Launching a global brand in the Middle East in the 1980s.
Managing the growth of international businesses throughout the EMEA region is what we do day in, day out – it has become second nature for our team. We do, however, depend on the systems, processes and technology we have at hand to run our clients’ regional operations successfully, and have recently wondered how much of what we do would be possible without these. Do we take our ‘modern’ means for granted and how would we work with clients that are based 5,000+ miles away without them?
Pondering how businesses expanded outside their ‘home’ region without the means we have today, we got in touch with the man that managed the early 1980s EMEA expansion of one of the largest NASDAQ listed global healthcare conglomerates in the world . Bill Ford headed the EMEA Finance operation and, along with his boss, was responsible for the launch of the brand in this new region.
Along with some interesting anecdotes, Bill discusses what it was like to launch and grow a business in the Middle East in the 80s.
Tell us a bit about the Middle East in the early 80s
It was 1982 when we went over to Dubai, the very first personal computer had only been invented by IBM a year previously, CD players cost $674 or $1,500 in today’s money and the medical world was still 5 years away from introducing Prozac to the market. Perhaps, most importantly, the UAE had only been in existence for 11 years, having previously been part of Trucial Oman.
To say the Middle East was a far cry from how we know it today is quite the understatement…
What was the decision behind setting-up operations in Dubai?
We had quite a lot of UK export business in the Middle East, and the way we developed our company was whenever we got the business to a certain size, we would set up a regional operation, putting boots on the ground so to speak. It certainly wasn’t easy to decide where our physical location would be. We wanted to get resource and support whilst ensuring we were giving ourselves the very best commercial advantage with our location.
Dubai was going through a transitional period and the rulers were actively looking to get business into the region. They knew they had a certain amount of oil and gas revenue, which would eventually run out, so they knew they had to do something different. Firstly, they made it into a financial centre, they also started developing their tourism industry which, as we know, is huge now, and they also tried to get Western companies to set-up in the region. Remember, this was in a time when Dubai consisted of a handful of buildings and the population had not yet exceeded 300,000 (today it is almost 10 times the size, at close to 3 million).
Our company was deciding between Bahrain, Saudi Arabia and Dubai. Choosing to base our operation in Dubai was largely decided in 1982 by a letter from the ruling Sheikh. The letter supported our endeavours in the region and we used it to build new relationships and connections. The letter basically said we were setting-up operations in Dubai and please give us every assistance. It would end up counting for a lot and meant whenever we had any issues getting anything, we could just show the letter and it would be sorted. It was almost a case of ‘who’ you knew. From our Dubai base we would service the UAE, Saudi Arabia and the other Gulf states.
Thinking back to the very beginning, can you recall what you had to do to get the business up and running?
My boss and I arrived in the country and were the first two staff on the ground for three months. The biggest task was registering the company, which was a labyrinthine process. Our first physical task, so to speak, was furnishing the office. We had an empty room and my boss and I had to take a pick-up truck down to the local furniture shop and actually buy our desks and chairs and also stock up on pens and paper from an office supplier. An expense, even in those days.
What were the biggest challenges?
There were certainly a few. One of biggest was the fact that under the UAE law the company could not actually trade, so we couldn’t hold stock or raise invoices, unless we gave a local partner 51% of the company. This is a law which still remains if you want a formal presence in the region! We certainly weren’t willing to give away 51% of our businesses so we set it up as a UAE branch of our American-based company. First major hurdle overcome…
Negotiating the complex financial hurdles became somewhat of a constant, we did however manage to implement a process that enabled us to invoice and collect money in the region, by sending the invoices from where the products were manufactured. Invoices would be physically mailed all the way from the UK or USA (remember, we didn’t have email then) to Middle East customers, who would then pay the UK or USA entity, and we, as a regional operation, would be paid a commission which would fund our activity.
Finding the right resource to aid our effort was also a major challenge and something that continues to put many companies off geographical expansion. Companies still invest an incredible amount of time and money in recruiting the right people, it’s a minefield and an extremely difficult task even today, so just imagine how hard it was back then! We had to find sales and marketing people armed with a pen and paper, telex and a telephone, in the middle of a region we didn’t know. There were no ‘agencies’ like Harper & May to support us in those days.
The bureaucracy was also interesting. There were all sorts of things written in the UAE commercial law that when it came to actually operating, didn’t really exist. Anything that worked commercially tended to work in the favour of a UAE equivalent company. These are the things you only really realise when you actually start ‘working’ in the region. We got round them, though.
How on earth did you set everything up without the technology we have today?
It probably sounds completely alien to many, and goodness knows what the digital natives of today would think, but we really didn’t have any technology whatsoever back then. Well, apart from telex and telephone. The fax didn’t arrive in our office until I was leaving Dubai in 1986. Even I sometimes think ‘how did we do it’?
We managed by setting up with local distributors in almost every country in the region, we worked tirelessly at building relationships and we’d often make trips to visit them and their customers, sometimes just for a catch up. Business relationships were worth their weight gold in the 1980s, especially when starting from scratch in a new geography. Without the freedom of choice and abundance of accessible information that the internet offers us now, once a relationship was made, it tended to remain. Face-to-face was the way to do business out there and we quickly learned the cultural nuance that the locals preferred meeting in person. Needless to say, we certainly racked up the air miles.
On the topic of cultural nuances, how did you negotiate these?
I received some great advice when I first arrived in the region; it came from one of our local distributors, George, who I’d known for some time. George told me that if we wanted anything from the locals, then don’t just go see them and ask for it straight away, ‘You won’t get it’, he told me. He explained that the trick was to go in, talk to them about non-business-related things and then ask them once you’d gained their respect.
I took heed of George’s advice when I went to get a telephone exchange from a local businessman. I noticed football pictures on the wall of his office and struck up conversation about the World Cup and we chatted for some time.
After about 15 minutes, he turned to me and said, ‘Mr Ford, what is it you want?’ to which I replied, ‘Our business needs a telephone exchange.’ He paused for a few seconds then responded with a smile, ‘Well of course I can get you one’. If I’d gone in and asked straight off the cuff I don’t think he would’ve said yes. I quickly became aware that something that may seem totally normal to you, in your region, could be the difference between an open or closed door for your business in another. You have to learn from people who know the region, and George was one of these guys.
Finally, do you have any advice or observations for those looking to expand internationally?
I can’t really imagine people setting-up new businesses abroad nowadays having to go through what we did, but it was a great experience and learning curve.
One thing I have noticed, is the ability of software companies to expand quickly. Without having to negotiate physical products and with the internet as their ‘store front’, they are able to sell into new regions with relative ease. That said, without people in the region that understand the nuances of business and cultural differences, growth will only go so far.
It is also worth noting that, with today’s technology, companies don’t necessarily need invest in full-scale regional operations and, without the associated cost, are penetrating additional geographies at a far earlier stage than we would have done in the 1980s. These companies are widely supported by a) the internet and b) outsourced functions .
As a final point, despite the catalogue of differences between the 1980s and now, one thing remains the same; people buy from people. Understanding the culture, the way businesses operate and communicating in the right way will always be the way to achieve success. Working with people who know the region and have the right connections is vital.