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SOURCE: USDOC, International Trade Administration
SOURCE KEY: IT
PROGRAM KEY: IT MARKET
PROGRAM: Market Research Reports
UPDATE: Monthly
ID NUMBER: IT MARKET 111104782
TITLE: UNITED ARAB EM. - PLEASURE CRAFT - ISA9207
DATA TYPE: TEXT
END YEAR: 1992
UPDATED: 09/17/92
KEYWORDS 1:
| 9207
| ANTIBOYCOTT|COMPLIANCE
| ANTIBOYCOTT|LAWS
| BEST|PROSPECTS
| CC520
| COMPETITION
| DISTRIBUTION
| END|USERS
| ISA
| ISA9207
| MARKET|ACCESS
| MARKET|ASSESSMENT
| PLB
| PLEASURE BOATS AND ACCESSORIES
| PLEASURE|BOAT|ACCESSORIES
| SPORTING AND RECREATION GOODS
| SPT
| TRADE|CONTACTS
| TRADE|PROMOTION
| UNITED ARAB EM.
COUNTRY:
| UNITED ARAB EM.
| UNITED ARAB EMIRATES
| U.A.E.
| AFRICA, NEAR EAST AND SOUTH ASIA
| ANESA
| ASIA
| MIDDLE EAST
| MIDDLE EASTERN COUNTRIES
| MIDDLE EASTERN GROUP
| NEAR EAST
| NEAR EASTERN COUNTRIES
| NEAR EASTERN GROUP
| OPEC
| ORGANIZATION OF PETROLEUM EXPORTING COUNTRIES
TEXT
UNITED ARAB EM. - PLEASURE CRAFT - ISA9207
SUMMARY
This article is derived from a report titled: "The Pleasure Craft Market in
the United Arab Emirates, prepared by Anne de Souza, American Consulate -
Dubai. This article consists of 06 pages and contains the following
subtopics:
OVERVIEW
STATISTICAL DATA
MARKET ASSESSMENT
BEST SALES PROSPECTS
COMPETITIVE SITUATION
MARKET ACCESS
TRADE PROMOTION OPPORTUNITIES
ANTIBOYCOTT COMPLIANCE
FIRMS ARE REMINDED THAT THE EXPORT ADMINISTRATION AMENDMENTS OF 1977 AND
EXPORT ADMINISTRATION REGULATIONS (15 C.F.R. PART 369) PROHIBIT CERTAIN
FORMS OF COMPLIANCE WITH FOREIGN BOYCOTTS, INCLUDING FURNISHING INFORMATION
OR ENTERING INTO OR IMPLEMENTING AGREEMENTS. THIS DOCUMENT OR SUBSEQUENT
ASPECTS OF THIS TRANSACTION MAY INVOLVE CONDITIONS OR REQUIREMENTS
COMPLIANCE WITH WHICH IS PROHIBITED. VIOLATORS OF U.S. ANTIBOYCOTT LAW ARE
SUBJECT TO SEVERE PENALTIES INCLUDING FINE, IMPRISONMENT AND REVOCATION OF
EXPORT LICENSE PRIVILEGES. FIRMS ARE FURTHER REMINDED THAT ANY UNITED
STATES PERSON RECEIVING A REQUEST FOR THE FURNISHING OF INFORMATION, THE
ENTERING INTO OR IMPLEMENTATION OF AGREEMENTS, OR THE TAKING OF ANY OTHER
ACTION WHICH FURTHERS OR SUPPORTS RESTRICTIVE TRADE PRACTICES OR BOYCOTTS
MUST REPORT SUCH RECEIPT TO THE DEPARTMENT OF COMMERCE, IN ACCORDANCE WITH
15 C.F.R. 369.6.
INFORMATION CONCERNING U.S. ANTIBOYCOTT LAWS AND HOW TO COMPLY WITH THEM IS
AVAILABLE FROM THE OFFICE OF ANTIBOYCOTT COMPLIANCE, ROOM 6098, U.S.
