International trade between Kuwait and the World - Essay Example

Franchising in Kuwait Kuwait is a Middle East country bordering Saudi Arabia on the south and on the north is Iraq. Kuwait has a population of 2.7 million, about half of the population consists of non-nationals, and its growing rate stands at 1.986%. The country occupies an area of approximately 17,818 sq. kilometers. Kuwait city is its capital and forms the business hub for investors. Its official language is Arabic and it is predominantly a Muslim population. Kuwait is rich in oil reserves and believed to have approximately 9% of world’s oil reserves. Its rich economy is an attribute of petroleum production. Petroleum production accounts for almost 95% of export revenues and provides 80% of government’s income (Moore 179). The rising oil prices around the world have significantly influenced Kuwait’s economic growth. Its government has been keen on reducing the overreliance of oil through the transformation into a regional trading and enhancing Kuwait as a tourism hub (Dianne, Peter, and Nasser 1-15) Kuwait is very active on food imports, vehicles and also construction materials and services. Despite Kuwait’s relatively small population, itis firmly placing itself among the world’s most popular and attractive markets for many leading international franchises. The major motivating factor to these franchises lies on the young, strong shopping and consumer culture and the affluent population that has a great affinity for international brands. It is a suitable destination for retailers around the world seeking to extend their footprint. Kuwait’s law restricts foreign firms from opening branches solely in the country, but retailers can enter in the market through joint ventures and partnership with the locally incorporated companies (Moore 128). Before venturing into any market, it is always advisable to explore several factors such as the culture of the people, economic overview, geographical factors, religion, living standards, and the people’s responsiveness to international businesses. Culture Habitants of the Gulf region are not anyhow strangers to conflicts and contradictions. Many are the idiosyncrasies that have shaped the region in both the ancient and the modern times. In the country, there have been contacts with the western countries and most their corporations and these have resulted to a commendable improvement to the region (Dianne 6). It has been through encouragement for better education, increased communication, greater mobility and an improved healthcare. Though cultural conflicts are now minimal, in the past there had been many conflicts with western cultures and the Arab culture and their religion. Industrialization has changed most cultural ways of life and people of Kuwait try to achieve the modern lifestyles while also maintaining some of the traditional values. For franchisees, they should not fear of any cultural factors as hindrance to venture in the country. Kuwait nationals are friendly and welcoming especially on international businesses (Dianne 4). Kuwait has a long and rich cultural tradition tied on the history of its traditional community of fishermen, and tradesmen. The love music especially the traditional Kuwait Music is they believe that it evokes the founding chapters of the Kuwait’s history. They also have a strong passion for war dances and the sawt of Kuwait. Geographical factors As it lies at the gulf region, Kuwait witnesses a warm, subtropical, and arid climate with extremely hot and dry climate in the summers from May to the month of October. There are numerous sandstorms during the months of June and July due to shamal a northwesterly wind common in the area. Its land is non-mountainous land and provides ideal areas for investments all around the country that has nine island most of which there are people living there. For franchisees willing to engaging in any business in Kuwait, they do not find any much challenge on geographical factors. Economic overview The country is a rich and relatively open-ended economy (Dianne, Peter, and Nasser 1-15). Compared to its adjacent neighboring nations, it is more liberal and business friendly too. Kuwait is highly industrialized and richest it is forth world richest nation per capita. The country’s oil reserve provides world’s fifth largest oil reserve. Kuwait mainly imports construction materials, clothing, food, and vehicles from partners such as Japan, Germany, US, china, UK, Saudi Arabia and Italy. Its main exports include fertilizers, oil, and refined products to partners such as Singapore, US, Netherlands, china, and Japan. It is a major and high potential zone for investors in the car industries, clothing franchises, and restaurants. Clothing franchise Kuwait clothing market is a vast area for franchisers in the clothing line. The young and the elderly provide a large and very lucrative