1 :// · Later, as the shopkeeper explained that the girl had taken a short break from her studies to get a quick jolt of caffeine, it struck me: change the clothes and the brand

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Drinking Red Bull in Dahiyeh

The Arab world is home to more than 350 million consumers.Despite the outside stereotypes that paint the region in a neg-ative light, they want the same kinds of quality products asconsumers anywhere else. Businesses, both local and fromaround the world, are seizing these boundless opportunitiesand building markets throughout the Arab world.

Ididn’t realize how vibrant and globally connected the Arabworld really is until one afternoon at a small shop in the

middle of a Hezbollah-controlled section of South Beirut. Ilooked across the counter of the small convenience store andsaw it there, slim and shiny, sitting on the shelf: They sell thathere?

Our two-car caravan had taken a right turn at the cornerof a massive walled compound, skirting the side of a mosqueand driving down toward the multistory residential buildingsrising a few blocks down the road. The wide street lookedalmost festive—the sort of promenade that typifies the French

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COPYRIG

HTED M

ATERIAL

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10 THE ARAB WORLD UNBOUND

influence on Beirut. The dozens of banners, one or two hangingon each light pole along the center berm, gave the street acelebratory air. But to those of us inside the car, they served as achilling reminder of the political divisions that run throughoutthis seaside city and the Arab world at large. The banners, myhost explained, featured photos of Hezbollah martyrs, someof them killed in combat and others who died as suicidebombers. All of them were canonized as heroes in Dahiyeh,this neighborhood in the heart of Hezbollah territory in SouthBeirut. The scene suddenly felt reminiscent of the images I’dseen hundreds of times on U.S. newscasts.

In a city where at least seventeen religious sects try tomaintain a tenuous balance, my hosts took me through variousMuslim and Christian neighborhoods, showing me how theyand their products were making inroads throughout the city.They urged me to avoid Dahiyeh, and I could sense theirrising tension when we pulled off the main boulevard intothe narrow side streets. This was not an area that welcomedWesterners gladly, and my editor, a six-foot, six-inch whiteAmerican, wouldn’t exactly blend in with the crowd here.Bringing my tall editor along made one of my hosts, whomanaged distribution and marketing in this neighborhood,especially nervous. He refused to let him out of the car.

I didn’t pay it too much attention at the time. We’d parkedon a narrow side street lined with local storefronts. A few streetvendors pushed by with their carts, one covered with fruit,another with cases of bottled water. In a shop window acrossthe street, several goat or sheep carcasses hung from large,three-pronged hooks. One of the shop’s butchers plunged agloved hand into a tub and pulled out some hairless skins, whichdripped a thick liquid as he carried them off to a back room.A few passersby glanced over as I got out of the car, but no one

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Drinking Red Bull in Dahiyeh 11

paid much attention as three of my hosts and I walked into adoukan (a small retail shop) about halfway down the block.

As I browsed around the doukan with my hosts, in walkeda young woman about fifteen years old and fully covered inan abaya, the traditional robe and veil that many Arab womenwear. She struck up a conversation with the shopkeeper, eyedthe popular items he had displayed around his counter, andasked for a bag of potato chips and a can of Boom Boom, apopular energy drink. And then I saw it, that slim and shiny canon the shelf. I couldn’t believe it: they sell Red Bull here? Andas I looked around, I also saw Coca-Cola, Pringles, and Alwaysfeminine pads. This doukan, in one of the most virulently anti-West neighborhoods in the region, stocked a wide variety ofthoroughly Western brands and products.

Later, as the shopkeeper explained that the girl had takena short break from her studies to get a quick jolt of caffeine, itstruck me: change the clothes and the brand of energy drinkshe bought, and I could’ve witnessed the exact same transactionat a convenience store in my home town of Austin, Texas. I evenasked the shopkeeper where he thought Red Bull came from.He shrugged and guessed it was a Lebanese brand. He could nothave cared less that it was an Austrian company popular for itshard-charging brand image in the United States. His customersliked it. His distributor supplied it. He sold it. It was that simple.

THE ARAB MARKET IS VIBRANT ANDGLOBALLY INTERCONNECTED

I found similar scenarios in every Arab country I visited: amarketplace filled with consumers who shared the same basicwants and needs as anyone else, anywhere else. Regardless ofthe political and cultural differences between Arab countries

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and the rest of the world, people drank Red Bull in Dahiyeh,drove Range Rovers in Kuwait, and ordered Domino’s Pizza inSaudi Arabia. I saw the success of these so-called Western brandsthroughout the region. In 2010, the two top advertisers in theArab world were an American and a Dutch/British company,respectively Procter & Gamble and Unilever, each of whichspent as much as $70 million in the region that year, accordingto market research estimates. (See Table 1.1.) Seven of the topad spenders in the region were local companies.

My experiences in the region left me with one indisputableconclusion: when shopping, Arab consumers care first and

TABLE 1.1 The Twenty-Five Largest Advertisers in the Arab World

The region’s two biggest ad spendersProcter & GambleUnilever

Arab companiesEtisalatZainSaudi TelecomAmericana Group

AlmaraiDuMobinil

Non-Arab companiesPepsiCoNestleThe Coca-Cola CompanyL’OrealJohnson & JohnsonReckitt BenckiserMcDonald’sKraft

MarsNokiaGeneral MotorsSonyToyotaFordSamsungLG

Note: This list is based on 2010 estimates. Aside from P&G and Unilever, the two largestad spenders in the region, the actual order may vary. This list gives ad spending in SaudiArabia, United Arab Emirates, Qatar, Bahrain, Oman, Kuwait, Jordan, Lebanon, Syria,Egypt, Morocco, Tunisia, and Algeria.Source: List supplied by MCN MENA.

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foremost about the quality of products they’re buying for them-

selves and their families. My visit to the West Bank in November

2009 drove the point home. If political anxieties were rising

anew, as major international news media reported during my

visit, they weren’t obvious from the shoppers at the Plaza Mall,

a new and modern shopping center in Ramallah. The parking

lot bustled with people going about their everyday business on

a balmy evening.

There was no indoor ski slope at this mall, like the famous

one in Dubai’s Mall of the Emirates. Carrefour and Hugo Boss

hadn’t leased space there. But drop this shopping center almost

anywhere in Austin, Texas, and aside from the Arabic signs and

the local brands on the shelves, it wouldn’t look out of place.

Even the wide, clean aisles of the Bravo Supermarket looked

like most U.S. grocery stores, complete with a Unilever logo

and several of its top global brands stickered across the sliding

glass doorway.

All of the top Western brands were there, as well as many

Israeli brands. Palestine and Israel have an intertwined rela-

tionship, and that connection shapes the consumer markets on

both sides. Many Palestinian brands, including El-Zarafa tahini

and Zadona pickled products, have done quite well in Israeli

markets, said Michal Shapira, a professor at the Ono Academic

College. Little wonder, given that Arabs accounted for roughly

20 percent of Israel’s 7.5 million people in 2011, a population

larger than some Arab countries.

In the West Bank, Israeli brands have done well in some

of the top consumer product categories—partly because they

were the only choices Palestinians had for many years, but partly

because they have a reputation for high quality as well. Shukha,

for example, accounts for more than 55 percent of rice sales,

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the mall’s general manager told me. Other strong Israeli brandsare Osem pastas, Telma soups, and Tnuva milk.

When given a quality alternative, he said, many West Bankstores and shoppers prefer a local product. But in Ramallah,consumers buy brands from around the globe. Like anywhereelse in the world, mothers in the West Bank want to feed theirchildren and furnish their homes with the best products theycan. Politics go by the wayside when buying milk, diapers, orfacial soap, and many of the most successful global brands haverealized that Arab culture, religion, and style of dress have notclosed its markets to the rest of the world.

