Smart Manufacturing: More on China

Last week we ran a series of China and manufacturing questions by Professor Kulwant Pawar of Nottingham University Business School – this week, we’ve got Dexter See’s - Singapore-based Ascendas PTE Ltd (www.ascendas.com) and a presenter at PEIE’s (www.peie.om) Smart Manufacturing Conference - perspective on Made in China.

PM: In reading about industrial development in China, one often encounters the terms – Economic and Technological Development Zones (ETDZs), High-tech Industrial Development Zones (HIDZs), Free Trade Zones (FTZs) and Export Processing Zones (EPZs). To the new China-hand, this “alphabet soup” may seem daunting and confusing. Can you explain what each of these terms signify and how they differ and can affect a company’s selection of a location?

This is a natural progression of any economy moving forward from agriculture-based to industrialization to knowledge-based economy. I see it in good light that China is increasingly participating in a larger international community, and at the same time, the international community can tap on to the resources China has to offer. These zones offer tax incentives and other benefits that foreign direct investments (FDI) can take advantage of. From a business space perspective which Ascendas plays a role in, these zones are better planned and managed, with better infrastructure and services and they enjoy a higher profile compared to other industrial estates. For example, Ascendas plays a part in the development of Suzhou Industrial Park located west of Shanghai. SIP is an ETDZ where FDI enjoys, for example, income tax exemption for two years and 50% for the next three years. At the same time, the park is well-planned with excellent infrastructure, efficient logistics and customs hubs, and, for human-resource talent growth and retention, it has adopted the Singapore-styled Provident Fund. Investors would find such location ideal for business and knowledge-based workers. The ETDZ and HIDZ are the same but reporting to and supervised by two different ministries. ETDZ reports to MOFCOM while HIDZ to Ministry of Science and Technology. FTZ and EPZ are bonded areas. EPZ is a new version of FTZ but for manufacturing only (without trading).

PM: Today over two-thirds of foreign manufacturing in China is for the domestic market. The second wave of FDI is characterized by a two-fold shift: from low knowledge base industries to medium and highly knowledge-intensive industries and geographically from the coastal and southern areas of the country inward. This seems to indicate a less coastal bound stage of development and a more domestic as opposed to export oriented economy than most other observers have reported. Are these trends clear at this time and how certain is this change in economic development?

China has a huge domestic market one can cater to. A large number of FDI establish itself initially for exports but soon finds the domestic market lucrative as well. At the same time, we see a boom in returning Chinese, a strong pool of well-trained Chinese executives, and a high return of investment in education from the locals. All these combined, coupled with the Government push to expand to the inner cities, give rise to what you have mentioned. Inner cities like Xi’an, Chengdu, Chongqing are developing rapidly not just in manufacturing but in Information Technology as well as IT-enabled Services. Ascendas sees these emerging trends, and as a good service provider, follow our clients there to assist in their developments. A case in point is Infineon who has established in Xi’an’s Ascendas Innovation Hub.

PM: The non-state sector, which consists of private companies, self-employed businesses, shareholding corporations, joint ventures with foreign investment and community-owned rural industries, a great part of which are actually private undertakings, now contributes 74% of industrial output, 62.2% of GDP and more than 100% of the increase in employment. These and other statistics seem to indicate an economy that has already transitioned much more to a private business model than most people outside of China realize. Is this change as deep as the above statistics suggest and in terms of state control of business how different is China today than many European countries in terms of state control and state intervention in the economy?

The State is still playing a dominant role in economic development. However, we see the major SOEs restructure into more profit oriented companies and more core-business focused. Many are listed on the Shanghai or Shenzhen Stock exchanges or even overseas in New York, Singapore and Hong Kong. The telecommunications and banking sectors seems to be taking the lead. Many of the smaller SOEs are also privatised. Many private companies are emerging, especially in the real estate sector and many other industries. Out of the 74% non government owned industrial output, many, we suspect are contributed by foreign-invested companies given the strong FDIs in the last ten years. (suggest you check with Toh Sim on the response to this one)

PM: If you were to give five reasons for a company to consider establishing a factory or a business office in China, what would those reasons be?

I would say the five would be huge market opportunities, availability of raw materials, abundant talents (and affordable), good infrastructure, and low costs of business. But I must caution that it is tough business in China given the strong competition in every area.

PM: How important is an understanding of the regions and provinces of China to a company’s plans in China and how best would you recommend for a company to acquire and build such knowledge into its planning?

Just like anywhere else, local knowledge is an absolute must. This knowledge can be in terms of market dynamics, technological trends, and guanxi (relationship). I would say, first, gather info from resources you can get your hands on, be it publications, seminars, or exhibitions. It would also help for one to talk to experienced investors either from similar industry or those who are operating in locations you want to establish in. Next, build relationships and a circle of influence while working the ground. When it is time to establish a presence there, offices and ready-built facilities are available for lease so that risks are kept low. I believe investing in human resources is important in acquiring and building such knowledge – so be sure to put this into the plan as well. Working with distributors (from city to city) is a good way Multinational Companies can make entry into the market and gather intelligence. Joining trade organizations and chambers of commerce is an excellent networking platform too.

PM: For years, China has been the cheap assembly shop for the world’s shoes, clothes and microwave ovens. Now, it’s laying the groundwork to become a global power in more sophisticated, technology-intensive industries that demand considerable capital. Billions of dollars are flowing into autos, steel, chemical and high tech electronics plants. How will this affect manufacturing in Europe and North America?

China has the advantage of learning from the others and so shortens the learning curve. As one saying goes, it skipped the VCR era straight into CD and DVD. At the same time, its companies have attained a level where they now go on a buying spree. Some say that this is going to be China’s era. The European and North American manufacturers are also expanding into China. They are taking advantage of the opportunities to gain better competitiveness worldwide.

PM: Chinese manufacturing will drag down the profitability of global industries – do you agree with this statement?

One could sell at a lower price but at a lower cost, profitability can still be maintained or even increased. Lower costs, of course, can be achieved with advancement in technology, for example.

KOM on Corporate Communications

In today’s highly competitive world there's a lot of pressure on marketing and communications executives to find more innovative, better crafted and executed ways of communicating with not only their internal audiences, who are the building blocks of their own organization but also their customers who drive profitability and purpose. Knowledge Oasis Muscat’s (KOM) December Open House - scheduled for Tuesday, 6 December at 5:30pm - will explore and show how certain communication activities can help maintain or improve an organization’s overall competitive edge.

According to Ibtisam Al Faruji (pictured), KOM’s Open House Co-ordinator: “December’s session is intended for heads of communications departments, senior managers and marketing professionals taking responsibility for planning, managing and delivering integrated marketing, communications and PR strategies.”

With over 15 years professional experience in corporate image management, Atulya Sharma, Communications Manager, United Media Services SAOC, and the seminar’s presenter said: “Successful communications is increasingly central to the management of an organization’s reputation in all its forms. Commercial performance, corporate values and good governance are all critical to the more holistic perception of an organization now demanded by the market – this includes investors, customers, the media and employees.” Having consulted international organizations on formulating and implementing best practice corporate communications strategies, “Sharma combines practical commercial experience along with an interactive style. We fully expect the seminar to be relevant and applicable to the challenges faced by Oman’s senior corporate communicators,” remarked Al Faruji.

Including the latest communications, marketing and PR theory and developments, Sharma’s Open House seminar will draw on existing best practice, use real-life, corporate communication case studies and generate thought provoking ideas and solutions that can be immediately applied by attendees in their own situations. Asked about the value of KOM’s 6 December seminar, Hisham Al Zubaidi, Marketing Director for the Public Establishment for Industrial Estates said: “If I had to list the key reasons why I’ll be attending Sharma’s session they’d be: to help me develop my strategic framework for corporate communications and PR planning and strategy implementation; to help me realize the value of my brand and corporate image through integrated communication channels; to understand the implications of global and local communications planning and management; and to learn best practice tools, tips and techniques to apply in my organization.”

PEIE Thinking

PEIE's blog is intended to give you an insight into Oman's manufacturing and ICTS sectors. In this regard, we sat down with Sultan Al Habsi, PEIE's Executive President and discussed innovation, smart manufacturing, competition, SMEs, Knowledge Oasis Muscat and Open Source. Indeed, the interview ought to give you a flavour of PEIE's way of thinking.

