Dubai: A recently released analysis by Dubai Chamber of Commerce and Industry shows that the UAE retains its position as a leading global consumer electronics market thanks to its strong domestic demand that is ever growing.
Its strategic location as an international business hub serving the Gulf Cooperation Council (GCC) and the rest of the world is also an important factor.
Located at the crossroads of Asia, Africa and Europe, the electronics distributors of the UAE serve a potential market of almost 2 billion consumers.
The analysis further reveals that in recent years, the domestic market in the UAE has steadily become more significant in relation to re-export trade. The UAE is the preferred testing ground for multinational consumer electronics companies for new product launches and marketing initiatives.
According to a report by Business Monitor International (BMI), the UAE was ranked first in the regional consumer electronics market business environment in 2009.
Demand for consumer electronics in the UAE has been boosted by a strong telecommunications and information technology infrastructure as well as the large resident population, which have both assisted in driving market development forward. From this, the BMI have forecast that the UAE's consumer electronics market is projected to increase to $2.77 billion (Dh10 billion) in 2010 from $2.62 billion in 2009.
Dubai is at the heart of the UAE's electronics sector. It accounted for more than 80 per cent of the UAE's total exports and around 85 per cent of re-exports in 2009.
Dubai also imported more than two-thirds of the UAE's consumable electronic goods last year. In essence, Dubai's electronics sector is boosted by the annual shopping festivals, which accounted for as much as 50 per cent of annual sales for some of the larger distributors in some product categories. Festivals such as Summer Surprises, GITEX Shopper, Consumer Electronics Expo and the Dubai Shopping Festival, as well as a number of trade fairs, have resulted in a significant increase in sales for electronics firms.
That said, the UAE's consumer electronics sector does face some challenges. The country's low trade barriers contribute to a growing problem with counterfeit (or grey) market goods.
This illegal import trade is also exacerbated by the proximity of free trade zones such as Jebel Ali, which is the centre for the flourishing re-export trade.
With low margins due to the intense competition, parallel imports present a particular challenge to firms.
Overall, several factors have contributed in making the UAE electronics market a significant one for the region.
In part, it is on the back of the UAE's central geographic location, serviced daily by flights from the Middle East, West Asia, East Africa and the Mediterranean.
The country has a well-organised chain of retailers and wholesalers, a well-developed sourcing network, extensive logistical facilities and an excellent general business environment.
In addition, growth has been driven by government policy; in particular, low import duties which have helped make the UAE an electronics trading destination for the region and a shop window for the latest consumer goods.
Looking ahead, electronics firms are increasingly seeing the UAE as a distribution hub of global rather than merely regional significance.
As more firms have established facilities in the UAE, this in turn has brought more expatriate workers and this trend acts as another stimulant to the local consumer electronics market.
- $2.77b projected increase for consumer electronics
- 50% of annual sales is brought in by shopping festivals