Sheikh Zayed Road Dubai |
UAE (United Arab Emirates), a federation of seven countries
has a population of just about 9 million out of which over 85% are expatriates,
yet there is a label industry that is growing steadily and is attracting
interest from global suppliers all the time. At the start of this millennium the
number of label printers in UAE worth the mention was less than 10. The number
of label companies has been rapidly growing ever since. Those were the days when
Industrial growth started seeing an upswing in UAE. The number of companies
from India who started to set up shop in the UAE was also growing. Indian label
printers who were ambitious to go global started to make efforts to use UAE as
a gateway to the world of international business. The then Finance minister
(later Prime Minister) Dr. Manmohan Singh’s economic liberalization programs
had become the catalyst in aiding the Indian entrepreneurs’ aspiration to be
called a multinational!
Dubai has always been the face of UAE even though in terms of
area it is just less than 5% of the of the total of 83,600 km² area of UAE
(The whole of UAE in terms of area is smaller than the small state of Meghalaya
in East India). The largest emirate (or country) in UAE is Abu Dhabi at 67,340
square kilometers, yet it is Dubai that is recognized as the face of UAE. Dubai
has a population of 2.7 million that, if not already there, is inching towards
a figure twice that of the population in Abu Dhabi. Surprisingly the percentage
of women in Dubai is just 31 % and men 69 % according to data available as of
2014. This is largely due to expatriate population who, leave their families
back home and travel to UAE for gainful employment. The gender mismatch is also
similar in other emirates. UAE is a federation of seven emirates, and was
established on December 2, 1971.
The constituent emirates are Abu Dhabi (which
serves as the capital), Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah and Umm
al-Quwain. UAE is a major international tourist and business hub. It has one of
the highest per capita incomes in the world at nearly $25,000 USD. UAE
has approximately 10% of the world's total known oil reserves, 90% of these oil
reserves are in Abu Dhabi and only about 10% of these are in Dubai. UAE is
not anymore solely reliant on oil and gas revenues. The oil sector
contributes about 30% of the country's GDP. Lead by Dubai the trade,
tourism, real estate and construction are large contributors to UAE economy.
Sometimes one wonders how a country with population and area less than most big
cities in India, continues to attract such fervor for tourism and investment.
Indians form over 25 % of UAE population. With the country being home to
between 50,000 and 60,000 Indian companies, today India is UAE's largest
trading partner.
The label industry in UAE is facing a more or less similar
situation as in India. The market keeps growing and the number of printers also
keeps on increasing, thereby translating into intense competition and lower
margins. Being a federation of emirates or countries with low population, it is
actually the exports that are driving growth in labels. From being a trading
distribution centre, UAE has transformed to be a manufacturing hub selling
globally. The immediate access to Middle-Eastern and African markets is the
starting point for all label companies and as they step up their capabilities, from
here they venture into Europe and beyond as well. The glitter, liberal life
style, cosmopolitan character and excellent infrastructure of Dubai and the
rest of UAE, has always tempted the ambitious investors to establish presence
here. According to recent Smithers Pira report, total printing revenues in the
Middle East and North Africa (MENA Region) were $17.6 billion in 2012, and are
forecast to grow 7.2% per annum reaching $26 billion by 2018. On trying to
reach an approximate market size in the region; considering labels to be 20% of
the total print industry, the size of label industry in this region in 2018 is
estimated at $5.2 Billion. Pressure sensitive labels being a little over 40% of
the total labels industry one can estimate the market size of pressure
sensitive labels in the MENA region in 2018 to reach approximately $2.08
Billion.
UAE Label industry is largely, either owned, run or managed
by Indian expatriates. This
market is divided into 3 distinct segments; (A) the
top end that has 5-6 very big players. (B) The big players that are the middle
segment and (C) The not so big players who are either testing their luck or are
the offshoots, ex employees of A & B trying to emulate their ex-employers.
As is always, the middle segment suffers the most as they are continuously held
back by the competition from the smaller players making it difficult for them
to invest so as to get into the top segment due to lower margins and unviable
return on investment. The niche or top segment has the least competition but
delivering to customer’s expectations and retention is in itself a big
challenge that the top players keep attending to so as to meet the demands of
their high end customers. Therefore the increase in number of printing
companies, affects largely within the segments they operate in. The established
top players in UAE include; Emirates Printing Forms in Abu Dhabi, Kimoha in
Jebel Ali-Dubai, Pacman CCL in Alquoz-Dubai, Futurepack in Sharjah and GulfAdhesive Label Factory in Ajman. In recent times established Indian companies
who have invested in UAE include Gulfscan, Prakash Labels and Ajanta packaging.
