Cover Story

COVER STORY: Making a date with the Middle East

Making a date with the Middle East

UBAI, THE MAJOR global city in the United Arab Emirates (UAE), the gateway to the Middle East of modern times, is on the up and out. We all know about the skyscrapers and the cranes (many of them courtesy of Multiplex) dominating the Dubai skyline, but now Dubai is going in for expansion of a different kind with shopping malls, marinas and various lifestyle activities to entertain the occupants of all those high rise apartments.

There’s Burj Dubai (the Dubai Mall), the Mall of the Arabias, Dubailand, and a series of off-shore marina-type cities such as The Palm Deira and The Palm Jebei Ali. So why all this focus on malls? “It’s basically because the locals like to shop, and it’s too hot for the expatriates to do anything else with their kids in the middle of the day” says Peter Linford, Australia’s Dubai-based Senior Trade Commissioner for the Middle East.

In Linford’s three years in Dubai, he has seen a massive growth in Australian companies setting up in Dubai to launch their Middle East operations. “It’s a real gateway to the region, like a Singapore or Hong Kong. And with (the airline) Emirates having its hub here, it’s a great place for Australian exporters to base themselves for doing business in the Gulf States, the Middle East in general and even North Africa where new opportunities are beginning to be tapped into.”

Linford’s observations are certainly backed up by the data. According to research recently conducted by Austrade and the Australian Bureau of Statistics (ABS), there are 1456 Australian companies exporting to the UAE, which is nearly as many as India. This shows how the UAE basically plays an entrepot (trading hub) role for the region with many imports to Dubai being reexported to other markets in the Middle East.

The art of doing business in China

Linguistic, cultural and political factors have hindered Australian companies’ efforts in China. Stephen Cameron of ChinaSource explains how to make sure these issues and others do not prevent your business from building a successful trading relationship with the world’s fastest growing economy.

CHINA’S EMERGENCE into the world’s market is an extraordinary example of positive global development that Australian companies cannot ignore. Yet traditional trade relationshipbuilding tactics such as visiting trade shows are not the right way to build trust or win business in China, where business is simply not conducted using tactics and strategies familiar to most Australian organisations.

Nor do Australian businesses portray themselves in a way Chinese businesses appreciate. Most Australian businesses I work with usually try to portray themselves as a ‘rock’ of stability, credibility and competence in a turbulent market.

Yet China is like a river moving very quickly to the coast: it is no use being a rock in that river as the current will flow over and around you! To ride that river requires a recognition that China is a radically different market in which you must change the way you do business. Allow the river to push you gently and learn how they do things discreetly…over dinner, not across a board room table.

Trucking with the Chinese

ASK DOMINIC D’AMBROSIO if it is possible for a 30-person Adelaide company to work with one of China’s largest automotive companies and his answer is cautiously optimistic.

“I guess someone has to do it,” he says. “They saw our product and saw it was as good as any in the world. We were prepared to do the hard work and now we are exporting to China. It is a different order of magnitude for our business and we do not know where it is going to lead us in all honesty.”

Ambrosio’s uncertainty is in part due to the small size of the company he heads as Managing Director, Aldom Transport Engineering.

Aldom builds and designs bodies for trucks and trailers, including refrigerated vehicles. The jewel in its crown is Panelock, which uses extruded aluminum planks that interlock to form rigid truck bodies that are smooth, solid and make a great surface for painting signs. Panelock is Aldom’s own technology, developed and manufactured in its own facilities.

The product is well-known in South Australia and Aldom has licensed its manufacture in New Zealand and South Africa. Panelock, however, is far from Australia’s dominant truck body product. And with between 25 and 30 staff and a turnover in the millions. Aldom is far from a giant. “Most of the business is in South Australia,” D’Ambrosio says.

Technology company goes with the flow in China

FOR MANY PEOPLE, ‘doing business in China’ raises issues of language barriers, years taken to form relationships, and unfamiliar customs that involve banquets and business cards.

However, since launching in Hong Kong 18 months ago and Shanghai 6 months ago, we have found these perceptions to be considerably off the mark. Today’s China is a modern, fastpaced, and highly-educated business environment. Many of the people we deal with in China have been educated to a tertiary level in Australia, the USA or Europe, and so the reality is that doing business in China has many similarities with doing business in Australia.

Aconex was formed in 2000 with the goal of becoming Asia’s leading provider of online information management solutions to the construction industry. Our system (called Aconex) replaces paper documents on construction projects by storing all information online and is fast becoming the global industry standard. We are an independent, privately owned company that is proud to name Multiplex, Grocon, Bluescope Steel and McDonald’s Restaurants among our clients. We are also proud to say that we service more than 23,000 companies across 18 countries on projects valued at AU$65 billion, a volume of work that makes us the market leader in Australia and a fastgrowing contender in the UK and United Arab Emirates.

Taking out the risk of exporting

In everything we do, in both a personal and business sense, we are prepared to undertake an element of risk. To protect ourselves, we identify the risks and take steps to minimise them.

The same assessment is necessary when we are considering exporting our goods or services, because there are several major risks inherent in offshore trade. Among the most prominent of those risks are:

• Buyer risk – Will your purchaser be able to pay?
• Documentation risk - Can you meet the terms stated in the contract?
• Shipping risk – Can you get the goods there safely?
• Country risk – Is the destination country safe from political unrest?
• Bank risk – Are the banks involved in this transaction trustworthy and financially secure?
• Currency risk – What is the volatility of the currency like?
• More general risks related to general business – If I have to provide payment terms in order to compete in a particular market, will I be able to manage them with my cash flows? Once all possible risks are identified, we need to analyse each risk in relation to our specific business and decide a strategy to minimise its impact or remove the risk altogether.

One of the most important institutions to help mitigate these risks will be your bank. A bank that understands how you work with the trade cycle can not only help protect your business but also help you to optimise use of your capital and security.

Fast learning for online training company

MY COMPANY, OZeLearn is a small company with a big product. We have about 12 staff, with our head office in Bendigo, our servers in Adelaide, and another office in Liverpool in the UK. Our product provides web-delivered learning, which means companies can train their staff online while we provide all the support that an IT department normally would. This saves money and hassles for our customers by reducing their exposure to in-house IT responsibilities.

In 1999 we realised that further growth would only be possible if we could find a bigger market for our product. We had a sophisticated product but in a very small, competitive market, where it’s hard to capture significant market share. By contrast the sheer size of the United Kingdom market made it attractive.

So we went to the UK to explore the business opportunities. But at that time was too early for our product. Our product uses competency-based training, where student progress is measured by achievement, not time. Competency based training was well ahead in Australia, but in its infancy in the UK.