Analysis of Middle Eastern and North African Economy ( in the last 2 years)

                             fig 1 Dubai written on wall( source: insidethemiddleeast.blog.cnn.com)                                          

Middle Eastern and North African economy (MENA) has gone through a lots of ups and down in the past couple of years. In 2009 due to global economic downturn and dipping in the petroleum prices along with real estate bubble burst in Dubai hampered the MENA economy. The whole region whose GDP grew with the rate of 5.5% in 2008 witnessed a very slow growth rate of 2.9% in 2009. (Worldbank.org, 2009)


In the given blog the author attempts to do a comprehensive analysis of the MENA Economy in the past couple of years in a very simple and layman’s language. The blog will be divided into three parts: -


• The crisis in 2009 and its effects on the various individual economies.

• The corrective period of 2009 where Economy signaled coming back to normal condition.

• The future prospects of the region in 2011 and thereafter.


Before further analysis it is essential that few points should be cleared. Middle Eastern North African region or MENA includes Middle Eastern countries such as Iraq, Iran, Kuwait, UAE, Saudi Arabia, Bahrain, Oman, Qatar, Yemen, Lebanon, Jordan etc and North African countries such as Egypt, Morocco, Libya, Algeria and Tunisia. The Socio-Economic conditions are not homogeneous across the region. There are countries which are oil and gas exporters where as there are countries which are importer. The whole region can be primarily divided into four parts purely based upon Economic conditions. (Worldbank.org, 2009)



• Gulf Cooperation council (GCC): - These include oil exporters like Kuwait, UAE, Saudi Arabia, Oman, Qatar and Bahrain which have got a very small population.


• Oil exporter like Iran, Iraq, Libya, Sudan and Algeria which have got large population for themselves.


• Oil importers whose economy is closely linked with the GCC in the form of remittances, FDI, foreign aid and tourism. These include Jordan, Syria, and Lebanon etc.


• Diversified countries like Morocco, Egypt, Tunisia whose Economy is linked with other countries in the region as well as with the Europe in the form of trade and tourism.


As mentioned earlier MENA has huge diversity in itself, it consists of some of the richest nations in the world as well as some of the most poor, some of the most politically and socially volatile nations as well as some of the most stable ones.


In 2009 there was the global economic downturn which did not have much impact on MENA directly since most of the financial institutions in this part of globe were not directly integrated with the global finance, but it had other indirect impacts in the form of (Middle East Economic survey, 2009) :-


• Due to drop in petroleum prices revenue of exporting nations got affected. In mid 2008 the petroleum price was at its record high of 150 US dollars a barrel where as in 2009 it went down to an average of 62 US Dollars a barrel. In order to deal with reducing price Oil exporting nations responded by reducing oil extraction to increase oil price, oil extraction got reduced by some 10% in 2009 in contrast to 2008, this further resulted in reduction of revenue.


• Drop in revenue affected their govt. expenditure, real estate investments, and other projects.


• Tightening of international credit resulted in lower investment and inflow of capital.


• The above factors affected the economy of non exporting nations whose economies were based on tourism and remittances. Nations like Egypt and Lebanon are primary source of labor for construction projects in the oil exporting nations. Investment crunch in such projects affected these non exporting countries indirectly as well.


Some of the other observations made during the period were:-


• Lower Oil prices have also helped oil importing countries in reducing their import cost.( International Monterey Fund, 2009)


• The average price per barrel went down to 62 US dollars per barrel. (meed.com, 2009)


• GDP for the year 2009 were as follows (meed.com, 2009): -



Algeria                                             2.1

Bahrain                                            3.0

Egypt                                               4.7

Iran                                                  1.5

Iraq                                                  4.3

Jordan                                              3.0

Kuwait                                             1.6

Lebanon                                           7.0

Libya                                                1.8

Morocco                                          5.0

Oman                                               4.1

Qatar                                               11.8

Saudi Arabia -                                  0.9

Sudan                                               4.0

Syria                                                3.0

Tunisia                                             3.0

UAE -                                             0.2

Yemen                                             4.2



Few of the conclusions drawn could be: Qatar showed exceptional growth, non oil exporting countries like Morocco, Egypt, and Lebanon were less badly hit than the oil exporting countries.

• Inflation for the year 2009 is as follows(meed.com, 2009)



Algeria                                              4.6

Bahrain                                              3.0

Egypt                                                12.3

Iran                                                   12.0

Iraq                                                   6.9

Jordan                                               0.2

Kuwait                                              4.6

Lebanon                                            2.5

Libya                                                5.0

Morocco                                           2.8

Oman                                                3.3

Qatar                                                0.0

Saudi Arabia                                      4.5

Sudan                                               11.0

Syria                                                  7.5

Tunisia                                               3.5

UAE                                                  2.5

Yemen                                               8.4



It can be seen that inflation was comparatively moderate in oil exporting countries. In importing countries like Egypt inflation was high on account of high food inflation.( Later on though some incraese in inflation was observed in the oil exporting countries as well.)

• Though for GCC (Gulf Cooperation Council) other than Qatar the GDP growth have been abysmally low, they entered the crisis in a much stronger position and hence were able to provide cushion against it. (Auguste Kouame, 2009)

• For developing oil exporter countries ( Iran, Syria, Yemen, Algeria) GDP growth rate fell down from 2.9% in 2008 to 1.6% in 2009 and for non exporters it fall down from 6.6% in 2008 to 4.7% in 2009.(siteresources.worldbank.org, 2010)

• The revenue for all the oil exporting countries which included both GCC as well as developing oil exporters went down from 755 billion US dollars in 2008 to 485 billion US dollars in 2009; the current account deficit got reduced from 25% of the GDP to 7.3% of the GDP. (siteresources.worldbank.org, 2010)



• Diversified economies like Egypt and Morocco were hit not only due to being linked with the oil exporting economies but also due to alleviation in tourism and merchandise export activities to Europe. In Egypt the Merchandise export went from a 33% growth in 2008 to minus 15% in 2009, similar pattern was observed in Morocco and Tunisia. (siteresources.worldbank.org, 2010)



• Most of the MENA nations tried to respond by increasing their expenditure which resulted in increase in fiscal deficit.




• One of the major events happening in this period was the real estate crisis in Dubai. Dubai underwent an unbridled growth in past six years and the dessert state was transformed into a lavish metropolis with state of the art buildings, malls, towers, and even man made islands. But it all got a sudden break in 2009; more than half of construction projects worth 582 Billion US dollars have been halted or cancelled. Though there was no exact figures but there was a joke that Emirate airways is not making loss due to unemployed workers going back. It is estimated that the Dubai’s economy contracted by 5% in 2009(Paul Lewis, 2009)



Economic Analysis of the MENA in 2010

After the Economic slump of 2009, the year 2010 came with some favorable sign. Though the growth was yet to touch the pre crisis levels but things were much better than the previous year.


Middle East and North Africa had been benefited primarily due to the increase in Oil prices. From 62 US Dollar a barrel, the price had increased to an average of 79 US Dollar a barrel as well as increase in oil production which had risen to 25 million barrels a day for the GCC alone(Bloomberg, 2010). Rising price had some effect on importing cost for nations like Morocco but it had been observed that over all there had been an increase in FDIs and investments. Jordan saw a 31% rise in soft loans and aids. (Thomas White, 2010)

The important observations made during 2010 are as follows: -

• GDP in these countries grew by 3.8% this year compared to 2.9% a year before. (Bloomberg, 2010)

• Due to slow credit growth stimulus spending was important as well as useful.

• There had not been much increase in the non oil export.


• Dubai had shown recovery with many of the non oil trade and tourism coming back to the basics. Dubai is the trading hub of the Middle East and  in this sixth largest container terminal of the world trade comprises 40% of the GDP. Though the total GDP growth is still expected to be very low in 2010 and the fate of many of the real estate projects are yet to be decided, it is expected that things will get much better in 2011. According to standard charted Dubai will grow by 4% in 2011.