ARAB CONSUMERS CONTROL MORESPENDING POWER THAN YOU THINK

The diversity and wealth of the Arab world provide an incrediblearray of opportunities for consumer companies that take thetime to understand the people and their culture. If the ArabLeague were a single country, its gross domestic product (GDP)in 2010 would’ve been roughly $1.99 trillion, exceeding theGDP of all but eight countries in the world. (See Table 1.2.) Itwould be larger than India and the Russian Federation—twoof the four so-called BRIC markets (Brazil, Russia, India, andChina) so coveted today by multinational businesses. The Arabworld is not one economy, of course. (See Table 1.3.) I’lldiscuss more about the rich variation throughout the regionin Chapter Two, but what’s clear from the data here is thatthe Arab markets—both the six wealthy countries of the GulfCooperation Council (Bahrain, Kuwait, Oman, Qatar, SaudiArabia, and the United Arab Emirates) and the less developedeconomies such as Yemen and Mauritania—can offer profitableopportunities for consumer companies.

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TABLE 1.2 The Arab World Is the Ninth-Largest Economy in theWorld: GDP of the Fifteen Largest World Economies, 2010

2010 GDPRank Country (trillions of US$)

1 United States $14.532 China 5.883 Japan 5.464 Germany 3.295 France 2.566 United Kingdom 2.257 Brazil 2.098 Italy 2.069 Arab world 1.99

10 India 1.6311 Canada 1.5812 Russian Federation 1.4813 Spain 1.4114 Australia 1.2415 Mexico 1.03

Note: The Arab world total includes actual and estimated 2010 GDP data. Figures are inU.S. dollars at current prices.Source: IMF World Economic Outlook Database (Sept. 2011); Central IntelligenceAgency, The World Factbook, http://ciaworldfactbook.us/ (accessed Oct. 22, 2011).

The region’s wealth doesn’t sit solely in the hands of sheikhsand oil barons. A rising middle class in the Arab world is using itsown wealth as it works to improve its own standard of living (seeChapter Five). If the twenty-two Arab League countries were asingle economy, their collective GDP would amount to $5,563per person—more than both China and India. (See Table 1.4.)Of course, the relatively small populations and the large oiland gas revenues in countries such as Qatar, Kuwait, and theUnited Arab Emirates (UAE) boost the GDP per capita totals.In fact, that combination of fossil fuels helps give Qatar one ofthe world’s highest per capita GDPs. But it’s too simplistic toassume that all of these figures are skewed by oil wealth. Many

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TABLE 1.3 The Arab Economies, 2010

2010 GDPCountry (billions of US$)

Saudi Arabia $448.36United Arab Emirates 302.04Egypt 218.47Algeria 157.76Kuwait 132.57Qatar 127.33Morocco 91.14Iraq 81.11Libya 71.34Sudana 65.39Syria 59.33Oman 57.85Tunisia 44.28Lebanon 39.24Yemen 31.32Jordan 26.45Bahrain 22.66Palestinian Territories 6.64Mauritania 3.63Somalia 2.37Djibouti 1.13Comoros 0.574

Note: IMF figures reflect actual and estimated 2010 GDP data.Data for Somalia and the Palestinian Territories are CIA WorldFactbook estimates for 2010 and 2008, respectively.aIncludes South Sudan.Source: IMF World Economic Outlook Database (Sept.2011); Central Intelligence Agency, The World Factbook,http://ciaworldfactbook.us/ (accessed Oct. 22, 2011).

of the Arab countries without vast petroleum reserves—Jordanand Lebanon, for example—still have a higher per capita GDPthan India. In fact, only five Arab countries have a lower percapita GDP than India’s, and nine have a higher per capita GDPthan China’s.

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TABLE 1.4 Per Capita GDP in the Arab Countries, 2010

2010 Per CapitaCountry GDP (in US$) 2010 Population

Qatar $72,397 1,758,793Kuwait 48,441 2,736,732United States 47,004 309,050,816United Arab Emirates 40,209 7,511,690Oman 20,792 2,782,435Bahrain 17,955 1,261,835Saudi Arabia 16,335 27,448,086Libya 11,225 6,355,112Lebanon 9,281 4,227,597Arab world total 5,563 357,867,177Algeria 4,448 35,468,208China 4,392 1,338,299,512Jordan 4,374 6,047,000Tunisia 4,197 10,549,100Syria 2,902 20,446,609Morocco 2,852 31,951,412Egypt 2,693 81,121,077Iraq 2,532 32,030,823Palestinian Territories 1,599 4,152,102Sudan 1,501 43,551,941India 1,394 1,170,938,000Yemen 1,302 24,052,514Djibouti 1,270 888,716Mauritania 1,049 3,459,773Comoros 781 734,750Somalia 254 9,330,872

Sources: IMF World Economic Outlook Database (Sept. 2011); Central IntelligenceAgency, The World Factbook, http://ciaworldfactbook.us/ (accessed Oct. 22, 2011);World Bank World Development Indicators database.

THE SHADOW ECONOMY

The informal flow of money and products throughout theregion adds even more heft to Arab consumer markets. Accord-ing to research by Friedrich Schneider, Andreas Buehn, and

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Claudio Montenegro, Egypt’s $218 billion economy would growby more than a third if the shadow economy were included inthe official calculations. (See Table 1.5.) The percentages dropin wealthier countries—the shadow economy is only 14 per-cent of GDP in Qatar, for example—but all the Arab countrieshave a larger shadow economy than China does. (India’s 22.2percent would put it around the middle of the Arab pack.)

The Arab countries mitigated some of the shadow economyin 1997, opening up smoother official trade pathways with the

TABLE 1.5 Shadow Economy in the Arab World,1999–2007 Average

Shadow Economy as aCountry Percentage of GDP

Comoros 38.7Tunisia 37.2Mauritania 35.1Egypt 34.9Morocco 34.9Sudan 34.1Libya 33.7Lebanon 33.1Algeria 32.5Yemen 27.1United Arab Emirates 25.9India 22.2Kuwait 19.4Syria 19.1Jordan 18.5Oman 18.4Saudi Arabia 18.1Bahrain 17.9Qatar 14.1China 12.7United States 8.6

Source: F. Schneider, A. Buehn, and C. E. Montenegro, ‘‘New Esti-mates for the Shadow Economies All over the World,’’ InternationalEconomic Journal, 2010, 24, 443–461.

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Greater Arab Free Trade Area (GAFTA) agreement. The agree-ment, which includes eighteen of the most prosperous Arabcountries, prompted many consumer products companies toincrease their commitment to local manufacturing, a decisionthat eliminated many of the import-export hassles while fos-tering a higher level of brand loyalty among local consumers.It hasn’t worked perfectly. Unilever, for example, producesseveral of its products in Morocco, but it ships those items toAlgeria via France because of the tepid relationship betweenthe two Arab nations.

Despite moves to smoother trade pathways, a robust parallelmarket has emerged outside official company channels, provingagain that wherever entrepreneurial companies find demandfor a product, they will figure out a way to get it there. I foundthe clearest example of this at a modern hypermarket in Aleppo,Syria. Earlier in the day, I’d met with the senior manager of aSyrian distribution company, who said foreign companies thatwant to bring products into the country have to prove thosegoods have no significant connections to Israel. Most multi-national companies would source their Syria-bound productsfrom other Arab countries, taking advantage of GAFTA, butthe government had banned many brands because of real orsupposed ties to Israel. Neutrogena, Band-Aid, Tylenol, and Lis-terine, for example, all were banned—at least officially. But justhours after my meeting with the distributor, I found a neatlyarranged selection of Listerine at this major hypermarket inAleppo. I could’ve purchased enough mouthwash to keep myteeth and gums germ free for months.

Finding Opportunity in the Shadow EconomyThese gray markets present a, well, gray area for governmentsand consumer products companies. Most Arab countries havecracked down on counterfeit and black market goods. The

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Oman Ministry of Commerce and Industry, for example, cre-ated a consumer protection division that searches for piratedsoftware, fake Lipton tea bags, knock-off mobile phones fromChina, and numerous other counterfeit items. But the graymarket, in which official goods reach consumers through unof-ficial channels, did not get the same level of scrutiny. In Jordan,Syria, and Lebanon, sales of gray market products amounted toroughly $4 million a year on Unilever products alone, companyofficials told me when I visited in 2009.

