Doing Business In Dubai

A pro-West attitude offers Georgia business adventurers big opportunities with an emphasis on big!

by Charles Molineaux

July 1, 2008

D ubai: Las Vegas on steroids? The Rodeo Drive of the Middle East?

Attempts to describe the frenetic Persian Gulf hub of Dubai frequently drift into wild superlatives usually involving luxury, glitz, and audacity, ostentatious and, above all, bigness.  Another high-profile attribute of this fast-growing commercial center is an enthusiastic invitation for businesses, an invitation increasingly resonating with Georgia companies. 

"I was really nervous. My family was mortified that I was going to the Middle East," says Melissa Coleman-Grina, director of sales and purchasing with Aventure Aviation in Peachtree City. Aventure does business all around Middle East, but Coleman-Grina finds the environment in Dubai particularly warm, and it's not just the 100-plus degree desert heat.  "Everything is ‘ welcome, welcome, welcome.' They welcomed us as Americans," she recalls. "They want Americans over there. They want to do business with Americans, and they need more people to come to them." 

One of seven sovereign entities within the oil-rich United Arab Emirates, Dubai has emerged as an irresistible destination for worldwide trade with its port, business-friendly tax structure and frenzied pace of investment in construction and economic diversification. Although black gold may have catapulted it from a tiny desert town to a city-state of millionaires in just the past couple of decades, Dubai faces the prospect of its oil reserves running out by 2010 and has embarked on a vigorous petrodollar-fueled campaign to transform itself into an opulent commercial and tourism destination.    

Major Atlanta institutions such as The Coca-Cola Co., Scientific Atlanta and UPS are strengthening their connections with the emirate. Delta Air Lines started nonstop service to Dubai five days a week in May 2007 and recently added a sixth day. Since Delta started the route, the airline has carried more than 103,000 passengers to Dubai. Delta serves three Middle Eastern markets out of Atlanta (Dubai, Kuwait and Tel Aviv) and three more out of JFK in New York (Amman, Cairo and Istanbul), making it the largest U.S. carrier serving the region. It will fly seven days a week starting in October out of Atlanta.  It's a move the airline's leadership trumpets with enthusiasm "Dubai, like Atlanta, is a major aviation hub," says Salah Ibrahim Sharif at Delta's UAE general sales agency in a statement. "The linking of these cities will create dynamic opportunities."


Come One, Come All?  
"There are opportunities galore for anyone," concurs Gretchen Corbin, director of international operations with the Georgia Department of Economic Development. The department reports that between 2005 and 2007 Georgia doubled exports of large commodities, machinery and equipment to Dubai. Shipments of electrical machinery, medical instruments and meats to the UAE grew especially fast. "This market doesn't do much manufacturing so they're importing everything," Corbin says.  

Regents Professor Ken Bernhardt of Georgia State University's Robinson School of Business calls Dubai "an incredible growth market for a number of Atlanta companies." Last year, he saw it firsthand the emirates' hunger when he taught in the United Arab Emirates University's MBA program.  One of the biggest areas of opportunity continues to be construction, with some $300 billion in projects in the works over the next 10 years. "Everything to do with infrastructure," Bernhardt says, "because they're building like crazy over there. That means architects, engineering firms, firms that can build huge office buildings, shopping centers." 

"Huge" is the operative word. On Dubai's rapidly rising skyline, its 1,053-foot-tall Burj al Arab hotel ("burj" simply means "tower") is already overshadowed by the $1.4 billion Burj Dubai, officially the world's tallest tower at more than 2,000 feet and still climbing toward its expected completion this year.  Scientific Atlanta (now known as the Cisco Service Provider Video Technology Group) has had a long presence in Dubai in order to help the real estate community with its connectivity issues.  

"We work closely with developers to make their buildings more efficient and connected. With the construction boom there are more opportunities to provide IT support and networking solutions," says Marc Musgrove, global PR manager for Cisco. "There could be multiple networks in a building and we bundle them into one, thus offering economies of scale and allowing into do things such as switch off lights, turn on the AC. This solution was developed out of the Dubai office. But there are enormous opportunities as they are trying to diversify their economy and build sustainable economic growth." 

"Every developer wants to build something that's never been built before and definitely wants the biggest, the best, never seen before, the tallest, the widest," marvels Sheba Ross, an associate at Atlanta architectural firm Thompson, Ventulett, Stainback and Associates, which has an office in Dubai. "Four years ago Dubai was more like an aspirational city. It was a city that was dreaming big. But now, if you go, it's living its dream." 

Among the firm's Dubai projects is designing the conceptual vision for The Lagoons, a 70-million square foot waterfront project that is composed of seven man-made islands sin in the middle of lagoons in Dubai Creek.  

Whom Do You Know? 
Opening the door to all that opportunity, however, can be a challenge. "Networking is extremely huge," Coleman-Grina says. "Everywhere in the Middle East, you need to have a connection. I couldn't walk in if I didn't know somebody already. What makes you different from the next person? Well, maybe someone that they know and trust ... trusts you."  Corbin finds the notion simple and familiar. "It has to with a relationship, as all business does."  

The fine art of relationship cultivation has turned into something of a wild card for TVS, which has networked its way right up to the royal family and found the sometimes slow road for major projects elsewhere can become a dizzying superhighway in the emirate. "In the U.S., it's more stringent," Ross observes. "You have to go through a lot of submissions before you're ready for construction. But there [in Dubai], it's an executive decision. The crown prince decides which buildings he wants to get built. They'll tell us a project has the prince's personal interest, and a project that you'd ideally like to do in nine months, they want it done in six months!"  Philip Weems, managing partner of King & Spalding's Middle East practice, agrees that business is conducted quickly. "That surprised me," he admits. "The pace here is quick and deals are done fast. They don't want to wait. The first thing people ask is for your cell number. I don't have my cell on my U.S. business card; it's the first thing on my Middle East card. They want your immediate attention." 