DEPARTMENT OF COMMERCE, WASHINGTON, D.C. 20230, (202) 377-2381 AND FROM THE
OFFICE OF GENERAL COUNSEL, ROOM 2010, U.S. DEPARTMENT OF THE TREASURY,
WASHINGTON, D.C. 20220, (202) 566-5569.
A. OVERVIEW:
Over the past few years the UAE has developed into a popular base for
businessmen, tourists and industrialists alike.
Worldwide the UAE and Dubai in particular is becoming known as an ideal
location for trade investment, distribution and manufacturing operations, as
well as a first-class holiday destination featuring many of the finest
leisure facilities available anywhere in the world.
The sea-faring traditions of the Gulf are well known and even though
traditional sailing ships, dhows continue to ply their trade across the
Arabian Gulf, today's vessels are dominated by the power boats and pleasure
craft which have become very popular in the UAE. Given the coastline
attributes of this part of the world it is hardly surprising that
watersports should be such a popular past-time here.
A number of U.S. pleasure craft firms are represented in the UAE, such as
the Boston Whaler, Glastron, Bayliner, Chapparal and Larson, but U.S. firms
can still find capable businessmen interested in generating sales for
products new to this market. The water jet ski has become very popular in
the UAE and is a fast moving product line.
B. MARKET ASSESSMENT:
The UAE's pleasure craft market is based on the desire of individual
nationals/expatriates to have their own pleasure craft. The sea is
accessible within an hour's drive for the majority of the residents of the
UAE. Local production is of a very high standard and offers quality at a
very competitive price. Exports of local manufacture are made on a regular
basis to all the GCC countries and even to France, the Maldive islands and
Finland.
The UAE has a long coastline with no lakes or inland waterways. Therefore
all pleasure craft are used in the sea, and most models purchased are
seagoing vessels. Traditionally, low budget boat owners had to be content
with small rowboats which were sometimes fitted with an inboard or outboard
engine. Today, they have the option to purchase inflatable boats or small
crafts which are light, fast and reliable. Lightweight boats are ideal for
easy transport. However, inflatable boats are not very popular here as they
are not very good for use on the open sea under rough weather conditions.
These are mainly used for scuba diving. Another factor which works against
inflatable boats is price. A good quality inflatable boat with accessories
could cost almost the same as a small craft manufactured locally.
Between 1988 and 1990 annual imports of pleasure crafts to the UAE grew from
U.S. $ 5.3 million to U.S. $ 13.7 million, an average annual rate of 60% per
year. The market's growth is expected to continue at an estimated average
of 50% over the next 2-3 years.
Total UAE imports during 1988-1990 were:
1988 U.S. $ 5.32 million, of which $ 1.9 million was for yachts and other
pleasure vessels and $ 3.3 million for commercial vessels.
1989 U.S. $ 8.2 million, of which $ 3.2 million was for yachts and other
pleasure vessels and $ 5.0 million for commercial vessels.
1990 U.S. $ 13.6 million, of which $ 4.5 million was for yachts and other
pleasure vessels and $ 9.1 million for commercial vessels.
The UAE's total market for pleasure craft in 1990 was estimated to be nearly
U.S. $ 27.2 million. It is estimated that approximately 50% percent of this
market demand is met by local production. The total market appears to have
an annual growth rate of over 50%.
Locally manufactured boats are popular as they are of a very high quality
and available at very competitive prices. At present there is a joint
venture between a British company and a local company. Another Japanese
firm (Yamaha) have just started a joint venture with their local agents
building their own boats in Dubai with production starting early September
1992. Market sources predict that boat prices will drop in the near future
due to the stiff competition of these joint venture operations in the UAE.
Though boats manufactured locally are of a very high standard, the local
market in itself is not very big. Market sources estimate that
approximately 60% of these boats are exported to other Gulf countries
including Saudi Arabia, Kuwait and Bahrain. It speaks volumes when one
considers that some Scandinavian countries are buying boats which are
manufactured in the UAE as it is comparable to those manufactured in
Europe. It is cheaper to produce a boat locally than in Europe due to low
cost labor. The main deterrent to increased export sales to EC countries is
high custom duties levied on non-EC manufacturers.