PM: What does innovation mean to you?
Innovation is the successful exploitation of new ideas. We want to get ideas out of the research centres, into the offices and factories and onto the balance-sheet to help Omani businesses compete in the global market. To be frank – our future success will be won through the exploitation of new ideas, particularly in the area of information and communication technology.

For the Omani economy as a whole, innovation is the key to higher productivity and greater prosperity for all. The government has already laid the foundations of an innovation-driven economy by creating a stable macroeconomic environment, promoting fair and free trade and improving education and skills. But there’s more to be done. To hold our own in modern manufacturing and ICT – areas that PEIE is actively involved in – we’ll need to innovate strongly by creating new high-tech firms and light-manufacturing industries as well as helping current PEIE-based firms upgrade.

At the same time, we need to raise the level of innovation in our service industries. In this regard, PEIE is in the vanguard of helping Oman become a regional knowledge hub – a country with a reputation for turning knowledge into new and exciting products and services; a country that invests in business R&D and education and skills, and exports value-added goods and services. As you’re aware, Knowledge Oasis Muscat (www.kom.om) is very much part of this process. Indeed, this is why PEIE is organizing the Smart Manufacturing Conference – 23 – 25 January 2006 (www.peie.blogspot.com) on an annual basis, we feel there’s a real need to bring business people, policy makers and academics together to discuss innovation and entrepreneurship and their importance to manufacturing and ICT.

PM: We hear a lot about the Weightless Economy – what’s PEIE’s take on it?
In our view, the weightless economy is shorthand for the changes taking place in markets across the globe. Just think back a little, only 20 years ago, phone conversations travelled by copper wires which carried less than one page of information per second. Today, a strand of optical fibre as thin as a human hair can transmit in a single second the equivalent of over 90,000 volumes of an encyclopaedia. This change is driven by two factors which reinforce each other – rapid development of technology, and the opening up of markets across the globe.

PM: How does an established company actually go about it if it wants to innovate?
There’s no right way of going about this. But there are a variety of tactics a company can use to improve the probability of producing new ideas. One is to fundamentally question the existing mental models of the organisation. Let’s face it, every organisation operates under certain mental models and paradigms. For example, these are our customers, this is how we market, this is how we sell, this is how we hire, this is how we do business. What I’m suggesting is that an organisation will never discover anything new unless it first questions what it already has and says. Ask yourself - why are we doing it like this, is there another way? As long as an organisation is happy and satisfied with what it has, it isn’t going to search for something new – and will never discover anything new as a result.

PM: With your experience of managing KOM, where do you see innovation happening in the future, particularly in IT?
Probably in places we least expect it. I'm intrigued by what’s going on in countries like China that are promoting Linux and other open source solutions in its government and to its citizens. Their government favours Chinese-developed open source software, such as the Chinese Academy of Science's Red Flag Linux. Like many countries around the world, China wants to build its ICT infrastructure and economy with domestic spending and expertise. India, Argentina, Mexico, Germany, Venezula and Peru are doing similar things, if not at the government level, then at the grassroots and corporate level. With all these people building software to solve real-world problems using open source tools and technologies, I expect there will be a deluge of new innovation in that space in the next ten years or so.

PM: What do you feel are the main challenges facing Gulf-based small businesses today? One of the main challenges facing the region’s SMEs centres around the death of distance. With improving technology and the Internet, SMEs can operate on a global basis. For this to succeed, they need to be as professional, as efficient and as cost-effective as possible. The other challenge facing them is the immense competition from larger companies.

PM: What’s the state of entrepreneurialism in the Gulf?
Entrepreneurialism is thriving in the region, but there is a high churn rate of entrepreneurs who come and go. For instance, hundreds of budding entrepreneurs will give it a go this year in terms of setting up their own enterprise but many of these will close within their first three years. This is one of the many start-up issues we’re grappling with in the Knowledge Mine, the business incubator program at KOM.

PM: What type of person makes a good entrepreneur?
Being a bit of a loner tends to help, as sometimes the whole world is against you. You could go into work one morning and find a bank breathing down your neck, a supplier wanting to know what’s happening, orders stacking up and staff not turning up. So, a good entrepreneur needs a thick skin.

PM: A lot of people think entrepreneurs are born, not made. What's your view on this?
This is an interesting question. I'd say both. Some people are born as such – they have the right temperament and are entrepreneurial from an early age and others pick it up as they go along. For people like Steve Jobs of Apple and Sir Richard Branson of Virgin, I’d think it’s more the former than the latter. I admire people like Jobs and Branson for creating new things in the face of severe doubt and opposition, and in doing so, for making the lives of people that much better. Same for HP in its early days. I admire Bill Joy for coming up with Java and Sun for maintaining a culture of innovation and entrepreneurship.

PM: If you could change one thing overnight to make it easier to start up an enterprise, what would it be?
Changing attitudes to enterprise and innovation is the key to this – fear of failure is one major factor that prevents many people — young and old — from putting their business ideas into practice and business survival rates improve dramatically when fledgling businesses seek advice and support. So, my wish is for a cultural change to take place in the region to stimulate more business start-ups, with people taking advice at each stage leading to more successful, growing businesses, following on from that.

Chinese Manufacturing

As a presenter at PEIE's forthcoming Smart Manufacturing Conference (23 - 25 January 2006, Muscat Inter-Continental Hotel) PEIE Mirror sat down with Nottingham Business School's Professor Kulwant Pawar (pictured) to talk manufacturing and China.

China is the fourth largest country in terms of size and the largest in terms of population. Driven by domestic demand and supported by World Trade Organization accession, China's economy should continue to grow robustly over the next 2 years. The total value of goods and services has been growing at a double digit rate for over 20 years. Although growth figures are now in the single digits (about 7.3 %), this is a large market that cannot be ignored. The World Bank estimates by the year 2025 China's economy will account for 25% of the total world economy.

PM: In reading about industrial development in China, one often encounters the terms – Economic and Technological Development Zones (ETDZs), High-tech Industrial Development Zones (HIDZs), Free Trade Zones (FTZs) and Export Processing Zones (EPZs). To the new China-hand, this “alphabet soup” may seem daunting and confusing. Can you explain what each of these terms signify and how they differ and can affect a company’s selection of a location?

Economic and Technological Development Zone (ETDZ) has a more general function, whilst High-tech Industrial Development Zone (HIDZ) focuses on high-tech industry. But in reality, the distinction between the two is not clear and often they are differentiated only by name. To date, there are 54 national-level ETDZ, among which, eastern coastal regions 34, Middle West regions 21. The ETDZs have been quite successful in attracting foreign investment and have made significant contribution to export.

On the other hand Free Trade Zone (FTZ) and Export Processing Zone (EPZ) are kinds of special zones, whose main function is for international trading, exhibition and export-oriented manufacturing. Therefore, goods imported to these zones enjoy zero custom duties.

PM: Today over two-thirds of foreign manufacturing in China is for the domestic market. The second wave of FDI is characterized by a two-fold shift: from low knowledge base industries to medium and highly knowledge-intensive industries and geographically from the coastal and southern areas of the country inward. This seems to indicate a less coastal bound stage of development and a more domestic as opposed to export oriented economy than most other observers have reported. Are these trends clear at this time and how certain is this change in economic development?

The publicly available statistics are patchy and present a fragmented and fuzzy picture. It is always important to develop a holistic and complete picture as more and more statistics emerge, otherwise there is danger of presenting an incomplete and contradictory viewpoint.

Much of the current production in China has been organised by foreign companies themselves, and they dominate the industry and overseas companies accounted for 87% of China’s 2004 exports. The next 5-10 years will be critical as many foreign companies will cut their expatriate staff to reduce costs and many companies will also lose their special tax status over this period. Currently, state-owned Chinese companies have access to 300,000 engineers who graduate from universities every year, however, foreign companies tend to attract the best talent. Many state owned Chinese companies are initially likely to rely on a fast-growing domestic market before venturing into high technology export markets.

PM: The non-state sector, which consists of private companies, self-employed businesses, shareholding corporations, joint ventures with foreign investment and community-owned rural industries, a great part of which are actually private undertakings, now contributes 74% of industrial output, 62.2% of GDP and more than 100% of the increase in employment. These and other statistics seem to indicate an economy that has already transitioned much more to a private business model than most people outside of China realize. Is this change as deep as the above statistics suggest and in terms of state control of business how different is China today than many European countries in terms of state control and state intervention in the economy?

