Plenty of scope for British ventures in Saudi Arabia

Updated 15 September 2015

Plenty of scope for British ventures in Saudi Arabia

LONDON: The opportunities for doing business in Saudi Arabia were explored during a day-long conference organized by the Middle East Association (MEA) and sponsored by Saudia, Rezayat Group and British Offset in London this week.

A wide range of companies such as Saudi Aramco, SAGIA, Rolls-Royce, Areen Design, Al-Abdulkarim Holding Company, TPP, BMG Financial Group and Takaful, Prudential took part in the event.
The conference was chaired by Sir William Patey, former UK ambassador to Saudi Arabia.
Keynote speakers included Peter Meyer, CEO, Middle East Association, Tobias Ellwood MP, Minister for the Middle East, Simon Collis, British ambassador to Saudi Arabia, Nasser Almutawa Alotaibi, co-chair, Saudi British Joint Business Council, Baroness Symons, co-chair, SBJBC, Imad Al-Abdulqader, director of Investment Promotion, SAGIA, Emad El-Dukair, CEO, The Care Group, Lord Tom King, special trade envoy to Saudi Arabia, and Vic Annells, director of trade, UKTI Saudi Arabia.
The message that came out strongly from the conference was that for UK businesses to succeed in Saudi Arabia, it was necessary to take a long-term view and be prepared to establish a presence in the country.
Companies that offer training opportunities and become part of the fabric of society are looked upon most favorably.
People who fly in for a meeting on a contract by contract basis and try to conduct their affairs by e-mail from Dubai or further afield are not so well regarded.
Lord Tom King emphasized that UK companies setting up in the Kingdom should be aware of the importance of providing job opportunities to young Saudi nationals.
The country has a young and fast growing population seeking good employment prospects.
Imad Al Abdulqader, director of Investment Promotion at SAGIA, emphasized that today’s business model is one of partnerships rather than mere transactions.
He added that right now there are more than 100 projects ripe for investment and many opportunities exist within the supply chains.
“The Saudi market is still open — the time is now,” he said.
There is plenty of scope for British businesses in the health care, education, defense and security fields as well as the major infrastructure projects to which the Saudi government is firmly committed.
It was noted that with Saudi Arabia going through a period of change at the top levels of government it would be necessary for companies allow for a time of adjustment and for patience to be shown in the light of an unfolding situation.
Saudi Arabia was described as a beacon of stability in a region facing considerable turmoil.
Companies wishing to do business with Saudi Arabia were advised to act now and take advantage of the opportunities that abound across many sectors, including for SMEs.
As one speaker put it — “Do not wait for the storms to pass — enjoy dancing in the rain.”
It was pointed out that dancing in the rain was not that easy to do in the arid conditions that prevail in the Kingdom — but the general point was understood.
There was some criticism levelled at the UK by Paul Tweedale of TenBroeke Co, who as a former Head of Risk and Business Development for HSBC Rail oversaw and developed a new business in financing and owning passenger rolling stock.
He expressed a view that the UK is failing to win big infrastructure projects in Saudi Arabia because of a lack of coordination in its approach which he feels to be too timid, polite and constrained by political correctness. As he put it: “We don’t get enough of the pie.” He watches China and Germany sweep in with confident and successful proposals and said he cannot understand how a country like the UK that has fantastic projects like Crossrail underway and who used to build railways all over the world is not better showcasing what it has to offer.
His criticisms, however, were not echoed by other delegates at the conference who said in their experience the assistance offered by organizations such as UKTI is extremely useful and effective.
Presentations made by representatives from the University of Leeds, in a panel chaired by former ambassador to Saudi Arabia, Sir Alan Munro, showed the important educational links between the UK and Saudi Arabia. Within the UK Leeds attracts the third highest number of students from the Kingdom after the universities of Wolverhampton and Manchester with many studying engineering.
Khalid Al-Abdulkarim, CEO of Al AbulKarim Holding Company, pointed out that after graduation the Saudi students will take up employment in Saudi Arabia.
He thought it would be useful if British companies were to reach out to the Saudi students while they are studying the UK to offer work programs.
The focus here would not be on the pay but on the experience.
The upside for the UK companies would be that the students would gain first-hand knowledge of their company and products which can only bolster mutual business opportunities in the longer term.
On a separate issue, he spoke about how the US is very up to speed on being able to offer highly coordinated and comprehensive university systems.
He pointed out that a State like Texas, with the backing of the US government, can offer a complete university system. For countries wanting to build universities this is very attractive.
They offer the system and the experience.
In the UK, he said, things were more piecemeal with individual universities offering their particular expertise in a less coordinated way.
One of the areas where it was felt that British business could be better provided for by Saudi Arabia relates to visas.
While the US has an arrangement for five-year multiple entry visas, British business people have to make do with a six-month visa which many find inconvenient.
Concerns were also expressed over SAMA’s insurance regulations which it was felt would have been better framed under conventional terms.
Overall, the mood in the room was one of optimism with a lot of networking taking place during the breaks.
The conference which was packed full was held in the impressive Edwardian surroundings of One Great George Street in the heart of Westminster.


