THE MIDDLE EAST PENETRATING NZ’S EXPORT RADAR ( January 2005)

The arrival of Emirates Airlines to New Zealand skies and its subsequent sponsorship of our America’s Cup challenge has done much to positively raise the profile of the Middle East, including the opportunities for export.

The airline heralds from Dubai in the United Arab Emirates, a Federation of seven emirates. Annual exports of approximately $105.2 million make the UAE New Zealand’s fourth largest market in the Middle East. It is, however, our most diversified market in the region, with exports comprising of a range of products and services besides traditional meat and dairy. It is also an important strategic trading hub.

The UAE has undergone a dramatic transformation in the past 30 years, and its aim to reduce its dependence on oil is seeing a multitude of development projects. These projects offer significant opportunities for NZ exporters across a range of sectors.

To give some idea of the immense scale of development in the UAE, one project is a mini-city environment comprising residential, commercial, entertainment and retail developments spread across 40 beachfront towers. The development will include a state of the art marina aimed at positioning Dubai as a premier yachting (primarily motor yachts) destination. This is just one of more than 20 projects currently underway in Dubai – each with a budget in excess of US$1 billion.

As well as building and construction, other sectors offering good export potential include food and beverage (hotel development being a cornerstone of the tourism growth strategy), education, consultancy and ICT (NZTE has recently announced a new ICT beachhead – Technology Oasis - in Dubai’s Internet City).

Saudi Arabia
New Zealand exports to Saudi Arabia (population 24.2 million) were worth $281.4 million last year, making it our most significant export market in the Middle East and 20th most important market globally. Exports are dominated by dairy and meat product.

As in the UAE, the Saudi government is encouraging private sector growth to lessen the kingdom's dependence on oil and increase employment opportunities for the swelling Saudi population. However, economic reforms in the kingdom proceed cautiously because of deep-rooted political and social conservatism. Priorities for government spending in the short term include additional funds for education and for water and sewage systems.

Egypt
Egypt (population approx. 78 million) is New Zealand’s second largest export market in the Middle East, more than 80% of which is dairy, are worth about $116.5m.

However, lack of substantial progress on economic reforms since the mid-1990s has limited foreign direct investment in Egypt and GDP growth.

Iran
Iran is New Zealand’s third largest market in the Middle East. Worth $101.1m last year, exports continue to grow strongly to this large and relatively sophisticated market. While our exports remain dominated by dairy products, diversification is becoming evident, with products such as air pumps, compressors and ventilation systems and radio transceivers also exported.

Gas-Rich Qatar
Located to the west of the UAE, Qatar is now the richest Arab state. There is a building boom in Qatar eg. a group of islands is to be built off its coast. To be known as the Pearl of the Gulf, the islands will cover 400 ha and will include three luxury hotels, four marinas for mooring over 700 boats, housing and 60,000 sq m of retail and restaurant space.

A new Australian and New Zealand business group has been formed in Doha offering networking opportunities for visiting New Zealand business people targeting work in this market.

Doing Business
As a general rule, a measured and conservative approach to business meetings will serve New Zealand business people well in their initial interactions with customers in this region. Business styles will vary markedly by individual and nationality, which can impact on communication. Personal relationships (particularly at the higher levels) are a cornerstone of business activity and face to face meetings will do a lot to move opening discussions forward.

New Zealand businesses should check the credentials of prospective customers before committing to distribution or agency relationships. Many traders will seek regional agencies and exclusive agreements as conditions of their taking on business. Once registered however, these agency relationships are very difficult and potentially costly to break. Relationships or business in one market does not automatically translate to others in the region so companies are advised to consider restricted territories or informal distribution agreements with performance measures included.

If you would like further information about these, or other export markets, please contact Jacqui Oldham, Regional Manager, NZTE on (06) 843 7726.