Cultural differences between the West and Middle East mean a brand must also be conscious of the potential for anti-American sentiment in the region. But Middle Eastern experts and business analysts say that need not hinder international development in the region. Middle Eastern cultures, they say, don’t let politics—particularly American politics—interfere with the social settings in which they live.
“Middle Easterners have traditionally been impressed with American ideas and American innovation,” says Dr. Amaal V.E. Tokars, an expert on Middle Eastern politics and culture, and author of the upcoming book, America & Iraq: Seduced By Fear. “In the last few years, Middle Easterners have often tried to separate their perspective on American policy from their perspective on American people.”
Still, recent events have caused American brands to reposition themselves in the marketplace, says Robb Hecht, a marketing and consumer brand behavior expert who has provided guidance to leading domestic and international brands, including Unilever, J Walter Thompson, Winstar, Volt Services Group, Cendant, and E*TRADE Financial. “The recent U.S. invasion of Iraq has upset the poignant separation of perspectives and has made it more dangerous for American businesses to exist in certain countries in the region, making perhaps more globalized versions of brands succeed there, versus strictly American brands.”
“Attitudes can fluctuate with political movements in each area [of the Middle East],” says Yehia Mostafa, business development manager of The McDonald’s division of Coca-Cola. “The call for boycotting American flagship brands was at its maximum level during the Palestinian/Israeli conflict in 2002 and extended until mid-2003. There’s still a percentage of Middle Eastern people who have continued their boycott, but it is minor.
Support for this notion comes from recent reports from TNS, a global market research firm. According to a 2003 TNS study of the fast-food habits of Egyptian consumers, 32 percent of Cairo’s population bought foreign-branded fast food at least twice a week. The study also found that the primary consumers of foreign fast-food brands were teens and adult males. A 2005 TNS study of fast-food consumption habits in the United Arab Emirates found that 26 percent of the country’s residents eat out at a quick-service restaurant at least once a week. This has prompted some American chains that already have a Middle Eastern presence, like McDonald’s, to open even more restaurants.
According to the McDonald’s Arabia Web site, www.mcdonaldsarabia.com, the chain has opened more than 230 restaurants throughout the Middle East. Other American brands have prospered, too. Coca-Cola operates in every major Middle East market, with bottler partners across the whole region, and the system has achieved a steady growth rate in both market share and profitability, Mostafa says. Meanwhile, Port City operates in Saudi Arabia and Indonesia, with units under development in Dubai, Jordan, and the United Arab Emirates.
If you’ve done the right research, know your Middle Eastern markets, and have a dedicated local team to ensure success, the region could be fertile ground thanks to its booming economy.
“Middle Eastern economies have been on a high-growth curve for the past five years, and it’s not surprising,” says Port City Java’s Reynolds. “The U.S., as most of the world, literally runs on oil, so the oil-rich countries have seen significant revenue from their oil as consumption has increased. This has supplied the countries with real cash flow and their economies are highly stimulated.”
According to Mostafa, the quick-service industry’s annual growth in the Middle East tops out at between 10 percent and 12 percent, and the average gross domestic product growth in all Middle Eastern countries exceeds 5 percent.
“The surge in oil prices over the past few years has produced substantial budget surpluses,” Mostafa says. “Coupled with the oil prices surge, much major investment has entered the Middle East markets. Consumer spending has been very encouraging. [The growth seen in the region] is considered a very healthy growth and would attract many key players to expand their presence in the area.”