The newly announced 100% ownership law in the UAE will likely slow down or completely eliminate local retail groups which depend largely on their distribution rights to international fashion brands, according to the CEO of Arab Fashion Council (AFC).
Jacob Abrian said there is a chance the distributors will no longer have exclusive right dealers of global brands.
“…the newly celebrated law puts an end to the successful business model of some local retail groups, particularly those that traditionally gained their power from being exclusive dealers of international [fashion] brands as a result of the former ownership law,” said Abrian.
“Contractually, international brands represented by local dealers will have enough legal power to renegotiate their existing agreements and even terminate [them]; hence, to move on with their own capacity by operating solely in mainland...” he added.
Arabian Business reached out to several regional retailers including Chalhoub Group, which declined to give a comment. Chalhoub Group owns rights to Carolina Herrera, Michael Kors, Celine and other global luxury brands.
Al Tayer Fashion, which partners with the likes of LVMH and Armani, also refrained from providing a comment at the time of this article’s publication.
However, AFC chief Abrian said the new law will “set ground for fairer competition” for both established businesses and start ups, where they can make decisions based on measuring benefits of full or partial ownership.
The CEO said the law will ultimately play a positive role for international and local designers in the long run.
“The new 100% ownership law in the UAE will certainly pave the road to attracting more foreign investment into the country… [It] eliminates all doubts that new investors might have when it comes to ownership regulations. In relation to local designers… It will give them the chance to be sole owners of their brands and intellectual property… providing them with more leverage to attract partners that will be interested in investing in their shares versus real value,” he said.For all the latest retail news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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