INTERVIEW: Philip Morris International mideast chief on using hi-tech to progress toward a smoke-free future

Updated 18 August 2019

INTERVIEW: Philip Morris International mideast chief on using hi-tech to progress toward a smoke-free future

  • Tarkan Demirbas tells Arab News how smart technology will woo 9 million Gulf smokers and reduce risk

Alongside politics and religion, there is one other dinner party subject virtually guaranteed to push people to opposing extremes: Smoking.

In much of the world — especially the West but increasingly in the Middle East and other emerging markets — tobacco has been marginalized to the point where smokers feel shunned and lonely in many social environments, banished to pavements or poorly ventilated kiosks in airports.

After a series of multi-billion dollar lawsuits around the globe for the undoubted bad effects smoking has on health, Big Tobacco — the giant multinational companies that made billions out of the nicotine habit but neglected to say exactly how bad it was — is nowhere near as big as it once was.

All of which leaves Tarkan Demirbas with something of a challenge. He is vice president for the Middle East of one of the biggest tobacco companies, Philip Morris International (PMI).
Think Lucky Strike and the Marlboro Cowboy, legends of the industry and of marketing before grim, litigious reality overtook
the business.

BIO

BORN • 1968, Erzurum, Turkey.

EDUCATION • Bogazici University BSc Industrial engineering. • University of West Georgia, MBA.

CAREER  • Senior management positions at PMI in Hungary, Colombia, Malaysia, Singapore, Switzerland. • Vice President Middle East.

Demirbas is on message for the new anti-tobacco era. “There is no doubt that the best way to reduce the risks of smoking is to not smoke or use any nicotine product at all,” he said recently at an event in Dubai’s Capital Club, an oasis of tobacco-friendliness in the anti-smoking desert of the Dubai International Financial Centre.

On the surface, that seems a strange line from somebody who for the past 15 years has been promoting PMI’s products around the world, from southeast Asia through Budapest and on to Bogota with a stint at PMI’s Swiss HQ along the way.

But it coincides with a new direction PMI has taken. The new buzz-phrase in the company is “a smoke-free future.”

PMI launched the initiative with a “commitment and ambition to replace cigarettes as soon as possible with better alternatives to smoking for the millions of men and women who would otherwise continue to smoke.”

That might sound like turkeys voting for Christmas, but there is a sound business logic, as Demirbas explained. “The reality is that the vast majority of smokers simply do not quit. Even the World Health Organization’s own predictions forecast that there will continue to be more than 1 billion smokers by the year 2025,” he said.

“This is why a growing number of experts believe that public health policies should not be based solely on discouraging initiation and encouraging cessation, but need to leverage the potential of scientifically substantiated smoke-free products for the benefit of smokers and public health,” he added.

Technology is key to the campaign, and the product that PMI has come up with is IQOS. The Dubai event marked its regional launch. Imagine a slim mobile phone with a stubby cigarette sucking out of one end, encased it in a stylish carrying case-cum-charger, and you have an idea of IQOS.

Unlike other electronic smoking devices which vaporize nicotine juice, avoiding the harmful effects of the pathogens produced by burning tobacco, IQOS stays with the weed but does not burn it.

By heating tobacco sticks — called Heets — that look like mini-cigarettes to 350 degrees Celsius, the nicotine that smokers crave is released, but the tobacco is not burnt. Demirbas cites respected scientific sources as well as PMI’s own research indicating that 95 percent of the harmful by-products of tobacco are avoided.