• Egypt had shown strong signs of resilience during 2010. The Economy was driven more by internal demand rather than depending on foreign trade. Compared to the 80s when the economy primarily depended on Suez Canal revenue and petroleum exports these days it exhibits a much more diversified portfolio with sectors like tourism and SME based export playing important role. The expected growth rate is 5.25% according to the government agencies and the govt. relied on expansionary measures. In spite of the high inflation, interest were not cut down by the national bank stating the reason that non food inflation is not high. One another upside of the economy was high foreign reserves (in mid 2010, it touched a record high of 35.5 Billion US Dollars). The downsides were/are high rate of unemployment, trade deficit , most of the growth coming through government investments alone and Egypt  still not insulated from the slowdown in Europe.(Meed.com, 2010)



• A recently released report by Dubai chamber of commerce estimates the GDP of GCC will grow  by 4% in 2010, a net foreign asset of 110% of GDP and fiscal balances are expected to increase by 7% between 2009 and 2011 (stellguru.com, 2010)



Middle Eastern Economy: the way ahead

                                          

The year 2011 seems to bring better growth results for the MENA economy. IMF estimates that the region will grow with the rate of 5% where as World bank predicts 4.4% in 2011. These estimates were made on the assumption that oil price will be around 75 US Dollars a barrel but given the fact that Oil price is approaching 100 US Dollars a barrel, highest in the past two years, a higher growth can happen( though higher price will also result higher import cost for importing nations like Morocco). It will also result in, increase in foreign direct investments, remittances, aids, credit and higher employment.



• Many parts of the region are going to invest heavily on infrastructure. Qatar which is hosting 2022 football world cup is going to invest 250 Billion US dollars in infrastructure, housing, roads, stadiums etc. Oman is going to invest 80 Billion in the next five years where as Kuwait 104 Billion us dollars in the next four years. Abu Dhabi will be investing 27 Billion US dollars in establishing world class museums and attraction centers. Saudi Arabia will be building 5 new cities in the dessert for business purpose. ( arabnews.com, 2011)



• Morocco had strong ambitions in the tourism sector. It aspires to be among the 20 most visited destinations in the world and wants to double its tourism revenue to 20 Billion dollars in next 10 years. It had planned to invest 20 Billion US Dollars in developing various facilities, hotels and infrastructure. (Thomas White, 2010)



• Economy in Egypt seems to be comparatively stable, though inflations and unemployment rate are still high. The govt. has strong plans to boost export, and aspires to reach a figure of 34 Billion US Dollars by 2013. (Thomas White, 2010)



• In the GCC crude oil extraction is expected to increase from 25 Million barrels a day in 2010 to 26 Million barrels a day in 2011.


• Dubai seems to come out of its short term challenges related to the real estate bubble burst. 2010 was the year of constant and moderate growth and 2011 seems to be better. Business men in UAE seem to be unanimously optimistic of doing good business in 2011. ( Manafn-Khaleejtimes.com, 2011)


Recommendations: -



In the end author will like to give some recommendations based on his readings and understandings of research papers and articles related to the MENA economy. These are as follows: -


• Egypt should try to diversify its export business to newer markets like Latin America, South East Asia etc. So far the growth is driven by govt. investment which is keeping the fiscal deficit high and not allowing the inflation to come down. In order to achieve a growth rate of 8.5% by 2015 govt. needs to build an economic structure which is less dependent on govt. spending.


• Unemployment is another major concern for the Egyptian Economy. In order to curb the current rate of unemployment it at least needs 850,000 to 870,000 new jobs a year. The only factor that can bring such a higher employment is a growth rate of at least 6-6.5% or above.


• In the Middle East region there had been hardly any considerable increase in the non oil revenue. It is high time that the various individual economies  diversify into various newer avenues other than  oil. The government needs to prudently invest into a diversified portfolio. Efforts must be made to reduce the dependence on non oil revenue.



• The MENA oil importers need to work on their competitiveness. This region is characterized by dominating public sector, inefficient and weak institutions and burdensome regulatory frameworks. The region needs to work on improving business climate along with implementing fiscal consolidations and sound Macroeconomic policies. (Middle East economic survey, 2010)



• As discussed earlier in Egypt’s case most of the MENA's oil importing nations are restricted to Europe for trading purpose. There had hardly been much growth in Europe in the recent time whereas most of the growth has come from emerging economies of Asia and Latin America. Today BRIC (Brazil, China, Russia and India) constitute 50% of the global GDP but only 9% of the total exports of the Oil importers of the MENA region. Hence it is imperative that it needs to diversify its trade to such new engines of global growth. (Middle East economic survey, 2010)



• For Oil exporters in the region fiscal stand should be expansionary as long as there is no sign of overheating in the Economy. (Middle East economic survey, 2010)





• For Oil exporters, development of financial market is another area where there is ample scope of development, non GCC oil exporters need to develop their financial market by working on free entry and exit barriers. GCC members though have sound fiscal policies which helped them cushion against the global meltdown but still there are ample scope of development. For both GCC and non GCC oil exporters development of bond market can be another strong alternative. (Middle East economic survey, 2010)



Referencing: -

1> Worldbank.org, 2009, Q & A on economic crisis and MENA, available at <  http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/MENAEXT/0,,contentMDK:22153569~pagePK:146736~piPK:146830~theSitePK:256299,00.html  >


2> Worldbank.org, 2009, Q & A  on economic crisis and MENA, available at <  http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/MENAEXT/0,,contentMDK:22153569~pagePK:146736~piPK:146830~theSitePK:256299,00.html   >


3> International Monetary fund, 2009, Middle East economic analysis, p-10


4> Meed.com, 2009, Economy 2010: Middle East returns to growth, available at < http://www.meed.com/supplements/2009/meed-yearbook-2010/economy-2010-middle-east-returns-to-growth/3003020.article  >


5> Meed.com, 2009, Economy 2010: Middle East returns to growth, available at <  http://www.meed.com/supplements/2009/meed-yearbook-2010/economy-2010-middle-east-returns-to-growth/3003020.article >


6> Auguste Kouame: (chief economist world bank, Middle East region), 2009, Interview on: QA on global economic crisis and MENA …..On April 23, 2009


7> Siteresources.worldbank.org, 2010, Regional economic prospects, p-140


8> Siteresources.worldbank.org, 2010, Regional economic prospects, p-142


9> Siteresources.worldbank.org, 2010, Regional economic prospects, p-142


10> Paul L, 2009, Dubai's six-year building boom grinds to halt as financial crisis takes hold, Gurdian.co.UK, available at < http://www.guardian.co.uk/world/2009/feb/13/dubai-boom-halt     &gt ;, Accessed on January 2011


11 Bloomberg, 2010, Middle East, North Africa Economies Will Accelerate Next Year, IMF Says, available at < http://www.bloomberg.com/news/2010-10-24/middle-east-north-african-economies-will-accelerate-next-year-imf-says. html >


12>Thomas White, 2010, Middle East/Africa: Economic review, available at < http://www.thomaswhite.com/explore-the-world/economic-reviews/middle-east-africa. aspx >


13 > Bloomberg, 2010, Middle East, North Africa Economies Will Accelerate Next Year, IMF Says, available at < http://www.bloomberg.com/news/2010-10-24/middle-east-north-african-economies-will-accelerate-next-year-imf-says. html  >


14 > Meed.com, 2010, Egypt’s economy shows resilience during financial crisis, available at < http://www.meed.com/supplements/2010/middle-east-economic-review-2010/egypts-economy-shows-resilience-during-financial-crisis/3007349. article  >


15 > Steelguru.com, 2010, GCC economic outlook indicates robust growth – DCCI, available at < http://www.steelguru.com/middle_east_news/GCC_economic_outlook_indicates_robust_growth_-_DCCI/182585. html >


16 > Arabnews.com. , 2011, Faster growth in Middle East economies expected in 2011, available at < http://arabnews.com/economy/article232333.ece?service= print  gt;


17 >
Thomas White, 2010, Middle East/Africa: Economic review, available at < http://www.thomaswhite

18 > Thomas White, 2010, Middle East/Africa: Economic review, available at < http://www.thomaswhite.com/explore-the-world/economic-reviews/middle-east-africa. aspx >

19 > Manafn-Khaleejtimes.com, 2011, UAE businessmen bullish on economic growth in 2011, available at < http://www.menafn.com/qn_news_story_s.asp? StoryId=1093386251>


20> International Monetary fund, 2010, Middle East economic analysis, p-33


21> International Monetary fund, 2010, Middle East economic analysis, p-36


22> International Monetary fund, 2010, Middle East economic analysis, p-16


23> International Monetary fund, 2010, Middle East economic analysis, p-22 to 24

PEST Analysis of MICE industry in Middle East

                                fig: Abu Dhabi Ferrari theme park( source: http://www.coated.com/)                                                                  
In the past two decades one of the regions in the world that had witnessed phenomenal growth is Middle East. It had shown excellent growth not only in the traditional oil and gas sector in which it has abundant resources but also in other sectors like services, retail, tourism and hospitality. Having some of the fastest growing cities with state of the art infrastructure carved in the midst of the dessert Middle East attracts a large chunk of tourist from all around the globe. Along with the leisure tourism the segment which is growing by leaps and bound is the “Business tourism” or the MICE segment. In the following blog the author will attempt to do a comprehensive PEST analysis of the MICE industry in Middle East. ( #)


PEST Analysis: -

Political factors: -

• The political factors in Middle East have both pros as well as cons.

