The Nigerian executive picked up his phone and called his Indian counterpart. A deal they had been working on had hit a snag. He knew that it was important to do what successful businessmen do: meet face-to-face. The emails, faxes and phone calls would not do it. The principals needed to work the problem out. “The usual place?” The Nigerian said to the Indian over a crackling mobile phone line. “Yes, the usual place,” came the swift response. Two days later, they hopped on planes, greeted each other on arrival and sat down to business in a hotel conference room in their “usual place”.
This small episode – a microcosm of how business gets done – envelops a larger story, one that includes the dramatic growth in intra-emerging markets trade as well as the critical importance of hubs and gateways to facilitate trade and business growth.
“I hold many of my international meetings in Dubai,” our Nigerian protagonist tells me. “It’s easy to get there for so many people with all of the flight connections,” he adds.
To visit Dubai today is to witness a business revolution. Call it the South-South revolution, emerging markets are trading with each other at historic levels, and Dubai is playing a critical role in mediating that trade.
Just ask V Shankar, the CEO of London-based Standard Chartered Bank (Europe, MEA & Americas). He is a board member, with wide-ranging responsibilities, and it would have been reasonable for him to choose London as his base, along with other board members. But he chose Dubai.
At a recent panel discussion that I moderated on the new South-South economic order, staged by Falcon and Associates for an audience of international business and thought leaders attending the Dubai World Cup, Shankar explained his reasoning: “I had a choice of either being in London or in Dubai. The choice was easy. Dubai has everything I need: easy access to large growth markets, an excellent infrastructure and comfortable lifestyle. Dubai International Airport is one of the best in the world.”
Shankar’s case is made by legions of bankers and global firms that choose to place their regional offices in Dubai. Many emerging market companies do not see Dubai as just a place to put a Middle East headquarters. His Excellency Mohamed Alabbar, Chairman of Emaar and Dubai Events Council, and a man who has been instrumental in building Dubai’s soft infrastructure in his post as the youngest head of the Dubai Department of Economic Development, knows about the expansive nature of the Dubai “region”. He compares Dubai with other global hubs, noting that “neither New York nor London have a neighbour with a population of 1.2 billion, but we do”, referring to India. “If we count the Middle East, that becomes 1.5 billion,” he adds.
His Excellency Alabbar travels constantly, usually by corporate jet, but his travels are taking him across “the New Silk Road” or what HSBC’s Stephen King calls the “Southern Silk Road”. Of the US$16tn of world trade annually, more than 25 per cent of that is South-South, according to the recently published 2013 United Nations Human Development Report. Twenty-five years ago, it barely reached 10 per cent. The title of the UN report, The Rise of the South, is evocative.
You can see it in Dubai, the emerging super-hub of this new South-South trade corridor, and a city-state vying to become an offshore renminbi trading centre. There are more than 2,500 Chinese firms registered in Dubai and more than 250,000 Chinese visited Dubai last year. A massive retail complex, Dragon Mart, acts as a virtual China offshore trade centre, and the Burj Al Arab hotel is packed with Chinese visitors.
Trade and tourism has dominated China-UAE ties, but Hongbin Cong, Managing Director of Invest Dubai, Falcon and Associates, sees potential growth for Chinese infrastructure companies in the UAE as the country continues to grow. Despite rapid growth in the relationship, Hongbin sees plenty of room for more. He notes that three of China’s top five banks have set up in the Dubai International Financial Centre, and more Chinese companies are seriously looking at ventures in the UAE.
Many Chinese already see Dubai as a hub for Africa. Part of the reason is Dubai’s connectivity via Emirates Airline. Pasha Bakhtiar, Managing Partner at Willow Impact, considers Emirates key to his business of investing in Africa. On his regular flights to Africa, he estimates that one-third of the passengers on board are Chinese. “Dubai plays a very interesting role in the African renaissance,” says the Geneva-placed banker. Firms looking to do business in the continent often start by creating a hub in the Emirate to take advantage of the air links, infrastructure and strong laws and regulations. Dubai’s soft infrastructure of top-notch schools and secure family lifestyle also attracts him and others, he adds.
But it’s not just Chinese transiting to Africa. There are more flights from India to Dubai than India to the rest of the world. Emirates has virtually become the national carrier of India and Dubai, as the joke among Indians goes, has become “the best city in India”.
To many Western investors, the rise of emerging markets has been seen as an investment opportunity, a chance to capture a bit of alpha in a beta world. For Western firms, the growing middle classes from Africa to Asia – urbanised and wired – have become a source of future growth.
That’s why traders and investors and bankers from Africa to Asia, to even, increasingly, the Americas are saying: “Meet me in Dubai.” This might be the new catchphrase of this South-South revolution transforming our world.