(MENAFN - Arab News) Seventy percent of small- and medium-size businesses established in Makkah in the past three years have already gone under, according to the Makkah Chamber of Commerce and Industry (MCCI).
The chamber attributed the high rate of failure to several factors including flawed visions and expectations on the part of entrepreneurs who failed to take into account the many different nationalities coming to the city for Haj and Umra.
It also attributed the spread of low-quality products labeled "made in Makkah in the market to the shortage of factories in city.
"These projects were supposed to serve the Makkah economy but due to the owners' dependence on inaccurate feasibility studies they did not meet the requirements of the market," said Ehab Mashat, a member of the MCCI board. "Some of the entrepreneurs have followed their personal convictions only without considering the requirements of the market and consumers. Market needs must be recognized and consumers' convictions are no less important than those of traders," he said.
Professor Khaled Al-Matrafi, Dean of Entrepreneurship at Um Al-Qura University, attributed the failure rate to lack of experience, insufficient capital and knowledge of the competitors, unplanned expansion and lack of a qualified management team.
Al-Matrafi called on Chambers of Commerce and Industry to concentrate on business incubation and databases that can familiarize investors with the tools of marketing and competitiveness.
Mashat added that the chamber will put in place plans for establishing a research and economic studies center under its umbrella. The center would work on surveying the market in Makkah and creating a database that can provide free-of-charge information to traders and manufacturers, especially in the service sector.
Adnan Shafi, the chamber's secretary general, said many new businesses collapse because of feasibility studies that have no value. This failure discourages the young men and women enthusiastic about serving the city's economy, he said, adding that through the planned research center, the chamber will try to find solutions for small and medium enterprises failure.
Shafi said that studies showed that Makkah lacks some commodities that should be available and should be manufactured by the city's enterprises. "In the future, factories and projects will be launched depending on the city's manpower and with an eye toward implementing the role of craftsmanship and work-from-home families."
Currently Makkah's economy is eligible for reaching a global level, given the fact being a destination for 10 million people every year, and the government is determined to create economic and investment opportunities, he said.