Still, successful companies in the Arab world have figuredout ways to turn this gray market to their advantage. WhenUnilever launched its new Clear shampoo in 2009, it unleasheda television ad blitz on the pan-Arab satellite networks. Theads supported the official Clear launch in Gulf CooperationCouncil (GCC) countries, but it also started building brandawareness in markets where it hadn’t launched yet, includingJordan. Soon enough, Unilever’s staff in Jordan were seeingClear show up in their territory. Although they didn’t like theidea of losing control over those sales, they realized they coulduse this information. So brand managers started researchingthe gray market sales, tracking how and where Clear sold andwho was buying it. When Clear officially launched in Jordan thenext year, the company used its gray market research to helpcraft a successful local marketing strategy.

SHADES OF INDIA AND CHINA

I reside in one of the most livable cities the United States hasto offer and go to work at one of the world’s leading researchuniversities. If my home state were a country, it would haveranked thirteenth on the World Bank’s list of 2010 nationaleconomies. I’m comfortable, happy, and prosperous here inAustin. Life is good. So if I were running a major consumer

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business in Texas, why on earth would I want to tackle thechallenges of the Arab world?

I heard the same question in the early 1990s, only thenpeople were asking me why I would encourage them to considerexpansion in countries such as China and India. Compared tothe size and comfort of Western consumer markets, today’sArab economy is no different from what the BRIC marketswere then: relatively modest, complex, and easily ignored. In2009, the roughly 25 million people in Texas produced a largereconomy ($1.14 trillion) than the nearly 38 million people inthe six GCC countries combined ($912 billion). (See Table 1.6.)The per capita gross state product in Texas was $46,190 thatyear, while GDP per capital in the GCC was $24,120. However,as I argued in my book The 86% Solution, the future growth ofthe global consumer market won’t come from the 14 percent ofconsumers who live in the aging, developed countries where theGDP per capita is more than $10,000. The GCC surpasses the

TABLE 1.6 GDP and Population: GCC Versus Texas, 2009

2009 GDPGCC Countries (billions of US$) Population

Saudi Arabia $369.18 25,391,100United Arab Emirates $230.25 4,598,600Kuwait $148.02 2,794,706Qatar $98.31 1,409,423Oman $46.11 2,845,415Bahrain $20.59 791,473Total GCC $912.47 37,830,717Texas $1,144.70 24,782,302

Note: At the time this table was compiled, the latest GDP data available were from 2009.For consistency, this table uses 2009 data throughout.Source: World Bank World Development Indicators database, http://data.worldbank.org/indicator (GDP and population for the GCC countries); U.S. Bureau of EconomicAnalysis, Regional Economic Accounts, http://http://www.bea.gov/regional/index.htm;U.S. Census, 2010 Population Finder, http://http://www.census.gov/popfinder.

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developed market threshold, yet many consumer companiescontinue to overlook it.

Combine the untapped potential of the GCC’s relativelywealthy markets with the emerging markets throughout therest of the Arab world, and the region presents as promisingan opportunity now as India and China did then. Yes, theArab world might seem complex, different, unknown, andperhaps even threatening at this moment. But the market isemerging. It’s large, growing, vibrant, and globally connected,with boundless market opportunities. And it’s open for business.

OPPORTUNITIES BEYOND CRUDE OILAND ABAYA

Few images from the Arab world resonate more than a photoof an oil well in the desert. It might be rivaled only by the ubiq-uitous image of veiled women on Western newscasts. And whynot? Both are a common sight throughout the region and a corepart of the economy and culture throughout much of the Arabworld. But for many people, particularly in the West, the imagesof oil and abaya have become empty caricatures—stereotypesthat belie the incredible cultural variety in the region. Localand multinational companies are reaping millions of dollars ofprofits by looking beyond the oil fields and the veil.

Exporting a Different Kind of OilThe Arab world produced other valuable oils long before itdrilled its first well and built its first pipeline. And while theregion today is known globally for its fossil fuels, many compa-nies are capitalizing on the market opportunities provided bysome of the Arab world’s other precious resources.

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Moroccan companies and cooperatives have built a thrivinginfrastructure around argan oil, produced by the argan treesnative to the country. This oil is edible and often consumedmuch like olive oil, but it is also widely used in cosmetics andother beauty products, including those produced by Azbanecosmetics and perfumes. After seeing much of the value ofargan oil go out through foreign companies and middlemen,Azbane worked with public and private officials to help organizethe women who harvested the argan seeds from which the oilis produced. A cooperative in southern Morocco now controlsmost argan production and shares the profits with Berberwomen.

The Sweet Smell of OpportunityI caught a whiff of an oud-based perfume in many of the Arabcities I visited. The naturally rich oud oil is extracted from treesand used as the main ingredient for fragrances, both traditionaland new, that are popular throughout the region. I found theseperfumes almost everywhere I went in the GCC, including atone of the original stores passed down through the generationsof the Atyab Al Marshoud Co. in Kuwait.

Larger companies are exporting these distinctly Arabianscents to a global audience. Amouage, a perfume maker ownedby the Omani royal family, gave its perfumes a more interna-tional twist. After taking over as CEO in 2006, David Crickmorespent his first year at Amouage revamping the entire productline, including its packaging and branding. He balanced itsmore traditional frankincense-based fragrances with scents andpackaging that would appeal to a non-Arab consumer base aswell. The motto for Amouage, ‘‘The Gift of Kings,’’ was based ontales of the queen of Sheba, the company’s royal ownership, andthe fact that Oman was the only country in the ancient world

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where one could get gold, frankincense, and myrrh (which,according to the Bible, were the three gifts presented by thethree kings to the baby Jesus).

When we talked in June 2010, Crickmore said sales fromGCC countries, once 95 percent of the company’s revenue, haddropped to just 60 percent as international sales developed,a trend he expected to continue as the business’s expansionoutside the region grew. ‘‘Whereas before Amouage was anOmani brand trying to sell internationally,’’ he said, ‘‘now it’san international brand that just happens to be based in Oman.’’

The Rich Taste of OpportunityMost of the world’s finest olive oils come from countries alongand near the Mediterranean Sea. Perhaps most people thinkfirst of Italian olive oils, but many of the Arab countries are hometo old olive groves that produce excellent oils. IFFCO, a UAE-based company that produces a range of consumer products,goes directly to olive farms in Tunisia, where it produces itsoil, to pick out the best crops and ensure the highest quality.Although it has a hard time competing with the local oliveoil producers in the Tunisian market, IFFCO executive ShirazAllana told me the company controls the largest share of theGCC olive oil market with its Rahma and Allegro brands. Byfocusing downstream on branding and marketing activities, italso is pushing to convince consumers in olive-rich countries tobuy higher-end-branded bottles of oil.

Jordan’s King Abdullah II took that one step further, work-ing with some local business leaders to produce a premiumolive oil. Using the fruit from some of the world’s oldest olivegroves, including several that have been standing for thousandsof years, the company is producing a high-end brand, Jordan’sTreasure, from one of the country’s few natural resources. The

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project began in 2001 as part of an effort to spur developmentin northern Jordan. King Abdullah pulled together some ofthe country’s top businessmen, including Ghassan Nuqul andKamil Nader, and together they created Jordan’s Treasure. (SeeFigure 1 in the photo insert.)

