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Business

Sending it by bike

by Nathalie Rosa Bucher August 29, 2013
written by Nathalie Rosa Bucher

As a student, Karim Sokhn used to cycle to Université Saint-Joseph, frequently returning late at night. “Beirut is charming at night. It is small, everything’s close and it’s fascinating to experience the contrasts between old and new areas.”

An intense love for cycling and strong environmental concerns motivated him and Matt Saunders to set up Deghri Messengers – the first bicycle messenger company in the Arab world – as a project run by CyclingCircle s.a.r.l . As of next month, Beirutis will be able to send goods by bike.

“Bike messengers are found all over the world in congested cities with large economies, particularly service-based ones,” Saunders explains. “It was a logical step to apply this idea to Beirut.”

As co-owner and manager of CyclineCircle, Sokhn has successfully been organizing bicycle rides and bike-related activities, including night rides, around Beirut since its inception a year ago. Saunders, who worked three years as a bike messenger in Zurich, Switzerland, has been sharing his logistical know-how, training local cyclists and teaching them about being safe on the road and how to best and safely deliver letters and parcels of up to 10 kilograms that must fit into the giant, waterproof messenger bags the crew will don.

He says they have only carried out limited tests on the market, but are confident their service will succeed. “Market research has involved extensive opinion-gauging but stopping short of commissioning surveys and finding out about the strengths and weaknesses of existing delivery services.”

Sokhn adds, “some people argue that motorcycle companies are faster and charge the same price. That’s some of the feedback we get but by and large we get mostly positive responses — also from members of the cycling community. Many of them are business owners or managers.”

Deghri has had a fair bit of exposure from major national and international news organizations wanting to profile Deghri Messengers as a service, CyclingCircle as a movement and the Beiruti cycling scene in general. “Our promotion strategy relies on a combination of word-of-mouth promotion, social media activity and traditional advertising,” according to Saunders.

The two young entrepreneurs bank on the messengers' ability to speedily and reliably zip through all kinds of traffic and deliver on time. Customers will ultimately choose Deghri for their professionalism, competitive edge and for something motorized delivery services can’t offer: environmental benefits of a carbon-neutral service.

The $6,600 start-up capital needed to establish Deghri was fundraised. With this amount secured, the money has been invested in branded shirts, messenger bags and phones as well as locks, comprehensive insurance and corporate identity and advertising material.

The eight messengers who will ride on their own bicycles include two women. But in a city where few cycle, the danger to cyclists is clear. All the messengers are experienced cyclists and the messengers have to undergo a thorough training course during which a very strong emphasis is placed on safe cycling practices, minimizing risks and proper safety equipment. “It is also worth noting that all messengers are privately insured,” Saunders, who runs the training sessions, added. Deghri hopes to be increasing the team in early 2014 to 15.

While bike messengering has declined somewhat in Europe and North America, Sokhn points out that in Lebanon, electricity and reliable Internet are not a given. “There is still a value here of personally written and stamped documents,” Saunders adds. “We’re hoping private people will use our services, which generally is for everybody who needs to send or receive something urgently.” Anything can be couriered by bike messenger, including hard drives, fabrics, proofs, brochures, blood samples and promotional materials. Every item to be dispatched will be checked.

Bike ‘messengering’ does not constitute a hugely lucrative business, but Deghri pursues different aims. “We want the messengers to get a good pay,” Saunders explains. Sokhn, who runs CyclingCircle on the side of his full-time job, concurs: “Money is not a priority. Dispatchers and messengers will be earning based on a generous commission system, with the messengers earning most of the delivery fees.”

A regular delivery request within Beirut City (delivery within two hours of a request placed) costs LL9,000 ($6), while express service (within one hour) costs an additional LL3,000 ($2). Operations will run in line with office hours during the week and half-days Saturdays. Customers must pay in cash.

Deghri will cover the city of Beirut as well as greater Beirut, including Bouchrieh, Dekwaneh, Mkalles and Hazmieh in the East, and Hadath, Mreijeh and Bourj al Brajneh in the South.

Customers thus far include companies and NGOs. Saunders expects the customer base in Beirut to mirror Europe’s, and include hospitals, labs and clinics for medical deliveries. “We expect a similar customer profile and we want to prove our reliability.”

“Beirut is small and very compact,” Saunders points out. “Beirut city is only 6-7km across, distances are so cycle-able, and the heavy traffic makes it even more sensible, and more secure to ride.”

