In 1942, when 18-year-old Maghanmal Jethanand Pancholia landed in Sharjah, he was already the third generation to join his family business in what would later become the UAE. Now 94, he recalls that his grandfather arrived in the Trucial States in 1860 in an era when passports were not required for international travel. His father followed in 1885, when he was just 9 years old. And when it was time, he simply followed in their footsteps.
Popularly known as Maghaba, the Chairman of Arabian Trading Agency and Maghanmal Jethanand General Trading is an icon among the industrious group of families who laid the foundations of this modern country. From a modest start 75 years ago – helping his father and brother in their gold, currency exchange, trading and textiles operations – he was responsible for bringing electricity to Dubai and founding the Indian High School. Over the years, he has also become a spokesperson for his community.
“We were very simple people. There were no newspapers, TVs or radios. We didn’t know what was happening in the world, especially when the Second World War broke out, and we were desperate for news,” Pancholia says of those early years. Joined by his sons Dr Lal Chand and Rajkumar, who jointly run the family businesses based in Bur Dubai, the affable raconteur’s experiences sound incredulous and implausible today.
For many decades, family business was the only type of business in this land, although no one had even heard of the term. Many of these family businesses are long-standing clients of Mashreq, a bank which interestingly enough, began as a family-owned business of the Al Ghurair family. Such companies are a vibrant and vital part of the UAE’s economy and are typically much larger and more diversified than their counterparts in Western countries. Across the region, more than 80 per cent of businesses are family-owned and run, according to the Tharawat Family Business Forum, an association of leading family-owned companies across the Middle East.
Historical records of Mashreq indicate that the foundations of many of these sprawling empires were laid about five decades ago, often in small-scale trading activities or in necessary sectors such as electricity and food production. The second generation of leaders, better educated and equipped, modernised the original firms by experimenting with new business models and introducing contemporary management styles. And in many cases, a third generation now stands poised and empowered on the wings, with fresh energy and current ideas that they will bequeath to their families – and to their futures.
Building on a foundation of trust
Looking back 50 years, the nature of business in those early days was purely needs-based, Pancholia says. “There were no notes, only coins in Indian currency, and my shoulders used to ache every time I carried a bag of 1,000 coins for my brother’s currency exchange business. My family was the first in Dubai to own a radio, but it had to be powered by a huge and heavy battery, for there was no electricity at that time,” he says.
The Pancholias trace back their long business lineage to their hometown at Thatta, a small river port on the Sindhu, located about 100km from Karachi. He describes how the nationals of the Trucial States visited the area regularly to sell dates and fish and purchase textiles and spices. “This is how the connection began about 300 years ago, and then they invited us here to do business alongside them. Our community was particularly interested in financing the pearl business and purchasing pearls for sale in India,” he says.
Personal commitments underpinned business transactions in the emirates when Pancholia started out. “In those days, we were all a big family. The local Emirati people were gentle and generous, and all relationships were based on trust. Major cash and jewellery transactions were made without a single receipt. To this day, we maintain friendships and very strong ties with all the leading local business families.” One such relationship is with Abdullah Al Ghurair, who along with his brother Saif, founded Mashreq Bank. Some of the oldest business families in Dubai fondly remember their personal relationship with Abdullah Al Ghurair and how their businesses were financed and supported by Mashreq.
Passing the baton
Raju Shroff, the suave Managing Director of Regal Traders, is from a third generation of family business in the UAE, whose family has close business ties with Mashreq. Now in his early fifties, he arrived here when he was a three-month-old baby. His family had been visiting and trading in the Trucial States since the 1940s, and it was his grandfather who established Regal in 1952.
“I can remember Deira and Bur Dubai as two different markets with distinct clientele. The Indian business families were concentrated in Bur Dubai while UAE nationals and Africans dwelled and traded in Deira. It was a small community, and all of us knew each other very well.
“My father used to know Abdullah Al Ghurair in the mid-1960s when he was setting up the private bank which is now Mashreq. Even then, the Al Ghurair family had business knowledge and they had a good reputation; they were pioneers of the market.
Shroff says the biggest growth factor for family businesses like his, was the freedom that the Dubai government gave them and supported their entrepreneurial efforts. “In 1984, we were the first to install a satellite dish in Dubai. I had just joined the firm and when we approached the government for permission, there was no classification for the huge 15-feet dish in their import codes. Thoughtfully, they studied it and placed it under TV and Entertainment, because it would be good for business and good for the country.”
The Regal Group gradually extended this head start to include sophisticated CCTV and security systems for hotels and institutions, besides their large operations in technology, power diagnostics, garment trading, real estate and textiles – the latter of which still sits at the core of the family empire. “The UAE has grown and Dubai has changed from a small village in the middle of the desert to a global city. There have been dramatic changes in business – from local to regional and now international. With global connectivity, trading now includes manufacturing, transhipment and reshipment.”
Banking on family business
Mohammad Khader Al Shouli, a Palestinian who was born in Dubai’s Shindagah area and has lived here all his life, has multiple takes on the legendary and long-lasting family businesses of the UAE.
His father worked at the Bank of Oman (the former name of Mashreq) for 22 years, and he himself has been working at Mashreq for the past 20 years, where he is currently Senior Vice President and Head of Contracting Finance. Besides his professional knowledge of banking with family businesses, he has a long personal relationship with the Al Ghurair family – his employers and one of the most distinguished family businesses in the UAE.
“My family has been in the business of banking for several decades, starting with my grandfather and followed by my father. In the 1970s, the typical customer of a bank was a family who owned a trading or pearling business. There was a deep connection that a banker maintained with a customer – be it a trader or a manufacturer. Everything was small, the sizes were little, and people were simpler.
“Relationship was the only driver – it mattered more than numbers,” he says, agreeing with Pancholia. He remembers trailing his father to the Bank of Oman as a child and occasionally getting to see the contents of its strongroom. “Like other banks at the time, The Bank of Oman had a large strongroom and it would be filled with things such as saffron, bullion and carpets. This was an era of business and banking in the UAE when Persian carpets were offered as collateral and boxes of expensive saffron served as mortgage.”
While so many things have changed dramatically in the UAE, the values on which family businesses are founded has remained unchanged, says Al Shouli. “I am blessed to know two generations of the Al Ghurairs who form the very epitome of family business in this country. They run a very successful eponymous empire that has introduced many firsts in the UAE such as cement, flour, bottled water, insurance, and banking. They own Mashreq, a bank that continues to serve generations of successful businesses in the UAE. And the CEO of Mashreq, Abdul Aziz Al Ghurair spearheads the Family Business Council – Gulf. Theirs is a full and complete family business circle.”
When he followed his father’s footsteps and joined the bank, Al Shouli says its Chairman, Abdullah Al Ghurair, gave him advice that remains his personal motto in business and banking even today. “He said to me, ‘Be true to customers: look them in the eye and tell them what is true. It does not matter whether it is good news or bad, but tell them what you truly believe. Respect all your customers – irrespective of their stature in society’.”
Al Shouli believes each generation of filial entrepreneurs in the UAE has contributed to their own era. “The founding fathers were hungry for success, but they remained humble and they were connected to their roots. They believed that whatever they had could be taken away at any time and learnt to live without luxury. The generation that followed was told that the family had money, but none of it would be theirs until they learnt to earn themselves. They had to work hard to prove themselves.”
He now advises the next generation to be diligent, cautious and compliant in equal measure. “True creativity and passion can only come from family-run businesses, but sustainability is very important. It is a different world today – what we do here can make an impact even in New York. We have to be plugged in and we have to watch over our shoulders. We have to do the right thing and we have to do the right thing every single day.”