From pearls to sky­scrapers, Qatar’s Al­far­dan sticks to the fam­ily model

Kuwait Times - - FRONT PAGE -

DOHA: On the sev­enth floor of a Doha tower block, in a room filled with dis­play cases con­tain­ing old coins, clocks and Qu­ranic manuscripts, 82-year-old Hus­sain Al­far­dan sits fin­ger­ing a pearl neck­lace he says is worth $2 mil­lion. “Th­ese pearls are yakka, the high­est grade of nat­u­ral pearl each piece is rare. To­day the pearl is the num­ber one stone in the world. The most ex­pen­sive stone, the most pre­cious is the pearl.”

The room, known as the Tawach Gallery - one of the largest pri­vate col­lec­tions of nat­u­ral Gulf pearls in the world - is a com­mer­cial show­room and mu­seum for Qatar’s pearl industry and the achieve­ments of its owner, Al­far­dan. The son of a pearl mer­chant, Al­far­dan opened a small jew­elry shop af­ter World War Two and over 50 years, grew it into Al­far­dan Group Hold­ing Co, a multi-bil­lion dol­lar con­glom­er­ate that trades au­to­mo­biles, de­vel­ops real es­tate and pro­vides bank­ing ser­vices.

While state firms de­vel­oped the Gulf’s en­ergy wealth, fam­ily-run busi­nesses such as Al­far­dan Group built much of the rest of the econ­omy. They gen­er­ate over 80 per­cent of non-oil gross do­mes­tic prod­uct in the six-na­tion Gulf Co­op­er­a­tion Coun­cil, con­sul­tants PwC es­ti­mate. Now fam­ily busi­nesses around the Gulf face a more chal­leng­ing en­vi­ron­ment. The plunge of oil prices since 2014 threat­ens slower growth, even in richer coun­tries such as Qatar.

Gov­ern­ments have started to cut spend­ing in some ar­eas be­cause of shrink­ing en­ergy rev­enues. Last week, Qatar’s ruler Sheikh Tamim Bin Ha­mad Al-Thani warned cit­i­zens the gov­ern­ment could no longer “pro­vide for every­thing”. But the shift may cre­ate op­por­tu­ni­ties for pri­vate busi­ness.

Sheikh Tamim said he would re­duce sub­si­dies to some state-owned com­pa­nies and wanted the pri­vate sec­tor to play a big­ger role. “I have been ad­vo­cat­ing a stronger push to­wards pri­va­ti­za­tion for a long time. I be­lieve that no coun­try should be too re­liant on the gov­ern­ment only for in­come,” Al­far­dan said in an in­ter­view for the Reuters Mid­dle East In­vest­ment Sum­mit.


As a boy in the 1940s, Al­far­dan took boats out to the pearling grounds off Qatar’s coast, watch­ing his fa­ther buy from the divers. He re­calls walk­ing for hours be­cause of a lack of mo­tor­ized trans­port in Qatar, and us­ing herbal reme­dies be­cause of a short­age of hos­pi­tals. His busi­ness em­pire, now over­seen largely by his sons Ali, Fahad and Omar, in­cludes the lux­ury St. Regis Ho­tel, the 70-floor Kempin­ski Apart­ment Suites, which is Qatar’s tallest build­ing, and Com­mer­cial Bank of Qatar. Like most fam­ily groups in the Gulf, it does not re­veal con­sol­i­dated financial data.

Al­far­dan, wear­ing steel-rimmed glasses and a long white robe with a black-corded cot­ton head­dress, in­di­cated his group was now con­ser­va­tive about ex­pan­sion. “I have been fo­cus­ing ef­forts on what we cur­rently have rather than ex­pand­ing too much and then hav­ing to deal with the re­sult­ing com­pli­ca­tions, such as re­cruit­ment of new man­agers and nu­mer­ous ac­tiv­i­ties be­ing over­seen at the same time. I be­lieve it’s bet­ter to con­cen­trate on the things you can run well.” Gov­ern­ments around the re­gion are press­ing com­pa­nies to hire more lo­cal ex­ec­u­tives and staff rather than for­eign­ers. This pres­sure may grow as low oil and gas prices in­crease the ur­gency of keep­ing non-oil in­come in­side the coun­try. Al­far­dan said he wanted to see all his com­pa­nies run by Qataris one day, but that aside from his fam­ily, fill­ing se­nior po­si­tions with lo­cals had been dif­fi­cult. Around a quar­ter of his staff are Qatari though at Com­mer­cial Bank of Qatar, whose chief ex­ec­u­tive is Qatari, the ra­tio is closer to a third.

Some other fam­ily groups in the re­gion have de­clined in the past decade, hit by in­ter­nal dis­putes or com­pet­i­tive pres­sures. Al­far­dan said he knew the risks but be­lieved his di­verse con­glom­er­ate could con­tinue to thrive in the tra­di­tional man­ner. “Many fam­ily-run busi­nesses start with a vi­sion­ary and hard­work­ing first gen­er­a­tion, fol­lowed by a sec­ond gen­er­a­tion that suc­cess­fully sus­tains the mo­men­tum, and then un­for­tu­nately end­ing up with a com­pla­cent third gen­er­a­tion who just let the busi­ness fal­ter and even­tu­ally fail. I have care­fully con­sid­ered this com­mon trend and have made ex­ten­sive plans to avoid this from hap­pen­ing.”

He dis­missed so­lu­tions pro­posed by Western-ed­u­cated man­age­ment ex­perts in the re­gion, in­clud­ing go­ing pub­lic: “Once you con­vert to a share­hold­ing com­pany, then you have to deal with the re­sult­ing pres­sures from share­hold­ers and board meet­ings. “Al­though I have brought in man­agers and ex­perts from around the world to en­sure op­er­a­tional ex­cel­lence, my sons are the only ones I trust to carry my busi­ness for­ward as they are per­son­ally in­vested in its suc­cess.”

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