August 29, 2013 0 comments
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The Buzz

Business briefing: 29 Aug 2013

by Executive Staff August 29, 2013
written by Executive Staff

Economics and Policy

Brent crude oil is likely to rise towards $125 a barrel if the West launches air strikes against Syria and could go even higher if the conflict spills over into the rest of the Middle East, Societe Generale said on Wednesday.

More from Reuters

 

Major tour operators in Finland, Sweden, Norway and Denmark say they have canceled at least 60,000 trips to Egypt through the winter season that lasts until April due to recent unrest.

More from Associated Press

 

Despite this news, Egypt’s Cabinet approved Wednesday an additional 22.3 billion Egyptian pounds ($3.19 billion) in investment projects to boost the economy over the coming 10 months.

More from The Daily Star

 

The Economic Committees, Lebanon’s leading private sector association, geared up Wednesday for a nationwide strike planned for next week over the country's political vacuum.

More from The Daily Star

 

Companies and Business

The Arriyadh Development Authority (ADA) in Saudi Arabia has announced the two winning international consortia who will oversee the design and construction of Riyadh's new $22.5bn metro system.

More from Reuters

 

Saudi Aramco has signed agreements with a Japanese-Saudi consortium to build and operate cogeneration power plants.

More from Arabian Business

 

Passenger traffic at the Dubai International continued to increase in July and the world’s second busiest airport for international passengers maintained a double-digit growth for the first seven months of the year, compared to the same period in 2012.

More from Khaleej Times

August 29, 2013 0 comments
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Society

Homosexuality is not an illness, Lebanese scientists decide

by Benjamin Redd August 29, 2013
written by Benjamin Redd

Homosexuality is not an illness and cannot be ‘cured’, two leading Lebanese mental health organizations have agreed in a landmark ruling. The Lebanese Psychiatric Society (LPS) and the Lebanese Psychological Association (LPA) declared that gay people could not be treated as it was not abnormal, the first time scientific organizations had made such statements in the Arab world.

In a joint press conference with the Lebanese Medical Association for Sexual Health (LebMASH) on Wednesday, the participants noted that the worldwide consensus of their respective professions is that these therapies have no medical or scientific basis.

During the joint press conference, organized by local LGBT-rights group Helem, representatives from the three associations outlined their reasons for the change in policy. “Reparative” or “conversion” therapy, which attempts to change a person’s sexual orientation, has no medical or scientific basis, according to the organizations.

Furthermore, such therapy can be harmful to the patient — delegitimizing the practice in the eyes of the professional associations. “No real psychologist does reparative therapy,” claims Dr. Leyla Akoury-Dirani, a clinical psychologist with the LPA, adding that were a member of the LPA to engage in such practices, the organization would take action: asking the psychologist to stop or banishing them from the association.

However, since the LPA has no legal authority over psychologists — no organization does in Lebanon — they would be unable to take further punitive measures or force the offender to stop. This is a problem in Lebanon, says Akoury-Dirani, because “anyone with a bachelor’s degree [for instance] can act like a psychologist and treat people.”

The LPS, on the other hand, is part of the Lebanese Order of Physicians, a professional syndicate with legal powers. As such, the LPS’s Dr. Georges Karam says that if a doctor is found to be “using a treatment that causes harm” — as ‘reparative’ therapy is now classified — “they will be referred to the ethics committee” for punishment. So for psychiatrists, who are doctors and able to prescribe medication, there now exists an enforcement mechanism to stop these harmful therapies.

Despite the proclamations, homosexuality is far from accepted in Lebanon, with a recent poll finding that only 18 percent of Lebanese thought it should be accepted, down from 21 percent in 2002.

The need for the LPS and LPA statements is clear to Hamed Saleh, a board member at Helem. “We were struggling with people — especially young people — who are being taken to doctors who claim they can change their sexuality using spiritual and dogmatic [techniques] and others twisting science” to support ‘reparative’ therapy, he says.

But Helem’s ultimate interest in the matter is more legal than medical. “Our main focus is on the decriminalization of homosexuality,” says Saleh. Lebanon’s Article 534, which is usually applied to homosexuality, bans ‘unnatural’ acts. If homosexual acts are not unnatural from a scientific viewpoint, as the LPS and LPA statements imply, this “discredits 534” and its application to homosexuality, according to Saleh. “Why are you charging a person, if he’s not doing anything wrong or unnatural, so what is the point of 534?”

