• Donate
  • Our Purpose
  • Contact Us
Executive Magazine
  • ISSUES
    • Current Issue
    • Past issues
  • BUSINESS
  • ECONOMICS & POLICY
  • OPINION
  • SPECIAL REPORTS
  • EXECUTIVE TALKS
  • MOVEMENTS
    • Change the image
    • Cannes lions
    • Transparency & accountability
    • ECONOMIC ROADMAP
    • Say No to Corruption
    • The Lebanon media development initiative
    • LPSN Policy Asks
    • Advocating the preservation of deposits
  • JOIN US
    • Join our movement
    • Attend our events
    • Receive updates
    • Connect with us
  • DONATE
Consumer Society

Man’s best friend

by Executive Staff November 3, 2009
written by Executive Staff

For millennia, sailors have named their ships after the women of their hearts — mothers, sisters, sweethearts, wives — and cultivated bonds with those vessels so deep they could easily be called kinship. So if you find yourself behind the wheel of a Porsche Panamera, murmuring sweet nothings to the dashboard console, don’t be alarmed — you’re simply obeying an impulse that has existed for centuries between men and the vehicles they love. 

Most companies, competing to hold on to elusive consumer bases, strive to engineer products that exceed expectations. But when you have a chrome-plated reputation like Porsche’s, customers tend to expect nothing less than perfection. Executive was invited to travel to Dubai last month to test drive Porsche’s newest release.

The strongly contoured air intakes, wheel arches and sleek bonnet, the powerful shoulders over the rear wheels and the sweep of the roofline, quintessentially Porsche, leave little doubt as to the car’s manufacturer. And yet the size is striking to anyone familiar with previous models: The Panamera is a four door and is significantly wider (1,931 mm) than the 911. It is clear from the first glance that with this addition to its line, Porsche is cruising new ground.

Like a private jet on wheels

The Panamera represents a new phase in Porsche’s development, breaking with past precedents to incorporate a new four-seat interior. Some critics may question whether the sedan-like model can retain the sports car feel that the company has cultivated for decades, but from behind the wheel, the larger body makes little impression: it is evident that the Panamera is still geared 100 percent towards speed.

Seated in one of the two rear seats, one has total control of one’s environment — the Panamera’s interior is divided into four environments, each autonomously adjustable via a central console running through the vehicle’s interior — with all the luxuries of a private jet at one’s disposal. If a limousine could top out at 285 kilometers per hour (kmph), the passenger’s ride might feel a little like this.

At the controls of the Panamera Turbo, the 500 horsepower engine’s low rumble is like a dialogue between man and machine. Speed is an implicit promise: pushed to its limits, the Panamera can reach 100 kmph in a neck-snapping 4.2 seconds. But a vehicle of Porsche’s quality deserves to be coaxed before it’s unleashed. A touch of the foot to the gas pedal and the car glides forward, graceful as a panther — and nearly as quiet. The car responds like a well-tuned Stradivarius as it navigates through the streets of Dubai and slips onto the highway.

A car that can read minds

Driving a Porsche is, as it must be, a single-minded experience. There is no need to give thought to — or even mention — such extraneous details as stereo volume or climate control, both regulated automatically. One could expound at length on the top-of-the-line comfort features: the seven-inch, color-touch screen fitted with both CDR-31 audio system and Porsche Communication Management, including navigation module, the high-end Burmeister surround system… but these are ultimately cosmetic. It is the driving experience that makes a Porsche a Porsche, and the Panamera is no exception. With an eight-cylinder engine and bi-turbo technology, the Panamera Turbo has the muscle to burn almost any smaller two-door sports car audacious enough to issue a challenge.

On the highway, the car takes flight, with traffic cameras popping like swarms of paparazzi as it sails past at a top speed of 303 kmph. Out of the city and into the desert, the sun burning overhead, the separation between car and driver gradually vanishes. Both are learning to read the other, two personalities meshing into one as the road spins away behind; and on a level deeper than flesh or steel, they already share a basic DNA — a visceral, integral need for speed. It’s an impulse that predates man, stretching back to when rapid flight was a basic principle of survival. Then it was a necessity. With the Panamera, it’s a pleasure.  

November 3, 2009 0 comments
0 FacebookTwitterPinterestEmail
Consumer Society

Farid Chehab (Q&A)

by Executive Staff November 3, 2009
written by Executive Staff

Farid Chehab is the co-founder and current chairman of Leo Burnett in the Middle East and North Africa, as well as the firm’s chief coordinating officer for Central and Eastern Europe. With almost 40 years in the communications industry, Chehab is widely regarded as a creative guru. Last year, Leo Burnett Central and Eastern Europe became the most awarded agency at the Golden Drum advertising festival. Chehab recently sat down for a chat with Executive to offer up his in-depth knowledge of the industry and which way it is headed.

E  Your firm has won a lot of awards lately. What has your strategy been in order to achieve this?

We don’t have a consistent strategy. We always won awards in the past. What happened at one point is that some agencies adopted an award-winning strategy; agencies started creating ads specifically to win awards, scam ads. For two years this hurt us a lot. We were not willing to play this game and we used to enter without a strategy as we always do.

The way the others entered and diversified the ads between print and outdoor resulted in around two years where we were sheltered from the scene. I heard people say: “What is happening with Leo Burnett? They are not winning awards anymore.” Fortunately this joke stopped because recently there was a hoo-ha against scam [ads]. This is evident by the fact that most of our ads that won at Lynx [Dubai’s international advertising festival] won all over the world and positioned us as agency of the year in ‘new Europe’. We are just making ads… we do not make them to win, we just make good ads and good ads should win. I know that one agency spent $1 million to create scam ads to win. We never do that. We don’t have a budget to create scam [ads] because money is very scarce.

E  What is the reasoning behind creating scam ads at agencies then?

They think that when they want to pitch to a client, they claim that they were the number one agency at Lynx and so on. This can impress some clients and it does.

E  So it’s not a bad strategy per say?

It’s a very bad strategy because you cannot sustain it unless you want to cheat the client. If the strategy is about creating scam ads, going to the client, telling them that is what you deliver, working with the client, and not being able to deliver because you cannot sustain the effort it takes to create a scam all the time, is a very short-term strategy.

E  A year has passed since the beginning of the downturn. How has it affected your strategy, particularly on the creative side?

Honestly, in the beginning of the year it did affect us because we had a lot of real estate accounts that we lost. There were two ways to go. Either we could be defensive and scale down or look at things from a better angle and try to gain more business. This year was a year of fantastic opportunities. We didn’t want to fire anybody and we wanted to keep our teams intact because we have invested a lot in them and we didn’t want to lose them. We [pursued] a very thorough strategy of pitching and we won a lot of pitches. At the end of the day, we won more work than we lost and we are going to have a positive year in 2009.

E  So how did you differentiate your pitches in light of what had happened, knowing that clients had smaller budgets?

Prior to the crisis we had enough people to handle enough work and when we knew we were going to get more work we started bringing people in. In 2009, because we had some losses we had to free people. Some of the energy of the company was free to go into pitch ventures. We decided that there is no way that we could not use their time to try to get business. Anything that was pitchable, we pitched for it. We actually won 15 pitches and lost only one in 2009.