Local customers can buy a 750 milliliter bottle of oil forabout seven dollars or, in the finest Jordanian tradition, goto the production facility and get the oil straight out of thepress. The company takes a different approach to the high-enddomestic and export markets. Jordan’s Treasure was formed inpart to put the country on the regional and international mapby producing an olive oil on par with Cuban cigars or Belugacaviar. It doesn’t produce large volumes, about six hundredtons each year, and it contributes only about 10 percent of thecountry’s total olive oil exports. But Jordan’s Treasure comesin Italian-made glass bottles and features something no otherolive oil can claim: the king’s royal seal. It’s the first product ofany kind to carry the king’s emblem. If you’re a head of statevisiting Jordan, the king might even present you a bottle of yourown. For the rest of us, it costs around eighteen dollars in theUnited States.

Arab Wealth Beyond the Abaya

A woman I met at Dubai’s second-largest telecommunicationsprovider gave me a whole new perspective on the role ofArab women in the region’s economy. Rather than findingthe subservient, oppressed stereotype I see and read about fartoo often, I met dozens of successful women who had startedinnovative start-ups or helped guide existing companies togreater success. Hala Badri was one of those women.

I’d come to the corporate headquarters of Du, the second-largest telecommunications provider in the UAE, to learn more

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about how the company reached out to the diverse Emirati andexpatriate populations in Dubai. I scheduled a meeting withBadri, the company’s executive vice president of brand andcommunications, and as I sat in a glass-walled conference roomoverlooking the Dubai skyline, one of her colleagues informedme that she would not shake my hand. I knew that many Emiratiwomen followed tradition and avoided handshakes with men,but that left me with a dilemma: How should I greet her?

As it turned out, Badri entered after her colleague hadstarted introducing me to Du’s business, so she slipped into aseat and just joined the conversation with a brief hello. We hadan insightful conversation about the company and its work inthe UAE, and I was impressed by her intelligence, vision, andprofessionalism. Apart from her black abaya, which coveredeverything but her face, I could’ve imagined her holding herown in the most competitive conference rooms in all the For-tune 500 companies I’ve visited over the years. But in virtuallyall my meetings over all those years, I concluded business witha handshake or a hug. To me, it seemed a natural expressionof respect and collegiality. Now after such a rewarding conver-sation with Badri and her colleagues, I started worrying how tosay a proper farewell.

Badri rescued me from my awkwardness. She explained thatshe cares deeply about Dubai’s cultural traditions and made apersonal choice to dress and greet men in the manner she doesin personal and professional situations. When I left, she put herhand over her heart in a fond farewell. So I have to thank Badrinot only for saving me from any faux pas but also for promptingmy first true understanding of how misleading the stereotypesabout Arab women and culture are.

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HOUSEHOLD SPENDING IN THE ARAB WORLD

The typical Arab consumer has money to spend and will spendit. Taken as a whole, the Arab countries spend an average of 49percent of the regional GDP. That’s nowhere near householdspending in the United States, which runs at roughly 71 percentof the nation’s GDP, according to the same United Nationsdatabase. It’s also lower than Brazil (63 percent) and India (57percent). It is, however, considerably higher than the householdspending rates in China (37 percent). (See Table1.7.) So notonly do average Arab consumers have more resources thanaverage Chinese consumers, they also tend to spend more ofwhat they have. In fact, per capita household spending in theArab world ($2,307) was two-thirds greater than China ($1,378)and more than three times greater than India ($639), accordingto 2009 data from the World Bank and United Nations.

The Arab world is increasingly consumer driven, and withthat trend its residents have become increasingly demanding ofthe products they buy and use. Like the West Bank shoppers whobuy global products, the vast majority of Arab consumers todayspend their money on high-quality goods from virtually any com-pany that makes an effort to understand their wants and needs.

BEYOND BOYCOTTS AND BARRIERS

For decades, doing business in the Israeli and the Arab marketswas an either-or proposition. The Arab countries rejected mostcompanies that sold their goods in Israel, and vice versa. TheCoca-Cola Company still suffers from that legacy today. The falserumors abound: Coke has Jewish ownership; its graphics depictanti-Muslim material; some of its ingredients are unsuitablefor Muslims. As noted in a February 12, 2011, article in the

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TABLE 1.7 Arab World Household Consumption, 2009

Percentage ofCountry 2009 GDP

Mauritania 83Lebanon 78Egypt 76Yemen 74Jordan 72United States 71Syria 69Sudan 68Tunisia 63Brazil 63Morocco 61India 57Iraq 55Arab world 49United Arab Emirates 47Oman 39Saudi Arabia 39Kuwait 37Libya 37China 37Algeria 36Bahrain 35Qatar 18

Source: U.N. Statistics Division, ‘‘GDP and Its Breakdown at Current Prices, inU.S. Dollars,’’ calculated using GDP and household consumption expenditure,http://unstats.un.org/unsd/snaama/dnllist.asp (accessed Oct. 20, 2011).

Economist titled ‘‘How Firms Should Fight Rumors,’’ the top hitfor a Google search on the phrase ‘‘Middle East rumors’’ is aWeb site the Coca-Cola Company itself posted to rebut theseand other allegations.

Pepsi, in contrast, has distributed its products throughoutthe Arab countries for decades. Like McDonald’s, Toyota, and

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other global brands that have maintained their business inthe Arab markets, Pepsi found itself limited in or excludedfrom the Israeli market. It was one or the other until the ArabLeague’s boycott finally began to thaw in the late 1980s. Pepsi,for example, didn’t enter the Israeli market until 1992, andMcDonald’s entered in 1993.

The Arab freeze on brands such as Coca-Cola officiallythawed in 1991, and I found plenty of evidence—in both itsadvertising spending and marketing efforts—that Coca-Colahad reentered the region with gusto. In many Arab countries,however, Pepsi still maintained the significant advantage it hadgrabbed during Coke’s absence. As one market researcher toldme, consumers in some Arab countries refer to Coca-Cola as‘‘the red Pepsi.’’

A Path Around the RoadblocksThe Coca-Cola Company is pushing to expand its business bycreating a local image and working closely with local bottlers,none of whom faced as unpredictable a challenge as ImadHindi, the general manager of the National Beverage Co. inRamallah. The West Bank is one Arab market where Coca-Colaenjoys a greater market share than Pepsi does. But to maintainthat advantage, Hindi and his colleagues had to create anextremely flexible network of distribution centers and supplyroutes to work around the constantly changing set of roadblocksthroughout the West Bank.

When I stopped by his office in November 2009, Hindishowed me a map of the West Bank settlements and towns, aswell as his various properties. At the time, Israel operated 592checkpoints within the West Bank (excluding those leading intoIsrael), according to the United Nations. When Hindi’s truckswere barred from passing through one checkpoint in 2006, he

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told me, delivery times ballooned to four hours from ninety min-utes. Roadblock delays typically cost him about $700,000 a year.

‘‘After the invasion of the West Bank in 2002,’’ he said,‘‘we realized we had to show the maximum flexibility on thelogistics side in order to overcome these issues. So we createdthe concept of satellite depots. In the beginning, we usedto service all the West Bank from three depots: one in thecenter, one in the north, and one in the south. Due to thecontinuous blockades and changes from time to time, it didn’twork anymore. So now we have a central warehouse inside acity, and then we have satellites.’’

The Coca-Cola Company takes a similar approach in manyof the emerging markets in which it operates. In Cairo andother cities, for example, the company has set up a network ofmicrodistribution centers. In the tight alleyways of many Caironeighborhoods, it has employed people as small distributors,giving them coolers, keeping them supplied with Coca-Colaproducts, and charging them with distributing those goods tothe small stores throughout their small territory. Hindi faces amore formidable challenge, though: he might have full accessto an area on one day and severely limited access to it the next.

Distribution is a constant struggle, but the company’s cre-ativity and the West Bank consumer demand for Coca-Colaproducts make it work. (When I visited in November 2009,National Beverage controlled 60 percent of the carbonatedbeverage market in the West Bank and had become one of thelargest companies in Palestine, with annual revenue of roughly$53 million.) As for Hindi, he just shrugs off the challenge,essentially saying, That’s the way life always has been here. You expectit, so you just deal with it. The satellite distribution centers, thecontinuous route redesign, and a constant effort to create newideas for distribution have become an everyday part of the job.