• It has real sincere govt. machineries which want to put the region on the forefront of the tourism as well as business tourism market.

• Strong initiatives are taken, delegates are sent to different parts of the world, programs and promotional campaigns are conducted and meetings and conferences are high on the government agendas.

• The region has huge geo- political significance which attracts the attention of policy makers, corporate, officials, diplomats etc towards it.

• The down side is that many parts of the Middle East are politically volatile and disturbed which can create apprehensions about it.

Economic factor: -

• Middle East had been among the fastest growing regions in the world.

• In the past two decades the region had witnessed phenomenal growth.

• After the dip in the oil prices its growth rate went down and it witnessed a modest growth rate of 2.9% in 2009. ( Business intelligence middle east.com, 2010)

• Though yet to catch with the other developed markets the economy is poised for a strong growth in 2011. Govt. expenditure and rising oil price will facilitate stronger GDP growth in the region. ( arabnews.com, 2011)

• Middle East has cities like Dubai, Abu Dhabi, Kuwait, with state of the art infrastructure. There are also cities like Doha, Muscat etc which are growing very fast and investing hugely on infrastructure.

• The region can boast of some exquisite hotels, resorts, spas, leisure park and super market stores such as Burj al Arab, Emirates palace, Marina Mall tower, Abu Dhabi ice rink, Abu dhabi Ferrari theme park, Palm islands, etc.

• States run efficient and effective airlines such as Emirate airways, Etihad airways, Qatar airways etc that connects the region smoothly and frequently with the rest of whole world.

• Many parts of the region are going to invest heavily on infrastructure. Qatar which is hosting 2022 football world cup is going to invest 250 Billion US dollars in infrastructure, housing, roads, stadiums etc. Oman is going to invest 80 Billion in the next five years where as Kuwait 104 Billion us dollars in the next four years. Abu Dhabi will be investing 27 Billion US dollars in establishing world class museums and attraction centers. ( arabnews.com, 2011)

• It can be assumed that since Middle East is an emerging market it puts the meetings and conferences high on the govt. agendas compare to other matured markets. The basic region is that not only MICE is a growing and lucrative industry in itself but it also helps in driving investment and overall branding of the place .

• Middle East is comparatively economical and cost efficient in providing various goods and services in comparison to its more developed Western counter parts. But over the period of time it had been seen that cities like Dubai has become very expensive.

• A matter of concern could be the current Economic condition of Dubai, the city state considered as the epicenter of business and tourism activities in the Middle Eastern region has a debt of around 110 Billion US dollars and in 2010 it recorded a sub standard GDP growth of 3.2%. ( arabnews.com, 2011)

Social factors: -

• Islam plays a very important role in Middle Eastern culture.

• The primary inhabitants of Middle East are Arabs which are known for their warmth and hospitality.

• Many of the leading cities in the region such as Dubai, Muscat, Abu Dhabi and Kuwait etc are very cosmopolitan in nature with more than 50% of population comprising of expat population.

• The downside can again be the political turmoil and fundamental forces existing in the society.

Technological: -

• Middle East has some state of the art convention centers like the ADNEC (Abu Dhabi national exhibition center), DWTC (Dubai world trade center), QNCC (Qatar national convention center), Bahrain international convention center etc with excellent technical facilities to conduct meetings and conferences of international standard.

• Telecommunication facility varies in the Middle East from being very advanced to very rudimentary. Most of the nations have their own national operator though of late many of them are introducing foreign players as well. (budde.com, 2008)

Note: -

# (A point to be noted over here is that Middle East has a wide range of diversity within itself, there are places, which are growing very fast where as those just trying to catch up, which have huge oil and gas deposits as well those with almost no oil, which are very cosmopolitan and open in nature where as those which are comparatively less open. Hence the given analysis is just a generalized analysis and tries to look at Middle East as a single entity. Individual analysis of individual places and states will follow in subsequent blogs. )



Reference: -

1> Business intelligence middle east.com, 2010, Middle East economic growth to rebound to 3.7% in 2010, says World Bank, available at <  http://www.bi-me.com/main.php?id=43642&t=1&c=34&cg=4&mset=1011  >

2> Arabnews.com. , 2011, Faster growth in Middle East economies expected in 2011, available at <  http://arabnews.com/economy/article232333.ece?service=print  >

3> Arabnews.com. , 2011, Faster growth in Middle East economies expected in 2011, available at <  http://arabnews.com/economy/article232333.ece?service=print  >

4> Arabnews.com. , 2011, Faster growth in Middle East economies expected in 2011, available at <  http://arabnews.com/economy/article232333.ece?service=print  >

5> Budde.com, 2008, Executive summary: Middle Eastern Fixed Voice and Telecommunications Infrastructure Market, available at <  http://www.budde.com.au/Research/2009-Middle-Eastern-Fixed-Voice-and-Telecommunications-Infrastructure-Market.html  >

Meeting Industry in the last twelve months

                                                                  
                                                 fig: Bruce Macmillan( www.mpiweb.org)  

The last of couple of years were not very good for the meeting industry worldwide. Due to Economic downturn most of the companies had cut down their meeting expenditure. But as the Economy is slowly recovering so is the meeting industry worldwide. In the last twelve months industry had shown signals of growth and is expected to do better in the coming time. During EBITM James Latham from “Meeting review” caught up with Bruce Macmillan, CEO and president of MPI, Meeting professional international a professional community for global meeting professionals. During the interview Mr. Macmillan gave a brief idea on the growth pattern of the industry in the last twelve months, new trends and the future strategies. The link for the video of the interview could be found below:
http://meetingsreview.com/clients/eibtmtv/2010/eibtm-review-2.htm


In the given blog the author had attempted to write the key points of the interview which go as follow: -

• The overall industry seems much greener this time. If the year before the previous one was 20 percent greener with respect to growing business conditions the previous one was 70% greener.

• The key driver of the business is delivering value to the customers. Though hospitality has an important role to play but it is just a supporting constituent, providing value to the customers is of highest significance. It is essential that the attendees attending must get some value from the meetings. It all works in a cycle, the better value for the attendee’s leads to high attendees which translates into better relationship and better business.

• On being asked about the economic and political importance of meetings felt more among the developing nations rather than the matured markets he said that MPI is conducting an Economic impact study of meeting in USA and the result will be out somewhere in the January 2011. The report will consider various parameters such as economic values derived from meetings, employments development on account of meetings etc.

• Confidence is another important factor. Until unless confidence is not there business cannot aim high. Confidence will make businesses ,to invest in meetings and events, customers to attend the meetings. According to Macmillan there is a renewed confidence in the industry. There was a survey done among thousand decision makers all across which shows that there is huge increase in attendance in meetings where as moderate increase in spending. In the survey 49% said there had been increase in attendance, 30% said decrease where as 21% said no change. In spending on meetings 39% said there had been an increase whereas 30% said that there had been a decrease. 41% said there is no change in spending.

• On being asked about social media Macmillan said that the social media plays a very important role in circulating the content. He emphasized on heavily on high quality content development. At chapters, magazines, internal levels, websites everywhere content should be developed and then social media should be used to circulate it to bigger audience, in associating end users with the content and understanding their feedback. Talking about MPI he said that in spite of market conditions not being very favorable it invested 25% more in developing better contents in the form of better research tools, assessment kits, career development tools, training and development tools etc.