The emergence of the non-state sector is a phenomenon that has been mentioned by a number of analysts and observers. For instance, recently the Party Congress in Beijing has allowed members of the private sector to come into the Standing Committee. This is a positive step forward, and does indicate a trend towards a more open, diverse economy. While it is too early to say, it is possible to imagine a situation in which the Chinese economy is as diverse as and possibly more flexible than some of those in Europe today. On the other hand, China is already a much more open market than Japan or South Korea were when they started to become global industrial powers. China’s barriers to entry are still falling as it attempts to comply with its promises in 2001 to the WTO. In contrast, the pace at which China is opening sectors gives local companies very limited time to develop their R&D competences and hence innovative products which can compete with western companies.

PM: If you were to give five reasons for a company to consider establishing a factory or a business office in China, what would those reasons be?

1. Low labour costs but committed workforce.
2. Chinese culture is similar to Japanese and Korean and shares similar work ethics.
3. Huge potential for local markets as well as opportunities for export to neighbouring Asian countries and indeed to the West.
4. Relatively well developed infrastructure when compared to its competitors such as India, Indonesia etc.
5. Increasingly educated workforce. For example, in 2004, Chinese universities produced more than 200,000 graduates in computing and information systems and the government estimates that between 1978 - 2003, 700,000 Chinese studied abroad.

PM: How important is an understanding of the regions and provinces of China to a company’s plans in China and how best would you recommend for a company to acquire and build such knowledge into its planning?

Location is always one of the most important decisions which a company has to make as it has significant impact on the returns on investment. It needs to be considered that the development in China are highly divided, some regions are more prosperous when compared to others. In Shanghai more than 50% of the students have finished higher education. However, the level of progression of a region, including economic development, infrastructure, convenience of transportation, can often translate into investment costs and returns. Additionally, the level of development in one region often has high correlations to the culture, educational attainment, attitude and the policies of the local government.

PM: For years, China has been the cheap assembly shop for the world’s shoes, clothes and microwave ovens. Now, it’s laying the groundwork to become a global power in more sophisticated, technology-intensive industries that demand considerable capital. Billions of dollars are flowing into autos, steel, chemical and high tech electronics plants. How will this affect manufacturing in Europe and North America?

The advances in Chinese manufacturing present two challenges for producers in developed countries. First, more companies and industries will face new competition from low cost Chinese manufacturers. Second, as China becomes more self-sufficient, it may limit the opportunities for these same companies and industries to sell product into the Chinese market. In contrast, China’s success has two shortcomings:

1). Despite great effort to climb up the value ladder, the vast bulk of Chinese electronics manufacturing is focused on relatively low-value parts production or assembly.
2). The biggest beneficiaries so far have been overseas ventures.

Furthermore, it has been argued that if a multi-national company can come and take advantage of lowers costs, what can a Chinese company do that is different or better? It is felt that a large proportion of the Chinese educated labour force lacks creativity due to heavy reliance on rote learning and memorisation and students are not encouraged to ask questions. The system is heavily examination oriented even at the top universities.

I feel that the Chinese have not figured out how to capitalise on their culture in terms of economic wealth generation, once this happens then the West should be concerned. Similarly, Chinese industry still lacks technical know-how and competence to compete with the best in the world.

PM: Chinese manufacturing will drag down the profitability of global industries – do you agree with this statement?

As China moves into more sophisticated industrial sectors, Western companies are likely to face new challenges. They will have to move into even higher-tech, higher-value added materials and products - or buy them from China!

PEIE & Clusters

PEIE was involved in the recent MEED Sohar Port Conference (www.emapconferences.co.uk/oman) held at the Al Bustan Palace Hotel.

Establishing plastics and metal clusters in Sohar was a topic raised by a number of panelists at the MEED event. Indeed, the concept of "cluster" has attracted growing interest in recent years as a way to encourage economic development and growth at the regional and national level. PEIE’s existing foundation in manufacturing and technology-based activities, innovation focus, access to national and international business networks, strong local presence, as well as its mix of services to SMEs places it in a strategic position to foster cluster development and innovation in Sohar.

In partnership with Oman Oil (www.oman-oil.com) and Sohar Aluminium (www.oman-oil.com/newsdetails.asp?id=69), PEIE is looking to initiate and develop a downstream aluminium metals cluster in Sohar. In this regard, Quebec's Aluminium Valley (www.transformactions.net/english/val_alumi.html) model is of particular interest to PEIE.

How can Oman-based clusters benefit businesses and the economy?
PEIE believes that clustering can bring a wide range of benefits to both business and the wider Omani economy. For example:

o Companies can increase the expertise available to them if they locate amongst a cluster of other firms.
o They can also can draw upon others with complementary skills to bid for large pieces of work which each of the individual firms would have been unable to complete.
o Advantage can be taken of economies of scale by further specialising production within each firm, by joint purchasing of common raw materials to attract bulk discounts or by joint marketing.
o Social and other informal links are important and can lead to the creation of new ideas and new businesses.
o Reputations spread quickly within the cluster, enabling finance providers to judge who the good entrepreneurs are and business people to find who provides good support services.
o The cluster enables an infrastructure of professional, legal, financial, marketing, technical and other specialist services to develop.

If you’re interested in reading more about clusters, we recommend:

www.isc.hbs.edu/econ-clusters.htm
www.isc.hbs.edu/economicdevelopment.htm
www.competitiveness.org/article/archive/43/
www.gorgebusiness.com/2005/clusters.htm
http://aoi.cordis.lu/article.cfm?article=477
http://aoi.cordis.lu/article.cfm?article=1267
http://www.sciencejobs.com/insider/article.action?article.id=insider106&focusId=uk
http://www.rediff.com/cms/print.jsp?docpath=//money/2004/dec/29inter.htm

PEIE Backs Digital Oman

In partnership with ITTS (ittf.gov.om) and OEPNPA (www.omanobserver.com), PEIE (www.peie.om) has launched a quarterly ICT magazine, Digital Oman (DO) (www.digitaloman.gov.om)

DO is looking to involve and engage its readers rather than merely attract attention. Gaining attention isn’t enough. Put simply, DO’s remit is to analyze technology that has the potential to transform lives, business, industry, government or financial markets. As well as providing in-depth coverage of domestic and international innovations as they move from labs and pilot projects to the marketplace, DO evaluates the social impact of technologies in a variety of fields - from Government, manufacturing, sport through to consumer products.

The emergence of the Internet, mobile phones, satellite TV and SMS has raised Omani consumer expectations of interactivity in all the media they use. Moreover, there’s a heightened quest for self-improvement in Omani society and the explosion of new media is helping to fuel and satisfy this need. DO readers have a keen interest in self-improvement, new learning, ICT, innovation and entrepreneurship. Indeed, DO’s aimed directly at these social transformers. These are people that are involved in change. It is assumed that a high proportion of DO readers have recently changed jobs, completed an undergraduate course, enrolled or are considering postgraduate studies, moved home, had a first child, and so on – this is the educated, business savvy 21 – 35 year-old bracket. These are people that are open to change, guidance and practical information from trusted sources.

DO has the power to arouse interest in ICT and provide information that isn’t readily available. Indeed, in these days of information overload people need trusted influences to guide them through the mass of information. In this regard, DO should be perceived as an idea-generator and motivator. In brief, a reliable and intelligent ‘friend’ that passes on ICT recommendations - issues to think about, explore, do or buy. In fact, DO’s designed to be a companion which is consumed in ‘me’ time, making a private personal experience. In short, DO has been created specifically to become part of an individual’s personal network of reliable sources.

On the domestic ICT publishing front, DO has a head start in responding to this rapidly evolving post-mass-media world. Provided it gives readers good reasons to engage with it, and knows how to harness that engagement, DO should have a bright and long-term future.

PEIE-based Logistics Firm to Serve Sohar

PWC Logistics (pwclogistics.com) is Sohar Industrial Estate’s newest tenant. PEIE Mirror caught up with Chris Clark, PWC Logistics’ Country Manager to talk about Sohar, logistics spending, technology and the new economy. This is what he had to say.

PM: Can you give our readers some background details on PWC Logistics?

PWC Logistics’ is a Global supplier of Logistics services which includes warehousing, distribution, inventory management, transportation and freight management. Its fully integrated, end-to-end supply chain solutions provider, starting with demand planning and procurement and ending with delivery to the retailer or end consumer and invoicing.
PM: Why did PWC Logistics decide to set-up on Sohar Industrial Estate?