American boats are not price competitive in the UAE any more when you take
into consideration high shipping charges. American companies will have to
seriously consider setting up joint ventures or their own manufacturing
plants in the UAE if they want to maintain/increase market share.
The important factors which have a bearing on who succeeds in this market,
are price, service, promotion and commitment to the local agent. Support
and quick response from suppliers are essential to success.
Boat rental firms have been operating in the UAE for approximately 2 years.
In popular demand for hire are water jet skis.
C. COMPETITIVE SITUATION:
In the coming years, U.S. exporters will be well advised not to ignore
several new competitors that have appeared on the scene and are working to
increase their market share.
During the period 1988-1990, the U.S. share and its major competitors stood
as follows:
U.K. ITALY U.S. PAKISTAN TAIWAN JAPAN
% % % % % %
1988 3.47 - 49.69 14.97 - 9.24
1989 14.85 33.22 19.76 10.0 - 3.97
1990 25.84 24.21 22.65 10.19 3.82 3.65
Domestic Production:
The domestic boat industry is medium-sized and only directs 40% percent of
its output to the local market. The other 60% are exported mainly to Saudi
Arabia, Kuwait, Bahrain, Oman, Qater with a small percentage to France, the
Maldive islands and Finland.
There are currently approximately 40 boatbuilders in the entire UAE.
However, the local shipyards are handicapped by the lack of a national motor
manufacturer, which affects their competitiveness. For example, of the U.S.
$43.65 outboard engine motors sold in 1990, all were imported.
U.S. firms, such as Scat Hovercraft, Sunfish/Laser Inc., Wildcat Watercraft,
Performance Catamarans Inc., Boston Whaler, Glastron, Chapparal have a
presence in the UAE market. Their major competitors are Kawasaki and Yamaha
of Japan, Bombardier SeaDoo from Canada. Most firms carry a limited volume
of stock while some act only as suppliers. When local firms act as
suppliers they usually place orders with the company only after they receive
an order from a customer. On an average showrooms in Dubai have on display
5/6 crafts of local manufacture and 3-5 different kinds of water jet skis.
According to industry contacts, the advantage that U.S. firms used to enjoy
based on quality, reputation and service is fast being eroded as prices
which have always been an important factor are no longer competitive.
Promotion is also important but boat enthusiasts appear quite knowledgeable
about the subject from reading reports and tests in foreign boat magazines.
Local sources say that a boating magazine being prepared in the UAE is in
the offing.
For all cases, including pleasure boats and marine engines, all
distributors/ agents provide service through their workshop, and usually
offer a 6 month to a one-year guarantee. Local manufacturers generally
offer a 2 year guarantee for the hull. Effective and well organized service
is considered to be very important.
Cost is an important competitive factor particularly in the lower to
upper-middle price-range of the pleasure craft market. Price is less of a
consideration at the top end of the market where purchasers are less likely
to be concerned about discretionary income and expenditures.
Other key competitive factors in the pleasure craft market are durability,
safety, quality, style, design, speed, capacity, and accessories. It is not
easy to sell a used boat in the UAE so the resale value is not a very
important factor when buying a new boat though local market sources say that
it is not uncommon for a local manufacturer of repute to be approached for
boats which have been traded in for newer and faster models.
D. MARKET ACCESS:
The commercial climate in the UAE is one of free trade and competitiveness.
There are no impediments to entering the market nor are there any laws
regulating the imports of pleasure craft. English is the commercial
language alongside Arabic but Arabic takes precedence in official documents
with Government departments.
Normal working hours are from 0730 or 0800 to 1330, except Thursday, when
they close at 1200, for all government and public institutions (municipal
offices, banks etc), while the private sector resumes for an afternoon
session, usually from around 1600 to 1930. Some companies in the private
sector have a five day week with the weekends usually being Thursday and
Friday or Friday and Saturday. All government business must be accomplished
during the five morning hours. (It is not unusual for a civil servant to
operate a private business during evening hours.) No offices open for
Friday, the day of rest.
