UAE still the main hub for re-export sales

30% of IT products that enter the UAE are reshipped to markets such as Iran and CIS

Tags: IDC Middle East and AfricaUnited Arab Emirates
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UAE still the main hub for re-export sales The UAE remains a hub for suppliers and importers wanting to target some of the most inaccessible markets in the world. (ITP Images)
By  Andrew Seymour Published  January 19, 2010

Three out of every 10 IT products shipped into the UAE end up being re-distributed to other markets, such as Iran and Africa, according to IDC.

Although the re-export market has slowed down in the past 12 months, it still represents a significant percentage of overall transactions in the UAE.  

"Our analysis suggests nearly 30% of the products that enter the UAE are not meant for the domestic market - that is a huge number," said Jyoti Lalchandani, VP and regional managing director for IDC MEA and Turkey.

Based on IDC's estimate that the UAE IT market was worth around US$4.1 billion in 2009, the value of re-export sales could be as much as US$1.2 billion a year.

Iran, Central Asia and Africa remain the primary destinations for products resold from the UAE, according to Lalchandani, while CIS countries such as Kazakhstan have also come to account for a decent chunk of business.  

Despite a reduction in re-exports contributing to a 15% slump in UAE-based IT spending last year, IDC believes the UAE - and Dubai in particular - is still highly competitive as a trading hub due to its proximity to key markets.

"It is easier to get a product in from Europe to the UAE and back into Africa than it is to get a product from Europe into Africa," said Lalchandani. "And from a cost perspective as well, [suppliers] need a lot of big distribution companies that have been set up here to cater to both Iran as well as the African continent."  

That said, sub-distributors and re-exporters in Dubai have expressed fears in the past that business could be jeopardised should vendors ever begin to construct proper in-country distribution channels in under-developed markets.

Lalchandani believes those are valid concerns, but suggests the UAE re-export market is more likely to redefine itself if they were to materialise.  

"Once vendors have set up in-country channels in Africa or the CIS - or if the Iranian market opens up for example - then we see the UAE primarily becoming a hub for the Gulf," he explained. "Over time we believe that re-export [sales] all depend on how quickly those markets develop and open up to in-country distribution."

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