Sohar Industrial Estate provided a number of key attributes that were at the forefront of PWC’s requirements:

Geographical Position: 200km from Dubai and 250km from Muscat, the location couldn’t be more strategic.

In close proximity to Sohar Port, 6km away means that we’ll be well placed to service future potential clients.

Security: The 25 year lease means that PWC has confidence to make a significant investment (US$1 million) in PEIE.

The site is extremely well appointed with all utilities and a good road infrastructure already in place. In addition to this, PEIE provides assistance with obtaining building permits, this is a big attraction.

The leasing arrangement with PEIE means that PWC doesn’t have valuable capital tied-up in land.

Finally, Sohar Industrial Estate is a source of potential clients for our services.

PM: Apparently logistics spending in the US is anticipated to be between US$900 billion to a little over a trillion dollars a year. Transportation is a little bit more than half of that. How do you see the Gulf’s logistics market developing over the next 5 years?

I see out sourced Logistics spend in Oman increasing over the next 5 years. As companies focus more and more on core competencies, activities such as Logistics will be outsourced.

In developed Logistics markets such as the US or Europe, the estimated spend on outsourced Logistics is 40 - 45% of total Logistics spend. In Oman the outsourced Logistics spend is estimated at 8% of total Logistics spend (transport is estimated at 46% of this figure), based on trends elsewhere in the world it is my opinion that the proportion of out sourced Logistics in Oman will increase to around 15% over the next 5 years.

PM: Internet technology, wireless communication and tracking devices are the dominant technologies utilized in the freight and transportation industry today. How has PWC Logistics brought all this together?

PWC has invested a significant amount of money in ensuring that it has superior software applications so that it can effectively manage its customer’s supply chains. Our proprietary MicroTransport Transportation Management System (TMS) uses automatic vehicle locator (AVL) units (fitted to each vehicle) and global positioning system (GPS) technology to enable real-time vehicle tracking. Tight integration between MicroTransport and both the warehouse management and order management systems provides customers with full on-line visibility of both vehicles and their contents. MicroTransport also provides information on the truck, driver, route and scheduled arrival date. Another example is the tight integration between our EXceed Warehouse Management System (WMS) and MicroTransport which allows us to create shipment manifests without manual data entry. PWC is continually assessing the latest technologies available so that it can continue to provide value to our customers.

PM: What technological advances are your customers crying out for?

Our customer base is varied, however the common requirement across all industry verticals is for there to be greater visibility of inventory level and event information along the whole supply chain. In order to accommodate this many of our customers are asking for real-time vehicle tracking so that they know where the vehicles containing their valuable goods are located. Another requirement is Radio Frequency Identification Tags (RFID) to allow traceability of high value products and lastly customers are asking for all products to be scanned in and out of warehouses so as to fulfill requirements such as batch traceability.

PM: PWC Logistics has some great web-enabled solutions that provide real-time inventory visibility and control. In your opinion, what has been the best technological investment in terms of ROI for PWC Logistics thus far and why?

There is no one item of technological investment that stands head and shoulders above all others, each investment is seen as part of the whole solution, however our Warehouse Management System (WMS) is our most tangible investment. All of our warehouses use the EXceed WMS. This advanced application manages all warehousing processes, including receiving, putaway, replenishment, picking, packing, labeling and shipping. PM: What factors do you believe will differentiate the winners from the losers in the logistics industry over the next 3 years?

Oman in Logistics terms is a traditional market, it hasn’t experienced significant change in this area over the last decade. I anticipate that due to the catalyst of opportunities such as Sohar Port and Salalah Free Zone that the change over the next three years will be huge.

The winners will be those companies that embrace the change and seamlessly adapt to customer requirements. For those companies that resist the inevitable change then the next few years will be a rough ride.

PM: What makes for a successful “new economy” company?

PWC believes that it has embraced both new technologies and innovations whilst at the same time ensuring that this ‘new knowledge’ is harnessed to the core competency of the Company. For example PWC operates a network of warehouses throughout the Middle East. This can be seen as a very traditional aspect of Logistics, however we have equipped each warehouse with the advanced EXceed Warehouse Management System (WMS) developed by EXE Technologies (now part of SSA Global), Similarly, our fleet of trucks – another traditional aspect of logistics – is equipped with our proprietary MicroTransport Transportation Management System (TMS). We feel that our unique combination of assets and technologies, which provides for seamless real-time inventory level and event information, provides us with a significant edge over our competitors.

Why's PEIE Blogging?

In the words of the Financial Times blogging is: "Home to those informal, frequently updated online journals that people create to share their thoughts and opinions." Increasingly, PEIE has become aware of the potential of blogging as a means of communicating one-on-one with current and potential tenants - and filling a hole in our CRM program.

PEIE's blogging because.......

1. A corporate blog will help us be more approachable.

2. It'll help us keep our finger on the manufacturing and ICT pulse.

3. Current and potential tenants are smart - they're tired of 'corporate speak'.

4. It means we can communicate with our communities unfiltered and promotes instant feedback.

5. It builds a network.

6. Google. Page Rank means the more people that link to us, and the more often the blog is updated, the higher we'll appear on Google's searches.

Business Plans for Start-ups

Knowledge Oasis Muscat runs The Knowledge Mine - TKM -(pictured are the 8 start-ups based in TKM) - a business incubator program. Indeed, we regularly have young entrepreneurs requesting pre-incubation advice. In particular, questions related to business plans. As a response, we've pieced together the following business plan guidelines.

Business Plan for BoldIdea LLC

o Summary of Business Plan
An Executive Summary - a one-pager on what BoldIdea is all about. Hammer home BoldIdea’s WOW Factor. Think of it as a Lift Pitch, because if you can't explain your idea to someone in a one minute climb from the ground to fifth floor your target will be out of the doors and gone. If you pull it off, you'll be off to a flyer with them licking their lips and reading on.

Start with a one liner - your strapline - that really sums up BoldIdea so that your reader instantly 'sees' where you're at.

o Management
Detail BoldIdea’s management and/or business experience and team members – include your CVs here. Make sure you clearly set out the roles and responsibilities of each team member and how they fit together. What are their strong and weak points? Make sure you know this before deciding who does what.

o From Idea to Reality
Here’s where you detail all the nuts and bolts of BoldIdea - like premises (location), key partners, suppliers, IT, etc. Where’s the nerve centre going to be? Your home? Rented commercial premises - office space, a shop, a warehouse? Will your premises give access to BoldIdea’s key markets, good communications, such as Internet access and public transport for your clients?

What raw materials, equipment, facilities and other hardware does BoldIdea need? How will you get the raw materials? Who are your suppliers? Are they any good with a solid track record? How are you going to sell the product/service – from a shop, wholesaler, distributor? What are they like? Quality is key. How will yours be checked and maintained? It’s no good designing a product/service if it falls apart after five minutes. No-one will come back for more.

o Product: A Technical Explanation
Give a credible description of what BoldIdea’s product/service is, how the idea of BoldIdea works and what it will do for its clients that will make it worth paying for. Keep this short and to the point. Remember, clients are less interested in how clever you are than how well you can serve their needs.

o Market Research
Put yourself in your clients’ shoes when giving details of BoldIdea’s products. Think of it as they would think of it. Tell them why they won’t be able to do without your product/service now and in the future. This shows you really understand your market which is what often makes a successful idea stand out. But keep it simple. If you need to talk ‘techie’ then put it at the end of your plan.

What’s BoldIdea’s USP? What gives BoldIdea the edge on its competitors? How is BoldIdea different from its competitors?

Do you have any patents or copyright (register the name – website etc)? Address any of these so-called intellectual property issues. Can your competitors copy all the new things you are offering easily?

You may want to attach a ‘Features and Benefits’ analysis at the back of the plan, perhaps covering BoldIdea’s manufacturing process and any other life and death factors.

o Marketing
You will need to know BoldIdea’s market and how you will promote BoldIdea to your clients. Spell out where you are now - new market, mass market (everybody wants BoldIdea!), niche market (you’ve only 3 clients in the whole Gulf). How big’s your market, what’s its history and where does BoldIdea fit in? Is it likely to shrink, grow or stay the same? Your aim must be precise. Who exactly is your target customer or client? Research this.

Winning new clients and keeping your existing clients will be crucial. How will you do it?
You must know your competitors intimately. What are their strengths and weaknesses? How is BoldIdea different or better? How is the BoldIdea brand better?

