Israel Starts Tapping Into Hidden Business Potential of Arab Market

Israeli companies are making inroads into the Arab market and finding a richness of untapped purchasing power and manpower

Corporate Israel is starting to discover the hidden business potential of Israeli Arabs - largely virgin territory to most major companies, with the noteworthy exception of the cellular service providers.

For the rest, from clothing to food to footwear makers and distributors, the business potential can be terrific, says businessman Amir Assi, who specializes in advising Israeli enterprises and organizations on Arab affairs. Moreover, compared with their brethren in neighboring countries, Israeli Arabs have considerably more purchasing power.

A lot of Israeli companies, such as the Central Bottling Company, which makes Coca Cola in Israel, and the food companies Telma, Osem Industries and Strauss, have begun to step up advertising geared toward Muslim Arabs during the month of Ramadan, especially for Eid el-Fitr - the three-day holiday that marks the end of the month-long fast, and also ahead of Eid al-Adha, the Festival of Sacrifice, says Assi.

Christian Arabs aren't being left out of the mix either.

"Christian Arabs on the other hand step up their shopping at Christmas and the New Year, buying decorations, alcoholic beverages and food," says Assi, who has worked with the Kiryat Ono Academic College, Laufer Aviation VIP Services at Ben-Gurion International Airport, and at the Allenby and Jordan River border crossings.

Amin Fares, an economist and business consultant, asserts that there is great purchasing power in the Israeli Arab community that most of the big Israeli companies are just starting to tap. But some are on the ball.

"The cellular communications companies discovered the potential in the Arab market years ago," Fares says. "Over time they stepped up their activity, opening shops and service outlets in the Arab towns, and employing locals. They have become a massive presence in the Arab community."

Beyond its value as a consumer force, Fares says, there's a feeling that the attitude toward the Arab community is starting to change, based on recognition that it has quality human resources to offer.

"We see this in various companies, including high-tech companies, that are thinking about opening branches and centers in the Arab community," he says. Meanwhile, as they make inroads, these companies are discovering the existence of quality manpower at a low cost - relative to their Jewish peers, he says.

The main change in attitude consists of recognizing that Arabs are good for more than menial labor in restaurants, construction sites and gas stations. They have added value to offer, Fares says.

But while steps are being taken in the right direction, there's a long way to go.

"The dimensions of the change aren't big enough yet. To develop and exploit the potential, opportunities have to be created," Fares says.

He believes the breakthrough will come from collaborative efforts between entrepreneurs from the two sectors. Also, funding needs to become available for ventures in the Arab sector, he adds.

Competing with China

Another new element developing in the Arab sector is shopping at malls and supermarkets, says Sami Shaheen, president of the Chamber of Commerce in Nazareth and the Galilee - and these shopping centers are plied by Jews as well. He senses mounting ambition to develop various products, from clothing to electronics, in collaboration with the business and economic sectors of the Palestinian Authority. The resulting products would compete with Chinese imports, for instance - not with Israeli goods, Shaheen says.

Salem Sharkiaa, marketing manager to the Arab community at Partner Communications, says daily consumption patterns have been changing, as have Arabs' economic and consumer impact.

"We are seeing increasing use of communications services, and also, adoption of communications means as a status symbol," he says. "The younger segment of the Arab sector, which comprises more than 60% of the Arab population, has adopted advanced technology."

Cellular technology and communications reflect their growing sense of independence, in his view.

Assi estimates that the purchasing power of the Israeli Arab sector is roughly equivalent to that of all of Jordan, which has 6 million people. Israeli Arabs are among the biggest consumers of communications technology worldwide, he says. One way to get their attention is billboards, he advises, as well as advertising on regional radio.

But the most powerful venue has become the portal Panet, says Assi. According to Google Analytics, it had more than a million hits a day in recent weeks, of whom some are from people located in Israel and most people throughout the Arabic-speaking world, including the Palestinian Authority.

The author is a writer on the Panet portal site, which belongs to the Panorama business group.

'The Arabic press doesn't cover business news'

It isn't that the Arabic press in Israel ignores economic issues: it does report on certain aspects. But it does not set aside much room for economic analyses, says Dr. Amal Jamal, former head of the Political Science faculty at Tel Aviv University and current director-general of the I'Lam Media Center for Arab Palestinians in Israel.

Amin Fares, an economist and business consultant, explains that when it comes to reporting business news, the Arabic-language media faces a unique challenge - there is no media outlet specializing in such content because there is no growing economy to cover. According to Fares, the economy of the Arab sector is weak.

The Arabic press also ignores economic issues because they tend to be too complex for the average Arab readers, Jamal suggests, and so they do not take an interest. "In addition, the Arabic media isn't investing enough resources or effort into simplifying and breaking down [economics and business], and presenting it to the average reader in a simple fashion," he says. It isn't that the Arabic-language press wants to hide anything, it's that it just hasn't been bothered to cover this field, he sums up.

This leaves Arab readers in Israel with no recourse but the Hebrew-language business press, Jamal adds.