This year's Consumer Electronics (CES) Show, held this month in Las Vegas, was dominated by the presence of a new generation of Chinese manufacturers.
New lines of Chinese IT and IT-related consumer devices, such as smartphones and smart TVs, will soon be flooding regions outside the United States, with the Middle East high on the list.
"For consumers in the UAE this will mean becoming acquainted with new brands such as Hisense and Haier," says Bob O'Donnell, a vice president at the international research firm IDC.
According to Mr O'Donnell: "You had to just walk through the showroom to fully comprehend the scale of influx of Chinese manufacturers. The first thing you see is a huge stand for TCL. Hisense also has a huge stand and do other Chinese manufacturers."
The new breed of Chinese manufacturers are now producing smart TVs, Blu-ray players, personal computers, laptops, smartphones and other consumer items at a far cheaper price than other companies. Chinese-made devices effectively dominated what was the largest show in CES's 45-year history, with 3,250 exhibitors showcasing about 20,000 new products to 150,000 attendees from more than 170 countries.
"The Chinese are now doing what the Japanese and Koreans did before them and undercutting western prices," says Mr O'Donnell.
Previous CES shows have been dominated by big US firms such as Microsoft, now largely noticeable for their relatively low profile or complete absence.
CES 2012, for example, was overshadowed by Apple's new product unveiling, which generally takes place early in the year. But this year, the Chinese have stolen even the mighty Apple's thunder, suggesting consumers may finally becoming weary of the industry's best-known brand.
"It was largely a Chinese vendor show … There was no Apple shadow whatsoever at the show I could find, typically even though Apple isn't there, they hang like a dark cloud over the show. That didn't happen this year," says Rob Enderle, the principal analyst at research company the Enderle Group.
Instead, the show was flooded with low-cost rivals to Apple's treasured line of computers and smartphones.
"Of the Chinese vendors Lenovo, Hisense and Huawei stood out. Lenovo owned the PC segment … Hisense took over Microsoft's premier space across from Intel and had the best overall placement of the Chinese vendors, and Huawei pulled the most interest in their phone lines, only Samsung was stronger," says Mr Enderle.
Hisense in particular used CES to broadcast to the world that it intends to eat the top western manufacturers' lunch. It used dance performers to draw conference attendees to view its 110-inch TV, claimed to be the largest in the world, together with other models using 3D technology.
Another Chinese brand, Haier, also showcased smart TVs that have gesture control and face recognition features. China's TCL also unveiled its super-thin Blade TV together with a smart TV that can identify the face of the viewer to recommend specific content.
Smartphone makers such as Huawei and ZTE are increasingly starting to target foreign markets and were in evidence at the US show. But there were also rumblings at CES 2013 that the Chinese may have backed outdated technologies, and the industry is looking for innovation elsewhere.
According to Nick Dillon, an analyst at the international research company Ovum, the focus of innovation has now shifted away from the kind of hardware showcased at CES towards the software and services running on the devices. Consumers are increasingly judging new devices not merely on their design and functionality but also on the number of software applications they can access.
Mr Dillion believes that the hardware market has reached a level where it is unlikely to improve significantly. The software market, however, is mushrooming. According to Ovum, 40 billion software applications have been downloaded from Apple's App store.
Mr Dillon believes that this emphasis on software application will also extend to other devices such as thermostats and wearable fitness trackers. Several IT companies unveiled wearable fitness tracking devices at CES 2013, including Fitbit, Fitbug, Withings and BodyMedia.
The car industry is also focusing on incorporating IT software applications into its products. These use the latest consumer electronics technology to offer drivers features such as in-car entertainment and internet-based communications.
But the software hurdle for the Chinese may not be as high as Apple, with its proprietorial strategy, would wish. The Korean consumer electronics giant Samsung, for example, uses Google's Android operating system to power its smartphones, which are currently outselling Apple's smartphones.
The Chinese phone maker ZTE is also using Android, an open operating system that is also now freely available to other Chinese electronics manufacturers wanting to offer western customers a wide range of software applications.
Consumers in the UAE can therefore expect 2013 to be the year when a new generation of Chinese brands start to seriously undercut established consumer electronics manufacturers.
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Stage Two:
1. Mark Cavendish (GBR) QuickStep-AlphaVinyl 04:20:45
2. Jasper Philipsen (BEL) Alpecin-Fenix
3. Pascal Ackermann (GER) UAE Team Emirates
4. Olav Kooij (NED) Jumbo-Visma
5. Arnaud Demare (FRA) Groupama-FDJ
General Classification:
1. Jasper Philipsen (BEL) Alpecin-Fenix 09:03:03
2. Dmitry Strakhov (RUS) Gazprom-Rusvelo 00:00:04
3. Mark Cavendish (GBR) QuickStep-AlphaVinyl 00:00:06
4. Sam Bennett (IRL) Bora-Hansgrohe 00:00:10
5. Pascal Ackermann (GER) UAE Team Emirates 00:00:12
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Engine: 2.4-litre 4-cylinder
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Power: 181bhp
Torque: 244Nm
Price: Dh122,900
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Who: Marseille v Atletico Madrid
Where: Parc OL, Lyon, France
When: Wednesday, 10.45pm kick off (UAE)
TV: BeIN Sports
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Starring: Nayanthara, Vignesh Shivan, Radhika Sarathkumar, Nagarjuna Akkineni
Director: Amith Krishnan
Rating: 3.5/5
Like a Fading Shadow
Antonio Muñoz Molina
Translated from the Spanish by Camilo A. Ramirez
Tuskar Rock Press (pp. 310)
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COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
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Kanguva
Director: Siva
Stars: Suriya, Bobby Deol, Disha Patani, Yogi Babu, Redin Kingsley
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- Larger entities have specific provisions for asset and liability movements, business restructuring, and handling foreign permanent establishments.
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Rating: 4/5
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Starring: Vijay, Sneha, Prashanth, Prabhu Deva, Mohan
The specs
Engine: 2.7-litre 4-cylinder Turbomax
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