• On being asked about the condition of market which was quite a buyer’s market since the past two years he said that definitely it had been a buyer’s market but in order to make the meetings more productive it is essential that high end values be passed on to consumers. To make that happen higher prices have to be charged. It’s not possible to give high end values without some increment in price.

• In the concluding part of the interview he said in order to drive business strong relationships are required and nothing can build strong relationship than face to face meetings.

PEST and SWOT Analysis of MICE industry in Singapore

                                                                    
Singapore is one of the leading MICE destinations in the world. Located in a strategic location and known for its pro business environment it accounts for almost 25% of business tourism in Asia. Annually it conducts some 6000 events resulting in some 3 million visitors and 6 billion US dollars as revenue. (Singapore convention and exhibition directory, 2010-11)


In UIA ( union of international associations) world ranking for best MICE destination it scored 2nd rank just next to USA. Since the past 25 years it is being awarded as the best MICE destination in Asia by the UIA. The following blog attempts to do a comprehensive analysis of MICE sector in Singapore with the help of strategic frame works such as “PEST” analysis and SWOT analysis.

PEST analysis

Political factors:-

• It has a very pro business government.

• The government agencies in Singapore play a very active role in promoting Singapore as a global MICE destination. Under the guidance of STB (Singapore tourism board) it takes majors to promote itself as a MICE destination.

• In 2010 STB has launched “your Singapore” drive to promote Singapore as a MICE destination.

• Thus it can be concluded that the political factors are very favorable for the given business at Singapore.

Economic factors:-

• Singapore is a vibrant economy with its economy depending heavily on exports. From 2007 to 10 it enjoyed an average GDP growth of 7.62%. It enjoys a higher per capita income than most of the developed countries. ( Trading economics.com, 2010)

• In March 2010 it experienced a record growth of 45.2% in its GDP. ( Trading economics.com, 2010)

• Singapore is highly resource rich in nature. It has state of the art infrastructure consisting of state of the art venue centers, convention centers, hotels, roads, transportation facilities, telecommunication facilities, airline services etc.

• It is home to more than 500 financial institutions there by indirectly supporting the business with better and smooth credit and liquidity in the market.

• Due to its investor friendly government and vibrant economy large no. of MNCs have their base in Singapore. Around 80 international associations have their base here. There by making it an epicenter of business activities in the region.

Social factors:-

• Singapore has a very vibrant cosmopolitan culture.

• It has a very strong education system.

• Everyone is comfortable with English.

• Along with business tourism opportunities it has great facilities for leisure activities such as state of the art shopping malls, casinos, resorts, restaurants etc.

• Thus it can be concluded that the social factors are very supportive for the MICE industry in Singapore.

• Singapore is considered as a very safe city.

Technological factors:-

• Singapore has a very innovation focused culture. In March 2010 it was named as the most innovative country in a survey of 110 countries conducted by Boston Consultancy Group. The innovation centric culture is an advantage for the highly innovation centric MICE industry.

• Singapore has a world class IT infrastructure and IT support.

• It is well connected with different parts of the world with the help of airline and well equipped ports.



Thus it can be fairly concluded that all the four factors that is Political, Economical, Social and Technological factors are extremely favorable for the MICE industry at Singapore. Probably the strong growth of MICE sector in Singapore over the period of time can be explained with the help of PEST analysis.



SWOT Analysis

Strength

• Pro business government.

• Rich in infrastructure and resources.

• Base for a large number of MNCs and associations.

• Exotic avenues for leisure activities.

• Cosmopolitan culture.

• Moderate temperature and climate.

• Well connected with different parts of the world.

• Innovation centric business atmosphere.

Weakness

• Though there is no fundamental weakness but high cost can be considered as a weakness especially in comparison to emerging MICE destinations like Vietnam, China and India which are much more cost efficient.

• Being a small place it has its own limitations. Unlike China or India it cannot provide a wide range of exotic landscapes to explore for its visitors.

Opportunity

• Singapore is situated in South East Asia which is one most happening place in world trade and commerce and is showing exorbitant growth in last few years.

• Proximity to emerging stars of world economy such as China and India.

• Strong drives and initiatives taken by government will translate into more business.

Threat

• Due to Global economic down turn there has been a reduction in MICE activities across various sectors and Geography.

• Virtual meetings done with the help of teleconferencing are replacing real time meetings. The basic reason for this emerging trend is cost reduction. This can be a future threat to MICE industry in Singapore.

• China is also moving very fast in capturing a larger share of world business tourism. It is predicted that by 2020 china will be having 8.6% of world Business tourism. Not only China has strong infrastructure of international standards but also its services are economical. This will surely have some impact on the MICE business of Singapore. ( Dongugan news, 2006)

• Other emerging locations like India, UAE, and Vietnam can give tough fight to Singapore.

REFRENCES:-

1> Singapore exhibition and convention directory, 2010-11, Singapore raises its stake as a MICE destination, available at < http://www.sgmeetings.com/Indprof/SCNE/SCNEED01.pdf>

2> Tradingeconomics.com, 2010, GDP of Singapore, available at < http://www.tradingeconomics.com/Economics/GDP-Growth.aspx?Symbol=SGY>

3> Tradingeconomics.com, 2010, GDP of Singapore, available at < http://www.tradingeconomics.com/Economics/GDP-Growth.aspx?Symbol=SGY>

4> Dongugan news, 2006, South China’s MICE boosts business tourism, available at< http://www.newsgd.com/citiesandtowns/dongguan/news/200612140080.htm> < accessed on Jan, 2011>

Brief introduction to Incentive business travel and meeting Exhibitions

                                                                  
IBTM or incentive business travel and meeting exhibitions are a set of five 5- star exhibitions conducted in five different continents for the players of MICE ( meeting, incentive travel, confrences and exhibition)  industry. These are conducted by “Reed Travel Exhibition” a company specializing in conduction of international exhibition and business tourism events. There are a total of five events conducted annually namely:-


• GIBTM ( Abu Dhabi, Gulf)

• AIME ( Melbourne, Australia)

• AIBTM ( Balitmore, America)

• CIBTM ( Beijing, China)

• EIBTM( Barcelona, Europe)
These international exhibitions for the meeting industry provide a strong platform for the suppliers and buyers of the industry to interact with each other in a friendly but professional manner. These places serve the following purposes:-

• Selling and buying of “MICE” products and services between suppliers and hosted buyers.



• Training and education: - training and guest lectures are conducted by industry veterans there by imparting cutting edge knowledge on latest happenings of the industry.



• Social networking between members of the industry.

Suppliers: - suppliers include all the suppliers that directly or indirectly supply products and services for conduction of business and corporate meetings and events. These are event planners, venues, destinations, meeting planners, business travel agents, cruise planners, decorators, media agencies, Technical firms specializing in meeting metrics, IT services etc, logistic companies, airlines, hotels and resorts, spas, business accommodation companies, PCOs( professional conference organizers),

Hosted Buyers: - are the individuals who make meetings and events related decisions for corporations, associations and agencies etc.

Advantages of such events:-

• It provides an opportunity to all the related players of the “MICE” industry to interact with each other under one roof.

• Though professional but the overall atmosphere is very jovial and relaxed. There by providing a better incentive for individuals to interact with each other

• It helps in promoting and branding a particular geographical location to the investor and business community spread across the globe.

• Lot of economical and unique branding opportunities are available such as putting the name or logo on E-newsletter, website, merchandizes, gallery, Floor space etc.

• Availability of a wide range of services and products under one roof.

• Since participants visit from various parts of the world and various sectors of the industry it provides a unique networking opportunity to the participants.



The five important 5 –star events are described below:-

• AIBTM: - American incentive business travel and meeting will be conducted at Baltimore convention center, Balitmore, USA from 21st June to 23rd June this year. 1st day is an education program where as the next two days will be trade shows. The full list of exhibitors attending the event is yet to be published.

• GIBTM: - Gulf incentive business travel & meeting exhibition will be conducted at Abu Dhabi national exhibition center (ADNEC) from 28-30 March this year. Last year GIBTM was a huge success with over 1888 meeting professionals attending the event. There were 261 hosted buyers and 1500 trade visitors. (GIBTM, 2011)

• AIME: - Asia pacific meeting and incentive expo will be conducted for 19th time at Melbourne convention and exhibition center, Melbourne, Australia on 15-16 February, 2011. It is expected that this 3600 suppliers and buyers along with 850 exhibitors from 50 countries will be visiting AIME this year.

