The story of Salam as told by CEO, Issa Abdul Salam Abu Issa
From humble beginnings, Qatar's largest and most successful diversified private sector family firm, Salam International, has grown to become a leading force in the Qatari economy. 2012 is also momentous for the company, as it celebrates its 60th year of trading in the region and finished its most ambitious project to date, The Gate in Doha's West Bay.
Wiry and tall, Issa Abdul Salam Abu Issa greets TheEDGE with an easy smile and a firm handshake. From behind his large desk in his plush wood-panelled offices overlooking Doha’s Corniche, he recounts the story of the genesis of the multisector, multinational, multibillion riyal listed firm he now leads, having been handed the responsibility of doing so when his father passed away in the 1980s.
In the late 1940s the teenaged Abdul Salam Mohammed Abu Issa arrived in Qatar from Palestine to work as a welder on the pipeline from Dukhan to Mesaieed, from where the country’s first oil was exported in 1949. Hailing from a small, simple Levant farming town in the mountains of El Carmel, Issa Abu Issa describes how his father learned his vocational skills at a plant nearby Haifa under the guidance of an Italian foreman, before travelling to Qatar in search of better prospects, where he quickly advanced in the oil industry.
Then, introduced to it by an Armenian-Lebanese colleague, the young Abdul Salam Mohammed Abu Issa discovered photography, a pastime and profession that would form the foundation of his soon-to-be entrepreneurial endeavour: Salam Studio, as Qatar’s sole professional photographer, and a Doha retail outlet selling and processing film, and retailing a small selection of imported camera equipment.
It was the first and only store of its kind in Qatar and most of the Middle East at the time, and enjoyed instant success. This soon included becoming the designated photographer for the ruling Al Thani family in the 1950s. As legend has it, the then Emir HH Sheikh Ali bin Abdullah Al Thani saw some of Abu Issa’s photographs and as the only man with a camera in Qatar, quickly enlisted him to officially take portraits and document the royal family.
Abdul Salam Mohammed Abu Issa was clearly fortunate in choosing photography and selling camera equipment just when it was becoming popular and affordable worldwide and was spreading in the Middle East – and that it lead to royal patronage and connections. Issa Abu Issa responds animatedly to a question about whether he feels it was luck and good timing that played a role in his father’s success and the rapid growth of his start-up.
“Luck is one thing, and eagerness to do something better in your life is another thing,” underlines Issa Abu Issa emphatically. “You have to make the decision that you deserve to do something better with your life so you can progress, and this young man, sixteen or seventeen years old, decided that he wanted to do something better with his life. My father went to the refinery [in Haifa] and he worked as a boy helper and here is where the eagerness to learn comes in.
“So he learned,” Issa Abu Issa continues, “any opportunity that came his way, he learned from it and he excelled in it. He became a successful welder, then a foreman; then the company took him abroad and opportunities opened for him. When he saw the opportunity of photography he liked it, and he excelled in it. Luck comes along the way but you cannot sit at home and wait for it. You have to be determined and this is how we go about our lives. Bad luck comes more than good luck by the way, if you want to depend on luck then you should just forget it.
“Between 1952 and the 1960s my father taught himself English,” adds Issa Abu Issa. “He travelled the world more than anybody in the Middle East probably at that early age. In seven or eight years he was able to build something for himself to enable him to further progress in life, so it is actually, I would say, the determination, the eagerness and the curiosity and the quest for success were the driving factors.”
EVOLUTION, EXPANSION AND CONSOLIDATION
In 1954 Abdul Salam Mohammed Abu Issa extended the size of his first photographic shop by turning a neighbouring restaurant into a gift shop and evolved the outlet’s name to ‘Salam Studio & Stores’, a pattern of expansion and extension that endures in the corporation to this day.
Moreover, as Salam this month celebrates its diamond anniversary, much focus is also being placed on its long-term partnerships with brands sourced from the world over. A prolific traveller, especially during the 1950s, Abdul Salam Mohammed Abu Issa canvassed many well-known international firms, such as Canon in Japan, for example, and convinced them to enter into distribution agreements.
“Within eight years from 1952 my father was able to convince international companies that he could be a successful partner,” Issa Abu Issa says. “From inception he was a reliable business partner that gained the trust of companies such as Canon, with whom we just celebrated 50 years of partnership, or Estee Lauder, who we have been working with for more than 50 years. He was able to leave a positive impression on people. He was persuasive and able to build confidence whenever he met people, and today more than two thirds of the business we have are the companies that he established contacts with and are still ongoing.”
As far as passing on the custodianship of the Salam store, Issa Abu Issa tells TheEDGE there was never a doubt that as eldest son, along with his younger brother Hussam Abdul Salam Abu Issa, the business would remain within the family. From their early teens, the young Issa and Hussam would go to the store directly after school almost every day and spend most of their holidays working and absorbing all they needed to about the nascent photographic and retail business first hand. When they had finished studying – in Issa Abu Issa’s case a Bachelor of Science in Business Administration at United States International University in San Diego, California – they both assumed leadership positions in the firm around 1980.