 

A full report on Lebanon’s gay economy can be found in September’s edition, out on Saturday

August 29, 2013 0 comments
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The Buzz

Business briefing: 28 Aug 2013

by Executive Staff August 28, 2013
written by Executive Staff

Economics and Policy

Consumer confidence in Lebanon remains the lowest compared to its regional peers despite marginal improvement, a new study has found.

More from The Daily Star

 

Brent crude jumped to a six-month high, rising more than $3 to top $114 a barrel and sent equities worldwide substantially lower Tuesday as Western powers considered a military strike against Syria.

More from Reuters

 

 
The threat of an attack on Syria also affected the Gulf, with markets plunging on Tuesday.
 
More from Arabian Business
 
 
Companies and Business
 

Oman is in talks to buy Iranian gas in a 25-year deal worth about $60 billion, Iran's oil minister said yesterday.

More from The National

 

National Petroleum Construction Company (NPCC), in consortium with Technip France Abu Dhabi, has been awarded a $1.69bn contract to develop an Abu Dhabi offshore oil field.

More from Arabian Business

 

Land and property sales in Dubai have skyrocketed by 67 percent in a year with $6.26bn of transactions made to the end of July, figures show.

More from Arabian Business

 

Several Lebanese tourism businesses will face bankruptcy by the end of next month, officials in the industry warned on Tuesday.

More from The Daily Star

 

August 28, 2013 0 comments
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Society

Steering clear

by Tamara Rasamny August 28, 2013
written by Tamara Rasamny

When the dealer for Italian luxury marque Maserati is asked to talk of his business, he dips straight into childhood pleasures. “In my generation, when we were young, we used to play with small toy cars. These were my toys during my childhood, and I still live it ‘til this day.  So I went from playing with small cars to playing with big cars,” says Nabil G. Bazerji, managing director at G.A. Bazerji & Sons, explaining how the passion that drives his business today has remained the same since his family first started representing Maserati in Lebanon in 1969. 

Family passion for top-of-the-line cars is also the lifeblood of the Saad & Trad dealership which represents Bentley, Jaguar and Lamborghini in Lebanon. When his late father, Robert Trad, was traveling abroad, “he saw a Jaguar on a road and was so struck by the beauty of the car that he decided to import the car to Lebanon,” says Wissam Trad, director of the dealership. 

For Assaad R. Raphael, it was neither the Italian elegance nor the British noblesse but the power of Germany’s Porsche that made his pulse race years before he entered the automotive industry in 2002. Today he is the chairman and general manager of Porsche Center Lebanon. His favorite set of blazing wheels is the 911 GT3. He enthuses, “Until today, it has only been offered as a manual gearbox, because it is a car that you can drive on road and on track without any modification to it.”

The passion of these dealers is ever more important for keeping Lebanon’s luxury car market afloat in the current economy. Sales of all three dealers were hit in 2012. Porsche, which reported record global exports of 81,500 units in the first half of 2013, is the top-selling luxury sports car in Lebanon, but sales decreased from 311 cars in 2011 to 297 cars in 2012. Customers are not in the mood to spend, and “doing business during these times in Lebanon has become very difficult,” says Raphael.

The Maserati GranTurismo MC Stradale

 

Although Maserati sales ticked up from 17 to 19 cars between 2011 and 2012, the demand was significantly below the 26 units sold in 2010. For Bazerji, the local clientele of Maserati is defined by “the people who are behind the growth of the economy”, but the economy may just have grown too little for them to celebrate.

Trad can point to two reasons Jaguar sales slumped from their peak in 2010. Besides the weak local economy, Arab travel bans came to bear negatively on demand for the make, which is a favorite in the luxury rental car market. “This year has been my worst year in terms of sales for rental cars,” he says. 

 A particular soul for each brand

Bazerji, Trad and Raphael all say that luxury car brands each attract a distinct customer base, but some also appeal to a wide range of potential buyers.

The Maserati Quattroporte “is a four-door car with a sports heart”, says Bazerji. As the Quattroporte usually targets businessmen who are above the age of 50, Maserati will be introducing a smaller sedan by the end of this year in the hopes of attracting customers over thirty and women. According to Bazerji, female customers are usually first drawn to the  GranCabrio and the Coupé model, but he expects the smaller sedan to appeal to women. 