TVS started with a small project with one client. Since then, the firm has "established a good enough relationship with them that they keep coming back to us over and over again." 

And once that important door has been opened, economic gurus say be alert for surprise opportunities that may come knocking. Weems says that the government does play a role, but they don't micromanage projects. "The economy is tied in with the government. If they don't want it built or the deal not to go through, it's a big issue. There is usually a direct government tie in most of the deals and companies there. But it is also that they want to be the best partner and do things in a first-class way." 

Familiar boundaries by category or sector do not necessarily apply. "We encourage Georgia companies to really think out of the box," Corbin says. "You could be in contact with someone who's doing business in aerospace and he could be looking to buy medical devices as well. If you're working with people dealing in auto parts, that doesn't mean they're not buying cosmetics, too." 

King & Spalding started an Islamic Finance and Investment practice in 1995 and now has three offices in the Middle East (Abu Dhabi, Dubai and Riyadh). Those three offices have 19 lawyers, making K&S one the largest and fastest growing U.S. law firms in the Middle East. In fact, outside of this country, the Middle East practice has the largest concentration of clients.  

Initially the work was with Middle Eastern firms needing investing advice in the U.S. or Europe, Weems says. Now there are more Middle Eastern clients wanting to grow their business in the Middle East or Asia. "The deals we do are very large – hundreds of millions of dollars – and many of our clients are companies that don't have large legal departments but need highly sophisticated legal work done." Other services provided tend to be in energy finance, private equity, real estate and arbitration, he says. 

Culture Shock    
Notwithstanding the routine sight of woman and men in traditional garb, experienced visitors, women in particular, say Dubai, with a few exceptions, largely defuses any perceived cultural drawbacks to doing business in the Middle East. Although an unapologetically Islamic and Arab society, the emirate has built a reputation as a modern, cosmopolitan, culturally tolerant destination in a region where religious fundamentalists more often dominate foreign headlines.  

"The legal work you do in New York or London is no different than the work you do in Dubai," says Weems. "What is different is the cultural aspects. There is a lot of variety in the Middle East. It's hard to get your hands around the culture in Dubai because it is so pro West. What you see in Saudi Arabia, for instance, is not what you see in Dubai. Dubai is more pro-business and whereas in Saudi Arabia, it is more Arabian. In Dubai they want to focus on economic development and doing deals." 

In fact, Weems says that one-third of its attorneys in the Dubai office are women. "That is not a big deal," he says. "Of course, we wouldn't do that in Saudi Arabia."    Coleman-Grina confesses she expected the worst on her first trip in 2003. "I was a little bit intimidated. You hear that in Islamic culture they only like to deal with men. I found that not at all. They welcomed us as Americans. They welcomed me as a female."  

"They value everyone's opinion," Ross agrees. "I was really surprised when I went into a meeting and now they have women at top positions. My client was a woman, and she was reporting to another woman." 

"Business is business. Culture is secondary," Corbin insists.    Not that there aren't limits. Homosexuality is officially banned, as is living together for unmarried couples. Illicit drug use is sternly punished, and even legal prescriptions from overseas can run afoul of emirate policy. Business professionals suggest understanding and deferring their hosts' traditions.  

"The way men cross their legs with their ankle on their knee, exposing the sole of their shoe," says Coleman-Grina, "you never do that in Dubai. That's a sign of disrespect. When I was there, I never wore a skirt or low-cut shirts or anything like that." 

"Definitely, deal with everything professionally," Ross counsels. "That's what you would do whether you're practicing in Atlanta or if you're going to a meeting in Dubai."    

Growing Pains 
Explosive development does not come without costs or complications. "The traffic has gotten so terrible," laments Coleman-Grina. "If you think Atlanta's bad as far as traffic," she says, cringing, "Dubai is much worse." 

Furthermore, this society awash in money now comes with a problem not too hard to anticipate. It's expensive. Inflation in the UAE is projected to hit a possible 12 percent in 2008 and is raising concern about the costs of materials for all those skyscrapers. Rent for office space has jumped more than 30 percent in the past year to $128 a square foot, higher than Manhattan and more than four times the office rents of Atlanta.  

The challenge of shooting for the moon but remembering the planet is one the government is now taking up. Ross has gotten the memo. "In October, the crown prince actually gave a mandate that every single building that's going to be built in Dubai has to look at the sustainability aspect. It has to be a green building. And that's a big challenge. When you're building in the desert, it's going to be very difficult to maintain sustainability." 

Stepping On The Gas
Hiccups aside, the growth continues, as does the opportunity and involvement for Georgia companies. In June, Aventure Aviation relocated its headquarters to accommodate its expanding business. Next year, for the first time, the Georgia Department of Economic Development is sending a delegation to one of Dubai's premier events, the biannual Dubai Air Show. "In 2003, I think we were the only American company [at the air show] besides Boeing," Coleman-Grina says. "Then comes 2007 and the word is out! Everybody knows about Dubai, so there were a lot of American companies there."  

The competition is stiffening. Major sourcing fairs for home products, electronics and fashion accessories in Dubai are projected to be more than 60 percent larger this year than last as they showcase manufacturers ... from China. 

Weems says the firm daily gets requests from companies on advice to entering the Dubai market. "Again, people would be surprised how easy it is to do business – more so in other places say like parts of South America," Weems says. "When you sit across from someone doing a deal in Dubai, chances are that person – or a family member – went to school in the U.S. They understand." 

"They want the biggest and best of everything," Coleman-Grina emphasizes, "and they will spend whatever they have to spend to make it happen.