The house where everyone's buying
When Dinesh Paliwal walked into a press conference at the opening of his company's latest store at The Dubai Mall on Tuesday, he seemed very eager to prove a point.
"Friends," he told the gathering, "… all the doom and gloom is there. The excitement is right here."
Then he added: "I decided to miss one of the biggest consumer electronics events in the US to be a part of where things are really happening."
As the Chairman and CEO of US-based Harman International, a global audio and entertainment equipment company, Paliwal is at the heart of the ongoing economic malaise that has hit at the core of many industries, including his own.
But in Dubai, at the opening of the swanky, new 16,000 sq ft harmanhouse, the ninth in the UAE and the company's biggest showroom ever, the global financial crisis seemed a bit, well, far away.
"I meant everything I said about choosing to come here instead," Paliwal tells me later. "It's a completely different world here. Emerging markets are where it's all happening and this is also an indication from us about our desire to put a heavy emphasis on the Middle East market."
The consumer electronics event Paliwal refers to is the annual International Consumer Electronics Show (CES), one of the biggest shows of high-tech gadgetry that officially kicked off yesterday in Las Vegas. The largest trade show in the United States, the CES has also established itself over the years as a major event for the industry and a launch point.
But as the economic downturn tempers the normally dizzying extravaganza, some observers are wondering if the whole technology trade show business is past its peak.
Meanwhile, reports are saying that the same number of exhibitors have registered this year but the floor space is smaller at 1.7 million sq ft or about 29 football fields – down three football fields from 2008.
The number of exhibitors at Germany's CeBit, the world's largest technology trade show, declined to 5,845 last year from 8,106 in 2001. And Apple Inc shocked many fans this week when it announced it would no longer exhibit at the annual Macworld Conference & Expo show from next year.
Still, Paliwal says a lot of the global "doom and gloom" has been exaggerated. "The media has taken it to the another extreme. They make it sound so gloomy… like there is no hope," he says.
"But look at the growing markets here and in China, India and so on… there is so much potential and so much going on."
And it is in these trying times, he adds, that good companies invest. "This is when you should put in more money. Just watch, our partners have opened the biggest ever harmanhouse store, very soon they'd wish it was bigger."
Relatively young at the company himself, Paliwal took over the helm of Harman International from founder Sidney Harman a little over a year ago. Founded in 1980, the company designs, manufactures and markets high-end audio and entertainment products for cars, home theatres, cinemas and professional audio equipment.
Some of it's well-known brand includes Harman Kardon, JBL and Infinity, while the company exclusively supplies car audio systems to auto makers. Harmanhouse, the consumer electronics retail arm sells various audiovisual brands and will soon open its 10th store in the UAE.
"Consumer electronics is a small portion of our business but it is the bedrock of the company," says Paliwal. "Our brands are the platform for many of our products.
MA Fadavi, the managing director of Harman Middle East says the company is all set to pump more money into retail.
"In the 10 years that we have been in the UAE, we have opened nine stores today with one more opening soon in Dubai. That says a lot about how we've grown," he says.
"Our growth cannot be the same as 2006 or 2007 but we are confident. We have faith in Dubai's economy and stability. By 2010 we are expecting more than six million visitors to come to The Dubai Mall. So we are not worried."
According to the US-based Consumer Electronics Association (CEA), organisers of the CES, consumer electronics sales are expected to hit $724 billion (Dh2.6trn) in 2009. That is up 4.3 per cent from the $694bn in 2008 but a steep drop from the 13.7 per cent growth posted last year and the double-digit growth rates of previous years. While the CEA forecast that sales of consumer electronics will slow in 2009, it said they will "still outperform most other sectors".
Harman International's Paliwal says technological innovations and aggressive investments in emerging markets will ensure his company's growth in the coming years.
"Our research and development (R&D) money is expanding and emerging markets already comprise 25 to 30 per cent of our global sales and we want to double that in the next four years," he says.
"My philosophy is simple. I want to show the world that the best brands are not only in the possession of Western houses. China, Japan and the Middle East have the potential to lead the way.
"Economic cycles come and go. It's just like life," he adds.
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