His father sent his children overseas to study, digresses Issa Abu Issa briefly, as he believed it would broaden their worldview and help their decision making processes to mature far more quickly, which Issa Abu Issa has also done with his own children, some of whom are now working within the Salam company fold.
“In the future you have to take decisions on your own, so you really have to develop your children to think independently. This is really more important than being able to add and subtract,” Issa Abu Issa explains, before continuing the story of how he took over the family firm from his father. “We used to come in and be trained and work for him. From the age of fourteen, he used to take us with him to exhibitions, to meet companies, to introduce us to the business world continuously. He really put in a lot of effort and injected us with a lot of his knowledge. Then we graduated and joined the business and we were with him for a couple of years, and then he passed away. I was in my mid-20s and my brother was a year and a half younger and we had to take over the responsibilities, and we grew Salam to where it is today.”
Under the guidance of his late father in the early days, Salam Studio Stores, says Issa Abu Issa, was the first Qatari company among its ilk of all the large Doha-based local family businesses to begin trading in another country: in Abu Dhabi in the United Arab Emirates (UAE) in 1966. In 1967 another store followed in Dubai and then Oman in the 1980s, with many more across the region to follow. Within a few years, Salam’s operations would encompass studios, stores and divisions for wholesale, retail merchandise and services serving the entire Gulf under the umbrella of Salam Holdings, which went public in 2002, listing on what was then the Doha Securities Market.
In June of the same year, Salam Holdings merged into Salam International and then, in October 2005, Salam Group merged into Salam International Investment Limited (SIIL). Now, explains Issa Abu Issa, SIIL operates four sectors or industries under the broad umbrella of the Qatar Exchange-listed firm: contracting, industry and energy, technology, and luxury retail and hospitality.
“We established our Salam International as a vehicle, it was a small company and gradually we started adding the family businesses to it, doing some mergers and so on. In a public shareholding company the mindset has to change, consolidation and corporate governance must have a great deal of importance. Though others have followed suite, we were the first family business in Qatar to go public by many years. This consolidation and restructuring is a continuous process in our company and we have done it three times so far. It is a living thing rather than something you just do once, and though we have grown the business tremendously since then, I think that the company has the potential to still grow three to four times in the coming five years.”
Part of the advantage of this consolidation strategy, adds Issa Abu Issa, is clustering what he calls business likes with likes, creating a critical mass and enabling a broad-spanning business to optimise Salam’s strengths and a synergistic relationship between its various trading entities. He cites Salam’s construction operations as an example. This contains more than a dozen companies, from building to electrical, mechanical engineering, aluminium and steel fabrication, landscaping and interior design. Issa Abu Issa explains how these were brought together under one managing director, so that strategic opportunities could be identified and leveraged for the benefit of all, as well as administration etcetera being optimised on the back end.
Another competitive advantage to this unified strategy, adds Issa Abu Issa, is attracting and retaining talented and suitably qualified staff and creating a place where they want to work and feel comfortable doing so. “Talent and the retention of talent is a challenge,” he says. “In the US and Europe you can just pick up qualified people across the board and plug in the people who are more receptive to the culture of your company. But in general, it is much more difficult here. We have more than 22 nationalities working within our company, so you have to create a home – which is the company, Salam, the larger family and the unifying factor. Thanks to God that we are one of the few companies that have been able to grow and retain and attract talent better than anybody else.”
THE LEGACY OF THE GATE
Harking back to the legacy of Abdul Salam Mohammed Abu Issa – who saw an opportunity in the photographic realm and embraced it, growing the company from there – Salam’s style of business agrees Issa Abu Issa, has always been somewhat opportunistic. However, now he says the company is trying to focus more and more on being more strategic. But, he adds, because the manner of market in developing countries tends to force the former style of business it is ultimately about finding a balance between that and a planned approach. The state of the greater world economy, of course is an influence on the latter – and like many businesses a few years ago, the global financial crisis restricted some of Salam’s expansion ambitions.
Salam has thus also been cautiously managing its asset base, reinvesting in the company and its growth and operations, but also increasingly undertaking a broad-based equity strategy, specifically in real assets classes such as property. “Because we are in a small economy,” explains Issa Abu Issa, “and because we are very dependent on government spending, we have decided the best way to soften the spikes in revenue is by creating a stream of revenue from real estate. This is not the easiest thing to build though, because it is a long-term investment. I thought that we should have a floor of income-generating assets that can continuously get you a flow of income, because more than half of our company depends on contracting in the IT, oil and gas or building sectors. The retail business is a stabilising element and if you put both of those two together that will bring you cash flow and revenues. It was more of a strategic move for the company. Usually you would build your own assets on a personal basis, but I wanted that to happen for the company in order to protect it. Remember we are not – like most of the listed companies in the Qatar stock exchange – government driven. We are the only private company so we are not privileged with anything other than being able to strategise properly, to navigate carefully in the economy.”
