Dubai: The growing use of technology, a surging youth demographic and plenty of opportunities in India are all reasons to be cheerful for Procter & Gamble (P&G) regional chief Mohammad Samir.
“Generally I am a very positive person,” he said. “A very pragmatic realist, but I’m very positive.”
There is great potential in the new generation, he said. “The new generation is smarter, more efficient, more technologically savvy, has everything around. People forget how much progress we have made, how much we are making every day.”
Innovation and technology is transforming business and creating new opportunities for investors and new efficiencies for managers, pointing to recent investments in the UAE’s Noon.com and Souq.com. “People are talking about recession. What recession are we talking about? The dot-com for this region is very small right now. For very reputable companies and very smart investors to invest $2 billion [Dh7.34 billion] to make this e-commerce business work, it tells you a lot.”
And the potential offered by the opening up and development of India’s one-billion-strong consumer market is exceptional, he said.
While he acknowledges that 2017 is likely to be a tough year in the region — largely because the business community has convinced itself that it will be, he says — he has his eyes firmly fixed on the long term.
“The glass half full is long-term big potential, because the categories still have a lot of growth coming,” said Samir, President of P&G’s India, Middle East and Africa (IMEA) region, in an interview at the firm’s regional headquarters in Jebel Ali Free Zone, Dubai. “The middle class will grow. The young population. The oil is there. The location is great. And I think security will be much better in the future.
“When you put all these together, then the long run will be really good. Short term, sure, it’s going to be a bit different than in the past, so we need to adjust to lower growth rates and adjust plans accordingly.”
He added, “I think in the short term there will be a lot more fear of consumption rather than real economic pressure, especially for our type of industries, but it will come back.”
While he declined to provide numbers, he said P&G’s regional growth, which had hit “almost double digits” in the past had currently fallen to “mid single digits”.
“I think we can come back to faster growth behind a strong Subcontinent, behind a fast Africa, but also in the Middle East.”
But he said people should be realistic about growth in the Gulf, which had enjoyed high growth rates for a long period.
“We’re coming from a very high base. If someone is looking at their growth rates over the past 10 years and saying, ‘I want the same over the next 10 years,’ forget it. You need to adjust.”
But he suggested consumer adjustments might not see a reduction in premium brands, as tightening belts could mean spending on a known, reliable brand. “If you have a lot of money, you buy something, you don’t like it, you throw it away and buy something else, right? These people don’t have that option, don’t have that luxury of trying different things.”
While normalisation of trade with Iran might have a disruptive effect in the short-term, he remained confident that the long term outlook would be positive.
“How long will it take? I think a lot depends on how Iran and the new US administration deal with it, but from a pure consumer standpoint, the Iranian consumer is a very, very smart consumer. They like brands, they like quality, so they will be a very important part of the region.
“The Iranian people themselves are amazing traders and amazing business people, so you will find them integrating easily. From a historical standpoint, they have been a very important part of the region. So in the future they will be an important part also.”
At present, the Iranian market falls under P&G’s European region, with trade conducted via Switzerland to comply with US sanction regulations, but Samir expected it to be transferred to his IMEA region once economic relations were normalised.
He said he felt the business community gave too much weight to sanctions, pointing out that they have been imposed on one country or another for many years.
“I think what impacts the region more right now is security. You look around, all these security issues we have in the region, this is where people become fearful.
“Why would I spend my money if tomorrow I might have an issue next door? If you’re living in a house, and your neighbour starts fighting every day, threatening you, or threatening another neighbour, you’d be careful.”
The high growth rates in emerging markets in Africa and Asia are attracting considerable attention from international businesses, and Samir sees great potential in India.
“India is doing a lot of good things to move the economy forward, to move the whole system, whether it’s the general sales tax, the Clean India Initiative, the latest currency stoppage and putting in new ones. All these steps are extraordinary. Our business is doing pretty well there, and the growth potential is just extraordinary.”
The sheer size of the Indian market was also a draw, as well as a challenge. Anyone considering investing in India should be serious about it, he said — it is not a market for “hit and run” investment.
“The small stores there, we call them high-frequency stores, there are 10 million of them. If you don’t have the proper infrastructure to reach these stores, forget it. What are you going to do?”
Pakistan and Bangladesh offer similar opportunities, “but certainly India is the big one,” he said.
While much business attention has focused on high growth rates in Africa, he considers the continent a “long-term play.”
“You cannot win in Africa without winning in Nigeria, South Africa and in the north, Egypt and Algeria. If you’re not going to win in these four, just don’t go.
“But other than that there are countries with a lot of potential. I’m a big fan of Kenya, not only that everything is moving in the right direction and there is growth, but Kenya is a country that respects old regional agreements.
“To play in Africa… it’s 54 countries, you won’t build a factory in every single country. You need to leverage regional agreements, and any country that respects regional agreements has a lot of my respect, and Kenya is one of them. Kenya is the best of them.
“Ethiopia I think is the next best-kept secret, from an economy standpoint, and population-wise it’s huge. When you have a big population, it’s nice because even with short-term instability, it will come back. You get worried if it’s a small population.”
Opportunities trump challenges
Procter & Gamble (also known as P&G) is one of the world’s largest producers of consumer goods, with a 2015 global revenue of $76 billion (Dh279.1 billion), $129.5 billion in global assets, and around 110,000 employees.
The firm, founded in 1837 in the US, concentrates its efforts on 65 household brands, focusing on body and personal health care products, home care and fabric care. The firm organises its global operations into six regional divisions.
As president of one of those regions — India, Africa and the Middle East — Mohammad Samir has an understandably strategic, long-term outlook.
During the course of our interview, he is quick to correct mention of “issues” or “challenges”. These, he said, are opportunities.
“I’m not trying to play with words,” he said. “I really believe in opportunities. Whenever I’m in discussion with other business people and they say, ‘Ah, I don’t like doing business in this place or in that place,’ I say, ‘Are you doing business?’ And they say yes. ‘Are you making money?’ Yes. So what are you complaining about?
“This means that as these things develop, it’s going to get better in the future. OK, yes, let’s keep on moving.”