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That local distribution network, the company’s plantin Ramallah, and its 350 employees, virtually all of themPalestinian, have helped build a sterling reputation for thecompany as a local brand, and Hindi and his colleagues workhard to keep it that way. They sponsor local sports teams andhave acquired several well-known but struggling Palestinianbrands, including Club Cola and Jericho Water. By nurturingthis local identity and crafting a flexible distribution networkto serve his customer base, Hindi has maintained and evenexpanded Coca-Cola’s market leadership.

CHICKEN FIGHTS: LOCAL COMPETITION INTHE ARAB MARKET

By the end of 2011, KFC was the undisputed worldwide kingof fast food chicken restaurants. It operated more than fifteenthousand outlets in 109 countries, according to its corporateWeb site. In Saudi Arabia alone, the Americana Group ranabout 115 KFC outlets, including 17 in Jeddah, according to aDecember 2011 search of the Kuwaiti company’s online storelocator. Eighteen months earlier, as I drove throughout Jeddah,I saw plenty of those KFC outlets. None of them looked out ofplace, given the widespread presence of McDonald’s, Subway,Ruby Tuesday’s, and the other American restaurant brands Isaw in that seaside city.

In Jeddah, however, KFC was locked in a tough competi-tion with Al Baik, a local, roasted chicken and seafood chain.Loosely translated, Al Baik means ‘‘the sir,’’ a name that appar-ently refers to the bowtie- and top-hat-wearing chicken thatserves as the company’s mascot. The chain had become verymuch like the In-N-Out burger chain in the western UnitedStates—available only in a relatively small area but craved by

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consumers throughout the country. It’s not uncommon forSaudis flying into Jeddah from Riyadh to stop at an Al Baikoutlet before heading to their scheduled appointments, severalof my hosts told me.

I passed at least a half-dozen of these Al Baik restaurants asI traveled throughout the city, and I never saw one anywhereclose to empty. Drawn by the sign featuring that well-dressedchicken, I stopped by an Al Baik near Jeddah’s CornicheCenter on a Thursday evening between the maghrib (sunset)and isha’a (nightfall) prayers. Outside in the deepening dusk,the collection of middle-class shops and malls in this sectionof Jeddah bustled with shoppers. Inside the small shoppingcenter, a thick crowd surrounded the Al Baik counter.

Fifteen men waited in line to order from the streamlinedmenu of half a dozen offerings, typically about 11 Saudi riyalseach, plus 1 riyal for a Pepsi (all told, about $3.25). One womanwaited for her meal at the family register, where she didn’t haveto interact with the twenty-five to thirty men packed aroundthe main pickup counter. There, Al Baik employees served upmeals like a butcher, behind a meat counter, the sign abovethem reading, ‘‘Now Serving No. 84.’’ As I’d come to expect,Al Baik was doing a brisk business.

But as I walked on, I discovered that KFC had a small outletno more than twenty yards away, tucked around the cornerbeside a Krispy Kreme doughnut shop. The KFC had one smallcounter, about ten feet long, with only two people standingin line. As I watched, I realized both of the men in line hadstopped by to chat with friends who worked there. One of themen ordered a Pepsi and left, and the other departed withnothing. Of the handful people sitting and eating at the tablesthere, no one had food from KFC.

In a city where I had no problem finding all kinds ofAmerican fast food outlets and in a city blanketed by KFC ads,

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I was surprised to see how much success this local chain washaving. At Al Baik’s corporate headquarters, I was amazed bya large picture of its restaurant in Mecca. Amid a vast sea ofthousands of hajj pilgrims, a bright yellow-and-red Al Baik signimmediately caught my eye. And when I took a closer look atthe photo, I suddenly realized hundreds, perhaps thousands, ofthose people were standing in lines leading into the restaurant.The company doesn’t come anywhere close to challengingKFC’s massive scope—both in the region and around theworld—but as that picture would attest, Al Baik has become aformidable player in its corner of the Arab world.

THE GLOBAL EMERGENCE OF ARAB BRANDS

As KFC found in Jeddah, international brands that enter theArab market will come up against some entrenched localbrands. The region doesn’t lack for large companies, of course,particularly in the fossil fuels, utilities, and telecommunica-tions industries. But over the past two decades, the region hasstarted producing a growing number of global consumer brandsas well.

As I researched this book, one name kept popping upeverywhere. It was splashed across the jerseys of a top-flightEnglish soccer team and displayed on stadiums around theworld. It covered billboards near major international airportsaround the globe. In the twenty-five years since the Dubaigovernment created Emirates airline in 1985, the companyhad become one of the largest air carriers in the world. (See‘‘Emirates Group: Twenty-Five Years to Cover the Globe.’’) As of2010, Emirates offered more than eleven hundred weekly flightdepartures from Dubai alone, and in surveys it consistentlyranked as one of the most recognized and most respectedbrands based in the Arab world.

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Emirates Group: Twenty-Five Years to Cover the Globe

Emirates airline began humbly enough, with a leased airplane making the shorthop from Dubai to Karachi on October 25, 1985. In the years since, it hasdeveloped into one of the world’s largest airlines, known worldwide for itsluxurious accommodations and its nonstop flights from Dubai to points aroundthe globe. It has these firsts to boast of:

• 1992: The first airline to install personal video systems in all seats in allclasses, including video cassette players in first class

• 1993: The first airline to equip its entire Airbus fleet with in-flight phones

• 1994: The first airline to equip its entire Airbus fleet with in-flight faxmachines

• 1999: The first airline to install seats with an electronically operatedprivacy hood

• 2000: Served as the first launch customer for Airbus A380

• 2003: The first airline to project an image of the night sky on ceilingpanels to help reduce jet lag

• 2008: The first airline to offer safe mobile telephony on board

Today the Emirates brand name turns up on anything from footballstadiums in London to NPR stations in San Francisco, and its vast reach hashelped make Dubai a global hub for air traffic.

It did not start out in such a grand fashion. In the early 1980s, Gulf Air wasthe main airline in the region. The company, which was jointly owned by fourcountries (Bahrain, Oman, Abu Dhabi, and Qatar), took exception to Dubai’sdecision to open its skies and welcome any airlines that wanted to provideservice there. When Gulf Air scaled back its services, Dubai’s rulers developeda plan to create their own airline. It would start with $10 million from thegovernment, but ultimately it was to operate without government subsidies. Asmall group of airline industry veterans—including CEO and current executivevice chairman Maurice Flanagan, a former British Airways manager—launchedthe company five months after Dubai’s rulers gave the go-ahead.

As of November 2010, Emirates airline operated a fleet of 145 passengerjets flying to 108 destinations in sixty-five countries. (See the figure on thegrowth of the airline.) It doesn’t appear to be slowing down either. Thecompany had another 201 planes worth $68 billion on order, including 76 of

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the massive new Airbus A380–800s. For the fiscal year that ended on March31, 2011, Emirates planes carried 31.4 million passengers. The entire EmiratesGroup, which includes the airline, dnata (the group’s air services provider), andother operations, generated annual revenue of almost $14.5 billion and a nearly$1.5 billion profit. (By comparison, Delta Air Lines reported annual revenue of$31.7 billion for 2010.)

Dubai has reaped the benefits of Emirates’ growth. More than 47 millionpeople flew through Dubai International Airport in 2010. Not all of them flewwith Emirates, of course, but the company’s impact was massive nonetheless.It employed more than fifty thousand people from 159 countries in 2010, withthe bulk of them working at its hub in Dubai. But that only paints part of thepicture, according to Boutros Boutros, the company’s divisional vice presidentfor corporate communications. When I visited Boutros in November 2010, hetold me the airline keeps competitors on edge by constantly innovating. Healso said the Emirates Group and the companies that support it have createdabout 100,000 jobs in Dubai. During its fiscal year that ended in March 2010,he said, the company estimated it directly contributed $6.4 billion to the Dubaieconomy—a figure that rose to $8.1 billion when adding the indirect economicimpact. At that rate, Emirates would’ve contributed roughly 10 percent ofDubai’s economy during its fiscal year.