Chief among Salam International’s investments is The Gate in West Bay in Doha, which after three decades of phase-by-phase development, was completed in October this year. While this might seem a recent project to the casual observer, Issa Abu Issa reveals to TheEDGE that The Gate is in fact a fulfilment of a long-term the vision of his father, who bought parcels of the original land it now covers incrementally through the 1960s and 1970s, with he and his brother completing this process throughout the 1980s.
Though Salam owns other properties – most notably Jumana Tower on the Pearl and of course the long standing Salam Tower, in which we sat talking on the Corniche – The Gate is now the focus, encompassing QR1.7 billion in investment from within Salam and from external funders, under the auspices of its managing entity Salam Bounian, structured in such as way to minimise risk to SIIL – a decision taken even before the 2008/2009 financial crisis.
“We started leasing the property about a year ago, and it is a bit slow but it is building up. Now in 2013 I think it will start to move very fast,” Issa Abu Issa says. “The idea of The Gate is that we wanted to create a mixed-use building that can contribute to the diversity in its income. It is a flagship project that we have been able to build on the legacy of what my father started in 1982. Salam International controls it and owns part of it along with investors, but it is a separate company with no impact on Salam International.”
As far as the state of real estate, and more pertinently, retail in Qatar at present, Issa Abu Issa has mixed feelings. On one hand he is bullish about The Gate project and SIIL’s interests. However, what does concern him, particularly on the retail side, is the overabundance of multi-purpose retail space planned for the country. “During my 32 years of working in Qatar I have seen many business trends,” he explains, adding that in the past few decades certain types of commerce have become popular at the same time among local family owned companies.
For a time this was real estate and the building of towers, adds Issa Abu Issa and though this of course was stalled by the financial downturn there is he feels still and overabundance of office space, which will take around half a decade to return to a balance between supply and demand.
In Qatar now, he continues, the latest popular development investment is a retail explosion in shopping malls, which while on one hand is encouraging, Issa Abu Issa also finds a little disconcerting, especially if one considers that all these malls will require growth in local population with disposable income to be feasible. “It is going to be a challenge,” he says.
Like all Qatari businessmen, inflation in the economy is another issue that is of concern for Issa Abu Issa. Although there are many projects planned for the near future, doubling if not tripling business for contracting and service companies, all going well, such as those under the Salam umbrella, slow decision-making processes are delaying their announcement, and Issa Abu Issa says, influencing inflation, which is a normal outcome and something that must be anticipated. This is of course not an issue endemic to Qatar but the greater Gulf. And though Salam’s presence in neighbouring countries, particularly in the UAE, does indicate a broader economic strategy regionally, thanks to the after-effects of the economic crisis in the Gulf, most of SIIL’s focus remains in Qatar, which has remained relatively immune to global financial woes.
“Qatar for us is extremely important, and right now it is 70 percent of our business,” explains Issa Abu Issa. “The problem is that the rest of the region, and the rest of the world, is hungry for business and Qatar is over publicised. The amount of projects that we have in Doha is not enough to feed the rest of the world. It is hardly enough to feed us here, the local business community, but everybody is hungry and lots of companies have come in and failed to sustain their operations. In the past they have competed very harshly for projects and then realised that it is not an easy game and closed shop and left. In that process, a lot of damage has being done to the economy. Luckily today there is a different stream today with a deadline, the 2022 World Cup, and that is a milestone that nobody can mess around with.”
The downside repeats Issa Abu Issa, is that dates for many of the projects have not yet been set, making specific planning difficult at this stage, especially for contracting firms. But, he reiterates, at least there is a common purpose and goal for the country to be ready. In the meantime, until these projects come on stream, much of his attention is on The Gate.
Issa Abu Issa tells TheEDGE he has been deeply emotionally involved in The Gate as a continuation of what his father began 60 years ago. He has been personally involved with almost every detail, working very closely with architect Michael Leeds to make sure that the legacy of Abdul Salam Mohammed Abu Issa lives on in the project and all of Salam International’s business interests. “We are very much driven by our history,” he says, “because if you don’t build on your history, if you don’t know it, then you don’t have a future. This is what we always teach our children.”
His father, Issa Abu Issa closes, would be pleased with how Salam International has eveolved. “I think he would be very proud, especially to see the development of The Gate,” he says, before relating a poignant story that is a fitting conclusion to the first six decades of the company’s existence and the vision of its founder. “I was walking with my father once after the inauguration of Salam Plaza, phase one of the Gate which was opened in 1982 and at the time the largest private sector project in Qatar. After a long day at work we were walking from one roundabout to the other for some exercise and he stopped at that roundabout and looked at the building and at me and said that people will one day say that a person called Abdul Salam Abu Issa passed from here.”