• CIBTM: - China incentive business travel and meeting exhibition will be held at Chinese national convention center (CNCC), Beijing, China from 30th August to 1st September this year. Last year exhibitors from 26 countries visited CIBTM. ( CIBTM.com, 2010)

• EIBTM: - 23rd European incentive business travel and meeting exhibition will be conducted from 29th Nov to 1st Dec this year at Barcelona Spain. The preliminary activities for the event are still on. The last year was also a huge success. This year’s 22nd EIBTM attracted 3,125 exhibiting companies from over 90 countries. The number of trade visitors was 4,010 reflecting a 5% increase on last year and total attendance including Hosted Buyers reached 8,395, a 1% increase on 2009 (unaudited figures). Hosted Buyers at the show undertook more than 57,300 Pre scheduled appointments, a 1.35% increase on 2009. ( EIBTM 2011, 2010)



REFERENCE:-

1. GIBTM 2011, 2011, GIBTM 2011 featured, available at < http://www.gibtm.com/files/gibtm_2010_stats_a4_2pp_final_online.pdf>

2. CIBTM home page, 2010, CIBTM celebrates another record year, available at < http://www.cibtm.com/en/Press/Press-releases/CIBTM-celebrates-another-record-year/>

3. EIBTM 2011 Home page , 2010, EIBTM 2010 press release, available at < http://www.eibtm.com/page.cfm/Action=Press/PressID=868/t=m>

The Rocket Science of understanding “consumer INDIA”

                                             

 Science of shopping: The Indian context

Real innovations are usually hard to find. There are plenty of tomes that have been written about innovation. It means two simple things: Sharp consumer insights backed by courage of conviction. Of these, the latter is usually just as important in India. Would you agree?



Way back in 2001, Kishore Biyani tried his hand at big-box retailing. Till then, most retailers had stuck to the department store format — or opened supermarkets, particularly down South. In Kolkata, Biyani opened his first Big Bazaar, a soups-to-nuts hypermarket. Within the first week, Biyani knew that he had found the Holy Grail. In the very first week, the store pulled in one lakh customers generating a daily turnover of Rs. 1 crore on some days. “I’ve found the pan Indian model of retail,”. He was right.


An Irishman when asked to define trousers gave the following reply, “'trousers' was singular at the top and plural at the bottom!”. It also holds true for consumer India. From the top we are a one billion capacity consumer base, but when seen through multiple lenses we do find a great deal of diversification. There are many aspects like the demographic, cultural and the social trends and identifies the strategic themes and approaches that businesses must think about when addressing Consumer India.


Let us consider two identities, Balwinder Singh; a farmer who has devoted his life in agriculture to feed his family and himself. The second one would be Sumit Arora; an investment banker and an alumni of ivory league B-school. Now how important is the word SENSEX in Balwinder’s life, the answer is very simple… “zero”. Whereas for Sumit it’s a part of his bread & butter. Sumit again is least bothered if the monsoon delayed by a month or so, but ask Balwinder, his whole livelihood may change if there is a delay in monsoon. I quoted this example to brief you about how diversified India is as a country.


Keeping all the above aspects into consideration, imagine the amount of pressure various companies would be in, in order to make the consumer feel the tempt to buy its product. The bargaining power of consumer India is so high, that a small mistake could prove fatal. But still the companies fight & fight with one another and leaves no stone unturned in gaining consumers attention.


“Retailing” is the word which caught up pace in last three to four years. The events of the last 15-18 months have provided a steep learning for the retail and consumer product industry. While the last decade (2000-2009) has seen significant addition to consumption and retail market, it is expected that consumption is likely to double in India over the next 5 years, (nominal growth of Rs 33.75 lakh crore). There is going to be significant changes in the overall consumption basket hence brands in low involvement categories would be under the increasing threat of commoditization. Profitable growth would be the emphasis for retailers and investors in the time to come. We expect that in the next 5-10 years, the scale of business opportunity and pace of change would be fundamentally different from what it has been in the past. This calls for almost every company to go back to the strategy drawing board and develop a vision for the next decade in order to emerge as a successful player in the consumer and retail sector. Companies have switched gears and are targeting on this sector to maximize the sales & to brand them to the core. Important thing to consider here is that, out of all the footfalls generated how a company maximizes on its objective.There is a science involved in this. Now the brand manager of the company needs to understand this science to help the sales figure grow at a brisk pace. This science is well explained by Paca Underhill in this book “The Science of Shopping”. The book is divided into three parts: the mechanics of shopping – these involve how customers react to the physical layout and the staff activities in the store, etc; the demographics of purchasing – this part deals with different behaviors of segmented market based on sexes and ages; and the final part engages in the dynamics of shopping – how shoppers respond psychologically to the placement of merchandise, the packaging, and other product features

According to Paco;

1. The retail environment must tailor fit to the physical and anatomical abilities and other needs that are common to all people. Where shoppers go, what they see and how they respond determine the very nature of their shopping experience. In other words, build and operate the retail environment that fits the highly particular needs of shoppers and you’ve created a successful store

2. Underhill went all the trouble of getting his facts right through practical research studies such as observing actual shoppers’ behaviors and talking to the CEOs and retail managers. The result? Consumer behavior + economics = profitability.

3. Shoppers and potential customers have certain ways of walking through stores and how they look at the visual signs. They use the five senses and they want verification with their whole body before buying a product. If you understand such behaviors, you acquire huge competitive advantage.

4. Women and men shop differently. As quoted from the book, “men are from Sears’s hardware, women are from Bloomingdales’”. Men are likely to go into a store, look at a large shelf of items, pick one, and quickly leave. Women on the other hand are actually more information-intensive, reading the label before making a purchase

If we juxtapose the concept given by Rama Bijapurkar in her book “We are like that only” to that of Paco Underhill’s “ Why we buy”; we can say that things in India can be summon up if the companies have a thorough understanding of what exactly a customer wants and what factors influence him to take a decision. Easier said than done, companies are still finding it hard to understand this.



A consumer doesn't take anything away: he doesn't actually consume anything. Giving the same thing to a thousand consumers is not really any more expensive than giving it to just one.



……. “Linus Torvalds”

Blog written by "Anurag Chatterjee"
MBA Student
Mumbai Business School

MICE industry in Dubai: Comprehensive Analysis

                           fig 1: Burj Al Arab ( Source:                                            www.dubai-architecture.info)                                                              

Dubai is one of the very fast emerging players in the global MICE industry along with the players like China and South East Asia. It’s the state of the art infrastructure and the cosmopolitan culture of Dubai that attracts the attention of the businesses and corporations across the globe for conducting their meetings and conferences in Dubai.

The given blog will analyze Dubai as a MICE location, recent accomplishments it had made in the given area and SWOT analysis for its MICE industry .

Along with petroleum, tourism, financial sector and real estate sector are very important revenue earners for Dubai. Known for its beautiful and exotic hotels and resorts, restaurants, spas, beautiful land marks, shopping malls and fashion stores Dubai attracts an immense number of tourists every year from all across the globe. In the 1st nine months of 2010 total number of hotel guests was six million (DTCM, 2010). DTCM or Dubai tourism and commerce marketing, pioneer body to take tourism related initiatives in Dubai has an ambitious target of attracting fifteen million foreign tourists in Dubai by 2015. (ttnworldwide.com, 2008)

Dubai attracts both, leisure as well as business tourists. In the past few years there has been considerable increase in business tourism related activities in Dubai. Dubai convention bureau a part of Dubai tourism and commerce marketing is taking strong drives and initiatives to attract business visitors from all around the world to conduct meetings and conferences at Dubai. Like its twin sister Abu Dhabi, Dubai is sending delegates and conducting promotional campaigns all across the globe along with attending international meetings for MICE industry like IBTMs and IMEX etc. In the next part the author will be discussing two very important pillar of the MICE industry in Dubai that is Dubai convention bureau (DCB) and Dubai world trade center (DWTC)

Dubai convention bureau or DCB is not directly involved in conducting meetings and conferences but gives helping hand to the MICE industry in Dubai by promoting it internationally and nationally as meting destination. The services of DCB include the following (DCB website, 2010): -

• Bid assistance: - with the help of its strong expertise it helps national and international host in going for the bid. The prime services include identifying issues that needs to be addressed, writing the bid, providing endorsements from key govt. as well as private bodies, working on the strength and weaknesses of other competing cites etc.

