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Saudi Arabia Report
Marcopolis presents the Saudi Arabia Report focused on the investments, doing business, economy and other topics featuring interviews with key executives. The sectors under review in this issue are industry, real-estate, ICT, investments, banking sector, telecom sector and many more.
InterviewsNovember 07, 2022
Shaker Group: A Leading Air Conditioning Solutions Company and Distributor of Home Appliances in the GCC
Mohammed Ibrahim Abunayyan, CEO of Shaker Group
- Written by Sandra Francisco
- Published: November 07, 2022
Interview with Mohammed Ibrahim Abunayyan, CEO of Shaker Group
What is your overview of the sector and how does Shaker Group fit within it?
Shaker has a unique position in terms of its partnerships, we have a joint venture with LG Electronics in Saudi Arabia and the distributor of Maytag, Ariston, Indesit, Midea, and Bompani. We are partnered with global brands that have insights and solid positioning. Additionally, there is the diversity of the Shaker team itself, the knowledge and experience of the team here amount to over 100 years. Based on our internal data, experience, international reach, and visibility, we were better positioned to face the market challenges in the past two years including COVID, price increases, supply chain disruptions, and inflation. We are grateful for our team, and our partners who supported us in overcoming these issues.
How did you develop the partnerships and relationships with these leading brands and how do you represent them within Saudi Arabia?
We have been the distributor for leading global brands in the Kingdom and our partnerships have been going for about 30 years now, the reach and transparency between Shaker and the brands kept these partnerships developing and prospering to serve the KSA consumers. Additionally, Saudi Arabia is a very lucrative market for any international company, there is an extensive consumer base, the government has several ongoing mega projects and investments in efficiency, and transparent regulatory requirements for international businesses looking to expand in the Kingdom. Shaker has a unique joint venture with LG for over 15 years now for an air conditioning factory with a capacity of 1 million units. This factory is one of eight worldwide and we are the only factory with LG in the Middle East market. Today, we export 20% of our production to GCC and African countries and the rest goes to the local markets. We are extremely happy and we both benefit from this unique partnership. This joint venture presents many advantages, LG as a partner is very concerned about clean energy and has invented the dual inverter technology which focuses on energy saving in air conditioning. We are also ahead of other competitors in research and development for technology, innovation and energy consumption.
What are you doing to promote green energy and energy efficiency at Shaker Group?
Saudi Arabia set this goal more than 10 years ago, they eliminated certain gases, including Freon (R-22), and substituted it with another gas (R-410) that is cleaner, less harmful to the environment and the ozone layer. The Kingdom has moved towards energy efficiency and cleaner energy. Since his Royal Highness the Crown Prince initiated his vision, one of the main pillars for the Kingdom to be less dependent on oil and to increase efficiency and reduce electricity consumption in home appliances specifically ACs.
At Shaker, environmental sustainability underpins all our business decision-making processes. We actively seek to incorporate environmental friendly solutions across our business functions, as demonstrated by the efforts of our subsidiary Energy Services Company (ESCO) which specializes in retrofitting and providing energy-efficient solutions to government, businesses, and mega projects across the Kingdom. We are proud to say that ESCO was the first Saudi private sector company to be accredited by the Saudi Energy Efficiency Center (SEEC) in 2017 and is rapidly growing and expanding its energy-saving services and consultancy solutions. Additionally, we have received the stamp of approval for the new Saudi Energy Efficiency Ratio (SEER) standard, and we are well positioned to meet the rigorous requirements of the higher efficiency standards for air conditioners through the dual inverter technology that is manufactured locally at our Shaker LG factory in Tatweer Industrial City. Our commitment to environmental sustainability is also mirrored internally at Shaker with the use of a central printing system to reduce paper usage, and upgrading our headquarters’ HVAC system with the latest energy-efficient air conditioning systems.
Can you explain what dual inverter technology entails?
There are two kinds of compressors, on-off compressors, and inverter compressors. The on-off consumes more energy when it is going from 0 to 10. The dual inverter works in a very smart way. It will start on a full mode until it reaches the optimum temperature level, then when it reaches the targeted room temperature, it will hibernate and use only the quarter of the compressor’s capacity to maintain the targeted temperature level. As a result, it does not consume a large amount of energy and gas as compared to the traditional on-off compressors.
What products and services does Shaker Group offer?