Where are the gaps in the market and what is BoldIdea going to do about them?

Your marketing mix could be your money-spinner. So how are you going to position yourself in your market? Key strategies are:

Price. The Rials you expect your clients to pay is critical. Will you undercut your competitors or up the price knowing that all your extras provide value for money? How will your pricing policy affect the business - will you make any profit? How will your competitors react? After all, you are stealing their trade and they may launch a fierce battle to protect themselves, like slashing their prices.

Place. Can your clients get to you easily? Do they need to?

Promotion. How are you going to reach your target clients? If you believe that all you have to do is make it and they will come, you may be shocked when they don’t. Don’t make the fatal mistake in believing that BoldIdea is so cool and clever that it’ll sell itself. Cover all your options including advertising, public relations, direct mail, branding, networking etc.
Product. Why is BoldIdea’s product/service better than your competitors? Have you got that award-winning designer, the super-quality support service, the cool distribution channel? How will it develop in the future? How will BoldIdea move with or set the trends?

o Operational
Business location, equipment in-situ, proposed equipment.

o Short and Medium-term Objectives
What are your objectives for BoldIdea year one and for the next two to three years? For example, what targets do you want to achieve, what turnover or how many people do you hope to employ?

o Sales Forecasts
Is anyone going to buy BoldIdea’s product/service? Here’s where the numbers game kicks in. How many pieces will you sell? How many potential clients do you really have? And how much of your product/service are they likely to buy? Be realistic. How does this breakdown on a month-by- month basis?

o Financial Documents – P&L and Cash Flow Forecast
Sales may be great, but are you making a profit? Just because BoldIdea’s product/service is selling faster than you can churn it out doesn’t mean that you’re going to make any money at the end. So when it comes to piecing together a Profit and Loss (P&L) and Cash Flow Forecasts be realistic with your numbers.

Expenses/Overheads
Make sure you cover any fixed and variable expenses you have over the accounting year. These might include:

o Rents. Show how much you’ll be paying each month. If you pay your rent annually, you’ll need to divide it up evenly across each month.

o Utilities. How much are you likely to pay for water, AC, lighting, gas, etc each month?

o Telephone/Internet. When will you have to pay these bills?

o Insurance. BoldIdea may need: fire or liability insurance, life insurance, shipping insurance, employee insurance. How much will these be?

o Drawings. As your manning the ship, how much are you going to pay yourself each month? You will need something to live on.

o Salaries. How much will you pay your staff?

o Interest. If you’re borrowing cash to make BoldIdea work, what are your interest payments each month?

o Depreciation. Even the best equipment gets old and dies. Work out the value of your assets at the beginning of the year and how much they’ll depreciate by at the end of the year. The depreciation period can vary, e.g. your delivery van may be depreciate at a different rate to your desk.

Crunching Numbers
Now you need to put all this on paper to see if BoldIdea really can work. You need to think about:

1. Is BoldIdea going to make a profit, and

2. How much cash does BoldIdea need to make it happen and how long will it take BoldIdea to earn it back?

Profit/Loss Forecast (P&L)
Every business has to have a P&L. It’s not rocket science! At its simplest, this is the difference between what money you’ve got coming in and what you are spending. So:

Profit = Sales (income) less Costs (spending)

Your Sales/Income is everything that you will make from all sources over your working year. If you’re a photographer this could cover everything from weddings to sales from your exhibition.

Your costs are everything that you need to buy/hire/rent to make your idea happen in the same working year. This includes your Direct Costs (like raw materials, transport, etc) and your Fixed Costs and Overheads (like phones, office rent, heating, etc).

This produces your Net Profit. Now you know if YOUR idea’s worth it!

Cash Flow Forecast
When cash will come in and when it will go out (Cash Flow Forecast). Just because you invoiced in April, doesn’t mean you’ll be paid in April. Chances are you won’t get paid until May, or June… if not later. So you need to show how much BoldIdea needs to keep afloat until the cheques start rolling in and that you’ve got the cash to cover your costs. In brief, just how much cash do you need to make BoldIdea work?

To work it out you need what’s known as a Cash Flow Forecast. It does look complicated so you need a simple system to work it out for your idea.

Follow these steps:

Step 1: Set up a simple table with one column for each of the next 12 months.

Step 2: Work out your Sales/Income - who is likely to buy your product/service or time in the first year and how much cash this will produce each month. Think carefully about when they will actually pay you.

Step 3: Enter your most realistic projections of your income/sales into your table. Think about when you will actually get paid for all the work you’re going to do.

Step 4: Now work out your Direct Costs (like materials, transport, etc) and when you’ll have to pay for them so you won’t disappoint your clients/clients. Expect to pay for these in advance as you are a new business. Think about the smallest amount you’ll need to pay out to finish the job.

Step 5: Now plot these into your monthly table.

Step 6: Now work out your Fixed Costs and Overheads (like AC, rent, petrol, web access, etc). Remember, include everything!

Step 7: Now plot them against the headings most relevant to your idea and put them into your monthly table.

Step 8: Finally, work out your One-Off Costs that you need to cover to get started (like IT equipment, cars, etc).

Step 9: Enter these into your table in the month that you are likely to have to pay for them.

Step 10: All you have to do now is total up all the different costs for each month and take them away from all your sales/income received. You now know how much cash will move in which direction if your business lives up to your realistic projections.

The last thing you’ve got to do is enter the amount of money you will start with – your opening balance - and add (or take away if it’s negative) your cash flow for each month. Now you know what cash you need to make your idea work. You’ll also know how much investment your baby needs and have a clear idea of when you will make enough money to pay it back.

Smart Manufacturing Interview: Importance of Design

PEIE Mirror (PM) sat down with Colum Menzies Lowe, the NHS National Patient Agency's Head of Design and Human Factors and speaker at PEIE's Smart Manufacturing Conference, 23 - 24 January 2006, Muscat Inter-Continental Hotel.

PM: Can you give our readers sime background information on who you are and what you do?

In 1989 I graduated from Chelsea School of Art where I studied 3D Product Design. I ran my own design practice for a year before moving on to work for BLDC Retail Design from 1990 to1999, working with clients such as the Body Shop, Tesco, Butlers and Kilkenny. In 1999 I added an MBA in Design Management from University of Westminster to my academic credits.

After the BLDC I spent two and a half years as Head of Design at J. Sainsbury’s Homebase Ltd and just over a year as a Partner of Plan Créatif/Crabtree Hall Design Consultants before taking up my current position in November of 2003 at the NHS National Patient Safety Agency’s where I am Head of Design and Human Factors. My current role is as a vocal advocate for the better understanding and adoption of design in healthcare, especially as it relates to patient safety.

PM: Good design starts a good conversation. Is this an accurate statement?

I’m not sure I agree with this statement, certain products such as the iPod produce a lot of passionate support and debate and are always the subject of discussion but most good design remains invisible to the user, which is as it should be. For example the design of the London Tube map which goes about doing its job of communicating the very complicated without anybody actually noticing or appreciating it, good old Harry Beck.

PM: Everywhere you look today - from buildings and landscapes, to commercial products and public services, to Websites and print products - design has taken on new meaning. Design isn't just about decoration; it's a critical component of how we communicate, collaborate and compete. But behind the "look and feel" of any good design are a host of carefully conceived principles: fundamental propositions that define the essence of the design. How challenging is it to get this type of concept/mindset across to manufacturers?

As part of the Design Council’s manufacturing campaign and my role at the NHS I find myself having to define design on nearly a daily basis and it really isn’t that difficult, the difficulty lies in persuading manufacturers to part with a percentage of their profits today for the chance of greater returns in the future, it’s all about managing their risk.

PM: Do you believe that a good design should reflect a sense of human history - some aspect of where we've come from?

No. Good design fulfils a brief, it really is that simple. If the brief calls for ‘human history’ to be part of the aesthetic (although this is a very superficial way to look at design) then it should be considered in the design process but I would imagine in the main it is very rarely relevant.

PM: The success of a design has as much to do with its physical structure as with the emotion that it evokes. What are your thoughts on this?

It depends entirely on what the actual success criteria are. In my current role success equates to a reduction in accidental death and harm to patients, in most of my previous roles it is with the increase of profits, words such as physical structure and emotion are only relevant if they lead you to the ultimate success criteria, to talk about them in isolation is rather naive, almost as if design and art were somehow closely related, which they are not.

