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For far too long the internet and the Middle Eastern business world have been strangers to one another, but with diversification firmly in the mindsets of chief executives, online attitudes are rapidly changing. James Bennett Google’s Omar Hijazi, the CEO of online marketplace Tejari, and discovers why he is determined to install a regional digital legacy

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By  James Bennett Published  August 6, 2006

|~||~||~|If the internet and the Middle East were school children they would almost certainly be in the early stages of friendship. They would interact together to a minimum, maybe share a few classes, play ball at break time, and even have a select few mutual friends, but they would almost certainly still be unsure of one another. In other words, as Omar Hijazi, CEO of online marketplace Tejari says, regional and local companies still fear business online. But if there is one man who is determined to transform the Middle East mindset it is him. Since taking over the Tejari throne just over two years ago from Sheikha Lubna, now Minister of the Economy and the only female in the UAE cabinet, after doing a stint of consulting work for the region’s largest online marketplace, the Silicon Valley experienced and US educated Hijazi has driven the business to some headline grabbing results. In just six years of operation the company has facilitated US $3 billion (AED 11 billion) worth of business between members, capacity has increased to handle up to 70,000 more businesses through its tie-up with the Dubai Department of Economic Development (DED) and its 2005 revenues rose 25%, while its profits tripled. “Over the next two to three years we’re planning to double our revenues and that’s based on expanding our portfolio and also our regional footprint,” says the Tejari chief executive. However, not only does he want more growth in the business, but also more growth in activisation (getting businesses connected to online services) as well as spreading general corporate awareness that the internet can boost inter-regional as well as international trade — all for the benefit of future generations of Middle Eastern businesses. “It would be very easy just to go get the buck-shove eBays and Yahoos to come in and do everything for us but then what would we have? We would have nothing. What would be there for the next generation? We’ve built it all here in the Middle East, built it a little differently for the Middle East and it can be a legacy,” he says. “It’s just a different way of thinking and right now things are being built maybe not for this generation but for the next,” he adds passionately. He may be at the top of the corporate tree and the business maybe running at a healthy pace, but murmurs that it is still firmly controlled and funded by the Dubai government (His Highness general Sheikh Mohammed bin Rashid Al Maktoum, UAE vice president and Prime Minister and ruler of Dubai, who initiated the business) still continue to circulate in the media. The Arab-born CEO, however, is quick to dismiss the allegations that the authorities make all the decisions. “We’ve been running purely on retained earnings for the last three years and right now we’re in a healthy cash position and we fund our own investments. That will be the case as time goes on. We have laid a three-year plan and we have no external cash coming in. “The government don’t make the decisions. Naturally they are still our biggest customer and we bend over backwards to serve them but right now we’re independent.” Rumours aside, by using his top-level US management consulting experience, Hijazi is determined to continue to drive the business’s autonomy forward and ensure that the Middle East catches up and takes full advantage of all that e-commerce can offer. Not only that, he is also a globe trotting ambassador delivering keynote speeches around the world calling for foreign investors to tap into the region’s potential. At a recent US conference and alongside former chairman of the US Federal Reserve, Alan Greenspan, Hijazi said that foreign investment was the key to long-term viability. “As someone who joined Tejari from a US corporation, I am convinced that more American decision-makers need to be made aware of the commercial opportunities that exist in Dubai and the larger UAE market,” he says. Driving up awareness and spreading the word on the benefits of having a workable trading online presence, however, is Hijazi’s first love. “Why not have an online portal where you can engage and have it act as another channel for you to find more business connections or find more business? It’s that simple,” he says in his own Americanised twang. “People fear the internet here. Only 15% of customers who buy online use a credit card, the others use COD (Cash on Delivery) so having more companies out here doing this is essential. “Maybe there is more competition, but it reinforces that this is a valid thing and it’s not some anomaly. We are doing the right thing. We’re breaking down that resistance, pushing for laws, reinforcing the fact that electronic transactions are as good as paper transactions and with that people are becoming more confident,” he says. “Things will evolve, we will see more active competition, but we will also see more active adoption