Shaker has a diverse portfolio, we have retail, which is B2C, and we have B2B, which is the projects. The projects are our key focus of business for 2022 and the years ahead. We play a major role in some of the Kingdom’s biggest projects such as Roshn, Red Sea, NEOM, and the Formula One Jeddah Circuit. Our ESCO retrofitting and energy consultancy services are also a growth area, aligning with Vision 2030’s focus on energy efficiency and market demand for environmental friendly solutions. The government launched the Saudi Energy Efficiency Center (SEEC) Estbdal Initiative in 2018, which is aimed at replacing the old split units with more energy-efficient units, each eligible user can replace up to six ACs and save on electricity consumption. The initiative is for local manufacturers, with LG Shaker as leaders in this initiative thanks to our distribution reach and having a highly reliable “Made in Saudi” product. Following this success, the government has started the second Estbdal Initiative which is aimed at replacing the window ACs focusing on the same goal with a subsidy for the end user to replace the low energy efficient window ACs which are harmful to energy and the environment with new units that are more efficient.
What are your competitive advantages? What makes Shaker Group stand out from the other players in the industry?
The diversity of the Shaker portfolio and solution offering, in which we have HVAC solutions, home appliances and other products, gives us the ability to strengthen our position and access new segments in that market. The company is moving toward consolidated services and innovation in its technologies to achieve cost efficiency and enhance its competitiveness. As a result, we have a fairly extensive brand portfolio that covers most of the consumer segments with competitive prices according to the local market and customer demand. Our competitive advantage as well is our team, rich in experience, market knowledge and culture. One of the main drivers of any company is its human capital and I am extremely proud of my team members at Shaker and how they drive this company forward and continue to overcome any obstacles.
Are you looking for more partners or investors to collaborate with?
At Shaker, we always welcome partnerships and opportunities that complement our core business, whether regional or international, to drive innovation and support the growth of our portfolio. We are a publicly listed company and we strive to deliver value to our investors and shareholders. We succeeded in signing MOUs with Bompani, which is an Italian brand for cooking ranges. We believe it will bring high value for the consumer and shareholders. We also signed a partnership in a memorandum of understanding with Cashew, which is a buy now pay later service to cater to the Kingdom’s dynamic retail market.
What are your plans internationally? Are you looking at going outside of the GCC? Are you looking at expanding to any new countries in the GCC?
Going out of the GCC, internationally or regionally, depends on how we see the value for the company and its shareholders. We are always open, but it needs to fit certain criteria so that we can deliver the best value to our shareholders. We are a major stakeholder for a leading distribution and retail company in Jordan for LG home appliances and ACs and it is one of the top companies in the country. We also own a majority stake in EMS, Energy Management Services Company in the UAE, which extends our arm and capabilities in energy efficiency.
What is your vision for the company in the next three to five years, the medium term?
Our vision is to become a leader supplier and solution provider in our existing business segments and add further brands. Our strategy to achieve this is based on growing our market share and product mix; streamlining operational efficiency; and ensuring we have the right organizational structure and talent in the company. We will also expand e-commerce sales to meet consumer demand and further digitize and enhance our operating model. For 2023, our target is to further increase our profits and achieve a high double-digit percentage growth in revenue.
What is your inspiration? What drives you to do what you do?
His Royal Highness, the Crown Prince, has shown us the importance of being adaptable while embracing our cultural roots to not only remain globally competitive but also to be leaders and pioneers. As the Chief Executive Officer of Shaker, I have always been inspired by the Crown Prince’s leadership and believed that building a company with an adaptable management style is what keeps us at the forefront of competition. As a leader, delivering the best shareholder value and creating an environment within the company that creates growth opportunities for the team and makes them comfortable working at Shaker is important to my role as a CEO. For me, if anyone leaves Shaker to take on a leading position elsewhere, this is an achievement. This role and industry are enjoyable challenges for me, and seeing the results keeps me motivated. It is the fuel that keeps you thinking more, and seeing things in a very strategic, long-term approach.
If you could give a message to investors or potential partners, or anyone looking into the lens of KSA, what would you say to them?
Saudi Arabia has made significant strides in its development in all fields which resulted in the Kingdom successfully making its mark as one of the fastest emerging and developing nations in the world. The Kingdom, through its visionary leaders, has demonstrated that the most efficient path to addressing global crises or obstacles is through collaboration, sustained engagement, and meaningful partnerships. The dynamic economy is well placed to navigate global interest rates and inflationary headwinds, and so far, we see no impact on consumer and business confidence. Businesses who are looking to operate in Saudi Arabia are well supported and there are companies operating in the Kingdom for decades, this is a great reflection of investor trust in the Kingdom’s business landscape and the opportunities it can present.
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