E  In the last five to seven years we have seen a lot of diversification in the business of communications, which is supposed to use economies of scale to deliver more integrated services to clients. What do you see happening now that the crisis has hit?

I think the post-crisis era is going to bring all those agencies back together. Today you cannot produce efficient communications if you are not using integration, specifically digital and PR, in the best possible way. The crisis created something very important, which was less money to be spent on media. You need to do more with less money but this is not enough. We are in a period which is human-centric and the individual has a say. His opinion can change the environment around him and he can ask for something that he needs.

Before we used to give him what he was supposed to take and he would accept it. What is important is to turn consumers into ambassadors and generate free media for brands. If you turn a consumer into your ambassador they will become your spokesperson through viral internet or conversational media. You cannot bombard individuals with media carpet bombing anymore. If you need a person to react to your communication and become your spokesperson, you need to respect their intelligence and give them the opportunity to react.

Today digital and PR are becoming essential because PR is becoming even more important than television. What you need to do today is to create new contact points. To become competitive, media needs to become creative. We are discovering that all the elements of the equation are coming back together. The markets are going to go back into a fusion mode.

E  How long will this take to become a reality?

This will not happen immediately, but at least during the planning stage. You will need one umbrella that covers all areas. Then you still have time to let the specialists handle each part of it independently. The big ideas don’t only come from the creative people anymore, they come from a consensus of experts that can understand how viral media functions and what is the best way to trigger a contagious viral effect.

E  What does that mean in monetary terms for the industry?

The way agencies are remunerated is going to change. Today we are remunerated on either media commissions, which are becoming very rare, or we are paid on fees based on time spent and this is going to disappear. In the future you are going to be judged on your propensity to create and trigger free media for your brand. If you are capable of creating a conversational media or a digital conversation for your brand, and you can evaluate the value that you are giving to the brand, you will be paid according to the value that you are creating. When you are paid on a fee basis you are in a comfort zone, it’s like you are a consultant. But this is not the norm today and it is a problem as well as an opportunity.

E  So things are going to shift rapidly into the digital arena now?

It is because of digital that you can trace the effect that you are having. In 2006, when we did a campaign for Bank Audi and Johnny Walker, we created a campaign that went viral. The tones of free media that we got were worth millions. But we were not remunerated for that and the client got it free of charge.

E  So how do you measure the value of free media then?

We don’t have standards yet. But what some of the clients are doing is they are paying a minimum to cover the cost base and then a bonus based on what sort of value you can create out of your campaign.

E  What will agencies have to do to achieve this level of service so they can be remunerated on that basis?

What happened in the not so distant past is that creativity was no longer the norm. The modus in communications was the media people and not the idea people. The decade where media ruled is over. Today we are back to the period where ideas will rule again. It brings to mind the power of the big idea.

November 3, 2009 0 comments
0 FacebookTwitterPinterestEmail
Consumer Society

Waking to a country-branding dream

by Nohad Mouawad, Zeina Loutfi & Ramsay G. Najjar November 3, 2009
written by Nohad Mouawad, Zeina Loutfi & Ramsay G. Najjar

With Arab and foreign visitors swarming Lebanon this summer, from the malls in Achrafieh, Dbayeh, Dora and Verdun to the clubs and restaurants in Gemmayze and downtown, and the mountain enclaves from Broumana to Bhamdoun, it is obvious to the naked eye that Lebanon is more than ever a prime vacation destination.

However, this summer season stood out for more than just the growing influx of tourists that graced Lebanese shores. This past season also saw an unprecedented amount of international publicity for Lebanon and its capital city, with articles in the New York Times and Paris Match praising all the city has to offer and CNN videos declaring Beirut “the party city.”  Add to that the push to vote Jeita Grotto one of the new “wonders of the world” and you would think that Lebanon was finally having its day in the sun.

Dubai’s shattered reputation

On the opposite side of the spectrum, another state was facing much more negative publicity. As Dubai felt the impact of the global financial crisis, the international media were more than eager to officially declare it bust, recounting in juicy detail how expats are leaving the Emirate in droves, some, according to one article, even sleeping in their luxury vehicles.

As Lebanon shone in the spotlight and Dubai faced a barrage of bad press, one had to wonder: did country branding play any role in building or harming the image of each?

If we examine what has been done in the region in terms of country branding, we might find that examples of solid and consistent country branding are few and far between. Several countries or states have tried to establish their own identity by creating a logo, such as in the case of Qatar, which has used its logo in its communication of events and initiatives taking place in the country. Others, such as Abu Dhabi, have even gone so far as to flesh out what their identity stands for and to communicate with their population and visitors through a website and a few cultural events. Bahrain even undertook a full-fledged campaign of regional and international press ads, TV commercials and online advertising with the slogan “Business Friendly Bahrain,” aiming to attract global companies and investors to the country. Dubai branded itself as a hub of tourism and business in the region and the place where everything is always bigger and better.

Yet the majority of these efforts cannot be considered as part of a holistic country-branding program. In Bahrain, for example, although the country’s campaign was clear, this business-oriented message was not complimented by messages targeting other stakeholders that could give the country a well-rounded identity. Instead, audiences were left only with a vague impression of Bahrain’s business environment. With other countries in the region, there was also a lack of consistency in communicating what each state stands for and how it differentiates itself or what added value it has to offer versus its neighbors.

Land of missed opportunities

Lebanon, however, presents a different case entirely. Despite its many political and security setbacks, this tiny state is a country branding dream, with all the best ingredients to make it a well-established and memorable brand, from its nature and vibrant social scene to the many thousand years of culture on offer, and its unique and varied population. Unfortunately, though, this winning formula has been little exploited throughout the post-civil war years. The lack of coordination and funds within the government has meant that although the Ministry of Tourism, along with other private partners, has been able to produce several TV commercials throughout the years, these efforts were not enough to entrench one clear identity and message about Lebanon that people across the globe can recognize and identify with.

During the first few years of Lebanon’s reconstruction after the civil war, there were attempts at country and city branding that began with the well-known and recognizable “Beirut” logo popularly used on storefronts and restaurants across Lebanon and the region ever since. The “Beirut” identity certainly held a great deal of potential, but the failure to build on this identity and communicate what it stood for, minimized its ability to cross-over to becoming a national symbol. Moreover, an important element has been missing from any branding efforts that have been undertaken. Although well-intentioned and infused with the spirit of putting Lebanon on the map, the nomination of Jeita to become one of the new wonders of the world and the branding of different areas of Lebanon, from Baalbek to Byblos as part of different cultural festivals, have not been part of a larger national communication strategy that can link all of these initiatives to a larger Lebanon brand.

Wanted: Brand Lebanon

Yet a solid communication strategy that will effectively position Lebanon in a way that Lebanese agree with and foreigners, investors or tourists, are inspired by must be based on a national consensus. This might seem like an overly ambitious and politicized task asking Lebanese in general to agree on their view of Lebanon, especially to those who believe Lebanon’s identity can be developed overnight as part of a quick talent or graphic design contest. But grasping the essence of Lebanon should be done through market research into different segments of the population to gather insights on the different elements that Lebanese admire about their country, beyond the cliché “you can ski and swim in one day.”

