War, Trade and Four Decades of Betting on Dubai
Jacky Panjabi arrived in Dubai in 1985 with a simple observation: air conditioners were cheaper here than in Hong Kong. That single insight, combined with an appetite for risk during one of the region’s darkest periods, set in motion a four-decade transformation that would make his electronics business a fixture in the lives of generations of Dubai residents.
The timing seemed mad. The Iran-Iraq war was grinding through its fifth year. Iranian forces were mining the Strait of Hormuz and attacking commercial shipping. Baghdad had been striking Iranian shipping since 1984. Oil prices had collapsed from roughly $40 a barrel in 1981 to $25 by 1985, slashing government spending across the Gulf and drying up the revenues that private businesses depended on. UAE hydrocarbon revenues roughly halved over the period. “A lot of people were leaving the country because of the recession,” Panjabi recalls.
Yet Panjabi and his brother Ishwar saw something others missed. They had started Jacky’s as a mail order business in Hong Kong in 1970, selling everything from needles to cars. When Panjabi stopped in Dubai for two days in 1985, he noticed that a city importing almost everything was selling appliances it could barely function without at prices lower than those in Hong Kong. Fierce competition among merchants and huge trading volumes were driving prices down. He bought from several suppliers, shipped goods east, and made what he describes as good money. That success brought him back to open a tiny office in Nasser Square, now Baniyas Square, the heart of Dubai’s electronics trade at the time. The space served as office, packing room, warehouse and sleeping quarters all at once.
“We had no clue that one day we were going to make Dubai our headquarters,” says Panjabi, now 75.
The business found its footing when Jebel Ali Free Zone opened beside the port that same year. At a moment when falling oil revenues and regional conflict were making the Gulf look increasingly risky, Dubai was building infrastructure designed to attract international traders. Foreign companies could establish wholly owned operations beside one of the region’s biggest ports, and goods brought into the free zone for re-export could pass through without customs duties. For Jacky’s, this meant the business no longer had to depend simply on buying cheaply in Dubai and shipping goods out. It could operate from inside a logistics system designed for trade. Sony, Toshiba, Hitachi and other electronics manufacturers established operations there, giving traders like Jacky’s ready access to products they could ship to markets where they were harder to obtain.
The 1991 Gulf War brought sharp drops in business and another wave of departures. Panjabi was still based in Hong Kong and flying regularly to Dubai. Sometimes, he says, there were only four passengers on the aircraft. Then the Soviet Union collapsed, and traders from Russia and Eastern Europe began arriving in Dubai with cash, looking for consumer goods difficult to obtain at home. Jacky’s hired Russian-speaking staff and opened another showroom near the airport. “If we had 20 containers instead of 10, we would have been able to sell it,” Panjabi recalls of that period.
By 1996, when Jacky’s built its own 100,000-square-foot facility in Jebel Ali, the business was doubling every year. That same year, Panjabi moved his family from Hong Kong to Dubai. The company has since expanded far beyond consumer electronics into robotics, large-format digital printers, industrial digital presses, commercial 3D printers and sophisticated cutting equipment. It now operates across the UAE, Hong Kong and Africa.
Today, the latest regional conflict is disrupting the trade routes that built Jacky’s into a multibillion-dollar business. “We can’t ship anything,” Panjabi says of the current supply-chain crisis. Small, high-value products can travel by air, but bulkier electronics cannot be sent economically that way. Distributors remain reliant on sea freight, usually through the Strait of Hormuz. The irony is not lost on him: the business that began as a mail order operation now faces the same shipping constraints that shaped its origins.
By contrast, Panjabi rejects the notion that the conflict has broken Dubai’s economic model. His prescription mirrors what he has applied through previous downturns: preserve cash, examine costs and do not panic. The real threat, in his account, is psychological. “If you think of a short term, you’ll run away,” he says. “You have to have patience.”
Whether the current disruption to Strait of Hormuz shipping proves as temporary as the crises that preceded it remains the question that traders across the Gulf are now waiting to answer.