Approximately half of Jaguar’s customers are women.  “Women love Jaguar,” says Trad. The two other luxury car brands in his stable, Bentley and Lamborghini, are a different story. Very few women opt for a Bentley and, at least in Lebanon, absolutely none fancy driving the Lamborghini as their luxury transport. 

Raphael says that Porsche does not have a typical client, but an increasing proportion of its buyers in Lebanon are women. Besides having the wealth that it takes to afford a luxury car, his clients are “usually well-educated, know what they want and are very demanding”.  

The Jaguar XJ

 

The introduction of the Porsche Cayenne in 2002 was a breakthrough for the company. It was Porsche’s first SUV, and it was able to suit a larger clientele. “The sales drastically increased, almost twice as much,” says Raphael. The Cayenne was not only the highest selling model for Porsche in the United States but also in Lebanon, where 153 models were sold in 2012, nine more sales than those of the rest of the Porsche models, combined.

Care beyond the dealership lot

Even though the Cayenne has helped generate cash flow, the obvious challenge remains Lebanon’s current economic and political situation. What do these automotive companies do to try and boost their sales? Raphael explains that Porsche Center Lebanon “does everything it takes”. The company allows potential customers test drives, and it personalizes its contacts by keeping in touch with clients and welcoming them to the Porsche community.  

“A Porsche customer should be led through the Porsche experience in an excellent way,” Raphael says. A month after a customer purchases a car, they receive a ‘welcome kit’ which includes a frame of a signed Porsche logo, the car’s engine number, the chassis number and an invitation to join the Porsche Club. A Porsche customer also receives a package for their car’s first anniversary. In addition to this, the company has hosted events such as the “Porsche Kids Driving School” in partnership with Kunhadi, an organization dedicated to promoting road safety. 

Trad, Lebanon’s dealer of Bentley, Jaguar and Lamborghini, is offering special conditions and discounts to customers to improve sales. These include free options on the car. “We find ways to give attractive options to our clients,” says Trad.  

Bazerji emphasizes how important it is to find potential customers — which he refers to as leads — who show interest in his cars. He “[creates] contact between the lead and the car with the aim to motivate enough interest until they become customers”. However, he explains that “the difficult part is finding leads” because of the current political and economic situation in the country. Bazerji introduced the Maserati Club to Lebanon two years ago. The club hosts a variety of events. According to Bazerji, “What is amazing is that even if people do not know each other, by putting them together, we see that they can mix easily because of the love they have for their cars.”

For those who want to indulge in their passions, feel the thrill of the accelerator, or just show off their wealth, Lebanon’s high-end dealers are waiting with keys in hand. 

August 28, 2013 0 comments
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Economics & PolicyLuxury

Fit for a king

by Michael Karam August 27, 2013
written by Michael Karam

Alistair Hughes, owner of Savoir Beds, is explaining the role of the royal bed in late 17th century England, which was apparently more than just a construction to sleep in — it was a symbol of the monarchy.  “Charles II would travel around the country with a vast bed,” he says. “His friends would all sleep with him in it and courtiers would bow to the bed whenever they entered.”

Hughes is giving context to Savoir’s latest creation, the £125,000 ($192,000) Royal State. Only 60 of the beds will be made and three have already been bought by Qatari clients. “It is truly a magnificent piece of work. The labor intensive mattress and box spring cost around £70,000 [$107,000], the frame £50,000 [$76,000] and the crest £3,000 [$4,600],” he says with unerring self-belief.  “This is our homage to historical tradition,” he says. “And by the way, Charles II’s bed would today cost £30 million [$46 million], the equivalent to ten London town houses.” 

Hughes and his partner bought Savoir, the company that makes the world’s most expensive beds, from the Savoy Group in 1997. “Back then it was called the Savoy Bed Works, a company that was founded in 1924 and had previously been called James Edwards. When we bought it, we called it Savoir as a nod to the previous owners.” And no doubt the fact that he and his partner “knew” what they were doing. 

Bedding the customer

“I started with two and a half men and a sewing machine,” he laughs. He now makes 600 units annually, with a turnover of £7 million ($10.7 million). This figure excludes the Royal State beds, which if sold would generate revenues of £7.5 million alone ($115 million). The regular range — again excluding the Royal State — cost between £7,000 ($10,750) and £70,000 ($107,000). Half of Savoir’s beds go abroad with 10 percent ending up in the GCC. Frank Sinatra owned one, Emma Thompson loves them and the King of Morocco ordered 24 after sleeping on one.

