U.S. Firms Find Bonanza in Kuwait : Grateful Arabs Are Eager to Hand Out Contracts to American Companies
Four hundred American business executives landed here like an in vading army last week, along with three plane loads of merchandise--from trinkets to cake mix to high technology.
They were ready to battle for the $20 billion in business to rebuild and resupply Kuwait. The disappointed retreated to the airport Monday morning. But under the bluest skies to grace this oil-smeared emirate in a month, the victors were digging in to stay.
Exsel International, a Santa Ana-based marketing company, came to Kuwait hoping to find local agents and distributors for six California companies it represents. It did. The firm also snagged a big computer sale and has high hopes for even bigger contracts.
“We expect a minimum of $6 million in sales to upwards of $50 million from this trip,” said Exsel President Raymond Korotie. “We’ll be staying on probably three to five extra days just to meet the people we have appointments with. I’ll be back in two weeks.”
Before last Aug. 2’s Iraqi invasion, U.S. companies held just 15% of the contracts Kuwait had with foreign companies. But Commerce Department officials hope that the goodwill generated by the U.S.-led liberation forces will translate not just into a one-time contract bonanza, but into a permanent foothold in one of the Middle East’s richest markets.
“Kuwaitis want to do business with American companies,” said Timothy J. McBride, assistant secretary for trade development, who estimated U.S. exports to Kuwait--contracts and sales--at $1.5 billion since the invasion, compared to $500,000 to $800,000 annually in recent years.
“We’re looking at around $2.5 billion easily this year--triple U.S. exports--and considering this was a marketplace we didn’t really go after aggressively, we’re doing pretty well,” said Robert S. Connan, commercial counselor with the U.S. Embassy in Kuwait.
The trade show, conducted at one of the few Kuwait City hotels left relatively unscathed by the occupation, attracted thousands of ordinary Kuwaitis. The men roamed the red-white-and-blue booths dressed in traditional white dishdasha robes; most women draped themselves in black abayas. But the hundreds of Kuwaiti children dressed in miniature surfer duds and Ninja Turtle T-shirts. They clamored for American flags, buttons, T-shirts, even product brochures.
“They love to come up and take anything that’s American, anything,” said Michael Soares, a corporate business development official for Everex, a Fremont, Calif.-based computer firm. Soares had sagely festooned his booth with American flags and programmed his computers to display multicolor “I love Kuwait” graphics.
“We have had some equipment sold over the counter, but it’s more of a family attraction,” he said.
Soares isn’t complaining, though. With help from Exsel, he has sold $600,000 in computer notebooks, PCs and laser printers he brought with him, sealed a deal worth more than $1 million with the Kuwait Ministry of Education and has high hopes for deals pending at two other ministries.
“I can’t disclose which,” he said. But we’re looking at over the next 12 days doing $25 million.
“I think we’re doing a lot better because we’re getting to talk to the right people, and our product is actually made in California,” he said. “The booth next door, if you turn the computers over, they are made in Taiwan. The Kuwaitis feel like they owe America something.”
Other California companies were equally bullish, even those that did not leave with full order books.
“We did not come expecting to sell a lot of things off the floor. We came to renew old acquaintances,” said Karen L. Foley, staff consultant at Oracle Corp., a database company from Redwood Shores, Calif. The firm’s year-old office was looted by the Iraqis, but it plans to reopen this week.
“The landlord left town and the air-conditioning room is locked,” Foley sighed. Still, she said, “as long as we can show a commitment to Kuwait, show that we are not just some vultures, I think Oracle could fare very well.”
Across the hall, Kuwaiti buyers with fresh memories of power blackouts were clustered around Arne Ogaard’s collection of flashlights. Inexpensive they are not, but Ogaard, a former Los Angeles police officer responsible for international sales for Mag Instrument Inc. of Ontario, boasts that the waterproof, dust-proof, Operation Desert Storm-tested torches are “the best in the world, by far.”
Ogaard said he has $30,000 of orders in hand and expects at least $120,000 more.
“We just sold Saudi (Arabia) civil defense 5,000 units, and they’re ordering another 5,000 for the hajj, “ the annual pilgrimage to Mecca, he said.
But many businessmen said their profit margins are slim and groused about Kuwaiti customers haggling fiercely over small sums in million-dollar contracts. “They want everything cheap-cheap,” said one businessmen who asked not to be identified.
Though consumer products and high-tech equipment appeared most in demand, service companies also had high hopes.
James F. Stitzinger, of Books for Libraries Inc., in North Hollywood, estimates that the Iraqis looted millions of dollars worth of books from Kuwaiti schools and universities, including an estimated $75-million collection at the Kuwait Institute for Scientific Research. Even elementary schools have been cleaned out.
“I hope to give them a survival collection because they are going to open schools in September and they don’t have a single book,” he said.
Some companies were intersecting gingerly with Kuwait’s postwar political realities, which include government attempts to limit the number of foreign guest workers and control them more tightly.
Technology Connections U.S.A., of Cupertino, Calif., which arranges labor contracts for professional, skilled and unskilled workers, closed deals to import 5,000 unskilled laborers from India, the Philippines and Sri Lanka, said Bhagwan Bhatia, the Bombay, India-based director of finance. The company expects to place 50,000 more in the next year.
“Kuwait will need cheap labor,” Bhatia said gravely.
Wages range from $112 a month for janitors and other unskilled workers, who live in rough camps and may not bring wives along, to $1,400 for an engineer, he said. Most will have two-year contracts.
“Before, they were not treated well,” he said. “But now, (Kuwait) will be requiring a lot of manpower. They have to change their policy.
“We don’t give a slave to work for you; we give a man,” he added. “You have to respect him.”
Several U.S. businessmen said they felt uneasy about Kuwait’s political situation, though none was deterred from investing here. Soares said he heard disturbing stories from local Palestinians and collected souvenirs from the vast stores of live weaponry still for the taking in the desert.
“It doesn’t feel like a safe place,” he said. Nonetheless, he said, “It’s definitely worth it. . . . The Kuwaitis have been real nice to us.”
U.S. Exports to Kuwait Top 10 export commodities for 1990 ranked by value, in millions of dollars.(Percent change from 1989.) Cigarettes (-25.7%): 31.844 Cars, auto parts (-81.7%): 28.277 Aircraft parts (-22.4%): 22.624 Used cars (-35.1%): 18.919 Used auto parts (-58.1%): 7.376 Computer equipment(+841.4%): 6.515 Offshore drilling, production equipment (+207.1%): 5.697 Car accessories (-45.1%): 5.574 Engine parts for trucks, buses (-32.8%): 5.549 Carpeting (+9.9%): 5.064 Source: Commerce Dept.