Research can even look into  foreign investors and visitors’ expectations, in order to identify the strongest prevailing misperceptions of Lebanon as well as what they would like to know about the country. These leasons should help develop a clear positioning for Lebanon that reflects its plurality and can be communicated to different stakeholders in a consistent way, providing the guidelines for developing a brand identity that is used everywhere from international TV commercials, to guidebooks, press ads in travel and business publications and even in the branding of cultural and touristic events.

Yet the branding of Lebanon should not be limited to the development of an identity. Effective country branding means holistic communication ranging from interviews with prominent Lebanese artists, businesspeople and musicians, sending delegations of talented Lebanese to perform abroad under the new brand’s umbrella, to airing short documentaries and ads about Lebanon on international satellite stations. As part of introducing the new Lebanon brand, activities can take place in Lebanon and in countries around the region introducing people to what Lebanon stands for through food, music, special videos and even interactive contests. The combination of these initiatives will help create a memorable brand for audiences that they look to when choosing where to vacation or invest.

The next question that comes to mind is “where will the government get the money for all of this communication?” The answer is that although the government must lead any national branding exercise, the private sector has an important role to play, as it has done throughout the years, in supporting any communication related to promoting Lebanon. Just as private corporations have sponsored arts and cultural festivals, helping make these successes, and Middle East Airlines has helped promote Lebanon through in-flight advertising, companies can help fund the development of a Lebanese brand identity and its accompanying communication. Public-private partnerships will help enrich the quality of communication about Lebanon, drawing on companies’ expertise in branding and promotion.

Additionally, many communication activities can have a big impact with a small budget, including the dissemination of viral videos. Initiatives that create a public relations buzz without breaking the bank range from getting the largest Lebanese tabbouleh dish into the Guinness Book to getting recognition for Lebanon’s historic or natural wonders.

Going viral

Individuals, like the private sector, can also be instrumental in spreading the word about a new brand and its   communication campaign. This was seen all across the worldwide web this summer with Lebanese posting videos and articles promoting Lebanon on social networks and emailing these to everyone they know.

Although Lebanese are currently launching initiatives to get their national cuisine and landmarks noticed, as well as sending information about Lebanon to their friends around the world, these efforts are missing the elements that could make a greater impact. These activities need to be tied into a larger brand and positioning for Lebanon to help audiences understand their purpose, rather than seeing them as ad hoc initiatives. Viral communication should inspire those people who can help spread the brand’s message to not only accept the new brand, but embrace it as their own and agree that what is being said in the communication is what they would have chosen to say if someone asked them about their country.

Such powerful country branding that strikes a chord with audiences is more than an aesthetically pleasing logo or an appealing campaign that invites us to visit a country for some sun and fun. When country branding is the result of a well-built strategy based on a national consensus, the identity that is created and the resulting communication takes on a life of its own, becoming a symbol of the country’s narrative in such a way that people no longer realize which was created first: the country or the brand.

Nohad Mouawad, Zeina Loutfi & Ramsay G. Najjar S2C

November 3, 2009 0 comments
0 FacebookTwitterPinterestEmail
Real estate

Exhibiting a slow recovery

by Executive Staff November 3, 2009
written by Executive Staff

“Since January 2009, we have seen that exhibitions in Munich, Singapore, Abu Dhabi… were all very calm. So let’s see what is going to happen at Cityscape Dubai,” said Philippe Chaix, general manager of the Parisian office district ‘La Défense’ on the show’s first day. As expected, activity at the four-day exhibition in the emirate was calm as well.

Instead of rushing to stands and booking newly-launched properties, Cityscape visitors this year were monitoring the market, asking about construction and delivery schedules, and checking which companies were still exhibiting after a year-long financial slump.

Exhibitors came with a different aim as well. Instead of bragging about their new launches, developers answered visitors’ questions, explained the progress of their projects and offered their customers support in case of financial difficulties.

“I think that comparing Cityscape to last year is wrong,” said Markus Giebel, chief executive officer of Deyaar. “Before, it was to sell projects but now it is to tell the customers that we are OK. Both are important, but both are very different,” he added.

Cityscape by the numbers

The number of visitors fell nearly 50 percent compared to last year, from 68,061 to 38,000, according to a press release issued by IIR Middle East, the hosts of Cityscape Dubai. However, many exhibitors did not consider this decrease as bad news, since this year’s visitors were long-term investors and end-users only, as opposed to speculators who could cast their harmful spells on the market. “You see less people because 90 percent of the market was speculative,” said Hani Shammah, CEO of the Abu Dhabi-based Bloom Properties.

The number of exhibitors shrank as well. According to reports released last year, the number of exhibitors was 954. But Shamal Marketing Communications, who handles public relations for IIR Middle East, explained that this figure not only included the total number of stands, but also the different subsidiaries of a  company that might have shared a stand, thus producing an inflated number. In reality, there were 340 stands last year. The calculation method was corrected this year and the number of exhibitors was 218, a decrease of 36 percent. Companies who chose to participate at Cityscape said that their purpose was to show they are surviving these difficult times and still continuing their projects. “People think that if you are at the exhibition, you exist and if you’re not, you don’t. So we don’t have a choice,” said Salem Ahmad Abdulla al-Moosa, chairman of Falconcity of Wonders.

More specifically, the message that exhibitors are sending is “construction and delivery.” Each developer is explaining to its customers the timeline for the delivery of their project. “Damac is participating at Cityscape this year to show the progress that we have achieved since last year and what we have been doing,” said Niall McLoughlin, the company’s senior vice president of corporate communications.

Sergio Casari, CEO of Emaar International, agrees with McLoughlin adding that, “The market is going through a cycle but it doesn’t mean that people should stop talking about what they are doing.”

A different kind of announcement

Instead of launching new projects, companies this year are announcing new payment plans and bank partnerships. Hydra properties, Aldar Properties and Bloom Properties were some of many who announced new financing options for their customers, by partnering with several financial institutions securing up to 80 percent of financing.

“Obviously the crisis has affected everybody. We have announced a few solutions and incentives where we interacted with these clients and worked with them to allow them to keep their investments and afford them,” said Rami Nasser, director of sales and commercial leasing at Aldar Properties. The Saudi-based Tanmiyat, for example, announced a new payment plan that links payments to construction milestones. “It is the right way… but since it is a new thing for many, a lot of uncertainties are being questioned. They need time to get used to it,” said Wan Muhamad Hasni Wan Sulaiman, advisor in charge at Tanmiyat.

Even those who have units to sell are not offering them on the market, but only showcasing what they have. “I don’t think anybody is selling at Cityscape. I think they are all on the same wave as we are. We are building and constructing and we hope that our clients can be a little more patient for delivery,” said Nooman Khan, senior vice president of sales and residential and commercial property at the City of Arabia.

A push for greater confidence

These messages and reassurances from developers have one purpose: to rebuild confidence in the market in general and companies in particular. “I’ve heard people say ‘finally a developer is listening to me and taking time to show me things so that I have an informed decision about what I’m going to buy’,” said Mohammed Bin Zaal, chief operating officer of Al Barari. EFG-Hermes, in a Cityscape note, was also upbeat about the outcome of the show. “In general, most developers did a fair job of conveying confidence,” said the bank. However, “the reality remains that most developers are still trudging their way through investor build-up and funding/liquidity constraints,” it added. Moosa from Falcon City thinks that next year, organizers should adopt a different approach by gathering developers and financial institutions together under one roof and “hitting two birds with one stone.” “Financial institutions are the spine of the real estate market. Let them come and speak to customers and let them be available,” he said.