Amid jokes that the Marlboro Cowboy would find it hard to use IQOS and ride his horse at the same time, nicotine-hooked cigarette smokers at the event said the result was pretty close to the “real thing.”

There is potentially a big market to go for, globally as well as regionally. Worldwide, some 150 million people use PMI’s tobacco products, still overwhelmingly traditional cigarettes. By 2025, he aims to get 40 million of those onto heated tobacco products like IQOS.

“This year, our priority is to go deeper into existing launch markets. We are encouraged by the results to date, including that there approximately 8 million smokers who have completely abandoned cigarettes and switched to IQOS. Japan is the best example of IQOS’ success, where we have achieved nearly 17 percent of the national share of the market,” he said.

IQOS is currently in nearly 50 markets, including Japan, Korea, Canada, a number of European countries such as Germany, the UK and Spain, as well as Russia, Ukraine and Colombia.

PMI passed a significant milestone in its campaign to go global with IQOS when the American Federal Drug Administration authorized IQOS and other variants. It will market its products in the US in partnership with Altria, the big investor which has made a commitment to the “smoke-free future” with multibillion dollar funding of Juul, the market leader in the worldwide vaping craze.

 “There are 40 million American men and women who smoke. Some of them will quit, but most won’t, and for them IQOS offers a smoke-free alternative to continued smoking,” Demirbas said.

Progress towards smoke freedom remains elusive in China, the world’s biggest market, where PMI markets Marlboro and in turn promotes traditional Chinese tobacco brands around the world.

The UAE joined the list of countries heading smoke-free last year when an IQOS stand appeared in Dubai International Airport’s duty free section. The UAE was ambivalent about the value of trying to lure smokers off tobacco and onto safer products, with the Emirates’ health authorities warning against the use of e-cigarettes and vaping devices. 

But the IQOS airport stand was a sign of a change of heart, and was followed by public pronouncements that vaping would also be made legal. Users in the UAE had previously resorted to some pretty furtive measures to get their nicotine fix, but non-tobacco nicotine products appeared to be here to stay, judged by the large numbers of people seen sucking on devices in many outdoor public places.

After the UAE launch, non-cigarette nicotine is going mainstream. The Heet sticks will be on sale for around DH20 (SR20) per pack — roughly the same as a pack of Marlboro — in most traditional smoking shops, while the devices — retailing at around Dh250 — will be sold in Carrefour supermarkets and, eventually, branded flagship stores.

Demirbas sees the UAE as a testing ground for expansion into other Middle Eastern markets, with Saudi Arabia high on the list of targets. PMI already knows there is an appetite for its device in the Kingdom from the large numbers of Saudi citizens buying them at Dubai airport.

At the airport, they have to present national ID cards or passports as proof of age — 18 is commonly the age limit for buying tobacco products in the Gulf region — as well as making a declaration that they are already smokers who wish to quit cigarettes. “I stress that we are trying to convert existing smokers, not trying to get anybody started on nicotine,” Demirbas said.

“From a public health standpoint, we see great potential for reduced risk products in Saudi Arabia. In our view, it is important to set the right regulatory framework to ensure companies adhere to best practices and comply with local legislation with the adult consumers of these products in mind, particularly as alternative forms of nicotine consumption are being recognized in leading global markets, including Saudi Arabia,” he said.

“Our ultimate goal is to convert all the 9 million adult smokers across the GCC, who would not otherwise quit, to IQOS,” he added.

PMI faces significant competition in its mission. Juul, the trendy but controversial device that has grabbed a big slice of the global market as the “iPhone of the vaping business.” Several other vaping products already have a foothold and a cachet that could be challenging for PMI.

At the Capital Club, the test audience for the IQOS launch was a mixed band of cigarette and vape users who gave the new product serious consideration. Some were sold on it straight away, others said they would give it a try and were gifted samples by PMI. The stylish look of the new product was a big selling point for the tech-style savvy consumers.

Others were put off by the charging process that has to be carried everywhere and used between smokes. One complained that the taste was simply too similar to the cigarettes he had been trying to kick for years.

As Big Tobacco seeks to reposition itself in the new anti-smoking age, the multibillion dollar nicotine industry will always be controversial. Maybe IQOS will be the hi-tech product that helps millions finally kick the smoking habit. Demirbas hopes so.

“We’ve invested $6 billion in it. It’s the most advanced technology there is,” he said.