• Site selection: - it helps the host in inspecting convention centers, conference halls, hotels etc. Provides assistance with selection of PCOs (professional conference organizer) and meeting planners, provides local contacts.

• Helps in the promotional activities for the event.

• Provides other complimentary services like tour guides, information booths in meetings comprising over 1000 delegates, govt. contacts etc.

Dubai world trade center or DWTC is the leading destination for conducting exhibitions, conferences, meetings and corporate events. It also provides offices on rent to corporate and consulates from all around the globe. DWTC is considered as the focal point of business related activities in Dubai. In 2009 alone it was visited by some 1.24 Million conference and exhibition visitors (newzglobe.com, 2010)

In the concluding part the blog will attempt to do a brief SWOT analysis for the MICE industry in Dubai: -

Strengths

• State of the art infrastructure with plethora of international standard convention centers, hotels, logistic facilities etc. Dubai has around 566 hotels with more than 67,000 rooms. (DTCM, 2009)

• Crime rates are low.

• Cosmopolitan culture

• Epicenter of trade in Middle East.

• Pro- active government authorities.

• Well connected through air with different parts of the world.

• The leisure activities in Dubai are additional advantage for its incentive travel packages.

• Dubai is strategically placed between Asia and Europe where as it is close to Africa as well.

Weakness

• Dubai is becoming extremely expensive these days. In 2010 it was considered as the 55th most costly city in the world. ( Mercer, 2010)

• It has recently undergone a real estate bubble crash and hence the economy is still in a recovery mode.

• In spite of low crime rate there had been an increase in sex and drug related crimes. Some of them have got huge media publicity.

• Dubai lacks cultural sites.

Opportunities

• The increase in price of oil  will boost the economy.

• Dubai expects further growth in leisure tourism with around 15 Million foreign tourists visiting by 2015. This will surely be advantageous for business tourism in Dubai.

• Dubai is the business and tourism center of Middle East region which is high up on the geo-political and  business agendas of the West as well as emerging powers from the East.

Threats

• In recent times  lots of other cost efficient and exciting locations are rising in the Middle East such as Muscat, Doha and Kuwait City.

• Cities like Prague and Istanbul are attracting lot of tourist attention these days. These cities can offer cultural tourism as well as magnificent modern facilities at a much economical price to lure business tourists from across the world.

References:-

References –

1> DTCM press release, 2010, total number of hotel guest rises…….., available at < http://pr.dubaitourism.ae/2010/12/26/total-hotel-guests-in-dubai-touch-nearly-six-million-during-first-nine-months-of-2010-according-to-dtcm-report/ >

2> Ttnworldwide.com, 2008, Dubai to attract 15m tourists by 2015, available at < http://www.ttnworldwide.com/articles.aspx?id=1107&artid=8150 >

3> DCB website, 2011, Our Services, available at < http://www.dcb.ae/en/article/dcb-services/our-services.html >, accessed on Jan 2011

4> DTCM press release, 2010, total number of hotel guest rises…….., available at < http://pr.dubaitourism.ae/2010/12/26/total-hotel-guests-in-dubai-touch-nearly-six-million-during-first-nine-months-of-2010-according-to-dtcm-report/  >

5> Mercer, 2010, Worldwide Cost of Living survey 2010 - City rankings, available at < http://www.mercer.com/costoflivingpr#Top_50 >  

PEST & Trend analysis of tourism in India

Country Selected: - INDIA

Aim: - Given blog aims to do a PEST analysis and a trend analysis tourism in India. It will include a brief introduction followed by key trends in the Indian tourism market, their respective implications and major take away.

Introduction: - India as a country provides a huge potential for tourism to flourish. One of the oldest cultures of the world and a vibrant economy it has potential for various different kinds of tourism such as heritage cum cultural tourism, medical tourism, business tourism , eco cum adventure tourism, spiritual tourism, etc. The huge potential of India as a tourist hub can be derived the fact that it has a much diversified culture, different kinds of geographical terrains and a very rich cultural heritage. The potential gets an additional boost due to phenomenal growth of Indian economy in the recent years coupled by rise in average household income and investments in infrastructure. Right now also tourism plays a very important role in Indian economy. In the year 2009 valued at 41.73 billion English Pounds it constituted 6% of the Indian gross domestic product. It constitutes 5.8% of the total employment in India and employs 17.4 million individuals. But still the figures are very dismal given the kind of potential Indian tourism has. Though the market penetration of Indian tourism is still very low but can grow by leaps and bounds provided proper strategy is built into operation.

Indian Tourism: Trend Analysis

• In 2007 five million international tourists visited India; this figure is expected to touch ten million in 2010.

• Indian economy very fast in between 2002 and 2007. The average household income grew by 14% there by giving a boost to domestic tourism.

• Total tourist movement had doubled in the last seven years.

• In 2009 the total revenue earned from foreign tourist was approximately 10.5 billion British pounds (6.0 % of total exports). According to travel and tourism competitiveness review this figure is expected to grow to 31.5 billion English pounds in the next ten years.

• According to travel and satellite research (part of World travel & tourism council) the demand of travel and tourism with in India is going to increase by 8.2%. This growth rate is 3rd highest in the whole world.

• Indian hotel industry is adding 90,000 rooms per year.

• Capital Investment in the Indian tourism sector will increase by 8.8% per year. With this rate it can be expected that total investment will be around 59 billion English pounds in the given sector.

• Medical tourism is growing very fast in India. Growing at a Compound annual growth rate (hence forth will be referred as CAGR) of 19% it is expected that by 2012, 1.1 million medical tourists will be visiting India. Growing at a CAGR of 27% the net value of medical tourism will be approximately 1.5 billion English pounds.

• The present value of Indian tourism which is 41.73 billion English pounds is expected to increase by 200% in the next 10 years.

• It is expected that by 2019 there will be 40 million individuals in India employed in the tourism sector. (An increase of approximately 133% )



Internal and External audit of Indian tourism

External audit (uncontrollable factors):-

Macro Factors

• Political factors:-

1. India has a stable democratic government. This ensures stability for the tourism industry.

2. The centre has a specific ministry of tourism whose prime purpose is to device plans and strategies for the welfare of Indian tourism industry.

3. India as a nation is divided into various smaller state and every state has its own tourism department. These departments often fight with each other in ensuring higher tourist inflow into their respective states. Though this competitiveness ensures efficiency in the individual states but is detrimental for overall tourism as a whole. Since India is a diverse nation with every state having something to offer along with competition what is really essential is proper coordination between various states.

• Economic Factors:-

1. India is among the fastest growing economies of the world. In the last decade its GDP has grown with almost 7% per annum. A higher economic growth ensures rise in annual income hence increase in domestic tourism.

2. A higher economic growth also ensures increase, in investments in the infrastructure, promotional expenditures, construction of newer tourist avenues, beautification of cities and towns etc. These ensure a boost to the tourism industry.

3. High growth results in higher number of business visits.

• Socio –Cultural :-

1. India a diverse nation with end numbers of different languages, cultures, traditions, cuisines; make it an ideal destination of cultural tourism. The depth of diversity can be concluded from the fact that India has more than 22 constitutional languages and 1600 dialects.

2. Indian culture has always emphasized on respecting and entertaining their guests very well. The Sanskrit Shloka “ATHITHI DEVO BAHVAH” (guest is god) is the essence of Indian tradition. This warmth and love for their guests has always been appreciated by tourists in general and foreign ones in particular.

3. India has a vibrant and rich history of cultures that can also attract many culture lovers and scholars for further studies and exploration.

4. Due to 200 years of British rule English is an integral part of Indian education system. Most of the people at India can communicate and understand in English. This gives an added advantage to India in comparison to its neighboring counterparts in attracting foreign tourist.



• Technological:-

1. At present Information Technology plays a very important role in tour planning and its implementation. Starting from searching the tourists spots to booking hotels and transportation to transferring money every where web based platforms are used. In the Indian context there are plenty of such web based portals such as makemytrip.com, yatra.com etc. India being an IT superpower is capable enough for future development of such avenues in a very cost efficient and technologically superior way.