In order to enter the UAE market, U.S. firms must appoint an agent or a
distributor. Local representation is a legal condition for doing business
in the market. However, care is advised in the selection of an agent. In
selection of an agent. U.S. suppliers are reminded that the U.A.E. Federal
Agency Law No. 18 of 1981 and its 1989 amendments are applicable and should
be reviewed carefully prior to appointing a local agent. The Agency law
favors the local traders and cancellation of agency agreements and contracts
are difficult and costly, regardless of the severance clauses included..
Frequent visits and strong agent support by the manufacturer both before and
after the sale are the basic ingredients for success. The US&FCS can assist
in identifying reputable representatives.
Local sources say that the U.S. market share has been lost partly due to
lack of loyalty on the part of American companies to the local agent. It is
important to bear in mind that agents/distributors spend a lot of time and
money in promoting a product in this area and when the product gains
popularity, and an agency agreement has been signed, any inquiry received by
the U.S. firm directly from any individual/company from the UAE should be
routed through the local agent.
Duty for import of pleasure craft is the usual 2%.
Pleasure crafts are not presently required to be registered in the UAE.
Local market sources say that very shortly the UAE Federal Ministry will be
enforcing all owners of pleasure crafts in the UAE to have their boats
registered. They expect this to be put in effect by end this year.
Distribution and Business Practices: Domestic manufacturers sell through
distributors and also directly to end users. Imported boats are generally
retailed by distributors who carry a full spectrum of product lines. These
importers tend to represent more than one manufacturer, frequently three or
four, specializing in a specific product segment. The ability to meet
specific client needs for optional equipment, timely delivery, as well as
price are important factors to consider when selling U.S. pleasure crafts in
the UAE.
No safety standards are set locally but the trend is to go by the standards
set by the U.S. coastguard.
Approximately 10 marinas are in the UAE which are usually run by the large 5
star hotels or by boat clubs. Charges for mooring are high and vary in
price from marina to marina. The charge is usually based on footage and on
average could cost U.S. $ 1635/- per annum for a boat upto 20 feet. This
charge apart from mooring the boat would usually include maintenance, boat
washing and sometimes even battery charge.
Many people who do not want to pay the high costs of berthing their boats at
marinas moor them on buoys at sea, or keep them on trailers outside their
homes. Sailing boats can also be kept on beaches. Public slipways for
launching powerboats are available.
E. TRADE PROMOTION OPPORTUNITIES:
There is a wide range of services available for the U.S. exporter interested
in entering the UAE market. Among these are:
Agent/Distributor Service (ADS): assists in locating an agent.
World Trader Data Report (WTDR): provides credit information on potential
agents.
Comparison Shopping Service: identifies the product's potential
competitiveness in the market and also the best potential distributors.
U.S. companies may display and promote their products in the only biennial
exhibition held in Dubai, UAE. Details are:
Exhibition : Middle East International Boat Show
Organizers : Trade Centre Management Company
P.O. Box 9292, Dubai, UAE
Telephone : 971-4-3064052
Fascimile : 971-4-3064089
Contact : James Kfouri/Sandra Royan
Proposed dates : May 19-22, 1993
F. BEST SALES PROSPECTS:
Inboard powered boats (excluding houseboats)
Inboard outdrive boats (excluding houseboats)
Motorboats, cabin boats, motoryachts
Motorboats other than outboard motors
Sailboats, with or without auxiliary motors
Inflatable pleasure craft
G. STATISTICAL DATA:
U.S. $ MILLIONS 1988 1989 1990 Estimated average
annual real growth
over next three years*
Import market 5.3 8.3 13.6 approx. 50%
Plus Production 3.1 5.3 15.2
Less exports/Re-exports** 2.9 5.9 17.2
Equals total market demand 5.5 7.6 11.6
Imports from U.S. 9.7 5.9 11.3
* Inflation rate assumed= 3%
** Based on Estimates of exports/re-exports as follows:
1988= 34%; 1989= 43%; 1990= 59%
Exchange rate used throughout= 1 USD = 3.673 dirhams
1990 IMPORT MARKET SHARE (U.S. and major competitors)
U.K. 25.84%
Italy 24.21%
U.S. 22.65%
Pakistan 10.19%
Receptivity to U.S. products (1=lowest, 5=highest): 4 (very receptive)
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