Other activities

On the sidelines of the exhibition, Cityscape also hosted several forums and conferences discussing market conditions and other real estate related matters. For example, the show included the City Leaders Forum, Cityscape Connect, Green Day and a CEO networking lunch. It also featured the Cityscape Awards for Architecture in Emerging Markets, which had a record number of 300 participants. “The objective of these and other initiatives is to support the industry by providing a realistic and transparent view of what is happening throughout the region,” said Rohan Marwaha, managing director of Cityscape, in a press release.

Players’ expectations

As for market expectations, what is being discussed is whether the market has hit the bottom or not, and if recovery is expected in 2010. According to a survey of 28 developers conducted by the real estate consultancy firm Colliers International during Cityscape, 71 percent said that property prices in Dubai will fall further this year, while 25 percent think that they have stabilized.

Giebel from Deyaar said that no one knows if the bottom has been reached, but “the freefall is over.” If prices fluctuate between 2 and 3 percent up or down, it won’t matter. “If the lowest point is reached, I really don’t care, but has the bottom phase approached? Yes, absolutely.”

It remains to be seen whether the market hit bottom or not, and if 2010 will be a year of recovery or continued market fall. Still, whatever the situation, developers say Cityscape will always be one of the most important real estate exhibitions, and one in which they will participate. “Developers should be here in good and bad times,” said Hasni from Tanmiyat. “We are here for the long haul. You will see us next year and the year after.”

November 3, 2009 0 comments
0 FacebookTwitterPinterestEmail
Real estate

Solidere’s souks

by Executive Staff November 3, 2009
written by Executive Staff

The long delayed and much anticipated southern section of the Beirut Souks is finally open. On October 2, the public was given its first opportunity to wander through and visit the few shops that have opened, with others to follow suit before the souk’s grand opening at the end of the year.

Rami Ariss, the land, sales and real estate leasing division manager at Solidere, the developer behind the project, said that the reason the Beirut Souks had a soft opening is to respect the arrangements with tenants and the beginning of the fall season.

“When you open an area like this, you have to respect the fashion and the season… so we respected the requests of the tenants to be ready at that time,” explained Ariss. “So if they are not ready, that’s their problem.”

However, some stores are delayed because of the long approval process they had to go through in order to finish setting up.

“[The management] of the souks doesn’t give quick approvals. From our side, we were ready for quite a while but I think they have a long process, so it takes some time,” said a tenant who was supposed to open in September but has been delayed until the beginning of next year.

Still, the Souks did miss the summer shopping season and all the shoppers that come with it.

“We wish [we had] opened a long time ago, but with everything we have faced, it is good we reached this stage this month,” said Ariss.

The southern part of the souk includes 200 retail stores — 49 of which are in the Gold Souk — and 17 restaurants, with Solver, the Met and Megnet scheduled to open by the end of 2009. Solidere kept the streets’ historical names in order to “safeguard the souk’s historical street grid” said the company, with names such as Souk El Tawileh, Souk El Jamil, Souk Arwam, as well as the Intabli and the Ajami squares.

The project’s northern part will be handed over progressively over the next two years, said Mounir Douaidy, general manager and chief financial officer at Solidere. It is divided into two phases, the first featuring a 14 screen cinema entertainment complex, while the second will include a major department store.

The project is to cost $300 million and is financed by Solidere’s own resources, said Douaidy. According to Asharq Al-Awsat regional newspaper, the value was originally $120 million, but the project’s delay more than doubled its cost.

A 10-year lag

Originally, the idea of reviving what was once the most popular shopping destination in the capital started in the 1990s, and Solidere applied for the construction licenses in the second half of the decade. Beirut Souks were set to open in 2000, but were postponed due to “licensing delays arising from political issues,” said a source informed about the project. During that time, the only part under construction was the underground parking, until Solidere finally received the license in 2004 and works began. The Souk’s construction was again delayed by the 2006 war and subsequent political instability.

Trouble in the Gold Souk

The project is finally open, but there are signs of conflict brewing in the Gold Souk between Solidere and the Syndicate of Expert Goldsmiths and Jewelers in Lebanon (SEGJL). According to Naim Rizk, the president of the syndicate, Solidere offered to sell stores and offices at the Gold Souk in 1998 priced between $7,000 and $8,000 per square meters.

“They gave us 10 days to decide, and around 250 applicants applied,” said Rizk.

One-hundred-and-twenty of those applicants were accepted and paid 5 percent of the price, agreeing to pay 20 percent more after six months (when they would also sign the purchase contract), 20 percent on delivery and the rest over five years.

After six months, Solidere refused to receive the next payment, according to Rizk, saying that there was a delay in the license and the applicants should wait. Since then, the syndicate has had numerous meetings with the company, added Rizk, which stalled and asked them to wait. Three months ago, he said Solidere changed its mind and wanted to buy back the stores, offering $2,000 per square meter for shops and $1,000 for offices.

“That was a hit on the head,” said Rizk. He explained that the jewelers refused to sell, and wanted their shops to be delivered. Then the syndicate met with President Michel Sleiman and speaker of Parliament, Nabih Berri, who both said that they would work on the issue. Since then, negotiations have restarted, but Rizk says most of the applicants still refuse to sell. “Even if they give me $100,000 per square meter, I don’t want to sell,” he said.

Solidere claimed that in 1998, the company did not offer the plots for sale, but that the syndicate sent in applications with checks amounting to  5 percent of the total price as a goodwill gesture — hence there is a the disagreement over the interpretation of the 5 percent paid. Since there were no contracts signed, the syndicate does not yet own the shops and Solidere still has the right of ownership. This year, the board of directors at the company met and decided not to sell anymore, and offered each of the applicants a compensation amount, which some 20 of them accepted. Solidere is currently renting the shops to tenants, since they are still owned by the company, and the Gold Souk is expected to open soon.

Beirut Souks by the numbers

Source: Solidere

Shopping for all classes?

What differentiates the Beirut Souks from the rest of downtown is that they cater to both the high and middle-income segments of the market. “We did it to attract as many people as we could,” said Ariss.

To achieve this, Solidere formed a new company called Beirut Real Estate Management Services (BREMS), in partnership with the Abu Dhabi-based Aswaq Management Services (AMS). Ariss explained that the know-how of AMS and BREMS established the right mix for the Souk.

“The most important thing in a mall is to have a good product mix and tenant mix,” said Elie Harb, president of Coldwell Banker who is currently marketing several retail projects in Lebanon. He added that once the food court and the cinemas are open, the number of customers will increase, as visitors do not frequent malls only to shop but also to enjoy the entire experience of food, shopping and entertainment.

Luxury brand attraction

Beirut Souks will be an attraction to both Lebanese and foreign shoppers, and thus international brands have seen it as a good locale to open their high-end boutiques and showcase newly-launched products. Eric Vergnes, Middle East general manager of Tag Heuer, said the company invested some $250,000 in its Beirut Souks boutique, which is set to open in a few months. “It has been a long time [that] we wanted to open a boutique in Beirut,” he said.