Surely they can’t be that good. “You might think paying thousands of pounds for a bed is a lot,” says Hughes, “but our entry level bed works out at around £1 [$1.5] a night over 25 years. Our customers, 70 percent of whom are private individuals, have no complaints.”

Savoir has just opened two showrooms in China and one in Qatar, where he is still working out how to encourage couples to “try” beds in what is a traditionally conservative region. “For couples we are considering closed off areas, and we are training female staff so women shoppers can feel more comfortable.” 

Lebanon, with its affluent and discerning consumer base, is also on Hughes’s radar, and he is toying with the idea of opening a showroom in Downtown Beirut. 

For anyone wanting to try a Savoir bed, they can be found in the Riverside suites at London’s Savoy Hotel. “You would be amazed, considering how much they have to endure, how little hotels invest in beds,” says Hughes running through a list of the some the world’s most famous establishments and how much each spends on their mattresses. “Don’t quote me on those figures but let’s just say the international average is £300 [$460]. It’s quite staggering when you think about it.”   

He admits that the beds, while at the very pinnacle of luxury items, are not toys in the way that cars, boats and watches are. Still, he was thrilled to hear that in a recent poll conducted by a men’s magazine in which women were asked what was sexier: a man who boasts he drives a Maserati or a man who sleeps in a $20,000 bed, the majority opted for the latter. Now that’s a selling point.

August 27, 2013 0 comments
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The Buzz

Business briefing: 27 August 2013

by Executive Staff August 27, 2013
written by Executive Staff

Economics and Policy

The Turkish lira was headed for the weakest level on record Monday as the central bank provided funds to banks at its benchmark 4.5 percent rate for the first time in six days.

More from Bloomberg

 

In more bad news for Ankara, Abu Dhabi National Energy Co. may shelve a $12 billion power project in Turkey amid a deteriorating economic outlook and increasingly difficult financing conditions.

More from Reuters

 

The Egyptian pound strengthened on the black market on Monday as fears the country might be sliding into a period of sustained violence eased after a protest Friday passed relatively peacefully.

More from Reuters

Iraq’s Oil Ministry, struggling with sputtering output, has blamed Anglo-Dutch energy giant Shell over $4.6 billion in lost revenue due to production delays.

More from AFP

 

Companies and Business

International tourist arrivals to the Middle East grew by 13 percent during the first half of 2013 compared to the same period last year, according to a global tourism organisation.

More from Arabian Business

 

Net profits of the seven Lebanese banks operating in Syria have grown around 591 percent, but experts dismissed the rise as merely due to valuation of foreign currencies to the pound.

More from The Daily Star

 

HSBC has launched a series of Renminibi (RMB) accounts for its customers in the Middle East facilitating various investment options in China.

More from Gulf Business

 

Jordan’s largest lender, the Arab Bank, announced this week that a New York federal court has dismissed more than 90 percent of the claims in a long-running lawsuit accusing it of providing banking services to charities and individuals allegedly affiliated with Palestinian militants.

More from The Daily Star

 

Abu Dhabi’s new luxury mall The Galleria at Sowwah Square opened its doors on Tuesday, bringing more than 50 new fashion labels and several new food and beverage brands to the capital for the first time.

More from Arabian Business

August 27, 2013 0 comments
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Business

Online gaming: Turning apps into cash

by Livia Murray August 26, 2013
written by Livia Murray

The mobile gaming industry is notoriously risky: in a market estimated to grow to $12.3 billion in 2013, a game can make millions or it can get lost in the sea of apps. With profits from mobile games ranging widely from zero to over $1 million a day, much of what makes a game go viral still depends on luck. But a readiness to formulate a strategy can pay off.

Lebanese game development and launch company Gamabox — half of the group that brought us the hugely popular dystopian killer chicken game Birdy Nam Nam — has been experimenting with mobile gaming apps. With two game launches under their belt as Gamabox, co-founders Souad Merhebi and Jean-Christophe Hoelt have been able to draw some lessons about how best to tackle this tricky but lucrative market. “Every day thousands of new games and apps are published. It is hard to get noticed — you have to build a strategy,” says Merhebi.