market for modern cloth fashions and brands. A good example of clothing franchise in Kuwait is the Cortfiel clothing line started in Kuwait city and has emerged so well in the country and the Middle East. Cortefiel opened its first sale point in Kuwait city. The stores have an area of 178 sq. m in Kuwait 360º, which is one of the Kuwait city modern and exclusive malls. Their latest additions of Cortefiel network of stores have had an interest on male customers. The men collections have been carefully selected to meet the high needs in Kuwaiti market. Cortefiel featured in Kuwait market in 2006 after the franchise agreement in its international expansion strategy. Its brands are now common Serbia, Cyprus, Morocco, Syria, Jordan, and Czech Republic. Kuwait’s market is one of the most competitive in the Middle East (Moore 134), and opening of the Kuwait City Cortfeil store strengthened the clothing line in the Middle East. Car franchises According to Dianne, car dealership is another successful area in franchising in Kuwait. Most of all well-known automobile brands and makes are common in the country (1-16). The most common in Kuwait include Ford, GMC, Cherokee Jeep US, Volvo (Sweden), BMW, Mercedes, Audi, and Jaguar. The car venture is also booming zone for the Japanese car franchises such as Honda, Toyota, Datsun, and Subaru. Japanese companies are the major car franchises in Kuwait. They overcame the US in the 1993; U.S had dominated the market by then. In Kuwait, the car market is very competitive, but with the citizen’s high standards of living, the industry has been a success. Restaurant franchise Over years, Kuwait market has had a remarkable evolution in franchising (Moore 143). Major leading restaurant franchises have found the country as a suitable zone for expansion of their businesses and bearing in mind that Kuwait is a gateway for business in the Middle East. Restaurants such as the Macdonalds restaurants that ventured into Kuwait franchise market in 1994 have seen remarkable success in the Kuwait market. Other successful restaurant franchises in the country include the Starbucks coffee and Burger King among others. The Kuwait provides a suitable market for food points thus the food points can attribute their success to the amazing local consumers (Moore 204). Outsourcing IT in Kuwait In the recent years, Kuwait has registered numerous activities of outsourcing that have played a major role in many industries and activities of the state. Outsourcing has been common in Kuwait’s government projects. The main aim of outsourcing is to acquire the technological, economic, and strategic advantages from firms outside the country (AbdulwahedKhalfan & Tom 4). As an application of IT in major developing countries gets pervasive, most government institutions also are focusing on the appropriate means to facilitate successful IT adoption. There has been several IT outsourcing activities in Kuwait in areas such as in legal sectors, accounts, finance, HR activities, logistics and in marketing activities. For example, the Kuwait Contractor Company that is a specialized investment outsources most of its peripheral activities. Kuwait has been on the forefront to outsource most of the technological activities. Kuwait is a major destination for many international contractors as the government seeks to improve the country through development of infrastructure. For example, the Bubiyan Island development project, the client, Kuwait Ports authority decided to outsource the project to receive the best technological developments. The port is a major achievement of Kuwait’s pursuit of becoming a regional economic and financial hub. Kuwait awarded South Korea’s Hyundai Engineering and Construction Company, a contract to develop the port. The contract was also in partnership with Kuwait’s Kharafi Group as a way of promoting local companies. The port is to serves as a gateway for both Iraq and Kuwait. The main purpose of outsourcing such projects is to enhance effectiveness, to cut on costs and to ensure employment of high technology for the best results (AbdulwahedKhalfan & Tom 7). Work cited AbdulwahedKhalfan and Tom Gough. IS/IT Outsourcing in Kuwait : Public Sector Experience 2012. p 2-9 Available at http://www.engineering.leeds.ac.uk/computing/research/publications/reports/ Dianne H. B. Welsh Franchise relations in the Gulf region "The case of the Elegant shoplifter, Shuwaikh, Kuwait." (1996). 3-12 Dianne H. B, Welsh, Peter Raven, and Nasser Al-Mutair. "Starbucks International enters Kuwait." Journal of Consumer Marketing  15.2(1998)1-15 Moore, Pete W. Doing business in the Middle East: politics and economic crisis in Jordan and Kuwait. No. 20. Cambridge University Press, 2004 134-325 Moore, Pete W. "What makes successful business lobbies? Business associations and the Rentier state in Jordan and Kuwait." Comparative Politics (2001): 127-147. Read More