The average leasing price for shops is between $900 and $1,500 per square meter per year, depending on the location, size and the time when it is leased. Ariss also explained that according to contracts, the rents will increase around 5 percent in three years.

Ets. H. Atamian, retailers of several high-end brands, are opening four boutiques in Beirut Souks (including Tag Heuer). Barkev Atamian, the business manager at the company, said that $250,000 is the minimum brands are putting into their shops. “They are investing a lot because the Souks are going to have high standards,” he said. Barkev added that each boutique will have new editions and new products that will be introduced to the market.

Souks lack link to the past

When they opened to the public, many expected to see the historical souks revived — buildings separated by narrow streets, people gathered around flower shops and butchers, and both fancy and cheap textiles stores catering to both the affluent and the less well-off.

There has been much disappointment and heavy criticism, however, from local media, the general public and even political figures. Member of Parliment Walid Jumblat said at a press conference that the Beirut Souks is not linked in any way to Lebanese history and the people’s memory of the past.

Former Minister of Finance Georges Corm also told Al Akhbar newspaper that “it is a shame to call it a Souk. It became a huge Mall,” adding that it follows the example of some Gulf countries which destroyed their countrys’ heritage and replaced them with giant shopping malls.

On the other hand, there were others who appreciated Solidere’s efforts. Caretaker Prime Minister Fouad Siniora praised the project and congratulated the company on its historical accomplishment, according to Ad-Diyar newspaper, while also expressing his happiness with the flow of Lebanese shoppers and tourists into the Souks.  

Karim Makarem, director at Ramco Real Estate Advisors, said even though the new souks are not related to Beirut’s historical image, they will redefine the Beirut Central District.

“It has been dead for many years, and you can already see a large amount of people at the souks,” he said. Makarem added, however, that Soldiere should have waited until the end of the year to open to the public because construction work is ongoing and many stores have yet to open.

November 3, 2009 0 comments
0 FacebookTwitterPinterestEmail
Real estate

Georges Chehwane (Q&A)

by Executive Staff November 3, 2009
written by Executive Staff

Georges Chehwane is the president of Group Plus, one of the largest media groups in the Middle East. He is also the president of Plus Properties, a Group Plus subsidiary specializing in real estate development as well as marketing and promotion. Plus Properties is currently handling the marketing for the newly launched $500 million Venus Towers project on the waterfront of the Beirut Central District. The project is developed by Venus Real Estate Development Co., which comprises several partners and was launched in March 2008 specifically for the development of Venus Towers. The project consists of three luxury towers offering high-end apartments. Construction is slated to start this month, with delivery expected in five years.

E You have said that you sold $100 million worth of units at the launch event on September 24 and 25, based on a special pre-launch value. What is that value?

It was $100 million when we released the press release, now the final figures are $125 million. We sold so much due to three things: attractive launching prices, a huge campaign and the location. We had three categories of pricing depending on the views. The prices were $5,500 per square meter, $6,500 and $7,500. Sea view has a different pricing, mountain view is different, and “no view” is the least expensive. We also made an offer to those who pay 50 percent — they got a 25 percent discount. So if you remove 25 percent from $5,500, you get $4,125. Now there is no discount and we have even increased the price by $500 for each category.

E During construction, the prices were higher by $500 — will they continue to increase until construction finishes? And what about after delivery?

In general prices will not increase during construction, until we enter the advanced stage of construction. After delivery, nobody knows, but experts say that in two years time, Solidere’s prices will reach $10,000 minimum and $15,000 on the beachfront. The advantage of Solidere is that there is a scarcity of land plots.

E How much of the project was sold to Lebanese and how much to Gulf buyers? Can we differentiate between end-buyers and investors?

Around 75 to 80 percent were sold to Lebanese, and the rest to Gulf buyers. Most of them are end users; we might see 10 percent investors.

E How is the project financed? And did you offer any payment plans for customers?

The owners have funded a certain amount, and now they have got financing from the sales. Basically there are three sources: the original investment from shareholders, from the banks, and from the sales. As for the payment plan, it is for five years. If you paid 50 percent and you got the 25 percent discount, then you have five years to pay the rest. Every three months you have a payment. And some people make their payments related to construction. They have a choice.

E I know that last year you participated at Cityscape Dubai and Abu Dhabi. Why haven’t you participated this year?

We have nothing to sell. What we are doing is consolidation. There are two kinds of companies at Cityscape this year. The first category are the governmental companies who had to participate because the Dubai government asked them to participate, and the second category are the companies that have problems and want to show people that they are still alive. Since we don’t have problems [and] we are delivering our projects, we don’t need to participate. Our clients know that we are serious and building, so we don’t need to prove anything to anyone.

E You also participated in DOMEXPO in Moscow, and you translated your website into Russian — what is so special about the Russian market?

Because 60 percent of our clients in the Dubai waterfront are Russian, we do that in order to keep them aware of what is happening… It is because Russian people like to be on the beach.

E Have you sold all your projects in Dubai?

Today we have consolidated our projects. We are freezing some projects and delaying them, and starting construction of other projects.

E Are you planning to launch anything new in the United Arab Emirates? And what about other countries?

In the UAE, we have [already] started construction of three projects and we are delaying another three. So for the moment we will be only focusing on Lebanon.

E If we want to compare how different markets have been affected, how would you evaluate the region?

In Dubai, 85 percent of our clients were investors; in Abu Dhabi 30 percent were investors and 70 percent end-users; [the] same [goes] for Lebanon. There were a lot of projects in Dubai and a lot of free zone areas and off-plan sales — that was a major factor that effected Dubai. In Abu Dhabi you only have the Reem Island as freehold.

E Did you have to stop any expansion plans because of the crisis?

Before the crisis, I was planning to expand all over the world. Now we have to consolidate our Dubai and Abu Dhabi operations and develop some new projects in Beirut. Our strategy has always been diversifying, that is why we have been safe during this crisis, having some projects in Dubai and Abu Dhabi and some projects in Beirut. I believe for the next five years, Abu Dhabi will be good but Beirut will be better than all the Arab markets.

E Did you also diversify in terms of types of developments?

In Dubai and Abu Dhabi all our projects are on the beach. In Lebanon we have started in Solidere, now we will also start lower budget developments. Now the apartments are $1 million to $1.5 million. So we are launching a new project where apartments cost between $300,000 and $400,000. And we will also launch a new company called Plus Investment, whereby we will call investors to be part of our company. They will be shareholders. It will be Lebanon-based. So we were diversifying in different areas first, then we started diversifying into residential and commercial areas. Now in Lebanon we will start an office building and we will start projects in areas outside Beirut. In Dubai and Abu Dhabi, when we see the market booming again, we will go back. Right now we don’t have new projects in the UAE.

E How much is your company worth?

$500 million.

E What about your Plus Towers project? How much is it worth? In which stage of construction is it and how much has been sold?

We will finish in three years time. It is in the heart of Solidere, and it is a green building. It is worth $200 million. We launched it last year and we sold around 40 percent. Most buyers are also Lebanese.

E Do you feel that sales have slowed down?