The company was founded in March 2012 and brought Himzu Bavitch onto the team as an illustrator. A year later — in February — they released the mobile game Ali Hood, which played on a cross between two popular heroes: Ali Baba and Robin Hood. The strategy to market Ali Hood relied on media, review websites and forums — low-budget forms of advertising. Though the game received considerable attention and Merhebi put the number of downloads in the thousands, she did not want to talk about the specific revenues as it did not achieve the success its creators were hoping for.

Merhebi and Hoelt established the company in 2012

 

After their experience with Ali Hood, in July the company launched Baby Goo Puzzle. This game is designed for children aged from 11 months to three years to solve small puzzles, and was released in Arabic, French, English and Spanish. It has already received positive reviews and has seen considerable success in the French market, with Gamabox already receiving half the return on their investment developing the game. They expect to make a full return within the next three months.

Picking the right model

How a game can thrive in the market is a question asked by mobile game developers everywhere. One thing Merhebi stressed was knowing and adapting to your market, since a good idea is not always enough. “There are many great games that are well done, addictive, yet which still don’t make it,” she says.

Many games’ success is contingent on being there at the right moment. Merhebi says that this can be tapped into “by looking at market trends and seeing if a need exists.” Merhebi and Hoelt realized that parents were looking for puzzle games for their children after spending time with some of their friends whose children loved physical puzzles. The idea came to them to design a game for a phone or a tablet, and after looking in the app store they saw limited competition. Baby Goo Puzzle was developed within a month, which allowed them to release it shortly after identifying the market need.

Making money from online games is a challenge, especially when many games are offered for free. An additional difficulty is pirating: according to Merhebi when Ali Hood was sold at $1.99 per download, only three percent of downloads came from the Appstore and Google Play whereas 97 percent were downloaded illegally. Merhebi, however, believes that paid games can offer more to the customer because they are of better quality, well-polished and consist of finer ideas.

To get money from games requires knowing what the market is willing to pay for. One thing that distinguished Baby Goo Puzzle was that it was launched on a freemium payment platform, where the download as well as the first four out of twenty levels of the game are free — with a cost of $1 to access subsequent levels. Merhebi and Hoelt were happy with Baby Goo Puzzle’s conversion rate of six percent — meaning six percent of people who downloaded the app paid to unlock the extra levels. According to Merhebi this is twice the average global rate of three percent.

The monetary success of Baby Goo Puzzle made Mehrebi and Hoelt decide to re-launch Ali Hood using a freemium model. Merhebi and Hoelt are in the process of collecting analytics to refine the game — in particular looking at user feedback. Much of this was positive, but there were also comments that, for instance, some levels were too hard while others were too easy. To make sure their market is receptive, they are testing new versions of Ali Hood by releasing slightly modified versions under a different name. These versions will be released for a short period of time until they gather enough user feedback.

With high hopes for Baby Goo Puzzle and a determination to revamp Ali Hood, Gamabox is a games platform to look out for in the next couple of months. They are currently talking to Lebanese investors to get outside funding for their games — which up until now have been produced without external money. Though they did not specify the investors, they said that the amounts they were seeking would be enough to launch four to five games. Considering a game in the mobile market can cost between $10,000–$250,000, this could amount to a sizeable amount of cash.

August 26, 2013 0 comments
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The Buzz

Business briefing: 26 August 2013

by Executive Staff August 26, 2013
written by Executive Staff

Economics and Policy

Iran will stop paying monthly cash handouts to citizens who don’t need the aid, Shargh reported Sunday, citing a member of parliament.

More from Bloomberg

 

Elsewhere in Iran, the country's new oil minister has said the country is being hurt by high oil prices.

More from Reuters

 

Sudan earned at least $230 million in fees for the export of South Sudanese oil this year, official media reported Sunday.

More from AFP

 

Egypt’s premier said comments by International Monetary Fund Managing Director Christine Lagarde acknowledge that Egypt needs assistance.

More from Bloomberg

 
Companies and Business
 

Dubai's bourse on Sunday posted its largest one-day gain in August as small-caps surged on buying by retail investors, while Egypt rose for a fourth straight session after curfew hours were reduced.

More from Reuters

 

Al Jazeera has accused US cable firm AT&T of coming up with a “pretextual scheme” and having “acted in bad faith” after it refused to carry the Qatari broadcaster’s US channel at the 11th hour.

More from Arabian Business

 

Lebanon's FFA Private Bank has started financing Hollywood films.