of e-commerce and there’s plenty of room for more players,” he adds. One way to break down the region’s e-reluctance, not only in the Emirates but also across the Middle East and Africa — where Tejari plans to spread its wings during its next growth phase — is through awareness campaigns and partnering with large telecoms operators including Etisalat in the UAE, Orascom in Egypt and Omantel in Oman, says Hijazi. With internet penetration still low across the region (see box) compared to the Middle East’s more e-literate neighbours such as Europe and the US, however, he and the Tejari team have a tough job on their hands. “Naturally you’re going to be dealing with suppliers who aren’t even on the internet so we need to know the telecom providers and target that audience with them and get them connected. “We’re doing some joint promotions to incentivise businesses to come onboard, and we’re doing an e-literacy programme with the Dubai government to promote the internet and e-commerce and get people more excited about being online.” The link up with the DED, with the tagline ‘knowing more people, know more business’, is one method Tejari is using to draw in the e-innocent. The scheme allows any company that registers for a business licence to automatically receive a Tejari account linking them directly to become part of a national directory of businesses, have an electronic showroom where they can display their products or services, and exchange trade leads and send enquiries if they are looking for a particular category of goods or a commodity, for example. Tejari has also partnered with several universities and encouraged private sector volunteers to, as Hijazi says, “help the barber take digital images of his shop, put it in the showroom, write up an editorial and get them online”. One of the skills Hijazi has is the realisation that not everyone will stick to using the net for the benefit of their businesses and that a certain amount of ‘e-lapsing’ will take place. “What will happen when 50,000 companies come online, will all of them use it? Probably not, but at least you’ve thrown them into the pool, and now you’re helping them swim and hopefully they’ll start loving it. “Without that push and if we do it one company at a time, we’ll be here ten years from now talking about whether we had 10% or 20%, so why not just do it all. Let’s just get all of the Middle East on the internet and let the ones who take advantage of it prosper.” A large part of Hijazi’s role is taken up with talking about and encouraging e-procurement, a term that the Middle East business world has also struggled to understand, but is slowly adopting as time ticks by. “I try to talk to people about how things are a little different here. In the US, for instance, people think of e-procurement as saving money and doing things a little more efficiently online than you would on a paper basis. Here it’s very different. You’re talking about government policy, government transformation, how things are governed, bilateral trade and e-literacy because e-procurement affects all of those.” One of the “differences” Hijazi mentions is how Middle East governments, with the UAE cited as a specific reference, use online services. The Tejari CEO says as there is such an abundance of wealth in the region that the internet is a crucial tool to preserve anti-corruption, ensure transparency, monitor e-transactions and to manage the use of funds that flow through the region faster than anywhere else on the planet. He adds that to ensure a totally transparent e-environment Tejari is continually working on policy and pushing for a tightening of existing legislation and regulations. “We do a lot of work to promote legislation to enact e-transaction laws that make an online transaction as good as a paper contract,” he says. “Sheikha Lubna, my predecessor and I, are pushing for a general law for the UAE, so we’re out there trying to change legislation to make online transactions a reality. By the end of the year we will hopefully have a law covering all the Emirates.” Not only are laws changing, attitudes towards operating online are also rapidly switching tack throughout the region. The realisation that black gold is slowly but surely drying up is driving the need to look at alternative revenue streams. Hijazi believes Tejari’s “simple business model” can take advantage of this trend by spreading across the Middle East, Africa and Asia creating a self-sustaining platform for businesses in the region to trade with each other and their foreign counterparts. “Have you seen the movie Syriana? It talks about what will happen when oil runs out. Having created something here that’s self sustaining, that will get you past the oil industry I think a lot of these companies are being built with that similar plans in mind. I think Tejari is being built with that in mind, to last the ups and downs of the oil cycle and oil economics. “For Sheikha Lubna it was starting out and working out all the kinks, now it is about taking on this model, replicating it across the region and making it successful.” There is still a long way to go to bring the Middle East business world up to speed with Western online standards, so with Hijazi at the helm let’s hope the school children play together a lot more in the future.||**||

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