FEATURE ARTICLE: November 1996 (No. 8.1)

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Focus on Palestine


Anyone remotely acquainted with world affairs knows that Palestine -- also referred to as "West Bank and Gaza" -- is not the most predictable of places. But like Vietnam which was featured here a year ago, Palestine is one of the least understood markets in the world, yet it represents an effective gateway for doing business in the Middle East.

Table of Contents


(the following summary highlights major insights covered in the full report )

In spite of surface appearances to the contrary, however, it is possible to do business there and there are convincing reasons for doing so. In the long run, much depends on the progress of discussions between Israel and the Palestinian Authority (PA), and it's no secret that these have been somewhat bumpy of late. But then, few foresaw the progress of the past three years since the advent of the Oslo Accords. Businesspeople with a desire to source from or sell to the Middle East may be surprised to learn about the opportunities that Palestine offers.

Business Advantages

Open for Business

When companies consider doing business in the Middle East, Palestine is generally not the first place that comes to mind. But the reality is that many of us have already conducted business with Palestinian firms, albeit indirectly through Israeli companies and middlemen.

Since it was only recently that West Bank and Gaza became a recognized country of origin, goods from Palestine have traditionally been sold with "Made in Israel" labels. If you have ever purchased fresh produce, flowers, clothing, shoes, handicrafts, or stone and marble from Israel, the chances are good that you actually bought products from Palestine.

Likewise, if you have ever exported to Israel, there's a reasonable chance that your final customer was a Palestinian company or consumer.

In spite of their relative anonymity, then, many Palestinian businesses are not new to the rigors of world trade.

Aside from this, for those who believe that the raison d'etre of business should at least occasionally extend beyond the realm of profit-making, there is the matter of the closely synchronized relationship that exists between peace and economic circumstances.

Robert Pelletreau, Assistant Secretary of State for Near Eastern Affairs, recently summed this up with a simple statement: "When goods move, soldiers don't."

There are also a number of other purely business reasons for looking into this market:

Best Industry Prospects: What Consumer Goods Should You Be Selling?

The best prospects for the consumer market range from western fast food restaurants to car repair and computer equipment.

SEE: [fast food] [processed foods] [health and hygiene] [PCs/Office Equipment] [auto parts/repair]

Fast Food: The fast food business is booming in both Israel and Palestine. Palestinians who can travel in Israel have a growing appetite for McDonald's, Burger King, Pizza Hut, and Dunkin' Donuts. Those who have lived abroad bring home foreign foods and recipes as is evidenced by the growing number of ethnic restaurants (especially Indian, Italian, and Chinese). The author of this report was once treated to "Maryland Fried Chicken" in Nablus. Those foods which offer the greatest opportunity at present are pizza, ice cream, and inexpensive hamburger and chicken meals.

Processed Foods: The winner in this category seems to be snack foods which can be found in most corner grocery stores. General Mills now sells "American Bugles" (pronounced "buggles" in Palestine) through a Hebron-based snack food producer and distributor. Cereals, condiments, sauces, and other foods not requiring refrigeration during transit are also likely candidates.

Health and Hygiene Personal and Household Goods: Given that the competition is usually fairly high-priced Israeli goods, household cleaning items, dental care goods, toiletries, and hair care products should all do well in the Palestinian market.

Computers and Office Equipment: Computer and office supplies are notoriously hard to come by in Palestine. Growth of both the public and private sectors in recent years has created high demand for a full range of office equipment, including computers, software, copiers, faxes and supplies.

Automotive Parts and Service Equipment: The number of cars on the road in Palestine and Israel has mushroomed over the last decade. It's virtually impossible to go for a drive without spotting several student driver symbols on the backs of other cars in traffic. Because cars are heavily taxed at Customs, they are largely out of the reach of most Palestinians, so the tendency is for them to buy used cars from Israelis. Once purchased, they are then made to last in spite of rough road conditions. As a result, the automotive services industry has blossomed.

Consumer and Market Profile

Depending on one's choice of sources, 1994 estimates place GNP per capita for West Bank and Gaza at either $1,715 (according to the World Bank) or $2,800 for the West Bank and $2,400 for Gaza (according to the CIA World Factbook).

Household Expenditures
A 1996 report issued by the Palestinian Central Bureau of Statistics reveals that the typical Palestinian household divides its consumption as follows:

West Bank households consume slightly more ($878/month) than comparable ones in Gaza ($757).

Western Products Popular
Anyone who has been to Palestine is struck by the ready availability and extreme popularity of Western products. Major brand soft drinks, snack foods, cosmetics, and other consumables are easily found at prices above the local competition. Durables, such as cellular phones, are seen in greater numbers than North America and Europe. Unlike some countries, there is no apparent resistance to foreign products. The information below, taken from the Commercial Guide, sheds some additional light on consumer preferences:

As increasing numbers of the emerging middle-to-upper class obtain satellite dishes and gain access to the internet (which has been soaring since about June 1996), it is reasonable to expect that demand for non-local products will only grow.

Market Threats

What Problems Will Your Face?

As was alluded to at the outset, doing business in Palestine is not without its challenges. The most critical of these are:

Additional Information Resources:

To conduct business with Palestine, it is important to keep up on current events. Follow the peace process, the progress of the Cairo economic summit, and any modifications to Palestine's GSP and free trade status. If interested in learning more, a good starting point would be to contact one of the 600 American firms participating in November's summit to ask about their perceptions, experiences, and plans. Other sources of information include:

Opinions expressed are those of the author and not necessarily those of the operator of this network or site. PANGAEA makes no claims with regard to the accuracy of the information contained in this or any other report on the site.

(c) 1996 PANGAEACommunications. All rights reserved. No part of this file may be copied, distributed or disseminated in part or in whole without the express prior written permission of PANGAEACommunications Reprints are available for US$10.00 per copy, payable to "PANGAEA(tm)." Full report is also available for US$100.00.

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Updated: 1/29/97