Yes, because people buy either during the pre-launch to take advantage of the discount or wait until the building is erected to live in.

E Do you think the financial crisis might have affected it?

No, it is a concept.

November 3, 2009 0 comments
0 FacebookTwitterPinterestEmail
Feature

Co-ed science

by Executive Staff November 3, 2009
written by Executive Staff

With the aim of “inspiring a new age of scientific achievement,” the inaugural class of the King Abdullah University of Science and Technology (KAUST) began taking lessons this September in Thuwal, Saudi Arabia. The graduate level institution has been dubbed a new “House of Wisdom,” in reference to The House of Wisdom (Bayt al-Hikmah) founded in 830 C.E. in Baghdad.

In a move that has upset some members of the religious establishment, the religious police will not operate on-site and women will be allowed to mix freely with men, drive on campus, and will not be required to wear veils in the coeducational classes. The university is funded through a $10 billion endowment from Saudi ruler King Abdullah, which will be managed by former World Bank and International Monetary Fund economist Gumersindo Oliveros. The university will have strong links to industry, having so far announced collaborative projects with Sumitomo Chemical, Schlumberger, Dow Chemical, LyondellBasell, SABIC (Saudi Basic Industries Corporation), Boeing, IBM and Abdul Latif Jameel Co. Saudi Aramco will manage all non-academic aspects of the university.  The university aims to be at the forefront of technology and will host Shaheen, the 14th fastest super computer in the world. This will serve as the hub of the Saudi Arabian Advanced Research and Education Network (SAREN), a high-speed optical network to connect research and educational institutions within the kingdom that is being constructed in partnership with the Saudi Telecom Company.

The university boasts a six-sided virtual reality facility, 10 advanced nuclear magnetic resonance spectrometers, a coastal and marine resources laboratory, and bioengineering facilities with labs to study cell molecules for DNA sequencing. The university also puts a strong emphasis on sustainability, with energy efficient buildings and shared bicycles and electric cars for travel around the 36 square kilometer campus, which also contains 17 million square meters of coral reef and 2 million square meters of mangrove ecosystems.

Following a highly competitive entry process, 817 students — the majority of them non-Saudi nationals — have been selected from more than 7,000 applicants to attend class this year.

November 3, 2009 0 comments
0 FacebookTwitterPinterestEmail
Finance

Financial Indicators (Issue #124)

by Executive Staff November 3, 2009
written by Executive Staff

The Beirut Stock Exchange (BSE) closed the Oct. 23 session at 1,572.28 points, as measured by BLOM Bank’s Blom Stock Index. Shares on the BSE had a positive trajectory in October, despite some frightful interludes, when political worries were heightened by the political class’s unbelievable wrangling over ministerial positions and cabinet powers. Notable risers on the BSE were real estate firm Solidere, recording a gain of more than $1 to $26.28 on Oct. 23, just a bit below the stock’s 12-month high. Bank Audi stock appreciated even more and closed at $75.40 on Oct. 23, representing a 22% gain since Oct 1. Overall, the Lebanese share indices have risen to levels that analysts had estimated, after the national elections in June 2009, to be reachable on basis of a successful cabinet formation — but a sharp one-day drop on Oct. 22 due to disappointing political news served as reminder that markets must rely in precarious dependency on improving government stability.

 

Beirut SE (one month)

 

Beirut SE  (one month)/November - Zawya

The track sheet for stocks on the Amman Stock Exchange (ASE) showed a lot of red in October, more than the ASE index drop of 2.37% to an Oct. 22 close at 2,624.40 points would let on. Curiously, all four sub-indices — for services, industry, banking, and insurance — underperformed the general index, by between 0.7 and 3.7 percentage points. Of the four leading companies by market cap, only The Housing Bank for Trade and Finance recorded a small gain in its share price, up 0.56% in the review period. Jordan Phosphate Mines Co. dropped 0.51%. The largest company on the ASE, however, Arab Bank, gave up 6.14% in valuation and number two player, Arab Potash Co, lost 5.06%. With third-quarter result announcements slow in rolling in, trading volumes on the ASE remained subdued into the third week of October while investors waited for information. 

 

Amman SE (one month)

 

Amman SE  (one month)/November - Zawya

On the back of three months of fairly steady gains, the Abu Dhabi Exchange weakened in the sessions after Oct. 15 and ended the review period at 3,119.56 points, a tenth of one percent down from the beginning of the month. Construction, energy and real estate were the sectors that had driven index gains intra-month, whereas industry, consumer goods, and insurance underperformed in October. In the end, construction was the best performer, closing the Oct. 22 session 3.95% up on the month. Telecommunications operator Etisalat was a star of the earnings season, posting a 5% gain to $613.7 million for Q3 2009. As leading banks were also projected to bring decent results to the table, the contrast in expectations for the real estate majors, Aldar and Sorouh, became neuralgic points. Analysts anticipated year-on-year profit contractions of 65% or more for the two companies and shares of both moved lower after Oct. 15, an upwards revised target price for Aldar and the impending inaugural Formula 1 race on Yas Island not withstanding.

 

Abu Dhabi SM (one month)

 

Abu Dhabi SM  (one month)/ November - Zawya

Where Abu Dhabi goes, Dubai follows suit. Like the Abu Dhabi Securities Exchange (ADX) and Doha Securities Market (DSM), the Dubai Financial Market (DFM) index pattern sloped downward in the latter part of October. However, the DFM closed at 2,244.03 points on Oct. 22 with enough oomph for a 2.4% gain on the month, runner-up in the GCC after the Saudi market. Telco Du, expecting to double profits, gained 16.98% in its share price during the review period; the telecoms index on the DFM advanced 16.98%, making it the period’s best performing sector. Emaar Properties was not the strongest gainer on the DFM — that was Haji travel specialist Firdous Holding with a 90.7% gain — but clearly the most important one. Posting a third-quarter net profit of $178.3 million, Emaar made a different impression from its losses in the second quarter of 2009, beating analyst estimates by a mile. Emaar’s share closed the Oct. 22 session up 13.8% on the month — interestingly, the stock’s price climbed most vigorously up until about a week before the company announced its good earnings.

 

Dubai FM (one month)

 

Dubai FM (one month)/November - Zawya

 Losers outnumbered gainers in a sober October trading period that saw the Kuwait Stock Exchange (KSE) general index close at 7,607.90 points on Oct 22, down 2.7% from the start of the month. The quarterly earnings season did not spur obvious buying interest in any field, as all major sector indices moved lower. Insurance, which had seen above average downward pressure in 2009 until September, moved up 1.3%, making it the month’s best performing sector index on the KSE. The country’s strongest bank, National Bank of Kuwait, beat expectations with third-quarter result of $263 million, 10% higher than in the same quarter a year ago. Zain, the telecommunications group that is the market cap leader on the KSE, was making further news as negotiations moved forward over a sale of a 46% stake to a consortium of Malaysian and Indian investors.