PM: In 1943, Charles and Ray Eames designed a leg splint for the Navy that kept an injured leg stable during transport. The splint was elegant, simple and functional, and it solved a problem in a way that worked for everybody. One of the most important things about that object is that when you see it, you immediately know what it is. The design makes it instantly recognizable. In your opinion, do manufacturers too often confuse design with marketability?

It strikes me that a leg splint has no need to be beautiful and elegant and as such every second and every penny spent trying to achieve this is a waste of the client’s money, reduces the products long term chance of being commercially viable and smacks of the designers building monuments for themselves rather than fulfilling the clients stated needs. It being unthreatening, simple and intuitive sound like useful product benefits given the probable situation of use.

Manufacturers are famous for confusing sales with marketing however, manufacturing a product and then putting all the effort into selling it to a rather reluctant and unreceptive audience rather than producing a product that people want and then simply giving them the opportunity to buy it. Maybe you’re referring to the Raymond Loewe school, of design, “ugliness doesn’t sell” he famously once said, and he was probably right. Obviously there is more to design than pure aesthetics but sometimes pure aesthetics is all that is wrong with a product …. sometimes.

PM: The days of the solo designer independently creating an artifact or an experience are gone. The world is too complex. Taking an idea to its ultimate expression requires the effort of the entire team - a multidisciplinary effort, where do you fit into this multidisciplinary effort?

I’m not sure I agree that the days of the solo designer have gone, Philipe Starck still seems to be doing very well for himself as do any number of design ‘gurus’. They are still part of a team, but then they always have been, you would have to go back to well before the industrial revolution to find the designer craftsman model in full swing and even today there are many ceremicists, jewellery makers etc working in what could only be described as a cottage industry. In fact this type of design is the newest trend in Japan, consumers positively hunting out the one-off, the personal and individual, rebelling against the mass produced model.

In a standard manufacturing scenario design is part of everything for one reason only; the designer is the consumer champion. If you are producing a product for a consumer then their views must be represented at every stage of the process.

PM: Every now and then, a design comes along that radically changes the way we think about a particular object – what design radically changed your way of thinking?

The digital watch, it made me realize that looking at the numbers 3 4 3 was not half as rewarding or intuitive as two hands and a face that allowed you to understand instantly that it was nearly a quarter to four. I’ve also always thought that the disposable lighter is nothing like as clever as a little stick with some phosphorous on the end (and you can get 40 of them for 50 baizas), environmentally better too, probably. I’m not going to discuss the obvious iPod, Walkman, Fax machine, Windows software, mobile phone etc).

PM: How do you integrate style and technology?

In almost all cases technology should be invisible to the consumer, after all they’re not interested in the ones and noughts in their computer, or the friction ratios of anti-lock brake systems, they want the service that the technology provides, not the technology itself. The barrier to accessing this service is usually a poor human machine interface. So, if the technology is invisible you can have any style you want, as long as it’s black!

PM: How can you make an impersonal machine into a personal tool?

You can’t, it’s a machine! All you can hope to do is provide a canvas whereby a consumer can project human characteristics on to an inanimate object thereby giving it perceived emotional qualities, stupid really but we all do it.

PM: How can designers create new value from an old standard?

By being more and more in tune with consumer requirements and thereby making the old standard product/service more and more appropriate. And just when you think you’ve gone and produced ‘new value’, consumer opinion swings and you have to start again.

PM: When designing a new product how do the following issues impact on what you do?

Emotion (the perceptual experience that a consumer has when using a product)
Aesthetics (a focus on sensory perception)
Product Identity (a statement about individuality and personality)
Impact (social or environmental effects)
Ergonomics (a product's basic usability)
Core Technology (the ability to function properly and perform to expectations)
Quality (the durability, precision, and accuracy)

Rather obviously they all, and many others, have impact and have to be considered and their relative benefits to the project assessed, some can then be virtually ignored while others will take on more significance. This balancing or juggling act is just part of the design process.

Lean Enterprise Workshop

In addition to the two-day, Smart Manufacturing Conference - 23 - 24 January 2006, Muscat Inter-Continental Hotel - PEIE (www.peie.om) is encouraging Gulf-based manufacturers to attend a special, pan-sector, half-day Lean Enterprise Workshop scheduled for 25 January 2006 at Knowledge Oasis Muscat (www.kom.om) led by Mark Eaton, Director Consultancy, Advance Projects Ltd.

Many have tried to implement lean production in their businesses - some have succeeded, while many have struggled. Lean can be a key competitive advantage in all types of businesses, especially manufacturing, giving them shorter, more responsive production, more effective ‘office’ processes and higher productivity. This drive for ever better performance is a hard path to follow and sustain.

Eaton's workshop doesn't promise magic recipes - instead it offers manufacturers the chance to hear what it takes from those - big and small - who have lived through successful lean transformations. In particular, the workshop will highlight Lean case studies (http://kanban.blogspot.com) drawn from manufacturing, the armed forces (www.rand.org/publications/RB/RB80) and the health sector (www.strategy-business.com/resilience/rr00013) .

According to Eaton: "The Workshop is intended to show manufacturers how to use the three key tools to start on a lean journey. They'll learn to see the waste in their organization's value streams, how to create a continuous flow in their processes and how to improve customer service and cut costs by re-configuring their supply chains."

Should you wish to attend the Smart Manufacturing Conference or the Lean Enterprise Workshop then e-mail PEIE's Ibtisam Al Faruji on: ibtisam@kom.om

Further information on Mark Eaton can be viewed at: www.iee.org/oncomms/pn/manufacturing/biogs.cfm
www.iee.org/oncomms/sector/manufacturing/Articles/Heading
http://www.ideas21.co.uk/Event_Detail/194

Sohar & Risk Assessment

It's estimated that less than half of all businesses have a business continuity plan(www.continuitycentral.com/feature0258.htm) in place Recently conducted research reveals that 46% of businesses don't have a business continuity plan. Moreover, the research suggests that 17% of businesses claim to have been affected by a disaster in the past and that just over one in five of these companies took longer than a week to recover. Around 8% claim it took them over six months before they were up and running again.

Raza Ashraf, CEO, Total Alignment (pictured) will deliver a Business Continuity Planning seminar on Sohar Industrial Estate (www.peie.om), 5:30pm, Tuesday 15 November. According to Ashraf: “Business risk has many facets ranging from recovery from the impact of major events – fire, flood, product recall - as well as realizing the commercial benefits of risk through opportunity management. Indeed, a comprehensive business continuity plan is about anticipating the events or circumstances that could hinder the running of your organisation and having plans in place on how to respond to these.”

“Oman’s manufacturers face a number of challenges and risks, and they need to do everything possible to reduce the chances of these happening. They also need to have an effective plan in place to deal with them if they do. Every year, businesses close their doors because of disasters, but some of these could’ve been saved if they had a strong business continuity plan in place,” remarked Hisham Al Zubadi, Director, Marketing, PEIE.

Ibtisam Al Faruji, co-ordinator for PEIE’s Open House program commented: “Even if a manufacturer does have plans in place it’s important they update them so that they’re prepared for potential risks. We’ve just finished the annual holiday period, how many firms had appropriate measures put in place for this period? For instance, that key staff had access to contact details, such as mobile numbers and home contact details, and that authority had been delegated to a responsible member of staff who’s familiar with the company's continuity plans.”

According to Al Zubaidi, “the purpose of the Sohar Open House is to urge firms in the area without business continuity plans to develop them, we’re also encouraging those businesses with plans to review them.”

Eaton to Speak at PEIE Conference

PEIE's Smart Manufacturing Conference (www.peie.om) has an ambitious program covering a variety of topics relevant to the Gulf's manufacturing sector - from Lean Manufacturing; New & Emerging Technologies: Smart Machines; e-Business to e-Manufacturing: Current Technologies & Trends; through to China, the Gulf & the Realities of Global Competition. "Given the make-up of the event and the quality of speakers that have already confirmed their participation, it'll be an exciting two days," commented Mohammed Al Ghassani, Executive Vice President, PEIE.

PEIE confirmed today that Mark Eaton the former Director of the UK Government's Manufacturing Advisory Service will present at the January conference. "Mark's an experienced program manager with an impressive track record in working with both the private and public sector, designing, establishing and managing complex change programmes for manufacturing that have benefited thousands of businesses and returned improvements to the economy measured in the hundreds of millions of dolars," remarked Dave Pender, Marketing Adviser, PEIE.

