Sunday, June 24, 2007

Sher Value: Competing Interests

After sending off my book to the publishers the mind plans the next one; hence a book about Dubai has been a work in progress. One of the things I used to marvel at was that Dubai was creating an enabling economy, where the government sets up the infrastructure and private business flourishes creating services income for the government. Indeed, in some areas an element of aggregating competition has happened and government owned entities have been competing with the private sector. This has been all together healthy; up to a point. Now I am afraid its all getting a little too unbalanced.

In the past two years one of the major concerns seems to be the emergence of the government or semi government companies becoming competitors with the private sector. There is on the one hand a good feeling that the government is supportive and confident enough of the economy to be an active participant. However, there is a propensity for some officials to actually consider its role to be actively competitive with the private sector. As someone said that what these public sector companies are doing is to take the model from the private sector and expand it to a much larger size, re-brand it and launch it as their own.

The result is that the private sector is feeling squeezed by the pressures that come from this strategy. Some will argue that instead of the enabling model the competition that has been created is cornering the private sector to the point that their new business formations is declining. A leading retailer told me the other day that a public sector entity has been approaching foreign franchises to enter into retail franchising and felt that this was likely to create a monopolistic trend that cannot be healthy for the market.

By all means there is no doubt that the government here has been extremely supportive of the private sector and that is why this alliance has flourished. I strongly advocate that balanced competition is good but head on competition between the public sector and the private sector is likely to be counter productive. The answer is that the public sector should become a 'co-investor' with the private sector, thus taking equity positions of up to 40% of the private sector businesses and this is where the synergy works best.

This will ensure that the entrepreneurial spirit of the private sector remains intact, public sector financial strength works to create expansion, and most importantly brings together a synergistic sustainability to the market model. Thus the public sector companies should be setting up private equity operations rather than companies that compete. Just the rumor that a major public sector hotel strip is considering to enter into the theme park and attraction model creates competition that makes existing private sector developers wonder what they were doing for the past three years developing alliances in what is a very difficult market.

Sunday, June 17, 2007

Sher Value: Arab Media Assets

I have long been attracted to the media, perhaps the fact that having written for newspapers and magazines for over two decades one develops a certain perspective about media. Yet any discussion on business and politics will inevitably talk about the role, and more importantly, the power of the media. In the same stretch there is growing recognition amongst the business circles of the Arab world that being a media player is an important element of business presence. Walk through the aisles of any magazine section and you will be hit by the plethora of magazines, many in Arabic, that are being published from the region. Admittedly there is a huge invasion of fashion and glitter on the magazine stands, and of late business magazines are also making their presence felt.

However, as we all know, or some don't know, its not about just publishing a magazine, its all about distribution, voice, content management and consistency. Why is one magazine better read then the other? What drives content? Who is reading? Who should be reading and the questions can run into a ream of A4 size paper. When we consider the broadsheet papers and then the visual media the media picture and the role of Arab Media in this gets, pardon the pun, fuzzy.

My friends, particularly my American friends, are puzzled that I would recommend Al Jazeera International as a fantastic, and yes independent minded, television channel. A well known journalist friend of mine has been trying to subscribe to it in New York without any luck, given that he is told it's a 'terrorist' channel its impossible for the major content distributors to 'carry' it in their bouquet. Whatever happened to the land of free speech? Anyways, the point being that even a good channel like Al Jazeera, who boast the likes of David Frost and Riz Khan in their stable of anchors, cannot get the distribution into the market where its needed most, USA, then folks we have a problem.

It is interesting that aside from these more profiled issues there is a bigger issue within both the Arab media mind and the world at large. I keep bumping into business folks who want to start a newspaper, yes indeed. Its like they all congregate at some obscure café, drink the same coffee and come out wanting to own the next broadsheet newspaper from the Middle East "which will change the world of media as we know it." But I keep telling them we need to get content right, its not like print and presto you have circulation! I know this may be offensive but can aggregated content be all that good? Where is the journalistic voice from the region? Do I want to read what an editorial view from Baltimore is when I have not established my own editorial view on what is happening in my backyard?

I am all for media expansion, and ofcourse an indigenous media. However, any choreography of such a strategy has to expand to distribution into the US and Europe, and this is always going to be a function of getting some top class content into the paper. The other alternate is to buy the media companies in the West, a strategy that is painfully slow and exorbitantly expensive. For the moment: Improve our media content.

Monday, June 11, 2007

Sher Value: Consumption and Consumerism

I am amazed at the consumerism that surrounds us, in a sense its pervading and encroaching, sometimes resulting in consumption to excess and at others shaping our unique and personal definitions of luxury. Buying a car is as much a necessity as it can end up being a luxury, the difference being the price tag. In contrast buying a number plate for Dh 1.5 million (US$360,000) to put on a car that cost one third of that sort of stretches consumerism to absurd luxury; no different than the fellow who paid US$ 40 million for a 8,000 sq foot apartment in New York. This is where you do not take your cost accountants because they will either jump from the apartment terrace or let the car with the expensive number plate run them over before they can figure out what the whole deal was about.

Expanded onto the global matrix consumption and consumerism are becoming perhaps the crucial linchpins in defining our relationship with our environment over the next century. How are the products we consume produced and how is their production effecting the environment? Who influences our choices of consumerism? What is the role of free choice as opposed to engineered choice (advertising)? Who influences what is produced and how is it produced? Where does necessity stop and luxury begin? How do our material values influence our relationships with other people? How do poorer and wealthier nations adjust their needs and demands in the context of consumerism? Is there going to be a point at which the world will stop and realize that the resource footprint needed to sustain our growth consumerism is just not sufficient?