 

Kuwait SE (one month)

 

Kuwait SE  (one month)/November - Zawya

Oil is up 15% in the first 20 days of October and 99% since the start of 2009, with the Saudi stock market dutifully shifted into gaining mode — but ever so mildly. In the review period from Oct. 1 to 22, the Tadawul All-Share Index (TASI) added 3.1% to close at 6,515.81 points. Owing to this gain, which was the strongest for any GCC bourse in the review period, the TASI is up 35.7% since Jan. 1 and the Saudi Stock Exchange is almost on par with the Dubai Financial Market in terms of year-to-date performance. Insurance showed the strongest price movements, accounting for three of the four top gainers and for the biggest loser. Also notable were petrochemicals firms, among gainers, and manufacturers Saudi Cable and Arabian Pipes, on the downside, as was agro-industry company Anaam, whose share has appreciated 73% to Oct. 22 from the start of September.

 

Saudi Arabia SE (one month)

 

Saudi Arabia SE  (one month)/November - Zawya

The general index for the Muscat Securities Market (MSM) fared only marginally better than its peer in Bahrain, as the MSM closed the Oct. 22 session at 6,609.45 points, or 0.6% up when compared with the last close in September. However, the MSM has an overall growth cushion for 2009 of 21.5% at this time, rather comfortable and better than the GCC average. The banking sector, closing the period 1.8% higher, performed slightly better than the general index, whereas the industrial index shed 2.3%. Among the market’s larger companies, Galfar Engineering showed a notable performance with a 9.4% gain during the review period. Smaller companies — Gulf Mushrooms Co. and The National Detergent Co. at the top and the Oman Chemicals Co. at the bottom — provided the market’s largest share price gains and losses, respectively. Bank Muscat, the country’s top bank by market cap, posted lower profits for both the third quarter and the first nine months of 2009 when compared with the same periods in 2008.

 

Muscat SM (one month)

 

Muscat SM  (one month)/November - Zawya

Bahraini stocks continued to be under-appreciated in October as the Bahrain Stock Exchange (BSE) index closed the Oct. 22 session at 1,558.21 points, only 0.2% up from the end of September and still in the doldrums in relation to the start of 2009, compared to which the market was down 13.6% at the end of the review period. While the index for the services industry made gains of almost 6%, the investment sector index pulled in the opposite direction with a drop of 5.7% in its sector index. National Bank of Bahrain, which announced a 19.6% year-on-year improved net profit of $30.2 million for Q3 2009, and Bahraini Saudi Bank, were the best gainers in October to date, each moving about 14% higher in their share prices. Kuwait’s BSE cross-listed Global Investment House saw its share price tank 32.4%, followed by Al Baraka Bank with a drop of 17.6%.

 

Bahrain SE (one month)

 

Bahrain SE  (one month)/November - Zawya

The Doha Securities Market (DSM) closed at 7,285.14 points on Oct. 22 with a 1.7% drop versus the last close in September, as buying sentiment dropped in the course of October after having pushed the DSM index more than 700 points higher between Aug. 20 and the end of September. On Oct. 6, reaching 7,624 points, the index had been at its highest since Oct. 22 of last year. All sectors saw volatility in October trading but in the end a sudden push upward let the insurance index come out on top with a gain of 5.9% for the review period, followed by industry with a 0.5% rise. Banking and services ended 2.4% and 1.8% lower, respectively. Two heavyweights, Industries Qatar and Qatar National Bank, posted drops in their Q3 profits of 54% and 7.5%, respectively, but saw price gains in the review period. By contrast, it was the bourse’s third-largest player, Ezdan Real Estate, whose shares nosedived with a 14.7% fall. The real estate company, whose stock had rallied in two wild dashes in August and September, posted a 40% drop in net profit.

 

Doha SM (one month)

 

Doha SM  (one month)/November - Zawya

The Tunindex for the Tunisian Exchange closed the Oct. 23 session at 4,082.08 points, recording a 110-point drop from a new year high over two trading sessions. The index had rallied for much of the first 10 months in 2009, its year-to-date gain of 41.25% making it the MENA region’s number two performer, bested only by the gains seen on the Egyptian bourse. Tunisair increased 22.1% in the review period as the market’s top gainer. Market cap leader Poulina Group Holding dropped 3.3%. A new market entrant, cement maker Les Ciments de Bizerte, started trading on Oct. 21 and reinsurance company Tunis Re let it be known that it plans for an initial public offering before the end of 2009.

 

Tunis SE (one month)

 

Tunis SE  (one month)/November - Zawya

 The Casablanca Stock Exchange was a case of trading sideways in October, closing 0.6% higher at 10,830.43 points when compared with the start of the month. Its performance for the year to date has been similarly mellow, with a drop of 0.84% since the start of 2009. All regional bourses in MENA are participating in the global financial markets game, but not all are equally affected by the questions that generally stir the minds of global investors these days. Are banking stocks gaining too much too fast? Is the real economy’s recovery substantial enough to warrant growth of financial markets? These are burning questions elsewhere. In Morocco, main issues of concern relate to increasing the Casablanca exchange’s efficiency and give investors improved transparency. To this end, market authorities announced that a new index of selected liquid securities will be introduced next January. 

 

Casablanca SE (one month)

 

Casablanca SE (one month)/November - Zawya 

 

 

Egypt CASE (one month)

 

Egypt CASE (one month)/November - Zawya

TheEgyptian Exchange (EGX) 30 Index closed up 5.03% at 7,101.70 points onOct. 22 when compared with the end of September. As the market had notseen these levels since share prices had crashed through the entire7,000-point range in September of 2008, pundits immediately startedtheorizing of “psychologically important” index lines. The indexreading for the Oct. 22 close has the aura of a pretty number,regardless, and what made it ever more impressive was the exchange’syear-to-date climb of 54.5%. Orascom Construction, the market capleader, gained 15.4% in the review period, putting it in a club of 20stocks that appreciated by more than 10% in this short time. Notably,well-known names representing a wide spectrum of sectors dominated inthis stratum of sought-after shares, including EFG-Hermes, OrascomTelecom, Talaat Moustafa, Abu Qir and SODIC. 

November 3, 2009 0 comments
0 FacebookTwitterPinterestEmail
Society

Q&A – Tag Heuer

by Rayya Salem November 1, 2009
written by Rayya Salem

 

In an effort to move from a pure traditional watch brand toa full-on lifestyle brand, the 151-year-old Swiss manufacturer, TAG Heuer, istaking some bold risks. As the world’s fourth largest luxury watch brand andnumber one worldwide in chronograph pieces, it is also launching its secondgeneration of luxury phones, called “Link”, the first luxury smart phonedeveloped on an android platform. Its expansion plan in the Middle East is noless ambitious. In July the firm opened its 10th boutique in the Middle East,in the Beirut Souks, with the Atamian family as their exclusive agent. Beirutwill be one of the first markets in the region to be exposed to the new “1887”,which is an update of the iconic Carrera watch, with a twist. Though originallylaunched in 1964, the firm is now a chronograph manufacturer, so movements aremade for the first time via the firm’s 100 percent in-house department, insteadof sourcing from Swiss suppliers of chronograph movements like Zenith and ETA.Executive got in on the details during a cozy bar room chat with GeneralManager of LVMH Watch & Jewelry, Middle East, Eric Vergnes. [TAG Heuer isone of the 60 brands under LVMH]

E  How much doesit cost to produce the movement yourself?

It’s a huge investment… We are still at 25 percent of whatwe are aiming to produce in the future. But the difference in price would beonly around 10 percent.

