Nakheel unleashes ire-breeding dragon as China-Dubai partnership heats up

Forbes Arabia – June, 2005

 By Nancy Collisson

With retail space in Dubai luxury malls averaging US$900 per square foot, and expenses related to their concomitant sky-high rents passed to consumers in the form of inflated prices on goods, GCC visitors in town for the upcoming Dubai Summer Surprises (June 22 – September 2) may find the best buys to be had in the unforbidden city of  Dragon Mart.

Built by property developer Nakheel, Dragon Mart is the ginormous version of a dollar store — that even provides weekend cultural entertainment, allowing even Dubai-based laborers – as construction workers are so pejoratively labeled – a rare opportunity to enjoy dazzling and free performances of magic and acrobatics in the mall’s main lobby. 

In yet another in a series of firsts for Dubai, Dragon Mart holds the title of the world’s largest trading platform for Chinese-made goods outside of China. Items available at its more than 3,000 single-car garage-sized shops range from electric gadgetry and home appliances, to furniture, sports equipment, clothing, toys, and specialty foods where – as a brochure states – they’re all sold at factory-direct prices to retail and wholesale customers!

And that simple screaming TV-Lenny’s type announcement helps bring in the steadiest footfall and sales in town, according to Dragon Mart marketing manager Renee Wang, who said it. We never advertise she exclaims, why should we waste the money?

‘Great World Trading’ and ‘Lasting Long Enterprises’ represent two of the tiny store fronts that line three  parallel corridors in the sprawling, zig-zagging 1.2km dragon-spined complex located in the business free-zone dubbed ‘International City,’ a quick ten minutes from Dubai Airport. While these shop names may not yet have entered the lexicon of the average Dubai shopper, who, according to Dubai Tourism spends an average of US2,500 per year on luxury goods like Prada, Gucci or Ralph Lauren, which are available among the area’s fifty surrounding malls, these and other Dragon Mart businesses seem to be managing, collectively, to smack their spiked tail at the competition.

But that’s if looks say more than numbers, at this point. According to Wang, since Dragon Mart’s opening in December of 2004, statistics taken by property management Chinamex Middle East Trade & Investment Promotion have been related only to footfall which, through a combination of curiosity, raffles for trips to China, displays of Chinese folk craft and lobby performances bring an average of 25,000 visitors to the mall, each day.

While that number is fewer than half the 55,000 who daily trawl the luminous corridors of Dubai’s undisputed anchor mall Deira City Centre. And much fewer than the 5.5 million shoppers who will be lured by the likely magnanimous glory of the world’s largest Dubai Mall, Florentine charm of Mercato, swank Bur Juman, or Nakheel’s internationally themed Ibn Battuta, what matters are sales. About this, statistics remain cautiously guarded

But since seeing is believing, only along the spinal corridors of Dragon Mart can one observe shoppers hauling bags – armfuls of them. Dragon Mart management so well knows that its shoppers load up with goods that it provides flat-bed trolleys for attendants to steer out to the boots of cars parked in a vast (outdoor, uncovered, and brutally hot)  lot.

And if anyone thinks that the wealthy Emirati or expatriate population must be too snooty to step foot into a discount mall, they would be wrong. A mere glance around at numerous European expats, along with kandoura- and abaya-clad patrons says otherwise. After all, only at Dragon Mart can one can pick up a seven-piece, 100-percent cotton, 400-thread-count queen-size bedding set for less than $100. A modern  porcelain pedestal toilet and sink set also runs just over $100. A men’s pair of trendy blue jeans is only ten bucks. Prodigiously padded  lace bras are only $35 a dozen. Clutching a 30-dirham brass-finish standing lamp, Sandra Olivier, of Panama, asked Where in Dubai can you find deals like these?

Indeed, a dragon has awakened in the middle of the desert, but he’s begun to breathe ire down the necks of long-term Dubai-based expatriate business owners who now feel they compete at a greater disadvantage with Chinese goods, than they had previously with manufacturers of globally renowned branded products.

According to long-time Dubai-based textile wholesaler Sunil Bandari, the unique structure and opportunity afforded Chinese traders through the special relationship formalised between the Chinese and Dubai governments in 2003, makes businessmen who’ve been trading in Dubai nearly as long as he – 25 years – jittery.

It isn’t only us, it’s everyone, says Bandari, one of nearly seventy-thousand area Indian business owners in Dubai. It isn’t that Indians believe they deserve some kind of special treatment from Dubai, it’s that the playing field has changed because of this special relationship, and none of us – Indians, Iranians, Syrians – who have been here for years – will be able to compete! For this reason, I have to diversify my business activity or I will not be able to survive!

Individual Chinamex traders enjoy various perks of their free-zone status. They can offer diverse multiple offerings such as a mix of kitchen utensils and toys or umbrellas and fitness equipment – product combinations disallowed to others, randomly located on the increasingly lean and mean streets of Dubai where business and residential rents  increased this year by as much as 40 percent.

Dragon Mart shop owners have the lowest rents in town. According to some shop representatives, businesses facing DM’s main corridor pay approximately $12,000 annually for open-ceiling cubicles approximately 538 feet square. Shops located on the outer parallel corridors pay less than half that amount. Rent for shop or warehouse employees in a two-bedroom, two-bath flat just a five-minute walk away — in  new apartment buildings that also provide convenient Chinese grocery stores and restaurants — is about $6,000 per year.

Of further benefit to Dragon Mart business owners is the mere two-percent duty they pay to Dubai Customs and Ports Authority when they bring their goods in from the docks — all other foreign business owners pay a minimum of four percent.

Completion of Dubai’s proposed free-zone, Textile City, could eventually offer Bandari a measure of relief, assuming he would receive benefits similar to those presently accorded the Chinese.

Until then, complicating his attempt to diversify his business activities are laws that require business owners to pay the Dubai government steep up-front and annual fees for trade licenses for each product category of product they trade.

Wang feels she allays concerns of Bandari and other small business owners, who believe that DM is so well supported by the Dubai government that it can undercut their operations, by proffering the logic that Nakheel, in owning both Dragon Mart and Ibn Battuta Mall, would never compete against itself. She leaves off the point that in owning and managing both a high-end mall and mega outlet mall Nakheel is nicely covering all bases. Like them, we are not a kind of shopping mall selling branded items, she cheers. We are just a long-term exhibition center, a trade center, a cultural center!

Nakheel spokesperson Benedict Fisher shares Wang’s fiery sentiments. In many areas, he says, Dragon Mart products do not compete with other shopping malls. Hardware, machinery tools, and light and heavy machineries are one of the fields where Chinese goods are highly competitive, cost-wise.

To area small-business owners who, nevertheless, continue to feel threatened by spiking competition from China that Dragon Mart represents, Wang extends opportunity: They even can contact our manufacturers for supplies! They can get some more benefits from us! They can order directly from our factories!

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