The reliance on this location on the Persian gulf for both air and ship freight is expected to experience a 50% growth rate in the coming three years (Yoders, 2010). This will be reflected in an increase in investment for warehousing systems, supply chain management centers and the development of more efficient airline terminals specifically designed for the needs of air freight companies (Yoders, 2010). This will also translate into the need for greater services across the value chains of many of the world's most advanced and quickly changing industries, including the automotive industry (Sa Joe, 2006). A second example is that of professional services in construction and development (Donahue, 2007). Many American manufacturers have production centers in China and India, and need a more efficient route to European markets. The investments in supply chain infrastructure on the part of the UAE government are deliberately aimed at the needs of western nations (UAE Report, Q3, 2010). In effect, the UAE government is creating a state-of-the-art supply chain hub to rival any in the world, also offering tax-free export and outsourcing zones to attract investment. American companies whose supply chains and logistics systems stretch across China, Russia, and through North America can save days, even weeks of travel and delivery time using the Dubai centers for supply chain management. The potential for American companies to completely change the competitive dynamics of their companies is well within reach. Any American manufacturer who sells into Europe, the Middle East, Africa or Asia needs to consider Dubai as a potential supply chain hub.
Dubai's investments in two state-of-the-art airports, the free trade status granted freight carriers, and the development of tax incentives to foster new venture development all also show how committed the city and its supporting nation are to growing this area of the economy (UAE Report, Q3, 2010). For American companies looking to move a significant portion of their supply chain operations here, the financial advantages are very favorable.
A major concern for any company looking to relocate to Dubai, or create satellite offices and invest in the city is the availability and costs of healthcare for employees. Fortunately, Dubai has created an exceptional healthcare system that is 75% financed by the government and has over twenty hospitals throughout the region (CIA Research Division, The World Factbook, 2010). There is also a mandate from the UAE government to keep medical costs down for citizens and expatriates living in all areas of the country including Dubai. All of this translates into significant cost savings for any American company setting up offices in Dubai, or relocating entire headquarters as Halliburton has done.
The UAE has deliberately created programs and initiatives to foster and nurture Foreign Direct Investment (FDI) in their country (CIA Research Division, The World Factbook, 2010) (UAE Report, Q3, 2010). With so many incentives in place to support western businesses, it is understandable why corporations with significant revenue opportunities in the Middle East are relocating there. The fact that many U.S. companies are moving their headquarters here for proximity to opportunities throughout the region, and the growth of investments in supply chain infrastructure speak to this commitment (Yoders, 2010). The development of free tax zones for outsourcing and supply chain operations underscore this commitment, as the banking structure being heavily underwritten by the UAE government to ensure stability. The future of Dubai is in the direction of how it manages to attract and retain investors and partners globally, specifically from the U.S. The UAE government has made this a strong priority.
Frederik Balfour. (2006, December). Emerging Markets: Dipping a Toe In the Risk Pool. Business Week,(4015), 84.
Central Intelligence Agency, Research Division, The World Factbook. (2010). CIA, The World Factbook UAE Analysis (ISSN 1553-8133). Washington, D.C.: Government Printing Office. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/ae.html