Mark Eaton is now a Director of APL, an independent program management change consultancy, working with a wide network of manufacturing organisations across the UK and EU as well as providing high level advice and programme design support to a number of public organisations. Eaton Chairs both the IEE's World Class Performance Forum which is part of the Manufacturing Professional Network and also the IOM's 'Think Tank', focused on shaping the future of Operations Management in the UK. "We're delighted to have Mark on board. Indeed, I'm confident he'll add substantial value to the conference," said Pender.

Asked about the event's target audience, Al Ghassani, remarked: "PEIE's SMART Manufacturing Conference will attract the enterprise team of IT, manufacturing and business decision-makers from across the Gulf responsible for changing how work gets done in manufacturing and the supply chain, while better handling changing customer demands through products and services designed to enhance operations at a lower cost. I also believe the conference will attract automation and control engineering teams, manufacturing managers and systems integrators responsible for increased production uptime, improved accuracy, optimized plant operations and lower costs through the latest automation technology, systems and solutions."

Trowers & Hamlins on e-Legislation

Charles Schofield, Senior Solicitor at Trowers & Hamlins (trowers.com) delivered an e-Legislation seminar at Knowledge Oasis Muscat (kom.om) on Tuesday 1 November. Schofield has had extensive experience in advising both major corporations and innovative start up companies on the legal aspects of their online operations. His clients have included Australia’s largest online bill payment service, major banks and leading telecommunications and Internet companies. He has also been involved in government and industry initiatives to regulate online financial services and Public Key Infrastructure.

According to PEIE’s Ibtisam Al Faruji and Co-ordinator of the KOM Open House program: “Global co-operation on e-Legislation, Internet security and heightened consumer awareness is on the rise. Indeed, Internet users need to be protected legally.” Legal experts estimate that bulk unsolicited e-mails - or spam - accounts for over 60 per cent of all e-mail traffic on the Internet, up from under half in 2003 and under ten per cent in 2001 and is frequently linked to fraudulent or deceptive commercial activities. Research suggests that most spam received by Oman’s Internet users originates from overseas, making cross-border e-Legislation collaboration essential.

“We often think of spam as just annoying and intrusive. In fact, it gets in the way of legitimate e-Commerce and is often a vehicle for scams and computer viruses,” remarked Mohammed Al Maskari, Acting Director General, KOM. “Schofield’s 1 November e-Legislation Open House seminar was unique. We’re all united by a common goal: to stop deceptive and fraudulent spam from flooding our e-mail boxes, threatening our data security and undermining e-mail's effectiveness as a tool for commerce and communication,” Maskari told PEIE Mirror.

Schofield’s seminar offered attendees an overview of the key legal issues arising from e-Commerce and ways in which government legislation can help overcome those issues. Those emerging legal issues include the treatment of electronic transactions, jurisdiction issues, security, online fraud and data protection. The seminar also considered the international context in which these issues are being addressed and steps that domestic governments can take to better foster the growth of e-Commerce. “The objective of Tuesday’s Open House was to highlight the e-Legislation work being carried out in Oman. Moreover, it was intended to help government and private sector attendees understand ways in which they can help deter Internet-based crime and increase confidence in e-Commerce,” commented Al Maskari.

Massive Investment at KOM

HE Maqbool bin Ali Sultan, Minister of Commerce and Industry (mocioman.gov.om) and Chairman, Public Establishment for Industrial Estates (www.peie.om) recently signed a US$7.2 million contract with Al Adrak Trading & Contracting LLC (apexstuff.com/bt/200510/news.asp) to construct additional Class-A office space on Knowledge Oasis Muscat (www.kom.om). "KOM's expansion" explained the Minister "is to satisfy demand for additional hi-tech workspace. The US$7.2 million investment is being used to provide 9,000 square metres of flexible business accommodation that will cater for a broad range of hi-tech uses. The Park's new building will not just house people and offices, but holds the promise of spearheading economic growth for Oman. Indeed, further expansion of KOM is testament to the Park's success."

Sultan Al Habsi, Executive President, PEIE and the man spearheading the Park's development remarked: "By financing KOM's expansion, the government is furthering its objective of stepping up ICT research and innovation in Oman and establishing a leading regional position in the technology field, so promoting the competitiveness of the Sultanate's economy and creating new jobs." Inaugurated in September 2003 to develop and promote a community of technology and research and provide a location where such activities could thrive "KOM's viewed by many as an initiative that has been a boost to the entire country as it attracts inward foreign investment, encourages technology transfer from domestic and international tertiary institutes and provides job opportunities for graduates and local residents. The third building is just one of more coming in the future," commented Al Habsi.

According to PEIE's Executive President: "the additional 9,000 square metre, three storey facility will provide an excellent working environment for 'growing' technology-based companies. Office accommodation will range from 40 to 900 square metres and will be available for occupation Juy 2006. Tenants of the new facility can only benefit from the expertise and facilities available within KOM. I'm confident the new building will attract more international firms and create further employment opportunities."

"Through technology there is tremendous potential to expand the Sultanate's economy. In this regard, KOM is already helping to create and retain high-technology jobs. The Park is clearly promoting new business growth," concluded Minister Maqbool.

Oman & the Weightless Economy

Supported by Oman Air (www.oman-air.com), Oman Mobile, Omantel,(www.omantel.net.om) Infocomm Group (www.i-grp.com), BankMuscat (www.bankmuscat.com), Reflections and dGraphix, the topic of October's Knowledge Oasis Muscat's (www.kom.om) seminar and networking Open House session was the story of the Weightless Economy. Presenting at the seminar were: Gus Freeman (www.arabianresearch.com); Mark Hobbs (HH Consulting); Jamal Al Asmi (www.realitycg.com); and Eyhab Al Hajj (www.nawras.com.om).

What has fascinated economists and sociologists studying the Weightless Economy is not the business innovations themselves, but the geographic clustering that supports them. Various aspects of geography and culture has conspired to support high-growth businesses. Climate is one; relative proximity to Asia another. Some have even suspected that the latent laid-back ethos of San Francisco gave rise to a widespread ambition to escape the drudgery of office life through entrepreneurship. But ultimately, the reason geography has mattered so much is because of the importance of face-to-face interaction. For example, IT specialists have had to meet entrepreneurs, who have had to meet bankers and venture capitalists. In California's Silicon Valley this occurred fairly informally, although it was supplemented by networking clubs such as First Tuesday, an event not disimiliar to KOM's monthly Open House program (http://www.kom.om/index6ee2.html?lang=en&sub=activities).

From an Oman perspective, the Public Establishment for Industrial Estates (www.peie.om) - through KOM and the Knowledge Mine business incubator program (http://www.peie.om/under_the_spotlight.asp) is working hard to help Omani small businesses embed themselves in a supportive geographic context. Helping them to develop networks with tertiary institutes such as Sultan Qaboos University (www.squ.edu.om), the Middle East College of Information Technology (www.mecit.edu.om) and the Waljat Colleges of Applied Sciences (www.waljatcolleges.edu.om) and larger businesses is an important part of this. Indeed, KOM is viewed by many as one of the most ambitious real-estate development projects ever undertaken in the capital area. With 12,000 square metres of Class A office accommodation already occupied and a further 9,000 square metres ready for occupancy in July 2006 - "KOM's helping to transform this part of Rusayl into a centre of technology, it's, a next-generation work environment designed to facilitate productivity, satisfaction and balance for forward-thinking companies and their employees. Our thinking and facilities are very much Weighless Economy," commented Hisham Al Zubaidi, PEIE's Head of Marketing.

So how is Oman's own Weightless Economy progressing? "Rather than simply put the conditions in place and wait for entrepreneurs to get on with creating success, it's apparent to us at PEIE that a more intimate dialogue with businesses is needed. What do they want? Where are they currently looking for it? When do they feel lost? In this regard, PEIE is working hard to develop and strenthen such dialogue," remarked Sultan Al Habsi (pictured), Executive President, PEIE.

