Wednesday, Feb 02, 2011
Gulf News
Small establishments raise expectations.
Dubai: Buzzwords such as innovation and confidence that hark back to a time when the going was good and seemed would last forever are being heard all over again. And its no coincidence that these are getting repeated just as oil prices nudge past the $100 (Dh367) a barrel mark.
In two recent global surveys, conducted by GE and HSBC respectively, businesses in the UAE and Saudi Arabia were overwhelmingly favourable towards their current status and what they expect from the future. In this, their responses were markedly at odds with what their peers in the developed economies were feeling about themselves.
Small businesses across the region were right up there in ushering in the feeling good sentiment. In the UAE, there was a 12 per cent surge in confidence levels among small businesses during the second-half of last year, according to HSBCs findings in its semi-annual Small Business Confidence Monitor.
So much so, a good number of these businesses foresee increased spending on capital expenditure and even on recruitment. (The bulk of the proposed recruitment is to be in Saudi Arabia.)
Its interesting this should be so as the general impression was that any improvement in the wider economy would take time to filter through to small businesses. Also, tight liquidity was still very much a concern even during the latter part of 2010.
That small businesses were able to overlook these near-term niggles in favour of the bigger picture is what the survey findings such a compelling read.
Renewed confidence
It was also infectious for instance, small businesses in Saudi Arabia recorded near 30 points for the highest levels of business confidence in the world. No doubt, the price of oil being where it is now must have played a part in lubricating the upbeat sentiments among business owners.
With 59 per cent of MENA SMEs expecting their local economy to increase at a greater pace in the six months, confidence remains strong and continues grow within the region, said the HSBC report. The rise in oil prices has contributed to the increase in business confidence in the Middle East, with increases in wealth set to support private consumption and domestic demand.
In fact, 36 per cent of regional respondents saw a the rising oil prices as having a positive impact on their business.
Dubai Faith in innovation is certainly not in short supply among businesses in Saudi Arabia and the UAE. The two easily took the first two positions in a global survey of 12 markets including the likes of the US, Japan and South Korea in what businesses felt about what innovation would do to peoples lives.
This is according to findings recorded in a Global Innovation Barometer survey commissioned by GE, the US industrial major. To this end, 1,000 senior business executives among them representing companies with between 45 and 100 employees in 12 countries were polled.
Not just that, the survey found that the majority of global businesses feel SMEs and individuals can be just as innovative as large companies.
This is quite a departure from how it was bandied about in the past. People used the term innovation in a number of different areas, said Michael Barber, who heads healthymagination, GEs global initiative on creating innovations in the health-care space.
When we talk of it, its about truly understanding whats needed; our job then is to get a better intersection of whats possible and whats necessary. Thats innovation. It became a dirty word when a lot more things were made possible than were needed. Thats when innovation ran into issues. Going by the GE Innovation Barometer, a back to basics approach underscores what is expected of innovation in a post global crisis environment. The survey touched a responsive chord among respondents who felt that innovation, where possible, should be localised to serve specific market needs.
High expectations
Even here, the expectations are high that small businesses can show the way in true innovation. In the GE survey, 27 per cent of respondents felt that such entities would lead the way as against 19 per cent finding favour with large companies over the next ten years.
While a lot changed with the financial crisis, even at that time I dont think innovation was dead, said Barber. Maybe there were issues of affordability during this phase for the companies, but they still saw it as a need.
Because when markets recover, and they invariably will, you better be ready with the right kinds of products and services. So, understanding what provides more utility in the marketplace is what innovation is about, irrespective of whether it a cell phone, medical imaging device or an aircraft engine.
For regional businesses that has innovation at its core operating strategy but finding funding to be an issue, theres cause for optimism from the survey. A majority of those surveyed found that private investors are supportive of companies that need funds to innovate.
Global reach: Expansion plans
Globally, the number of small and medium establishments (SMEs) conducting international business activities is expected to expand from 29 per cent to 40 per cent by 2013, according to the HSBC findings. The increase is driven by domestic SMEs, 18 per cent of which plan to become international by 2013.
Internationally, SMEs show aggressive cross-border expansion plans with almost half intending to expand their international operations in the next two years to increase revenue.
No reason then why businesses in the emerging markets were having a positive outlook on their local economy, with more than 40 per cent projecting growth for it in the next six months. More than 6,000 small businesses in 21 global markets were surveyed by HSBC, in what is said to be the largest one of its kind. All of the Mena markets polled in the survey registered higher scores individually than those in the developed cluster.
By Manoj Nair, Associate Editor
Gulf News 2011. All rights reserved.