0

120

20101985 1990 1995 2000 2005

Countries

Nu

mb

er

Year

Destinations

100

80

60

40

20

The Growth of Emirates Airline, 1985—2010

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Emirates was not alone among Arab brands on their way tobecoming powerful regional or international brands. Almarai’sconstant pursuit of perfection within the Arab markets couldmake it one of the Arab world’s next globally recognized dairyand food companies. On a scorching June 2010 afternoon inRiyadh, I made the trek to the outskirts of the city to visitthe company’s headquarters. As an employee escorted methrough the office, I noticed a large number of European,American, and Indian employees at the desks and in the officesI passed. Already a major player throughout the Arab countries,Almarai has set its sights on bigger things. It has acquiredseveral other food producers and distributors since 2008, andit recently created a joint partnership in Dubai with PepsiCo.The partnership, International Dairy and Juice, will focus onmarkets from Africa to the Far East.

Almarai, which means ‘‘green field,’’ built its reputationon exceptional quality. Because one bad product can ruin adairy’s brand reputation, the folks at Almarai have set a highbar for their product development. Rather than merely tryto match the quality of multinational brands, the company’sR&D team doesn’t take a product to market until it beatsthe best of global brands in blind taste tests. The companyextends this vision of excellence throughout its supply chaintoo. It operates state-of-the-art farms in northeastern SaudiArabia, hires experienced farmers from other dairy-producingcountries such as New Zealand, and imports Holstein cattlefrom the United States. All told, Almarai has about eightythousand cows and gets an average of 3.5 liters of milk perday from each one. And each day it processes that milk anddistributes it to forty-five thousand outlets throughout the Gulfcountries.

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An Arab Company DeliversAramex leveraged its local expertise to become an internationaldelivery and logistics powerhouse, and in the process it hasbecome one of the Arab world’s most successful local brands.Fadi Ghandour founded the company in 1982, and by the end ofthe decade, it had entered a partnership with Airborne Expressand signed a service delivery agreement with FedEx. The U.S.-based delivery giants banked on Aramex’s local expertise toreach hot spots that had flared up in parts of the Arab world.With Beirut caught in the middle of the Lebanese civil war, forexample, Ghandour moved in and linked East and West Beirutfor banks and other companies. He dedicated the company toowning the last mile, developing methods to identify customerlocations despite the lack of street addresses in many parts ofthe region.

His efforts paid off with solutions that generated high cus-tomer loyalty levels, and by several measures, Aramex now is oneof the most respected brands in the region. ‘‘Entrepreneursdo not wait for a perfect world,’’ Ghandour explained. ‘‘Myteam and I chose to view the imperfect parts of our world asan opportunity, and that allowed us to be creative and suc-cessful.’’ (See ‘‘Fadi Ghandour: Delivering an EntrepreneurialEnvironment.’’)

Fadi Ghandour: Delivering an Entrepreneurial Environment

The Arab world needs more entrepreneurs like Fadi Ghandour. After graduatingfrom George Washington University, he returned home to his native Jordan andfounded Aramex International. Since its creation in 1982, Aramex has expandedto become the largest delivery company in the Arab region, with revenue ofmore than $602 million in 2010 and a market value of more than $715 million

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as of October 2010. But Ghandour’s passion went beyond making Aramex asuccess. He wanted to support as many innovative entrepreneurs and ideasas possible. For example, he became a founding partner of Maktoob.com,now the largest Arabic-language Web portal—so popular, in fact, that Yahoopaid $164 million to acquire it in 2009.

Ghandour could stack up his track record of entrepreneurial successagainst anyone else, so today he’s trying to help foster similar success storiesthroughout the Arab world. With the region’s employment base so heavilyskewed toward public sector jobs, its exploding youth population has put alarge and growing strain on government resources. The United Nations’ 2009Arab Human Development Report estimated that the Arab countries will needto create 51 million new jobs by 2010 if they’re going to employ the massiveinflux of youth starting to enter the workforce. About 60 percent of the region’spopulation is less than twenty-five years old, and those who have startedlooking for work have found jobs hard to come by. With the exception of theUAE, youth unemployment rates run in the double digits throughout the region,the report noted.

Most Arab governments have acknowledged that the public sector cannotprovide enough jobs for these incoming workers, and many of them havestarted programs to stimulate private sector job growth. Political and businessleaders around the world have joined them, eager to put young Arabs in gainfuljobs and hoping to minimize the radical tendencies that unemployment canfoster. In April 2010, President Barack Obama hosted 250 Arab entrepreneursin Washington, D.C., for a two-day summit designed to support new start-upventures and incubate those already under way.

Ghandour is a firm believer in the entrepreneurial spirit of his fellowArabs, and he works tirelessly to support it. He’s a founding board member atEndeavor Jordan, a chapter of the widely acclaimed Endeavor Global program,which supports and guides entrepreneurs. He serves on the regional board ofInjaz Al-Arab, the Arab affiliate of the Junior Achievement Worldwide program.And he has helped lead several public and private sector initiatives to help liftcommunities throughout Jordan and other parts of the Arab world, includingQueen Rania’s Jordan River Foundation, which he formerly served as vicechairman, and Ruwwad for Development (Entrepreneurs for Development),a private sector–led organization Ghandour founded to help disadvantagedcommunities by promoting youth activism, civic engagement, and education.

He also understands that the region has yet to build a solid infrastructureand ecosystem for start-up companies to thrive. He told me Arab countrieshave to create an educational system that teaches youth the skills and the

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commitment they need to become entrepreneurs. They also need to learnthat failure is just a possible outcome, not a shame, as it is often regardedin such a risk-averse culture. Governments in the region have to revamp theregulatory environment so entrepreneurs can more easily register a company,and they have to create bankruptcy provisions that allow entrepreneurs to takecalculated risks without the fear of the current harsh repercussions. And finally,Ghandour said, the market needs a greater influx of venture capital, angelinvestors, and mentors for the start-up companies, in addition to recent largeprivate equity deals for already established businesses.

‘‘A relationship between those three is a prerequisite for entrepreneur-ship,’’ he said. ‘‘The entrepreneur is already fighting a battle by introducingnew products and services. He at least shouldn’t have to struggle to registera new company or tap into an angel network. It’s starting to emerge, buthistorically the infrastructure has been a big struggle. Most entrepreneurs haveto rely on family and friends to get their early capital. And getting loans frombanks is a massive hassle because you have to collateralize everything youown. A more enabling environment is a prerequisite to have a mass appeal topotential entrepreneurs to venture out and plunge into it.’’

Despite the challenges, Ghandour is optimistic about the region’sentrepreneurial future. Arab countries have as much liquidity as anywhere elsebut China, he says, and it’s starting to put a new emphasis on educationfor twenty-first-century skills. As Arab governments continue to foster privatesector jobs and success stories like his start to displace the Arab preferencefor public sector employment, more money, people, and companies will cometo the region, he said. A lot of countries are slowly recognizing the challenges,he noted, and they’re realizing they need to create companies or be facedwith soaring unemployment rates. But when he looks around, he sees moreand more young people who have ignored the obstacles and ventured intonew territory—just as he did with Aramex, Maktoob, and other start-upcompanies.

‘‘I’m optimistic because I put my money where my mouth is,’’ he said. ‘‘Iput my money with young entrepreneurs who are just starting to rise from theground. . . . We need to give them all the support, energy, and knowledge wehave. It’s in our interest to create more sources of wealth and affluence in theregion, because that creates stability and a more robust future.’’

