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Under the Arab sun

​​​​​Growing populations, mega cities and urgent reconstruction needs. Strong artisanal culture, lack of wood as a raw material and large oil and gas reserves. 
 
The Middle East and North Africa is a unique market area. But how does one do business there?

   

Photo by: Stora Enso

T​he Middle East and North Africa (MENA) represent developing markets with a young and growing population facing rapid urbanisation. The United Nations expects MENA’s population to grow up to more than 470 million by 2030. The growth of the Arab world is also supported by large housing projects and other governmental investments to build up local infrastructure.
 
The value in artisanal life
Unique artisanal and design traditions have been the foundation of Arab economies and cultures for centuries, as the artisan’s life is considered a heritage passed down across generations. Local construction is not industrialised but often done by hand in small father and son companies. This artisanal culture is still today valued and protected by commanding high import duties on further processed sawn timber.
This prevents Stora Enso from developing business in MENA towards more value-added products.
“We compensate that by having the most efficient and unique sales channels and service – steady monthly shipments to customers with big volumes, enabling reasonable freight costs, good product quality, large product mix from several suppliers and efficient document flow. Our business in this market has been developing steadily,” says Satu Härkönen, Business Development Director, Overseas, in Stora Enso Building and Living.
 
Shopping at the port
Even if there is a long tradition of building with wood in MENA, the region lacks local raw wood material and a wood products industry, so imported sawn timber goods are essential for building sustainable infrastructure. Stora Enso Building and Living ship pine and spruce sawn timber goods from the company’s North and Central European units to the sunny ports of Casablanca, Alexandria, Sousse and Jeddah amongst others. At the destination port, packages labelled with company logos change hands and the sawn goods are loaded onto lorries and delivered to importers’ and wholesale customers’ yards.
 “In practice this means several cups of coffee or tea, eating together and long conversations, both business and non-business. Rush does not exist in this culture,” Härkönen​ says.
 
Person to person
Everything is based on trust and long relationships in the Arab world. “In practice this means several cups of coffee or tea, eating together and long conversations, both business and non-business. Rush does not exist in this culture,” Härkönen has learned. Stora Enso’s customers in the MENA area are private entrepreneurs and therefore very business-minded. Usually business is done verbally, face to face. Phone calls are also important, e-mail is seldom used.
In Europe business is done quarterly but in the Arab world business is usually done on monthly basis – every month the discussions start again.
“It’s not common to use written contracts and no signatures are needed. Arrival of a letter of credit is the final guarantee of the deal. It is also important to have local agents on the spot making sure that we meet our customers often, but also to get the latest, most reliable information about their situation,” Härkönen says.
 
Stora Enso operates in the MENA market through its trading company MENA Wood.