UAE is central to HSBC’s global SME strategy

By Babu Das Augustine for Gulf News

Global banking giant HSBC sees the UAE as central to its small and medium enterprises (SME) strategy following a strategic review of its commercial banking and business banking, Stuart Nivison, Global Head of Business Banking told Gulf News in an interview.

HSBC’s commercial banking business is segmented into three areas based on customer needs such as large corporate, middle market and business banking. Business banking focuses on SMEs or companies that have annual turnover up to $50 million (Dh184 million).

In the UAE, HSBC is focused largely on internationally oriented SMEs. “We are closely involved with firms doing international trade. We help them with protection and finance. Another segment we are involved is overseas companies coming into the UAE and a third category is the UAE companies that are expanding overseas. We help them to take the banking relationship to new markets where they want to expand,” said Nivison.

The bank has identified a number of separate but linked indicators that are showing surging positive sentiment among its clients in the UAE. One of them is the overall optimism in the country indicated by the sharp increase in the purchasing manager’s index (PMI).

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The Future of Export Promotion (VIDEO)

Professor Michael Czinkota and former US ambassador Charles Ford discuss International trade, foreign direct investments and export in the past and the future of US Foreign Service and how American businesses are involved in the global economy.

Yes Virginia, the Ham Is Chinese (Part 3)

Another concern is more xenophobic.  Many Americans are worried about lessened American competitiveness and the rise of China. There were similar concerns about the wave of Japanese cars and the purchase of iconic real estate by Japanese investors in the 1980’s and 1990’s.  In fact, the success of Japanese brands, like Toyota, Honda, and Nissan, was mostly positive for Americans, particularly for consumers, as it was accompanied by new capital, more sophisticated domestic manufacturing, new product ideas, and, eventually,  improved competitiveness of American car companies. Now individual states in the U.S. have learned to compete to attract manufacturing and services company investment in their communities. No reason not to expand such activities into the agricultural sector as well.

Of even more interest is the reverse flow, where international investments have a spillover effect on home country markets. Why not eat Hunan pork with Smithfield ham during a picnic at the Yangtze river? What pork other than Smithfield’s should be specified when planning the Chinese  government-subsidized opening of  restaurant chains in Africa ? The Smithfield acquisition opens new markets both for the Chinese investors as well as for American ham. Such is the path of true globalization.

The recent meeting between Presidents Obama and Xi Jinping demonstrated, that the United States and China have more to gain from a cooperative, albeit competitive, rather than a conflict based relationship.  Given President Xi’s experience as a student living in Iowa, we can hope that he is instinctively more likely to be drawn to the value of a asymptotic relationship with the United States, rather than one based on abrasive disagreement.

One of the principal motivators for the deal from Smithfield’s point-of-view, was the ability to more successfully sell its products to the huge Chinese market. That such an approach can work is seen in the acquisition of European car-maker Volvo by the Chinese company Zhejiang Geely Holding in 2010.  Not only is Zhejiang looking to profit from the existing global business of Volvo, but it is also expected to help the brand further penetrate the Chinese market, the largest and fastest growing automobile market in the world.

This article is a part of a series written by Michael Czinkota and Charles Skuba. Read part 2 here.  Guest writer Charles Skuba teaches international business and marketing at Georgetown University. He served in the George W. Bush Administration in trade policy positions in the U.S. Department of Commerce.

Yes Virginia, the Ham Is Chinese (Part 2)

The result is economic growth at double digit levels for several decades and a rapidly expanding middle class.  This success has also led to new economic challenges as the expectations of China’s citizens for higher wages and quality of life have risen. China may well be approaching a tipping point for an economic  transition from being export focused to becoming  consumption-driven.  After  improving the world by manufacturing good basic products, Chinese businesses must now learn how to succeed through marketing and excellence.

Just as American brands like KFC, Coca Cola, Apple, Buick, and Pampers have learned how to successfully win over consumers worldwide, Chinese companies need to compete for brand preference employing more than a low price approach. Already, Chinese products are emerging as leading brands.  WPP’s 2013 BrandZ Most Valuable Global Brands research has 12 Chinese brands among the top 100 global brands. However, a closer look at this study reveals that the top Chinese brands are mostly successful in China alone, and in sectors where access by foreign firms such as telecommunications, banking and insurance, Web-based technology, and energy is restricted. Though there are many Chinese consumer brands, such as Haier, Tsingtao, Li-Ning, Lenovo, Baidu, Tencent, and Huiyuan Juice, marketing to consumers outside of China has not been highly successful for Chinese brands thus far.

Marketing guru Philip Kotler defines marketing as both an art and a science. Chinese firms have mainly concentrated on science, via price. Now they must become better at creating higher quality products, placing them in distribution outlets that Western consumers prefer, and promoting them with a direct appeal to Western emotions.  The best way to accomplish all this quickly is through the acquisition of Western firms with already established base of consumer preference.  Therefore, in addition to the establishment of new brands, we are likely to see a significant expansion of Chinese acquisitions of U.S. and European consumer goods brands in the coming years.

Is this a good thing? Acquisitions by foreigners tend to be accompanied by concerns. When U.S. giant Kraft acquired British Cadbury, there was worry about diminished  chocolate quality in the U.K. Now Americans (accompanied with much hamming it up by master comic Jay Leno) state that the Smithfield acquisition could lead to diminished quality and loss of American jobs.

Far from it ! The Chinese are not just obtaining products – imports and exports would have done that. Rather, the acquisition helps integrate China into the global economy, and contributes to its future branding success by delivering new connections, experience, capabilities and trust. The key benefits will be learning of both quality and marketing.

This article is a part of a series written by Michael Czinkota and Charles Skuba. Read part 1 here.  Guest writer Charles Skuba teaches international business and marketing at Georgetown University. He served in the George W. Bush Administration in trade policy positions in the U.S. Department of Commerce.

Global Marketing Conference at Georgetown University

Don’t forget to sign up for the Global Marketing Conference on “Trade Policy and International Marketing: Breakthroughs on the Horizon?” hosted by Georgetown University, the American Marketing Association, and the International Trade Administration of the U.S. Department of Commerce on March 14-15. The first day of the conference will be held at Georgetown University and the second day of the conference will be held in the Rotunda of the Ronald Reagan International Trade Center. Avoid late fees and register before March 1, 2013!

To view the program for the conference, please click here.

To register please click here.