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If Aramex, Almarai and other Arab companies haveentrenched their brands deeply into the consumer psyche.Tiviski has become one of Mauritania’s most-recognizedbrand names, selling a range of dairy products made withcamel milk and earning its founder, Nancy Abeiderrahmane,worldwide acclaim. Moroccans who enjoy a little strawberryjam on their bread almost certainly have a jar of Aıcha in therefrigerator. The same is true of Hamoud Boualem soda inAlgeria. Founded in 1878, it’s one of the oldest companiesin the country, and today its carbonated drinks are in a tightcompetition with Coca-Cola and Pepsi. The Hayel Saeed AnamGroup is a massive Yemeni conglomerate with annual revenuesequal to some Fortune 500 companies, but it was the smallpacks of its Teashop brand cookies that kept catching my eyein both Yemen and Sudan.

A diverse and profitable business awaits foreign companiesthat come into the region and seek to understand the emergingArab consumer. But local entrepreneurs aren’t waiting around;they’re taking advantage of their expertise and capitalizing onthe region’s boundless opportunities.

A WORLDWIDE HUB: THE GLOBALLYCONNECTED ARAB WORLD

To those who see the Arab world only from the outside, it mightlook like a closed and inhospitable society. Most people whohave traveled through the region will tell you, as I will, thatnothing could be further from the truth. The region is glob-ally interconnected and open to companies and visitors fromaround the world. Dubai International Airport, for example,has become one of the world’s busiest air passenger hubs, han-dling more than 47 million travelers in 2010 and ticking ever

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closer to its capacity of 62 million passengers. Dubai authoritieshaven’t stopped there either. The new Al Maktoum Interna-tional Airport is expected to have an annual capacity of upto 160 million passengers when it’s completed sometime after2017. (By comparison, the Hartsfield-Jackson Atlanta Interna-tional Airport was the world’s busiest airport in 2010, with 90million passengers.)

Dubai’s central location in the Eastern Hemisphere makesit a natural connection point for international travelers. Aseven-hour flight from either of Dubai’s airports sets you downat London’s Heathrow, and an eight-hour flight puts you inShanghai. (See Figure 1.1.) In the same time it takes me to getfrom Austin to Chicago, I could fly from Dubai to Delhi. I couldfly to Karachi (about two hours) faster than I could drive frommy home to either of Texas’s two major cities, Houston andDallas (about three hours to each).

Destination Arabia: Tourism in the Arab WorldThe centrality of the Arab world made it a common histori-cal crossroads for trade, and today it has become a commondestination for millions of tourists as well. According to theUnited Nations World Tourism Organization (UNWTO) andits Tourism Highlights 2011 report, more than 79 million interna-tional arrivals entered the Arab countries in 2010. While thesefigures include Arab residents traveling to other Arab nations,the region collectively drew more tourists than any single coun-try, accounting for roughly 8 percent of the world total in 2010and attracting more than China and India combined. (SeeTable 1.8.)

Consumer companies and Arab governments have foundmyriad innovative ways to entice and tap into that tourismtraffic. The Moroccan government developed a comprehensive

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FIGURE 1.1 Flight Times from Dubai International Airport to Major

Worldwide Cities

UnitedKingdom

SyriaCairo3:45

to Beijing7:10

Delhi 2:35

Dubai

Johannesburg8:10

London7:55

To other major cities:Jakarta, 8:05Karachi, 1:55

Kuala Lumpur, 7:00Milan, 6:55Paris, 7:30

Sydney, 13:40Tokyo, 9:30

Germ

any

Bayof Biscay

AustriaFrance

Spain

Italy

NorthSea Denmark

Poland

Frankfurt7:05

Casablanca8:00

Ireland

Romania

Ukraine

Greece

Tunisia

Turkey

Morocco

Algeria

Mali

Guinea BurkinaGhana

Niger

Nigeria

Chad

Libya Egypt

Sudan

Ethiopia

Somalia

Kenyaor Congo

Angola

To the Americas:New York, 14:20

San Francisco, 16:00São Paulo, 14:55

Namibia

SouthAfrica

Zimbabwe

Zambia

Madagascar

Mozambique

Tanzania

Mauritania

Yemen

SaudiArabia

Iraq Iran

Turkmenisian

Uzbekistan

Kazakhatan

Afghanistan

Pakista

n

India

Arabian Sea

LaccadiveSea

Bay ofBangal

Malaysia

VietnamThailand

Burma

China

Mongolia

Bangkok5:55

Source: Emirates.com; Kayak.com.

tourism program, Vision 2010, to draw tourists to its naturalattractions, including its beaches, cities, deserts, and hills. Thecountry drew 9.3 million international arrivals in 2010, morethan double the traffic from a decade earlier, and that mas-sive group of visitors generated about $6.7 billion in tourismreceipts, according to UNWTO. That amounted to roughly 7percent of the country’s GDP that year, so it came as no surprisewhen officials at the Moroccan Agency for Tourism Develop-ment told me they’d launched a Vision 2020 plan for the nextdecade. Meanwhile, the Coca-Cola Company found a brilliantway to capitalize on all those visitors. One of its most popular

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TABLE 1.8 The Arab World Drew MoreTourists Than Any Single Country

Arab world 79.0 millionFrance 76.8United States 59.7China 55.7Spain 52.7Italy 43.6Egypt 14.1Saudi Arabia 10.9Morocco 9.3Tunisia 6.9Syria 8.5India 5.6Jordan 4.6Lebanon 2.2

Source: U.N. World Tourism Organization, ‘‘UNWTOTourism Highlights (2011 ed.),’’ http://mkt.unwto.org/sites/all/files/docpdf/unwtohighlights11enhr.pdf.

and picturesque points of sale is a cafe located on the wayup Toubkal Mountain, Morocco’s highest point and a populardestination for hikers from around the world.

Dozens of Arab companies have emerged to take advantageof people traveling into and out of the region. Kanoo Travelhas built one of the Arab world’s largest networks of travel agen-cies, forging an exclusive regional partnership with AmericanExpress Travel Services and expanding into Europe with officesin Paris and London. The Al Tayyar Group, a billion-dollarSaudi travel company, whose third-largest shareholder is theprivate equity firm Amwal Al Khaleej, has offices throughoutmany Arab, South Asian, and European countries. It gets mostof its business from government and corporate clients, but itsnetwork of international offices draws many Saudis returninghome for vacation, Ramadan, or hajj, an executive said.

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All those travelers need transportation, of course. The Gulfcountries have planned extensive new rail systems to connectthe GCC countries for both cargo and passenger traffic. Andvirtually every Arab country has a flagship national air carrier.Emirates airline might have the highest profile internationally,but it faces plenty of competition from other Arab airlines,including Gulf Air (Bahrain), Etihad Airways (Abu Dhabi),Qatar Airways, Saudi Air, Air Moroc (Morocco), EgyptAir, andAfriqiyah (Libya).

A relatively new group of low-cost, no-frills airlines hasemerged as well, opening air travel to even more Arabs andexpatriates. Flydubai had sixteen airplanes flying thirty-threeroutes in March 2011, less than two years after it began oper-ations. Its larger cousin, Air Arabia, had become one of thefastest-growing low-cost airlines in the world—somewhat akinto Southwest Airlines in the United States. As of 2011, the UAE-based Air Arabia offered no flights longer than four and a halfhours, but with hubs in Casablanca, Alexandria, and Sharjah, itsroutes still covered a population of more than 3 billion peoplespanning Europe to India. The company’s first flight took offin 2003, and, aided by a 2007 investment from Abraaj Capital,one of the largest private equity firms in the region, the airlinegrew to more than 4.5 million passengers and revenue of $566million in 2010.

Cultural TourismFrom Petra to the pyramids, from modern skyscrapers to ancientRoman ruins, the Arab world’s vast cultural diversity providesa built-in draw for millions of visitors and, opens up a stun-ning array of market opportunities at the same time. In 2010,the Arab world collected more than $60 billion in receiptsfrom international tourism—about 3 percent of the region’seconomy and more than that of China ($46 billion) and India

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($14 billion) combined, according to the UNWTO. ‘‘The bigthing about this region is the complementary nature of thesites,’’ said Jordanian senator Akel Biltaji, chairman of thecountry’s Tourism and Heritage Committee. ‘‘The authenticityof the sites and the narratives of these parts of the world arewhat makes it such a powerful place to visit.’’

