrepreneurs about opening businesses in either Abu Dhabi or Dubai are often accompanied with the question: "Is now a good time to start a business?"
Back in early April, Gateway's Senior Managing Partner, Nathan Hunt, published a blog called "Why Now Is The Right Time To Start Your E-Commerce Business In The UAE". It highlighted that with global lockdowns, people were stuck at home and their attention went online - there has never been a better time to reach a highly-engaged online audience. Not only are people providing consulting and coaching services online but consumers increased their purchase of goods online with the closure of shops and malls. This has now been reinforced with stats published by WAM confirming demand for e-commerce increased a massive 300% during the first five months of 2020 in the UAE! And, in the UAE, in May alone, 196 new business licenses were issued for e-commerce retail, reinforcing that individuals and companies are seeing how retail is increasingly moving online and they are taking advantage of this.
It's not just retail that is moving online either, business meetings have been moved online, which just didn't happen in the UAE prior to Covid-19 as the free video call platforms, such as Zoom and Skype, were not permitted as the UAE's telecoms providers provided their own paid for versions. However, during Covid-19, these services have been offered to businesses for free. It is yet to be seen whether this gesture will be continued post Covid-19, but the UAE's Federal National Council (FNC) is already asking this same question, but unfortunately both UAE telecom providers apparently sent their apologies and didn't participate in the FNC's virutal meeting this week. If free video calling remains available after Covid-19, then surely this has to be a huge benefit for entrepreneurs and businesses in the UAE as it will reduce telecoms costs whilst leveling the playing field as such services are free in many countries globally. It will reduce the cost of doing business. Hopefully, COVID-19 provided the push needed to open up video calling for free in the UAE.
It will be interesting to see how this change to holding meetings online affects foreign companies trying to get into the UAE market. We've heard complaints from people over the years informing that their calls and emails to organisations within the UAE were unanswered. This is because cuturally, business in the UAE was always done face-to-face - cold calling just didn't work. Traditionally, we have always told foreign companies that being on the ground in the UAE, spending time building up relationships, having regular, face-to-face meetings to gain trust is essential to being successful here. However, during the past weeks, its been encouraging to see the governments of the UAE enthusiastically adopting video calling to conduct their business. Not only does, this reduce the cost of telecoms, it reduces traffic on the roads with people not needing to drive to meetings, which in turns reduces car-fuelled pollution, but also saves people time not needing to commute, as well as the stress of being in traffic. Is it any wonder that we are all claiming to be more productive by working at home? Its actually because we have more time to actually focus on our business.
Hot business sectors in the UAE
So what business sectors are hot in the UAE right now? In addition to e-commerce, general trading, project management & building painting are the top business sectors for the issuance of new business licenses in the UAE in May 2020. These are followed by construction and repair & maintenance activities and then the always popular food & beverage related activities.
Where will your company be doing business after Covid-19?
Whilst global economies will open up at different rates - even within the UAE, the Emirates are each opening up their economies at different rates - it is yet to be seen whether there will be a second waive of virus infections or not. However, is your company strategizing about where the best opportunities will be for it after COVID-19? Doing what you have always done in your existing market, may no longer be enough. Expanding into new markets may be daunting but necessary for survival. So expanding into to a forward thinking, fast paced market, which can demonstrate a successful track record of achievements makes sense.
Back in March, I had a discussion with a distressed entrepreneur about how to get through this pandemic with limited business coming through at that time. I told them that I wasn't worried for my businesses in the UAE because the UAE demonstrated that it was quick to respond to COVID-19 and is a forward thinking nation. It will be the countries which can quickly bounceback which will be strongest and I said that I believed the UAE would be one of those countries. A few weeks later Euromonitor International's Macroeconomic Resilience Score (2020)* ranked the UAE as the third most resilient economy globally, post Covid-19.
For the last 20 years, the Emirates have been fiercely diversifying their economies away from their dependence upon their rich hydrocarbon reserves. They have implemented various strategic plans such as Vision 2021 in Dubai with the goals of world class healthcare, competitive knowledge economy, safe public and fair judiciary, cohesive society and preserved identity, first rate education system and sustainable environment and infrastructure. In Abu Dhabi, the Ghadan 21 plan driving the Emirate's development through investing in business, innovation and people. These are just two of the strategic plans in place. There are many more, each with goals which might seem unachieveable, but they are being implemented by a country which is results driven, acts fast and is prepared to take risks.
"Between 1995 and 2015, Dubai increased its GDP from $11 billion to $101 billion. It raised GDP per capita from $16,000 to $42,500 during the same period, all while reducing the contribution of oil revenues to its GDP from 18% to 1.2%. These numbers are akin to a development miracle when it comes to economic diversification and growth. Every single country in Asia, Africa, Latin America and now even in Europe is chase such development goals," Dr Yasar Jarrar, The Sheikh CEO.
When you start to understand the UAE, where it has come from and its visions for the future, its easy to see it is a country with a 'can-do' attitude. It is results driven and these speak for themselves. It has set huge targets to improve the ease of doing business and the lives of its citizens and residents. Wouldn't you like to be doing business here?
How Gateway Group can help with your organisations' company formation in the UAE
Gateway Group is the authority on company formation in Abu Dhabi and Dubai. We make sure we're the right company formation provider for your organisation. We believe that establishing a company in a foreign country is one of the most important decisions your organisation will make and we want to be sure that when we say our services will meet your requirements, we mean it! We want to get to know as much about your organisation and its plans for doing business in the UAE as possible so that we can determine the best company set up for your business. We begin with a discovery questionnaire and consultation so that we can get to know you and you can get to know us - setting up a company is like a marriage, its essential to be sure you are compatible because the divorce part can be painful - costly and time consuming. Setup your business quickly and securely with Gateway.
*Euromonitor International's Macroeconomic Score (2020) can be found on slide 13/26 of the Euromonitor IPO Market Resilience Index.
Written by Jenny Hunt, Founding Partner & CEO
Gateway Group of Companies, Abu Dhabi & Dubai UAE
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