Kimoha Factory in Dubai |
Vinesh Bhimani Managing Director Kimoha |
Gopalan Nair & Chinnadurai at Future Pack |
The market is getting crowded”. Chinnadurai at Future Pack
says, “New entrants are just one part of the story affecting margins, online
auctions have started to surface in UAE also, this will be another headache!”
he further added, “We are trying to replace old machines with new
technologically advanced equipment to produce cost effectively.” Sachin Arya at
Ajanta packaging says, “Prices have become challenging and payments are delayed
making it difficult for us to operate. More and more Indians are wishing to
locate outside India and to succeed; they are under compulsion to sell by
undercutting prices”. Chinnadurai feels that if the trend goes on like this it
will not be long before we see some people exiting this business.
Assad
Antonios heading Abu Dhabi based Emirates Printing Forms says, “Cost of living
in
UAE has gone up and with new printing companies coming up in Africa the
market place is shrinking bringing pressure on smaller players to exist”
Increasing number of printing companies, bring with it the need for more
operators whose demands become difficult to meet as they wish to bring their
families to UAE as well. It is becoming very expensive to hire operators. One
wonders how the new entrants with just one machine and that too of a lower end
can survive in an economy where per capita income is one of the highest in the
world and the market appears to be almost saturated. However still, most big
printers have said that there is definite growth in the market. The UAE market as mentioned earlier in this report is
dominated by a few large printing companies. Dubai based Pacman CCL Is headed by
John Dawson and has been in the news for their recent takeover of Mumbai based
Super labels. The company is a joint venture between the Albwardy group and Geoffrey
Martin lead CCL Label, the world’s largest label company. They have units in
Dubai, Oman, Egypt, Saudi Arabia, Pakistan and now India. Jebel Ali
headquartered Kimoha headed by Vinesh Bhimani has been a front runner and
always striving to excel. Abu Dhabi located Emirates Printing Forms has been
another success story. They have grown from just being a computer forms
manufacturer to a huge enterprise manufacturing Continuous forms, Self adhesive
labels, document security printing, wrap around labels on wide web machines,
EDP products, Shrink Sleeves, IML, Cut & Stack Labels, etc. Assad Antonios
of Lebanese descent has been heading the company for last 26 years. He is proud
to mention that this company, growing at a steady rate of 10% per annum, now
operates out of over 100,000 square feet shop floor space with 140 employees.
He is happy that due to respect given to all employees and creation of a family
like atmosphere, the company has very low employee turnover. Sharjah based
Future Pack is a part of the Saudi Arabian ENPI group which in turn is a part
of the Saudi Printing and packaging Co. (a public listed company in Saudi
Arabia). The company produces a diverse range of paper and plastic packaging. Chinnadurai
as their Vice President Operations at Sharjah has lead the company from just
labels to even production of specialized labelstocks and innovative label
products.
Assad Antonios of Emirates Printing Forms Abu Dhabi |
The Label industry in UAE started from Dubai then spread to
other emirates like Abu Dhabi, Sharjah and Ajman. With real estate prices
escalating and cost of living in Dubai becoming unaffordable, label printing
started to come up in other Emirates like Ras Al Khaimah, Umm al-Quwain and
Fujairah. Today the label printers are spread over in all emirates. However it
is pertinent to note that it is not the domestic sale or locational advantage
that makes them locate their units in far off emirates rather than in Dubai. It
is actually the need to produce cost effectively with lower overheads that
takes them to other emirates. The growing market at this manufacturing hub has
made Tarsus the organizers of Labelexpo series of events around the world to
invest in Gulf Print and Pack Dubai. The show has become a premier event in
Middle East Asia and printers from all countries in the region make it a point
to visit the show. This year’s edition, as per their official website has over
200 exhibitors. Registering a 26.7% increase, 11918 visitors from 110 countries
visited the last edition of the show. The interesting part of UAE is that the
local governments recognize the need for exporting and increasing their share
of global trade rather than relying on the limited and fast depleting oil
reserves. They have transformed the UAE economy from oil revenue based one to
one based on global trading, manufacturing, tourism and real estate development.
It is evident that mindset of rulers of the country will make manufacturing to
prosper and with that, the market of labels in UAE will surely grow.
Written by Harveer Sahni, Managing Director, Weldon
Celloplast Limited, New Delhi-India February 2017
The article maybe published with the permission of Narrow WebTech Germany giving credit to them and to the author
For advertising enquiries please email to; harveersahni@gmail.com
For advertising enquiries please email to; harveersahni@gmail.com
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