Alabbar cool on agency laws
The chairman of Dubai’s Department of Economic Development, says multi-nationals should be free to change their local partners if they don't perform.
Mohammed Alabbar, chairman of Dubai’s Department of Economic Development, has joined the debate over agency laws, which give local companies the right to represent international brands in the local market exclusively.
Asked in an interview with ITP.net last week what he thought of the decades old system, Alabbar, who is also chairman of Emaar Properties, replied: "How can you protect somebody with a business that’s not his?"
“If I do a good job, I should stay your distributor. If I don’t achieve my targets, you should go and look for somebody else.
Many people agree with Alabbar, but his views aren't shared by everyone. Many large family businesses have been built on agency agreements, which are often the only way into the local market for multi-nationals.
Once an agency agreement is signed, however, it is virtually impossible for the multi-national to terminate it or appoint a second business partner, regardless of how the local agent is performing.
Critics of agency laws see them as anti-competitive. Defenders say they prevent price wars and allow the local partner to invest in service and support.