Felix Neugart – CEO, German-Emirati Joint Business Council, UAE
Felix Neugart, CEO of the German-Emirati Joint Business Council in Dubai, highlights the typical characteristics of German companies in the region and their contribution to local development.
Having held a multitude of positions in Germany and in Europe, what motivated you to leave Germany and Europe behind and become CEO of the German-Emirati Joint Business Council here in Dubai?
“As it is a legal requirement to have a local partner, finding the right partner in the UAE for an SME is a challenge to be taken seriously.”
There were two reasons that motivated me to come to Dubai and lead the German-Emirati Joint Business Council. Firstly, it represented a professional challenge. After being with the association of German Chambers of Commerce and Industry (DIHK) for a decade, I felt like taking this position would be a good opportunity to go to a foreign country and engage in a demanding, challenging and interesting place such as Dubai!
Secondly, I must admit that I have a personal history with the region at large. I worked as a political consultant on the Middle East in my previous career and also happened to study Arabic language which I read and to some extent speak. Altogether it was an opportunity that catered both, personal and professional interests of mine, hence why I gladly accepted the offer.
How would you define your mission and ambitions as head of the council?
As a council, we have three main tasks. We are the official representation of German industry. As such we closely collaborate with the embassy and other entities in the UAE to foster German business interests.
As a membership organization with over 500 member companies, it is also our ambition to strengthen and enhance the German-Emirati bilateral relationship. I would like to highlight that, as an organization, we are unique in the aspect that we do not purely promote German national endeavors but rather try to create win situations for both countries. This is why we are called the “German-Emirati Joint Council.” This is also reflected in our organizational structure; half of the board is German and the other half is Emirati.
Moreover, we also provide important services to support German companies in the process of setting up their businesses in the UAE; especially in market access and developing their business here and in the wider region. The German business landscape is dominated by SMEs and they often require some support in setting up their business. Frankly, the German SME sector is quite special as it very internationalized in global comparison. Nonetheless, we and the other affiliates around the world usually come in to provide information, help with registration process, finding business partners and so forth.
What is the role the UAE plays for the German companies active in the region?
Most of the German companies—MNCs and SMEs alike—have their regional HQ in Dubai; I would guess at least 70 to 80 percent. They use Dubai as a hub to cater to the entire GCC region plus Iran and Iraq usually. Many even control their operations in Egypt and wider Africa from here. Some companies even choose to centralize their management operations for India in Dubai, however, I believe this is a minority.
To what extent do German companies influence the local development?
A typical aspect is that German companies usually do not only sell their product but packages which include maintenance, services and training surrounding their products. Although manufacturing as such is typically still carried out in Germany, for the surrounding services, local talent is typically hired. Most of these German companies emphasize local talent development as part of their commitment to the market, an aspect also highly appreciated by Emirati customers.
What are the major challenges and pitfalls that German companies have to overcome when entering this region?
The most important aspect is to really understand the market. Every foreign market is different, but especially for these SMEs from Germany it typically makes sense to initially learn to cope with a new market within the EU, then in a non-union European country and afterwards engage in the ‘real’ international business and come to the gulf region. In that order, the companies have usually accumulated extensive cultural adaptation and internationalization expertise to understand and succeed in this market.
Moreover, as it is a legal requirement to have a local partner, finding the right partner in the UAE for an SME is a challenge to be taken seriously. On one hand, it is vital for these companies to have a partner which guides the company, navigates the local regulatory environment and opens doors in the local community. On the other, the company must make sure this partner is reliable and a potent enabler because the wrong partner can be the breaking point for the internationalization endeavor.
Oil and gas projects are usually of significant scope and scale and require suppliers to have considerable financial capabilities. Given that the typical German company is an SME, how are they able to bypass size limitations and participate in such projects?
This is indeed a challenge. The council tried to tackle this issue already in recent year by giving several EPC seminars. German companies engaged in EPC typically do not provide turnkey solutions, also because the typical German company is in fact an SME. Many of the large projects are taken by Chinese or Japanese companies which unfortunately prefer suppliers form their respective home countries. Despite that, many German companies are successful by providing innovative niche solutions, which are increasingly significantly in the digital sphere. One example would be a German software company, which designed a program that larger companies use to train their staff. The program can simulate the build-up and operation of an oil rig, or the construction of a refinery for instance, thus allowing companies to train their staff without being exposed to the risk of being at the site handling material worth thousands or millions of dollars. These are the kind of contributions in which German companies excel.
To support the market access of German companies in this sector, we are part of the global AHK Oil and Gas Cluster. Within that framework, we are organizing a network event in late April at the Hannover Fair to provide a platform for networking and to showcase the different business opportunities worldwide.
Do German companies typically make a long-term commitment to the country or is it rather an opportunistic approach?
One of the questions I am often asked is why German companies are slower in investing in arising opportunities in comparison to other nations. The reason is simple; most German SMEs are family businesses, therefore taking investment decisions are coming directly by the owner who is minding that he is taking a risk towards his life accomplishments. Once the decision is made, however, these companies are as committed as a business can be and will usually stay in the country for a long time.
How do Emiratis and local businesses perceive German companies in the UAE?
Emiratis consider German companies to be loyal partners with a long-term commitment to business, country and region. Many of the German companies you will be able to find here, are not only businessmen here for pure business purposes, but are passionate about the Arab region and culture.
What do you tell German companies considering entering the UAE?
We openly communicate that the region at large has a huge potential now and in the future. Being in the UAE specifically is strategically advantageous as it provides access to the entire region. A region full of business opportunities and unmet needs which can be catered to by German companies. Frankly, for any company with the ambition of achieving global success, it is not feasible to not be active in this region.
Is there something you think German companies could learn from the Arab world?
I am confident that German companies –and Germans—can learn from the stability of relationships present in business in the region. As a newcomer, it does take time to understand the business culture and ultimately become an integral part of it. But once a certain threshold is crossed, the people here become highly loyal partners in business for many years to come. These relationships often cross between professional and private life and I personally think that this is an attractive aspect of being active in this region. Overall, one can learn that patience pays off.