With the pyramids, the Nile River, its Red Sea resorts,and other draws, Egypt generates more travel dollars than anyother Arab country. Millions of people visit Petra in Jordaneach year, walking through the narrow passageways the ancientNabataeans carved through the sheer red-rock walls and, finally,around the corner, catching their first, breathtaking glimpseof the Petra treasury. (Many Americans know this view fromSteven Spielberg’s movie, Indiana Jones and the Last Crusade.)

A vast ecosystem of small and large companies supportsthese cultural draws. A tented gift shop about fifty meters fromthe renowned treasury building in Petra was doing a thrivingbusiness at 11:00 A.M. on a weekday, and an award-winningMovenpick resort hotel sits just across the street from the site’svisitor center—one of dozens of hotels in the remote town. Inaddition to Egypt’s pyramids and museums, global hospitalitychains have created a set of resorts along Egypt’s Red Sea coast.Beirut continues to draw hosts of people who come for itsnightlife and panache. According to the UNWTO, about 2.2million tourists visited Lebanon in 2010, an influx equal to halfthe country’s total population.

Religious TourismMore than half the world’s population is connected to the Arabworld through religion. From the start, I knew I would haveto research the impact of hajj on the consumer markets inSaudi Arabia and beyond (see Chapter Three), but I was alsointerested to see the impact and draw of other popular Muslim

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sites, such as the Al-Aqsa Mosque in Jerusalem and the MoulayIdriss mosque in Morocco. I wanted to attend events like theSufi Culture Festival and the Fez Festival of Sacred Music, thelatter of which draws a worldwide group of performers from arange of religious traditions to Morocco.

Without a doubt, one of the most dynamic glimpses of theregion’s role as the birthplace of three world religions came inDamascus. I saw hundreds of Iranian tourists at revered Shiashrines, including the ornate mosque that Shiites believe housesthe tomb of Zaynab bint Ali, the granddaughter of Muhammad.The Umayyad Mosque provided a diverse look, with shrines toHusayn ibn Ali, Muhammad’s grandson and a Shia martyr;Saladin, the Kurdish Arab conqueror who fought the EuropeanCrusaders; and John the Baptist, who baptized Jesus Christ andremains a revered prophet for Christians and Muslims alike.

Millions of people visit sacred Christian sites in the Arabworld each year, including Bethlehem, the birthplace of JesusChrist; the Dead Sea, the site of many biblical stories; and Mt.Nebo, the biblical site where Moses first looked down at the‘‘Promised Land’’ after the Jewish exodus from Egypt. I alsoenjoyed learning about the many well-known Jewish landmarksin the Arab world. I toured the famous Ben Ezra Synagogue,an eleven-hundred-year-old synagogue in Cairo that, accordingto lore, resides near the spot where the prophet Moses wasfound hidden in a basket among the reeds of the Nile River. Ialso learned about the El Ghriba Synagogue, one of the oldestsynagogues in the world, which draws many Jewish tourists andpilgrims to its home on the Tunisian island of Djerba.

Adventure and Sports TourismThe many cultural and religious sites give the Arab world aconsistent draw for millions of tourists each year, but manyof the region’s countries are taking advantage of their natural

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environments as well. Just flipping through the tourism maga-zines at my hotel in Dubai, I could find anything from desertfalconry, to desert camping, to desert four-wheeling. I could’vewatched camel races one week and the world’s richest horserace the next. When I visited Oman in June 2010, governmentofficials had kicked off a major campaign to increase tourism bymarketing its beaches and desert and building up new ameni-ties that could help draw adventure-seeking visitors. Egyptiandevelopers have opened several ecofriendly hotels that givevisitors a taste of life in the desert.

Meanwhile, some of the Gulf countries have turned theirfocus to another potentially huge segment of tourists: sportsenthusiasts. Abu Dhabi drew hundreds of thousands of peopleto the Formula One auto races it hosted in 2009 and 2010. AndQatar hopes the 2022 FIFA World Cup proves equally successful.Billed as the largest sporting event in the world, the World Cupwas awarded to an Arab country for the first time since it beganin 1930. Not only will Qatar build several new stadiums forthe event—complete with air-conditioning systems to combatthe 100-plus-degree heat—government officials have said theyalso will relax some, but not all, of the country’s strict personalconduct laws.

THE ARAB WORLD IS NEITHER CNN’SNOR AL JAZEERA’S

During my travels, I met, spoke or dined with hundreds ofArabs and non-Arabs in the region. Virtually every one ofthem bristled at the way news outlets, especially in the West,portray their homelands. Most U.S. newscasts feature news ofterrorism, concerns about oil production, or women in veilscovering their faces. To be fair, those economic and socialissues directly or indirectly affect the lives of millions of people,

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but the constant barrage of these images reinforces negativestereotypes about the region.

Few people spoke as passionately about these mispercep-tions as Khulood Al Atiyat, a representative for the SheikhMohammed Centre for Cultural Understanding in Dubai. I vis-ited her at the center to get a better understanding of Emiratiand Arab culture, and I was impressed by her energy. We metin traditional Emirati style: shoeless and sitting on cushions andwoven rugs on the floor. Khulood offered me tea and freshdates as she explained the purpose of the center: to help fostera greater understanding of Emirati and Arab culture, as well asthe influence Islam has on it.

As an Emirati woman and representative of the land’s cul-ture and society, Khulood wore a black abaya. While explainingwhy she took pride in wearing the cloak and the headscarf,she discreetly showed me her gold watch and the cuff of herdesigner jeans. She covers herself out of pride and respect forher Emirati culture and her Islamic religion, but she enjoyswearing fine Western fashions and jewelry as well. Like manyother Arab women, she said she sheds her abaya when she trav-els out of the region. It crystallized an immutable truth for me:someone who saw Khulood on a newscast would see only herabaya, and they might not appreciate her taste for fashion, herwhip-smart perspective on world events, or her passion for hercountry, culture, and religion. They would not recognize howshe and millions of other Arab people balance their reverencefor tradition with their desire for progress and modernity.

Companies in search of new growth markets can easilyoverlook the richness and diversity on display in this region.The opportunities in the Arab world are there for the taking,but only for companies that talk to some the more than 350million consumers and learn how their culture and religioninfluence what, how, and why they buy the products they buy.

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I wrote this book as a primer for companies seeking tolearn more about the Arab world and how they can capitalizeon the market opportunities there. In the end, though, thisbook can serve only as an introduction. No one can read it andpretend he or she understands the intricacies of this vibrantand globally connected Arab market. Like watching the TVnewscasts and deciding you have a nuanced view of what’shappening in the Arab world, using this book as your only lenson the region and its consumer market will leave you with amonochromatic picture of twenty-two countries that are richin color, tradition, and history.

To truly understand the Arab consumer market, you needto go out, meet with, and understand the wants and needs ofthe Arab people. As Khulood so passionately put it, you have tolook beyond CNN and Al Jazeera. ‘‘I’m tired of people callingus terrorists,’’ she said. ‘‘We need to take this center, make itinto a TV channel, and broadcast it to the rest of the world.’’

BOUNDLESS OPPORTUNITIES

• Despite the turmoil in the region, how can you tap into the

vibrancy and the interconnectedness of the Arab world?

• What marketing strategies can you develop to accommodate

or take advantage of the range of consumer spending power

in the region?

• What can you learn from the Arab entrepreneurs who

developed these markets by creating their own brands or

localizing multinational brands?

• How can you capitalize on the opportunities competitors miss

if they fail to look beyond the misperceptions about Arab

consumers?

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Documents

1 :// · Later, as the shopkeeper explained that the girl had taken a short break from her studies to get a quick jolt of caffeine, it struck me: change the clothes and the brand