Market Research in MENA countries

Schlegel and Partners successfully assists its European partners in gaining intelligence about these markets and in building up a sound base for strategic decisions, even in markets with low transparency, like markets for chemicals in niche applications. The Schlegel and Partners approach to gain insights in these markets is a combination of phone interviews with own consultants based in Germany, face-to-face interviews, and the collaboration with partners (such as associations, selected market experts) to gain quantitative market information.

Middle East and North Africa: huge economic growth potential

The economic relevance of the MENA countries for Germany and for the European Union consequently increased during the past decade. In 2010, Germany was the European exporter number one into the region with exports worth about EUR 36 bn. Most important export destinations for Germany are still the two dominating countries in the Gulf region (GCC), the United Arab Emirates (UAE, EUR 7.4 bn) and Saudi Arabia (EUR 5.7 bn).

Compared to the growth of 2.5% in 2012 for the global economy, the World Bank projected an economic growth of 3.2% in the Middle East and North Africa. For 2013, a growth rate of 3.6% is forecasted. MENA economic activity should speed up in 2012 to 2013, driven mainly by the recovery of economic activity in Egypt and Libya and with the continued strong performance of GCC countries.

Besides improving economic factors, MENA growth is also driven by demographics. The population in the Middle East and in North Africa is young and rapidly growing. It is expected that today’s population of about 450 M will grow on average 1.7% per year until 2030, when the MENA region is expected to have a population of about 630 M.

Schlegel and Partner assesses opportunities in the MENA countries

Although the political and economic aftermath of the “Arab Spring” in some MENA countries is yet ambiguous with unsettled distribution of political power, and a considerable drop in employment and investments, the opportunities for European companies in the MENA markets have been blown wide open. E.g., companies in Egypt are currently seeking intensely for new business opportunities, which make it rather easy to start new business opportunities and to align corporate strategies in the region. In the future, the country could play an even more important role as a hub for foreign companies seeking for a production base in the MENA region.

The focus of the studies carried out by Schlegel and Partners includes the assessment of market volumes and future market potentials in economies like Egypt, Saudi Arabia, Iraq, and Libya. We gain intelligence about the functioning of various steps along the value chain, like mapping of product flows from import to end customers, significance of direct sales compared to distribution via retailers, and an identification of key wholesalers.

The analysis of country specific requirements for product specifications (e.g. required registrations and certifications, specific requirements in respect of climate) is also carried out by Schlegel and Partners. A core field of research in many studies focused on MENA countries are specific customer expectations, like logistic requirements (lead time, warehousing, etc.), service related requirements (technical support, support in trouble shooting), product related requirements, including specific quality levels, types of packaging etc., and various expectations of potential customers towards the relationship between two business partners (e.g. need for personal contacts, qualitative aspects of services, importance of trust).

Schlegel and Partners’ approach to gain intelligence about MENA countries

Because of a different communication and business culture in many countries in the MENA region, the design of the study is a crucial point for the success of market research projects. For countries in the Middle East and North Africa, Schlegel and Partners recommends to gain intelligence about these markets by a joint approach. One main pillar is to carry out telephone interviews with main players in the focused markets with own consultants. By taking our Germany based consultants with language skills in Arabic and English into our project teams, we are able to carry out qualitative telephone interviews with decision makers and application experts. Having the core of the project team members at our company base in Germany, we can ensure a fast and reliable flow of information between our team members and also to our clients.

Also, desk research in databanks, on company websites, at statistic offices and associations are always an important way to gain first insights into quantitative aspects of the markets in the Middle East. To get access to quantitative market information, we also collaborate with experts resident in the focus countries.

As market research in the “European sense” is often new to people in the Middle East, we advise to complement phone interviews by face-to-face interviews. Especially in the Gulf countries, building up trust is essential. Thus, it may be important to initiate a personal contact with key persons in the markets. This also gives the opportunity to crosscheck information derived from desk research and from phone interviews. In addition, face-to-face interviews are an excellent way to deepen the discussion about specific topics that arise during the project phase.

By this combined approach, we are able to gain intelligence about the latest developments in the MENA countries. Schlegel and Partners already proved its capabilities in projects such as the market for mechanical components to the cement industry in selected MENA countries, the use of additives for construction applications in GCC countries, opportunities for valves production in Kuwait, flooring systems in countries like Iraq, Saudi-Arabia, and UAE, markets for decorative paints in selected countries in the Middle East, and the use of solvents and specialty lubricants in Libya, Egypt, Algeria, Saudi-Arabia, and Qatar, to name some of our projects.