More from The Daily Star

 

Global contractors have been invited to submit bids for rights to construct a US$2.5 billion airport in Iraq.

More from The National

 

August 26, 2013 0 comments
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Business

Falafel games

by Paul Cochrane August 23, 2013
written by Paul Cochrane

Falafel Games is behind one of the most popular online games in Arabic, Knights of Glory, with around half a million members. On its website, the firm states its aim is to “design and produce the best games of the Middle East, from the Middle East, for the Middle East.” Yet while its core market is the Middle East and North Africa, the management is from Lebanon and Syria, and its strategic partners are Beirut-based venture capital firm Middle East Venture Partners and the Dubai-based MBC Group. Falafel Games is based in Hangzhou, a city of 4 million people some 40 minutes west of Shanghai by train.

Located on the top floor of an office block in the city center, it would seem a surprising choice of location for a company that needs employees to speak and write Arabic to interact with customers.  

The lure of the far east

So why did Lebanese co-founder and Chief Executive Vincent Ghossoub and Syrian co-founder Radwan Kasmiya, who was behind Arabic video games Quraish and Tahat Al Hasar (Under Siege), set up shop in China in 2010 rather than opt for say the Dubai Media City, the programming hub of Bangalore, or anywhere else on the planet for   that matter?

The short answer is that Ghossoub, after graduating from the American University of Beirut, initially went to Shanghai in 2007 to do an MBA and study Chinese, liked the place and wanted to stay. 

The office is a mix of Chinese and Arab workers

 

“To give a more objective reason, the business we do can only be done in China or Europe. It is not about programming cheaply — if you want that you go to India — but we need art, story boards and pretty high-end programming,” said Ghossoub. “In fact, 75 percent of global production of online games within our category is done in China.”

Falafel Games has a total of 22 staff, with three working remotely in Syria. In Hangzhou, in addition to Ghossoub and Kasmiya, there are three Syrians involved in customer care and Arabic language content of the game. The company also has one Chinese employee that speaks Arabic, and is soon to employ a second, while the rest of the Chinese staff are involved with the artistic and programming side of the game. “Hangzhou is pretty convenient to find Chinese Arabic speakers as it is near Yi Wu, a major trade center that attracts Arab traders, where there are a lot of Arabic speakers,” said Ghossoub.

When it comes to attracting Arabs to work for the company, Yi Wu again was a resource pool, while Hangzhou itself has its own appeal, renowned as a tourist destination for its West Lake and parks. “It is not difficult to find Arabs and a nice place to live — a quiet life, you don’t need to spend much, and one of the most beautiful cities in the country; there is even a mosque,” said Ghossoub. In terms of attracting programmers, Hangzhou has one of the country’s best information technology (IT) universities, and is a less competitive IT hub than Beijing or Shanghai. 

The characters may look Middle Eastern, but they are designed in China

 

Salary wise, Chinese and Syrian expatriate staff are paid similarly, “although the lower end of the Chinese [salaries] is lower than Syrian expats’ and the higher end of Chinese salaries is higher than Syrian expats’,” said Ghossoub. He added that the company would not easily have brought together a similar team in the MENA, “which actually makes our savings almost infinite.” 

Operating in China is three times more expensive than it would be in Syria, but two times less than in Dubai. Staff travel costs were around 7 percent of overall staff costs in 2012, and for executives on business trips less than 5 percent of the marketing budget. 

Working with Chinese companies is also straightforward and efficient. “The Chinese have great work ethics, and leaders of companies are workaholics, and want profits, so [they are] easy to work with and [offer] good service,” said Ghossoub.

Setting up the business in China was fairly straightforward, and no local partner was required. “The bureaucracy here is, if I have to compare it to the MENA, somewhere in the middle: worse than half the MENA and better than the other half. It’s not trendy to say that, but the little errands needed to set up and run a company are done through clear procedures and no corruption,” he said.

With the core business online, physical proximity to the MENA is not a necessity, but promoting the game from China can be challenging. “As far as collaborating with the ecosystem, and getting marketing at an industry influential level, it’s not that easy, as we can’t sit down and have coffee with media people or collaborators as we are at the end of the world. We have overcome those issues at conferences and events, and catch up on all the coffees we miss. But I only need to take with me a memory stick, and don’t have to take a big bag of samples to show anyone,” said Ghossoub.

August 23, 2013 0 comments
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