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Highs and lows in Dubai of trade in China

Building Brics: The differing fortunes of two businesses based in Dubai highlight the promise, and potential pitfalls, of doing business in China.

The differing fortunes of two businesses based in Dubai highlight the promise - and potential pitfalls - of doing business in China.

For Al Dobowi Group, a family-owned company that distributes tyres and other car products, access to the world's largest car market allowed them to dramatically rev up their expansion plans.

"We wanted to grow globally. The only way we could do this was to go to China," said Harjeev Kandhari, an executive director at the company, which has sales agreements in Saudi Arabia, the UAE, Nigeria and Europe.

"Now we have 3 per cent market share in the UK, sitting in Dubai," he said. "That would have been impossible without China."

The company found success through supplying materials and equipment to Chinese manufacturers, which Al Dobowi then distributes elsewhere in the world.

But as the costs of doing business in China grow, the company has chosen to compete with higher-quality tyres produced elsewhere.

The difficulties of operating in China are such that businessmen should tread with caution, said Rami Ghandour, the executive director of Metito Utilities, a water treatment company.

Despite entering China in 1994, when the country was ripe for foreign investment, Metito found competing with local firms hard enough to give up on the country altogether - especially when its revenues started disappearing and reappearing at a rival company nearby.

"I still can't pinpoint how they did it," he said.

The company re-entered China in 2008 as part of a joint venture with Germany's Berlinwasser, finding more success as it grew from two plants to seven.

However, this time around the country has presented a new set of challenges, as local workers demand higher wages and the yuan appreciates, Mr Ghandour added.

"It's a common misconception that China is a low-cost country," he said.

"It might have been in the past, but it certainly isn't any more."

ghunter@thenational.ae

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