Majority Of UAE SMEs See Competition As Biggest Risk

Small and medium businesses in the UAE rated direct risks such as competition and weak consumer demand as more serious than damages from fire and supply chain disruptions, a new survey has found.



One in three small and medium sized businesses (SMEs) in the UAE said that stiff competition in the market was the biggest risk they faced, according to the 2014 Global SME survey by insurer Zurich and Dubai SME.

About 20 per cent of the companies surveyed in the UAE said that weak consumer demand was the second biggest risk they faced, followed by 16 per cent who cited legal problems.

The 2014 Global SME survey polled 3,800 senior executives of SMEs around the world, including 200 in the UAE, to rank the top three risks faced by their businesses.

SMEs in the UAE were also found to prioritise such threats over other physical damages such as fire or a supply chain disruption, the study found.

Only 11 per cent of SMEs in the UAE believed that fire was a major risk while just eight per cent viewed the failure of partners and suppliers as a risk to their businesses.

In addition, just 14 per cent of SMEs in the UAE considered the health and safety of employees a potential risk to their businesses. This is in comparison to 32 per cent and 24 per cent of SMEs in Austria and Germany respectively who considered employee health a key risk to business.

Meanwhile, the number of SMEs concerned about cybercrime and damage to their vehicles rose from six per cent in 2013 to reach 10 per cent in 2014, the survey showed. Concerns over natural catastrophe and weather were up from four per cent to eight per cent in 2014.

On the other hand, the survey showed that theft has fallen as a perceived risk with just 11 per cent of SMEs listing it in 2014 compared to 18 per cent in 2013.

“The survey reveals that UAE SMEs need to seriously address gaps in their exposure to risk, especially when SMEs constitute more than 90 per cent of the total business establishments in the UAE,” said Abdul Baset Al Janahi, CEO, Mohammed Bin Rashid Establishment for SMEs (Dubai SME).

“SMEs that understand business risks and take measures to protect their businesses tend to benefit in the long term. While our SMEs are generally doing well, they should not take their business growth for granted.”

SMEs play an important role in the UAE’s economy as they contribute more than 60 per cent of total UAE GDP, according to the ministry of economy. They also contribute 70 per cent of Emirates’ non-oil GDP and employ 42 per cent of its workforce, as per an earlier report by HSBC.