2. In spite of India being an It superpower the overall home pc penetration is still low at just 26%. This disassociates a very large chunk of domestic users from using such web based portals.

3. For the success of tourism it is essential that a country must be equipped with state of the art transportation facilities. It must have very efficient transportation system that can help in transporting both large volume of people and goods in a very cost effective, fast and comfortable fashion. Thanks to its huge population and late opening up of economy its transportation system still not of international standard.

Analysis of MICE business in China

                                                                         
In the last three blogs the author attempted to give a brief introduction to business tourism & MICE industry. Now he will like to take this further and will like to delve deeper into it. In the next stage he will attempt writing on the trend of MICE industry in various individual regions. Along with the traditional hot destinations such as Europe and USA there are lots of new places such as Middle East, China, Singapore are emerging as favorable destination for business tourism and MICE activities. The next few blogs will like take a deeper look at these individual places along with the socio economic conditions and developing industry trends in the background. The very 1st one will be dealing with the neighboring China.


Ever since the Chinese economy was opened in the year 1978 China has shown phenomenal growth in the past three decades. Known as the factory of the world it holds a very strong influence in both world geo-politics as well as world economy. Al most all the major companies in the world has their manufacturing unit in China. Because of its investor friendly government policies, low cost of labor and strongly developing human resource it is considered as one of the most favored location for investment. Under such circumstances the importance of MICE industry increases many folds because of following reasons:-

• It is a lucrative business in itself that is a source of an end number of high end employments.

• Business tourism can stimulate leisure tourism as well.

• Since it brings in investors and business houses from all over the world it can stimulate investments in other sectors.

• It can play a very important role in local as well as regional developments. Since primarily it does not brand a whole country but a particular region or a city to the investor & business communities.

• Can stimulate govt. initiatives in building state of the art infrastructure.

The current status of Chinese MICE industry:-

• The Chinese MICE industry has grown rapidly in last 10 years. Most of the 1tier and 2 tier cities have state of the art exhibition halls of international standards. ( Michael Dreyer, 2010)

• The various kind of MICE activities include: Local events where local products are displayed to local buyers, Import events where foreign products (both capital goods as well as luxury products) are displayed to local consumers and buyers and sourcing events where Chinese exporters show their goods to sold to the international buyers. (Michael Dreyer, 2010)

• Important venues for MICE activities in China are Sanghai, Beijing, Hong Kong, Dongugan, Guangzhou etc.

• Business tourism plays an important role in inbound tourism in China.

• According to international Congress and convention association ( ICCA) by 2020 with 137 million business travelers China will account 8.6% of Chinese business tourism market.( Dongugan news, 2006)

• China is the third largest business travel market. ( BEDOUK.COM, 2010)

• Chinese government taking strong proactive steps to boost MICE industry in China. Recently in august the govt. had established two organizations, ICCA China committee & MICE advisory committee for covering eastern half of Chinese capital. (Travel weekly.com, 2010)

• China national convention center was opened in October 2009. With a gross floor area of 270,000 square meters its main purpose is to provide international standards for conducting exhibitions, conventions and meetings. It is expected that in the 1st five years of its operation it will be conducting some 173 events with almost 3, 20,000 attendees. Out of this 66 will be of international or regional association congresses and 56 will be national level meetings. (Rob Davidson, 2009).

• Since travel and tourism industry as well as MICE industry are growing very fast in China hence it complements each other.

SWOT Analysis:-

Strength:-

• China has invested hugely in the infrastructure recently. They have got state of the art infrastructure which includes top quality hotels, transportation, telecommunication, well equipped convention centers etc.

• China has a cost advantage since it is comparatively much economical than its western counterparts.

• China today stands in the centre of world economics and politics. Hence this is an added advantage for its prospect as a venue for meetings, events etc.

• China , a vast nation can provide a wide range of delight to its visitors ranging from its magnificent monuments, aesthetic oriental culture, exotic food, landscapes to state of the art modern amenities such museums, theme parks, sports complex etc.

• China is also a hot destination for travel and tourism business. This is an added advantage for its MICE industry.

• Traditionally most of the events have taken place in the same old European cities such as London, Dublin, and Paris etc. In contrast to them China can provide an all together new experiences to the business travelers. (Essaysforstudent.com, 2009)

• World class events like Beijing Olympics 2008 & world expo 2010 have been conducted in China. This had reaffirmed Chinese strength in handling big events successfully and also recognizes the fact that it had travelled a long way as a nation.

Weakness:-

• Language is still a major concern in China. Most of the Chinese still don’t speak or even understand English.

• For China MICE is still a new idea. In Europe and USA, MICE activities are happening since hundred years where as in China it had started in the last ten years only. Hence China is still undergoing through its learning curve and it has got many things to learn. It even does not have too many organizations to take care of these things in contrast to USA or Europe. ( Essaysforstudent.com, 2009)

Opportunities:-

• Most of the transnational organizations such as Honeywell, GM, and Kodak etc have their regional head quarter at China. Hence it can be added advantage since they will prefer conducting annual meetings at Chinese locations. ( Essaysforstudent.com, 2009)

• The China considered as the next super power, had got strong hold in the world geo-politics as well as geo-strategy. China has a very prominent role to play in the new world order that will be multi polar in nature. Hence this wide spread craze for China can act as a latent force in promoting China as a destination for MICE activities.

• East Asia and South East Asia themselves are under growing strong economic growth. There are lot of exciting business events happening in these areas. Being the strongest regional force China as a venue for MICE activities will always attract attention of regional industry players towards itself.

Threat

• So far in Asia Singapore is considered as the strongest MICE destination. Beating Singapore will always be a tough for the Chinese players.

• Lot of new players such as Dubai, Abu Dhabi, South Africa, India, Vietnam etc are joining the MICE bandwagon and can provide stiff competition to China.

• Players like India and Vietnam can be good alternative to China both in terms of cost efficiency as well as in terms of services.

• Though there is a China fever all across the world but at the same time there is a lot of reservations for China also because of its non democratic government, restrictions imposed on press etc. This kind of resentful thinking in some quarters of the world might deter some companies and associations from conducting events in China.

Reference:-

1. Michael D, 2010, The rapid growth of China’s MICE industry, CEI, available at < http://www.cei.asia/Weekly-highlightsarticle/2010_02/The-rapid-growth-of-Chinas-MICE-industry/38867>


2. Michael D, 2010, The rapid growth of China’s MICE industry, CEI, available at < http://www.cei.asia/Weekly-highlightsarticle/2010_02/The-rapid-growth-of-Chinas-MICE-industry/38867>


3. Dongugan news, 2006, South China’s MICE boosts business tourism, available at< http://www.newsgd.com/citiesandtowns/dongguan/news/200612140080.htm> < accessed on Jan, 2011>


4. Travelweekly.com, 2010, China develops MICE industry, available at < http://www.travelweekly.com.vn/regional-news/other/1753-china-develops-mice-industry>


5. Rob D., 2009, EIBTM trend analysis and market share report, p-20.


6. Essaysforstudent.com, 2009, Chinese Mice analysis, available at < http://essaysforstudent.com/print.html?essay=19072>


7. Essaysforstudent.com, 2009, Chinese Mice analysis, available at < http://essaysforstudent.com/print.html?essay=19072>


8. Essaysforstudent.com, 2009, Chinese Mice analysis, available at < http://essaysforstudent.com/print.html?essay=19072>

Analysis of the phenomenal growth of dubai in the last four Decades

fig 1: Palm islands (source: www.nakheel.com )                                                        

Dubai the second largest Emirate of UAE (United Arab Emirates) is considered as one of the top notch cities in the world. Known for its unique mix of extravagance, charm and elegance it equally attracts tourists as well as business travelers and professionals from all across the globe. But few decades back it was among the least developed nations in the world with economy primarily dependent on agriculture, animal husbandry and pearl trading. The turning point  for Dubai came in 1973 when oil and natural gas was discovered and from that point there was no looking back for the Emirate state. The following blog by the author will make an attempt in unwinding the success saga of Dubai and try deciphering various factors that helped morphing the desert state into such grandeur.

