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Wed 2 Jan 2019 10:31 AM

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Video: Has Dubai entered a low margin era?

The UAE economy has entered "the low-margin era" and companies will need to increase topline revenues in any attempt to increase profitability, according to Petrochem CEO Yogesh Mehta.

“I’m a strong advocate of saying that the good times are over,” Mehta said in an interview with Arabian Business.

“The world fell off a cliff in 2014, but no one realised it. People are still thinking this is a one year blip and that the rest is fine. Well it isn’t fine, this is the fifth year [since the economy transformed],” he said.

Founded in 1995, Petrochem is the Middle East’s largest chemicals distribution company, with $1.4 billion in annual turnover. It’s target audience, companies from printing to packaging that require chemicals to manufacture, sees it distributing its products all over the world.

However, an oversupply of raw materials and manufacturing around the world, as well as gaps shrinking with the pace of technology, has meant that “you can’t capitalise as you used to,” said Mehta, an HBS alum.

“Early on, the Middle East was dependent on imports. China single-handedly over supplied the world, while Saudi Arabia and the UAE have also become manufacturing hotbeds. Meanwhile, this is also being duplicated in India, which used to be tech deficient and is now tech efficient. Meanwhile, technology has changed the nature of information dissemination and people now know everything immediately,” he said.

Competing in the new world will need a new set of skills “because companies will need to fight to survive,” he added.

(Source: Arabianbusiness.com YouTube channel)