The Business Year

Julia Malofeeva

CEO-MEAI, ARC Middle East

Thierry Paresys

Plant Manager, Saverglass

Glassware manufacturers discuss the current operating environment.

How is Ras Al Khaimah for export-oriented companies?

JULIA MALOFEEVA Ras Al Khaimah is excellent for exporting. There is administrative support, an export market, rule of law, and no corruption. However, increasing demand in the Middle East is difficult because, in our market of tableware, consumers do not care much whether it is porcelain, clay, or glass; they either just love or dislike it. However, it is our job to find a way to reach out to our consumers, and this is the most difficult thing because there are beautiful and cheap porcelain and ceramic options. We need to differentiate our product. The glass tableware market is not a rapidly growing segment; in Europe and developed countries, it is not growing at all. In this region, because the population is so young, it is slightly different. In Saudi Arabia and Egypt, for example, there are many new families, and in turn, first-time buyers of homes and glassware. Where we have seen great success is in sets, whereby people purchase dinner sets as gifts as or for a first-time home buyer. We are a branded product; we are well recognized in the region as well as in China and Russia. People in the GCC care about brands, more so than other places, and they can afford premium. However, if we think about the growth driving the volumes, companies need to be in the mass entry price point segment and that is difficult to do from here. We can be competitive at our current prices. If we sell at current prices, we have to bring design, value, and something nice; those who are willing to pay for something nice will buy it.

THIERRY PARESYS All the bottles we manufacture here are for export outside the GCC, for example to the US, Australia, and Europe. We typically use Jebel Ali Port in Dubai for our exports, and Ras Al Khaimah is not far from it. We use containers to ship our products, and there are excellent shipping lines from Jebel Ali to all the major markets in the world. Overall, the UAE is a fantastic location for logistics. We do use Saqr for certain raw materials; however, at the moment the port can only handle 20-ft containers, and we need the larger 40-ft containers for our exports. Still, there are efforts underway to expand capacity. It would definitively be easier to ship our pallets directly from Ras Al Khaimah than from Jebel Ali Port. In addition, there is still further work to be done in the logistics sector by increasing the number of shipping lines from Ras Al Khaimah to other countries.

What are the main issues that manufacturers here typically face?

JM The gas price is the main issue. In our case, we have one of the most complicated businesses, which runs 24 hours a day and heavily consumes gas. Our glasses need to be polished by fire to be smooth. We use gas for the furnace and to finish glass surfaces. Therefore, any change or increase in gas prices or any change to the terms of gas consumption has a great impact. We have considered other forms of energy to reduce costs. However, it is difficult because we consume so much energy per piece of our projects that alternative lines such as solar panels would not be enough to run our offices. As an emergency backup, we can use fuel oil, but that pollutes more. Even if we could use electricity, the electricity per kilowatt hour is no cheaper because here it comes from gas.

TP One issue is VAT. Even though the rate in the UAE is low compared to other countries, when starting from zero, it is significant for everyone when their living costs go up by 5%. I am confident that eventually people will adapt, though it could have an impact on the country’s manpower costs. Energy cost and stability are very important for our industry. In the past, we suffered from big deviations in electricity and gas prices. Therefore, we hope to have consistency and reliability in those critical areas. The last factor is the dollar exchange rate. Luckily, the current trend increases our competitiveness with euro-linked markets.



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