E  You don’tfeel that the people would rather choose the Zenith or the ETA movement?

The Zenith is very limited in terms of supplies, quantities.We have a Zenith modified movement “Caliber 36”, it’s on the very high-end,around $12,000, compared to $4,000 for the other ones.

E  On apoint-of-sale level, how are you going to adapt your boutiques to allow thesenew models to be represented?

Our targeted customer is the feminine one; we have this verystrong image of being a masculine brand, but today, in the region, more than 50percent of our sales, in value, are done with ladies.

E  Where doesthe strategy of diversifying away from watches come from?

We don’t have diversification in the main families of thewatches, which are the Carrera, Monaco 1969 and Grand Carrera. Seven years agowe launched the eyewear, and now, for every two watches we sell one pair ofeyewear, and 100,000 units of eyewear are sold every year. We are one of thevery few luxury brands making mobile phones. Of course we are very smallcompared to Vertu. For every 10 Vertu mobile phones sold, we sell one [Link].

E  In the lastfour to five years the performance of luxury phone manufacturers was not verygood. How would you justify the Link [priced at $6,750]?

There was a survey that [said] that the market of luxuryphones will eventually be as big as the market of luxury watches. Nokia has haddifficulties, but Vertu is extremely successful in China, the Middle East andRussia. Our main competitors are stuck with their in-house software, but Linkhas a late generation of androids and the catalog of android applications. 

E  How much doesthe Middle East represent out of your total sales?

Approximately 5 percent, but we have huge potential forgrowth in the Middle East. We’re not very big in Saudi yet… Iran and the UnitedArab Emirates look very promising. We will not double the sales but we cancertainly grow by 30, 40, 50 percent.

E  How did TAGHeuer manage the relationship with the retail agents around the world after thefinancial crisis?

All partners in the region (in mid 2008) had all of a suddennearly two years of stock. We didn’t push the selling, instead we did as muchadvertising as possible and by the end of 2009 they were back to one year ofinventory. No partner has dumped product.

November 1, 2009 0 comments
0 FacebookTwitterPinterestEmail
Capitalist Culture

Humbled in crisis

by Michael Young October 26, 2009
written by Michael Young

A year since the meltdown of world financial markets and the bleeding appears to have been staunched, but still there is no agreement on the proper reaction to and path out of the crisis.

For proponents of the free market, governments did the wrong thing by throwing money at the problem — instead, mismanaged companies should have been allowed to sink. This would have saved the phenomenal expenditure of funds that will impose a heavy burden on taxpayers for years to come, while resolving few of the structural problems in the rescued companies.

Defenders of government intervention, in turn, say there was simply no way to allow large companies to fall. This would have undermined all confidence in both the markets and in the role of government. It was better to save the companies and later reform them than to preside over the disintegration of interconnected markets.

In retrospect, neither side has succeeded in answering the worries of the other. The fact is that in the United States and Western Europe many companies that should have been sunk were saved because the financial and political cost of allowing them to collapse were prohibitive. But the financial cost of saving them is almost as prohibitive, as taxpayers will remain fiscal hostages for the foreseeable future to misconduct they were not responsible for.

Free-marketers have to convincingly explain how Western governments could have avoided intervening in the midst of widespread panic last year, amid metastatic breakdowns in interlinked sectors. After all, a fundamental argument of supporters of the free market is the high degree of market integration, so it’s perfectly reasonable to understand that even companies that were not mismanaged but were tied into the larger economies of those that were, would suffer the consequences of government inertia. One of the immediate results of the meltdown was higher unemployment, which happens to be a legitimate government concern with implications for social stability.

The net result of the financial crisis is that it has yet to offer any real method out of similar such situations in the future. To an extent this is understandable, since each crisis is unique. We all recall that the chairman of the Federal Reserve, Ben Bernanke, was a student of the 1929 crash, yet his reaction to the crash of 2008 was sometimes characterized more by improvisation than by academic deductions.

Rather than looking backwards, however, we should examine how the financial meltdown may play out in the future realm of politics. Perhaps not surprisingly, this will have significant implications in the broader Middle East, where the presence of vital US interests, combined with high expenditures related to American military operations, will impact Washington’s economic and financial position.

We might want to focus on one scenario in particular: the American strategy for dealing with Iran in the event the Iranian regime is on the verge of building a nuclear weapon. The conventional wisdom is that the US administration, if all else fails, will resort to military means to prevent Tehran from getting the bomb. That may very well be true, but that assessment is built entirely on political considerations, and even then fairly narrow ones: for even politically, how would an attack against Iran affect the US withdrawal from Iraq, a priority of President Barack Obama? Or the stabilization of Afghanistan and the sponsorship of Middle East peace, two other priorities of the American president? The likelihood is that it would substantially undermine these aims.

But let’s talk financially. An Iran attack would almost certainly develop into a regional conflict, extending to Lebanon. Fighting in the Gulf would almost certainly raise the price of oil at a moment when the fragile world economy is rebuilding itself and adjusting to the high price of hydrocarbons. Washington would quite possibly have to respond to the political instability by reinforcing or boosting its military presence in Iraq and Afghanistan in the medium term, which would add to its financial liabilities at an already difficult time. While we would need accurate models to compute the likely costs, even a speedy evaluation leads to a straightforward dilemma: Is the US better off deterring a nuclear Iran or trying to prevent Iran from acquiring a nuclear weapon, particularly when an attack might not even halt its nuclear program?

Such questions as these highlight the real impact of the financial crisis of 2008, transcending theoretical debates over how Western governments should or should not have responded financially to limit its damage. If markets are profoundly integrated, so too are economics and politics and economics and power. Governments know that, especially when it affects the social mood. But as we look forward, we need a wider perspective to gauge how the West’s financial tribulations, particularly those faced by the US, may neutralize its activities in the Middle East.  

Michael Young

October 26, 2009 0 comments
0 FacebookTwitterPinterestEmail
  • 1
  • …
  • 444
  • 445
  • 446
  • 447
  • 448
  • …
  • 685

Latest Cover

About us

Since its first edition emerged on the newsstands in 1999, Executive Magazine has been dedicated to providing its readers with the most up-to-date local and regional business news. Executive is a monthly business magazine that offers readers in-depth analyses on the Lebanese world of commerce, covering all the major sectors – from banking, finance, and insurance to technology, tourism, hospitality, media, and retail.

  • Donate
  • Our Purpose
  • Contact Us

Sign up for our newsletter

[contact-form-7 id=”27812″ title=”FooterSubscription”]

  • Facebook
  • Twitter
  • Instagram
  • Linkedin
  • Youtube
Executive Magazine
  • ISSUES
    • Current Issue
    • Past issues
  • BUSINESS
  • ECONOMICS & POLICY
  • OPINION
  • SPECIAL REPORTS
  • EXECUTIVE TALKS
  • MOVEMENTS
    • Change the image
    • Cannes lions
    • Transparency & accountability
    • ECONOMIC ROADMAP
    • Say No to Corruption
    • The Lebanon media development initiative
    • LPSN Policy Asks
    • Advocating the preservation of deposits
  • JOIN US
    • Join our movement
    • Attend our events
    • Receive updates
    • Connect with us
  • DONATE