• Social and Political apparatus: - natural resources coupled with strong, visionary and stable administration can do real magic and nothing exemplifies this better than Dubai. Dubai as a state was formed in 1971 and since then it has constitutional monarchy. In early 1970s oil and natural gas was discovered in Dubai, and within a very brief time of 1973 to 82 when the oil price was very high  made huge economic development. The oil revenue was invested in developing economic and social infrastructure, providing high salaries, and in other social welfare schemes. This resulted in a very stable and peaceful political and social atmosphere (Mohamed Shihab). The ruling class of Dubai had understood the fact that since the overall oil resources in Dubai is just 1/20th of neighboring Abu Dhabi; state economy cannot depend on oil revenue for a much longer time. Hence they always emphasized on diversification of economy into various other alternative sectors such as trade, tourism, real estate, financial services etc. (Michael Matley and Laura Dillon, 2007 )

Factors that shaped the  growth journey of  Dubai

Oil and natural gas:- Oil and natural gas in Dubai was found in the 60s and since then had played a very important role in Dubai’s economy. In the time of 80’s 55% of Dubai’s GDP came from the oil sector but with time its significance kept on decreasing. It contributed, 10% of GDP in 2000, 5% in 2005 and just 2.1% in 2008. (Paul Holdsworth, 2010). The constant decrease in the contribution by the Oil and natural gas can be attributed to the fact the economy had diversified into various other sectors such as trade, tourism, real estate and finance etc. With the current estimate it can be predicted that the oil and natural gas resources in Dubai will not last much longer.

• Ports:- Dubai is one of the leading port cities in the world. After Hong Kong and Singapore it’s the 3rd largest re export center in the world. The 1st ever port namely port Rashid was constructed in 1972. Then in 1978 the Jebel Ali port was constructed. Jebel Ali is the biggest port in the Middle East and the biggest man made harbor in the world. The port is also surrounded by a major industrial zone having some 5,500 companies from 120 countries and an international airport. The leading port companies in Dubai  were Dubai ports authority and Dubai ports international which later on merged to form Dubai ports world or DP world. DP world operates 49 ports across Dubai and internationally and handles approximately 50 Million TEUs #. (Abdul Basit, 2010)

• Business and commerce:- Dubai has evolved as center of commerce for the Middle East. Dubai’s political apparatus had played a very important role in this transformation. The earlier point discusses about the Jebel Ali free zone where companies from all around the world get tax benefits and hassle free liberal environment to conduct business. Another important step taken was the construction of DWTC (Dubai World Trade Center). The 39 storey building was the pioneer center in conducting business meetings, exhibitions, conferences and corporate events in the Middle East region (though today other centers like ADNEC are catching up fast). DWTC is home to many corporate offices and embassies also, hence played an important role in exposing Dubai to the business and investor communities spread across the globe. Dubai had invested hugely in constructing business parks for dedicated industries. One such park was opened in 1999 namely Dubai Internet City. It is home to the offices of some of the leading software and IT companies in the world such as Microsoft, IBM, Oracle, Sun Microsystems, Cognizant, Siemens etc. Similarly other such business parks include Dubai Media City, Dubai Knowledge Village, Dubai Land, Dubai Health Care city, Dubai Studio City etc. By 2006 more than one fourth of the fortune 500 companies in the world were having its base at Dubai. (Michael Matley and Laura Dillon, 2007 )

• Tourism:- With time Dubai had morphed into one of the biggest tourist destinations in the world. Many people even consider it giving fight to Las Vegas as the tourist capital of the world. With lots of state of the art hotels, spas, restaurants, fashion boutiques, shopping malls and exciting activities like dessert safari, ice skating and camel racing etc it is today one of the most preferred tourist destination in the world. The emirate state was visited by some seven Million visitors in 2007 and close to 10 million visitors in 2010. With more than 450 hotels and lot of projects still under way Dubai targets 15 Million visitors by 2015. Dubai also attracts a lot of business travelers from all across the globe to conduct their meetings, exhibitions and other corporate events in Dubai. The credit for this can be given to the state of the art convention centers like DWTC and the heavy marketing done by the DTCM (Dubai tourism and commercial marketing) in promoting Dubai as a business travel destination. Dubai’s journey as a successful tourist destination started in the mid 90s. In 1997 the Jumeriah group was established which develops and operates luxury hotels in Dubai as well as in other parts of the world. The Dubai govt. had invested in many of the magnificent projects like the Burj Al Arab, Palm Islands, Snow Mountains, and Jumeirah Medina resorts etc. These coupled with heavy marketing and an efficient airline in the form of Emirates airline gave a huge boost to the tourism sector in Dubai. (Michael Matley and Laura Dillon, 2007)

•  Financial sector:- Financial sectors are other important constituents of the Dubai’s economy. In 2005 financial sector contributed 10% to the GDP of the Dubai. There is also a strong correlation between the real estate sector and financial sector. Dubai aspires to be the financial hub of Middle East. The Dubai Financial Market commenced its operation in 2000. It received a FDI inflow of 12 Billion US dollars in 2005.

Why Dubai?

One important question that always strikes is why Dubai had been so successful in making changes so fast where as other Arab states which equally looks attractive on paper could not make such an impact. There are following reasons for that:-

• Speed: - Dubai is well known for implementing its projects with phenomenal speed. From project launch to its implementation things are done with great speed.

• Truly cosmopolitan culture: - Dubai is a place where people from different part of the world came and mingled with each other in a much open fashion. Where as in other Arab states the expatriates were restricted to their own boundaries, in Dubai they mingled well with the locals as well as other expatriates giving an unique cultural edge to Dubai. Other states in the Middle East lack such an exciting cultural platform.

• Safe haven in the midst of a politically disturbed region: - Middle East is high up on the strategic agendas of the whole world because of its natural resources, but at the same time political and socio economic systems of these nations make others a bit apprehensive of them. Dubai was unique in this regard because in between a politically disturbed mosaic it provided a safe and stable place which attracted every one, investors, tourists, professionals , diplomats, sportsmen, artists alike towards itself from all over the world.

• Transparency: - While other gulf states are notorious for their transparency in govt. activities Dubai had tried hard to build govt. institutions which are very transparent and open in its approach.

It was the state of the art infrastructure, open and cosmopolitan culture, stable and efficient government, zero business and corporate taxes that made Dubai as one of the most sought after places in the world. The journey of Dubai in the last four decades is one of the most phenomenal success stories of the world but it had its own drawbacks. In the last two years Dubai had undergone a real estate bubble burst that had impacted its economy badly, fate of many of its big real estate projects seem to be doomed. The Emirate state had constantly been accused of human right abuses of its expatriate workers, as well as lack of quality in many of its projects. Last year with the help of financial support from Abu Dhabi its economy seems to be recovering strong  and atmosphere again seems to be optimistic. Dubai has a long way to go. The given blog analyzed the success story of Dubai so far where as the next one will analyze the future growth prospects and strategy for Dubai.

# The twenty-foot equivalent unit (often TEU or teu) is an inexact unit of cargo capacity often used to describe the capacity of container ships and container terminals

Reference:-

1> Mohamed S, Economic development of UAE, United Arab Emirates: a new perspective, P-250, available at < http://www.uaeinteract.com/uaeint_misc/pdf/perspectives/12.pdf  >

2> Michael M and Laura D, 2007, Dubai Business Strategy: past, present and future, Harvard business school,P-1, available at < http://belfercenter.ksg.harvard.edu/files/matly_paper1.pdf >

3> Paul H, 2010, Oil Makes Up 2% of Dubai GDP Post-Diversification, gulfjobsmarket.com, available at < http://news.gulfjobsmarket.com/oil-makes-up-2-of-dubai-gdp-post-diversification-7861765-news >

4> Abdul B, 2011, DP World container volume hits 
all-time high, Khaleej Times Business, available at < http://www.khaleejtimes.com/biz/inside.asp?xfile=/data/business/2011/January/business_January436.xml§ion=business >

5> Michael M and Laura D, 2007, Dubai Business Strategy: past, present and future, Harvard business school,P-3 to 4, available at < http://belfercenter.ksg.harvard.edu/files/matly_paper1.pdf >

6> Michael M and Laura D, 2007, Dubai Business Strategy: past, present and future, Harvard business school,P-3 to 4, available at < http://belfercenter.ksg.harvard.edu/files/matly_paper1.pdf >