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The Arabian Peninsula constitutes a wealthy market with a lot of potential for the Estonian defense industry, with more than a few companies having a foot in the door in the region already, Jaan Reinhold, Estonian ambassador in Abu Dhabi, tells Postimees in an interview.
You have served as ambassador to the United Arab Emirates (UAE) for over two years. What awaits Estonian businesses in the region?
The market is unfathomable in terms culture, the amount of money in it and the possibilities it offers. Unfortunately, our companies seem to be under the impression that their products and services will automatically fetch a good price here and bring endless business opportunities. While this is the general mindset going in, only the best get as far as signing a contract. The UAE has the world’s best solutions created by the world’s top minds. The customer knows the meaning of quality here. The market only has room for the best products and solutions. This means that businesses looking to secure a foothold here and indeed the entire Arabian Peninsula region need to be extremely goal-oriented and persistent.
Another key factor is having a solid marketing budget. I have been told that software companies’ annual marketing budgets start at around €200,000 in the UAE. This means having a company representative on location, as well as a local representative who speaks Arabic and preferably has experience and a network of contacts in the sector.
References from neighboring countries go far in the region. While Arabs find it interesting if someone has worked with the Finns or Germans, because Europe is highly regarded, it is not enough to build the kind of trust needed to go into business together. But if you can say you’ve worked with the Saudis or Oman, this can spark real interest in potential partners. As a characteristic feature of local culture, an Arab will consider your product or service suitable if it has worked for their neighbors. Expect a thorough background check with said neighbors, of course.
Which sectors have business potential in UAE or neighboring countries?
Three above all: IT, defense and the food industry. Digitization is a priority for all countries in the region. No matter what kind of business one wants to pursue, the digital component is key, which is where our reputation, solutions and flexibility in product development really pay dividends.
The region is a complicated one in terms of security, with countries sporting considerable national defense budgets: around 6 percent of GDP for the UAE and allegedly more for Saudi Arabia (8.4 percent). They are among the biggest procurers of weapons systems in the world. Our companies can offer certain components. It is admirable what Estonian defense contractors and the Estonian Defense Industry Association have achieved in a short time. A success story and no mistake.
As concerns food, the United Arab Emirates wants to be self-sufficient when it comes to main food components by mid-century, looking at climate trends. It sounds like something that would take a miracle here, in the middle of the desert. Especially if we take into account that the UAE currently imports over 80 percent of food products. That said, they are already growing vegetables that are popular in the region. Saudi Arabia has the world’s largest dairy herds living in superbly air-conditioned cowhouses.
But the UAE is not just interested in the export of food but also new technologies. Estonian producers can successfully offer organic foods and relevant technologies.
Which Estonian food products can already be found here?
There are a few Estonian products one can find. The shops carry Estonian potato chips, waffles and fish products, as well as cheese curd snacks (kohuke). Estonian company Foodstudio’s ready-made stocks won the most innovative organic product award at the major Gulf Food fair two years ago. Gulf Food is the second largest food fair of its kind in the world, and I’m glad the size of the Estonian pavilion has doubled for this year, giving more producers the chance to be here.
What could be the trump card of Estonian companies in the region?
There is an acute shortage of interoperability when it comes to the digital domain – how to render e-governance components compatible. This is where Estonia can rely on and share its extensive e-state experience. We can take the example of [Estonian software house] Nortal that has been active in the region for almost a decade and has built over 50 percent of Estonia’s digital architecture. In my experience, virtually every digital affairs decision-maker in the UAE is familiar with Nortal. Another trademark of Estonia that helps sales is that if the Estonians do something, they do it well. It matters to Arabs and is something they tend to remember.
To what extent can participation in the Dubai EXPO help Estonian entrepreneurs get a foot in the door?
Participating in the EXPO creates opportunities for our companies. It is the biggest EXPO to date, with 192 countries taking part. The UAE has clearly suggested that attending the EXPO can open doors for companies of participating countries. It’s as simple as that.
How big of an interest did the Saudis take in the Estonian defense industry?
The Saudis are interested in effective national defense, which for them means bringing the entire manufacturing cycle on location to avoid complicated supply chains. This means new possibilities in the field of defense.
Another important aspect is that our defense industry companies do not offer lethal weapons or strictly military solutions. Many products can be used for civilian solutions, such as evacuation in case of fires or natural disasters.
The Saudis, who are paying more and more attention to environmental topics, were interested to learn that our tracked vehicles can be used to plant trees. And we are not talking about pine and fir here but mangrove forests.
I imagine a lot of people think of the Arabian Peninsula as this problematic place. How do things look in UAE that hosts the Estonian embassy in the region?
The UAE is working hard to be known in the world as a tolerant country sporting an open economy, not just as a union of emirates producing fossil fuels. They have a very strong talents policy, looking at the level of income and opportunities on offer. Research and development is also prioritized. They want to contribute more to education and are headhunting for the best professors in the world.
They have lofty climate ambitions. The UAE is poised to become a notable hydrogen exporter in the future. The UAE has a business accelerator for hydrogen-based solutions it welcomes other countries to join. The hydrogen will be based on solar power that is very cheap to produce in the UAE.
One stereotype regarding countries on the Arabian Peninsula is the third-rate role of women in society. Can we see change happening?
Indeed. Half of the 40 MPs in the United Arab Emirates are women. (Half of delegates are elected and half appointed in the UAE – J. P.) An increasing number of women are in charge of ministries and state agencies, especially in forward-facing fields. A similar process is underway in Saudi Arabia. Women are highly educated and consciously promoted in public service. Many important changes have taken place in terms of women’s rights and opportunities. If just five years ago, Saudi women had to go to the movies in Bahrein, they hold high-ranking public offices and are in charge of strategic fields today.