Oxford Spin-out & Oman's Gaming Business

PEIE Mirror spoke to Tim Price-Walker, Business Development Manager- Schools, Immersive Education Ltd, UK - www.immersiveeducation.com - a speaker at KOM's (www.kom.om) 2005 e-Games Conference (www.egames-online.com) a two day Siemens sponsored event - www.digitalmediaasia.com/default.asp?ArticleID=5103 - we talked gaming and education - this is what he had to say:

1. What got you into gaming?
If I think far enough back in my life, my trusty Commodore Vic 20 was the computer that really started me off in gaming, playing all of those hi-tech, magnetic tape loaded games.However, the games that really got me hooked was Manic Miner for the Spectrum 48K and a little more recently the original Doom game there was nothing like pairing up with a gaming partner at night, turning the light out and waiting for something to jump out at you from the screen!

2. If you could be one gaming character who would it be and why?
A Sim in Sim City what an amazing place to be!

3. Do you think that gaming going mainstream has had a positive or negative impact on the industry?
I work for a software company (Immersive Education) that utilises games technology in education gaming going mainstream has helped us as a company to embrace gaming as a tool to learn I have seen the results of some of our games-styled software at work in the classroom with students I have seen it

• support learning of difficult topics (such as Shakespeare)
• support special needs education
• embrace inclusive learning
• encourage creativity in lessons
• as well as being extremely motivating!

4. Who's your favourite developer/publisher and why?
I have to support our technical guys at Immersive Education forging the links between education and games technology is no easy challenge what do you leave out to keep teachers happy but what do you put in that motivates students? But then I am biased.

5. Do you feel that gender affects the way we play games? Are there fundamental differences that affect not only what we play, but how we play?
Working at Immersive Education, I have been observing how children use games-styled software in the classroom to learn and I do believe there are subtle differences in how students use our software, but generally both genders see positive improvements in motivation. It's not only gender but also different age groups and ability groups that also provide an insight into how we play games and it's a dynamic state of affairs.Our software was first designed for 11-19 age range in 2001 now one of our best titles using the same software interface is designed for students age 5 and 6. For example, In Sheffield, UK, a school reported that a class of difficult students with poorly behaved boys became so addicted to our Kar2ouche storyboarding software (an English lesson learning Shakespeare) that the teacher had to physically prise them away from the computers at the end of the lesson. In previous lessons it was stated that it was difficult to maintain their presence in the classroom.

6. What are your thoughts on the greater development costs needed to produce even a marginal game and the impact this has on backyard developers?
Mmm.... getting a bit like Hollywood here.I just hope it does not stifle creativity.

7. What is your first gaming memory?
Desperate trying get Manic Miner to load from magnetic tape recorder plugged into my Spectrum 48K using those tape recorders, the first frustratingly attempt never seemed to work!

8. What do you think will be the next revolution in game design? A truly 3D controller? Greater online capabilities? Player created content?
I am someone who always thought that fantastic graphics was the route to addiction in games. Recently my view of this has changed with the advent of on-line gaming. I believe that greater online capabilities will be the way forward for games in the future. From an educational perspective, I perceive that more on-line community learning combined with rich graphic environments really will be the way forward in school learning.

9. Can you foresee a day when the gaming industry as a whole, finally recognizes the female gamer as an equal to her male counterpart and not just a plaything to help sell games?
Yes, definitely and it's going to happen sooner than you think. I have just been training some of those 5 - 6 year olds and half of them are girls.

10. What's your favourite game genre?
Go and see the trailers on eve-online.com then you'll know my favourite game genre.

11. Do you prefer PC or Console gaming and why?
PC my PC is everything.

12. How important is the 'social' aspect in games (not just online games - getting your friends round for a bit of console head-to-head, LAN gaming, or just watching over your shoulder and giving suggestions)? How can this social aspect be encouraged through games design?
Social aspect is really important our educational software works best when children collaborate around a PC - discussing how characters backgrounds or props should look in our Kar2ouche storyboarding software. Some the best storyboards created by children are where more than one student is involved. Therefore, our software design is carefully aware of this need to encourage social interaction. Also, IT resources in many UK schools are still limited few schools have a ratio of one computer to one child. Therefore, our software is designed for lots of different classroom scenarios e.g. Using an interactive whiteboard to teach to whole groups.This shared learning social experience is starting to gain momentum with on-line gaming environments.

13. Will game piracy ever be defeated? Technology supporting 'gaming as a service,' like Valve Software's Steam system is on the rise and is beating back pirates. In the Gulf we've organizations such as the Arabia Anti Piracy Association who are working hard to stamp out piracy. What could be done to further support anti-piracy initiatives?
In schools, our MediaStage software (virtual 3D production studio for teaching Media Studies) sells for RO255 for a single user licence - we operate a system where customers have to contact us by telephone in order to unlock their software this helps us to track our customers and be able to recognise illegal or illegitimate use of our software. Luckily schools.

KOM & Mobile Gaming

Karim Rahemtulla is MD of Infocomm - www.i-grp.com - a Singaporean company based on Knowledge Oasis Muscat (KOM) www.kom.om. Karim has a serious interest in mobile gaming, the difference between male and female gamers and the gaming development process. He was a speaker at the two-day, 2005 Siemens-sponsored conference -http://www.digitalmediaasia.com/default.asp?ArticleID=5103 and this is what he had to say.

1. Where’s mobile gaming headed?
The mobile games market will be over US$1 billion in 2005 and probably US$3 billion in 2006. The market’s getting closer to video games, this means simultaneous releases with the original game (game available on PS2, Xbox, Mobile..). It also means that the number of game versions will go on increasing, because of the technology fragmentation and lastly it means that the development time will dramatically increase because handsets are more and more powerful – for example, 3D capabilities and many different engines. UMTS (Universal Mobile Telecommunications System) networks will also bring a lot to connected games if it brings in terms of speed and time latency what it’s expected to bring and if there’s harmonization of multiplayer platforms.

2. What type of future has mobile gaming?
Does it have a future? It is the future. I don't think we've really seen any mobile games yet, I mean there are lots of games available for your phone, but they’re all cut down versions of games you see on your Playstation. In the not too distant future, we’ll start seeing games that simply couldn't exist on a Playstation or PC, games that use the phone's camera or are based on the physical location of you and your phone.

3. Is there a difference between the games played by youngsters and adults?
There are titles in the market that appeal to everyone from early teens to adults. Teenagers are of course very much in tune with the latest movies and music scene, and there are plenty of games and downloads based on these trends. Young adults are likely to enjoy the arcade classics, sports and action games, as well as puzzles and quizzes like The Weakest Link. A clearer segmentation is the male/female divide. Action, adventure, sports and arcade games are more likely to be played by boys and young men, whereas we’re seeing that puzzle, romance and quiz games appeal to a more evenly balanced male/female user base.

4. When the mobile gaming business kicks off in Oman, how will people pay for downloadable games?
In time - and judging from how things work elsewhere in the world - I imagine that the Oman-based tech savvy consumer will be given a wide choice of how to purchase Java games. They’ll probably be able to buy the games in a box from retail stores and pay up front; they’ll be able to buy them from mobile network operators and have the game charge added to their monthly bill; and they’ll be able to select them from a games page on a web portal or magazine and pay for them via premium rate phone line or SMS.

5. What’s involved in producing a mobile phone game?
The stages involved in developing a wireless game don't differ too much from those associated with PC and console development, but the work is compressed into a much shorter cycle - typically three months. One of the biggest challenges in developing games for wireless platforms is appreciating the techniques essential for writing compelling games on low memory embedded systems. This has implications for every stage of the development cycle from the reuse of early design art to the number of objects used in an engineer’s J2ME code. Of course, another issue that's unique to wireless gaming development is the number of ports a development team has to make of each title to deliver it to each carrier's portfolio of handsets. With games as small as 64K targeting such low memory phones you can often be looking at a significant rewrite to achieve a quality port.

6. Where’s the innovation in mobile gaming?
For wireless gaming the arrival of colour screens coupled with higher bandwidth speeds i.e. 2.5G, 3G and 4G has been a big market driver. As screen resolution improves, system memory increases and embedded processors get faster, the opportunities for enhancing the gaming experience and growing the market rise significantly. Handset manufactures recognise wireless gaming as a significant market and the form factor of many new handsets are being adapted for easier game play. On the local scene, we’ll see Oman-based telco operators making significant steps forward in attracting wireless gamers through the availability of new content services and higher data rates .

7. Tell us about KOM's e-Games Conference (www.egames-online.com)
That’s fairly simple. In my mind, KOM's annual e-Games event is all about bringing together people from various parts of the World that love to make and play games so they can meet in person, form alliances and help each other. The 2005 event was the first of its kind in the Middle East so we were proud to be associated with the event and are really looking forward to the 2006 program.