In that rather benign paragraph are questions that perhaps we need to pin next to our computer screen. These are the questions that will compel us and haunt us over the next few decades because in those moments we will be making decisions that will shape the way the world will be. While there is a tendency to blame over population as the cause of pressure on the resources this is not entirely true as the impact of wanton consumerism is also taking a heavy toll of the resource base.

The impact of this consumerism on the way our children are being brought up is frightening. There is a specific marketing slant that is added in today's marketing that targets the children early enough to convert them into the consumerist mentality. The kids market is huge and products and foods geared only for kids is evidence of this. Consumerism has reached a level where on the one hand obesity is as urgent and issue as tackling global poverty is an issue. Isn't that strange that in this day and age we can take one excess and one deprivation and at both ends of the spectrum have a major problem.

It is time that our global priorities are looked at in a refreshing way. We need to reassess what is essential and what is wasteful, and while some may harness the aid band wagon as a means of redressing necessary and urgent care in continents like Africa, the more important change has to come in structural building blocks being created and inefficiencies removed. However, underlying any attempt to fix what is wrong has to be our approach to consumption and consumerism, without changing that we are caught in a trap where only we are tightening the noose around our own necks.

Tuesday, June 5, 2007

Sher View: Labor conditions

(the following was posted by me in the G2K forum which is a closed end forum but thought i owuld share it)

I can see the world concern about how workers are being treated in UAE (and Dubai) and its becoming an issue of debate. While at the outset I would say there are a large number of issues concerning this and indeed in a number of labor camps the conditions are deplorable. However, the conclusion that nothing is being done about it by the government is also wrong. I am surprised people who have lived here and been in the region can make sweeping judgments.

I have in my weekly piece for the papers argued that a number of provisions of the labor law need to be changed the most important that would allow workers free movement from job to job without the statutory 6 months ban. ( a provision of the law that is misused alot) and I have also been vocal about bringing in minimum wage regulations. But after 27 years in the region I cannot draw the conclusion that it is a policy of the government to exploit the workers.

The law is very clear on a number of issues and last years inspection of a number of labor camps resulted in fines and even orders to close the camps and make new camps where living conditions are better. There is a government effort I believe to build a massive labor housing colony with all facilities, and the aim will be to close all privately owned labor camps (then the liberals will complain free enterprise is being trodden upon). My guess is that in the next few months companies violating the regulations will be hit hard.

However, I am sure the former Ambassador to the region (this was in response to a comment from a former British ambassador to Kuwait) is aware that a large part of the problem is in the home countries of these workers, where agents, (their kinsmen) charge then exorbitant amounts of money to get them 'selected' for a job in the Gulf. The exploitation is also from the companies who seeking more profits will bring in people at the lowest rate and put them in the worst conditions. I think that the entire chain has to be dealt with and this is what is important.

On a humorous note I am always amused when my Western friends start championing such cases, excellent, considering it took them 150 years to abolish slavery in the US, and for my British friends it was only 61 years back when tea estates owned by British companies in Assam, Ceylon (Sri Lanka) and India employed child labor. (by the India has the largest child labor force in the world and NO LAW enacted against it. As of now there are pending actions against a major confectionery company and a tire company for knowingly allowing child labor in the cocoa and rubber plantations respectively (only on April 15, 2007 a one year extension has been given to remedy the situation).

For the record I am from Pakistan and am all for the campaigns against child labor, and also want exploitation of labor to stop, but lets support those who are bringing change and lets be FAIR. (go after the companies who exploit, not against societies who are trying to change it).

Saturday, June 2, 2007

Sher Value: Teach your children well.

Investing in education is investing in our own future, and indeed bringing up our children with the right values is extremely important. This is all the more important when it comes to teaching them business values and become and integral part of the economic scene. A great deal has been done for the education of these young people to learn the practices of business through education however there are some important values that need to be learned in the broader experience of life.

There has been a timely announcement of the Makthoum Foundation for Human Development, which carries to the aim to improve the most important raw material to any business model: PEOPLE. This is where the importance of what I would call "Life Values' become important and how this will integrate into a wider model for the next generation to understand what their responsibility is; the most important of which has to be nurturing of good values.

One matter of concern to me remains the life values that some of the rich and middle class children are being taught or picking up in the country. This is the consumer value as opposed to the productive value that these young men and women are picking up. Let me give you an example.

In many societies the value taught to young adults is that if you want something then earn it. This could mean a part time job or running errands etc. However, when I see 18 year old kids wearing US$ 400 caps that they have bought off their father's credit card it does cause me a problem. These kids are learning to consume before they have learned to produce and I confess that I had the same mentality that if one can afford it then why not give it to the kids. I have changed in that respect by realizing that this is not the way to make business leaders out of the young people.

The position that the country has attained on the world scene is phenomenal considering the short time span in which all this has been achieved. This implies that in the years ahead the attention that the business arena here will receive will be unprecedented, some of this attention may well be unwanted and ofcourse the manner in which the values of the business community will be projected will be crucial. There has to be a concerted effort to bring an awareness into society that the right values are handed down to the next generation of business leaders. I know there is the best of education coming into the system but the values that need to be considered are broader and need awareness from all quarters.

It is important that Dubai is also know for the excellent business values that it brings to the business world and these need to be understood and appreciated by all parties. Perhaps there should be a best practices award for fairness, ethical business behavior and most of all an adherence to business and humanistic values.