The Middle East: a rising region for business

When it comes to the Middle East, stereotypes about wealth based on oil alone are well and truly dead in the water. In fact the region is among the fastest growing for a wide range of international business, from aviation to business banking, and all the signs are that this trend will continue.

A 2012 report by Ernst and Young outlined the reasons for this. As a location for foreign direct investment, the Middle East has a strong basic infrastructure, a growing population, and governments largely positive about encouraging investment.  Arguably the second of these is the single biggest factor.

middle east business

Particularly attractive for overseas entrepreneurs, the Emirates have also been benefiting greatly from the expanding trade with the biggest economies in the world: trade with China alone increased sixteenfold since 2002, reaching $40.4 bn. As a result, global banks such as HSBC have been expanding steadily their range of business banking accounts in the region, making it easier for international businessmen to operate here.

Business in the Middle East has also been boosted by an expanding young population with far greater wealth and a more global outlook than their parents’ generation, which offers a huge potential new client base. This is shown by the success of several companies in different fields. In retail, the success of a US-based chain of frozen yoghurt cafes is a good case study. Freshberry, only established in Oklahoma in 2008, already has twenty units selling their products across Bahrain, Kuwait and Saudi Arabia. This rapid growth has been possible due to the strong consumer appetite in these three Gulf states who share a number of similarities and have grouped together as the Gulf Co-operation Council.

Many young Middle Eastern people – male and female – now go abroad for their education, and generally travel more both around the region and around the world. This has made the region one of the fastest growing for airline passenger numbers, and while the regional carriers such as Emirates and Etihad have been first to benefit, other carriers are now seeking to gain a share of the spoils through partnership agreements. A partnership between Emirates and Australia’s Quantas is due to take effect this March, while British Airways and Air France-KLM already have deals with other Middle Eastern operators in place.

Political instability has traditionally been a source of concern for investors in the Middle East. However the Arab Spring uprisings, and continued instability in countries such as Egypt and Libya, have not halted investment in the way that doom-mongers might have predicted. In fact some commentators have pointed to the way the uprisings were sparked by a young, technology aware population, as evidence for future optimism. For example E-commerce start-ups have thrived in Egypt, which has 20 per cent of all internet users in Africa. The same technology which allowed young people to organise street protests is allowing them to create business opportunities, using the latest ideas such as crowdsourcing. This culture of local tech-entrepreneurs creates major openings for international companies providing the infrastructure for them to thrive. Hardware, software and communications technology are all in big demand, and better secure online payment services could be the next major growth tech-industry in the region.

All in all then, plenty of reasons for international business leaders to keep their eye on the Middle East when it comes to expansion. The market is a growing one, certainly more so than the economically troubled Eurozone, and looks set to become increasingly open to foreign investment in the coming years.   More info about entrepreneurial ideas can be found here.

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