KHALEEJ TIMES, JANUARY 17, 2008

Reynald Henry Katz: Visionary entrepreneur
Growing up in Avignon in France, Katz as a teenager was helping his father in his cosmetics factory where he eventually became manager for his nail polish filling plant. Already at 19, he decided to become independent by making a move to London where he partnered with a chemist who had invented a revolutionary anti-cracking nail polish formula. In only two years, Katz conquered 80 per cent of the global market for nail polish and became millionaire when selling the company to his biggest supplier. In the years to come, Katz would continue to innovate in the cosmetics industry by introducing new products for the low-price market. By reengineering the manufacturing process, Katz developed a way to sell the cheapest lipstick in the market, thereby pioneering the field of low-priced quality cosmetic products. It was the discovery of the Middle East as a high potential emerging market for cosmetics that eventually brought Katz to Iraq, where he would stay for six years as a Cosmetic Head Buyer. “I was living in the Middle East selling perfume door-by-door. And in fact, I was selling very well. The people I was dealing with became my friends. Still today, 20-30 years later, I can go to Abu Dhabi, to Kuwait, and meet people who are my buddies,” says Katz. Due to the Iraq-Iran war, Katz had to leave the Middle East and instead decided to explore the booming perfume industry in the United States. Over the years to come, Katz developed his own line of budget price perfumes and established a plant in Miami. He furthermore spent several years in China where he developed a new concept of malls for the Chinese government. An e-business idea brought Katz back to the United States for a period before he eventually moved to Panama in 2001 where he purchased a distribution liquor company at the Colon Free Trade Zone. Based on his personal experience, Katz identifies three key principles that have helped him succeed in business over the years. “Vision. The number one is vision. You may have something good to sell, but you need to have vision and passion. Second, I am good in humanity and to my people. I like to be good to my people, and this is very important. You cannot expect your employees or partners to do their very best for you if you do not treat them right. So I treat my people very well. And third, I do not do business primarily for money. I do it because I love what I am doing. I am now 52, and I think that when I am 92, I will still be with PIMM expanding the concept around the world,” concludes Katz.

Reynald Henry Katz Founder and CEO of Panama International Merchandise Mart

PIMM founder and CEO Mr. Reynald Henry Katz, is no newcomer to the world of trade and commerce. An entrepreneur at heart, Katz has several times throughout his career been able to turn innovative ideas into lucrative businesses. Speaking six languages and having worked in various parts of the world, Katz views PIMM as the culmination so far of a long process of learning and developing his approach as a businessman.
“I am 52 now, and the last 32 years have been my learning life. Now I am doing what I really like to do. I am building something that is my dream, the Panama International Merchandise Mart. During the previous three decades, I have done many successful things, but I also made mistakes. So I have been learning. I have learned to do business in Iraq, to do business in Lebanon, in China, in Italy, in France, in the USA. What I am doing today is the result of accumulating experience for 32 years,” comments Katz.

ONCE completed, PIMM will comprise the infrastructure and facilities of an entire commercial city, designed to provide an optimal environment for the showroom owners, their staff and buyers to visit, do business, and stay for shorter or longer periods of time. Apart from the 6,800 showrooms that have been divided into 34 buildings of 25,000 square metres each, PIMM will feature convention, exhibition, and communication centres, banks, 10 office blocks, apartment buildings with 600 units, four hotels, 10 local and international restaurants, recreational centre and gym, laundry and dry cleaner, supermarket, medical care centre, and fully equipped fire and police stations. Furthermore, a free shuttle bus service between the airport and PIMM has been set up to ensure that vendors and buyers will not have to worry about their own transportation upon their arrival to Panama. The entire structure of PIMM has been designed in the shape of a gigantic butterfly, symbolising the meaning of the word Panama in the local Guarani Indian language. The entire centre is scheduled to open in 2009-2010.
A project of national significance Based on statistics from the Colon Free Trade Zone, it is projected that PIMM the first year will receive at least 5,000 visitors a week. According to Katz, however, this figure is expected to rise dramatically after only 2 to 3 years as a result of PIMM’s marketing activities. “We expect a steep increase in visitors, as we have embarked on a very aggressive advertising campaign. We intend to fly in big buyers from other countries free of charge for them to visit the showrooms. This way, we are making sure that the vendors at PIMM are going to sell,” comments Katz. Within 2-5 years, total sales through PIMM are expected to reach a level of $35bn, rendering the project a matter of national economic significance. Says Katz, “In the CFZ there are about 3,000 operators that each makes on average $5m per year. A showroom owner at PIMM should be able to make $1m the first year, $2m the second year, and then eventually reach the same level of $5m. So we expect that PIMM will generate a total of $35bn in the trade business in Panama. This will have a big impact not only on the economy of Panama, but also on a regional level. With such a large volume of trade, PIMM will bring stability and sustain peace throughout the entire region.” Overall, the economic impact of PIMM on the economy of Panama is estimated at $550 billion. As each showroom will have three employees from Panama, the salaries paid to the 21,000 - 24,000 Panamanians directly employed plus the earnings of other service providers such as taxi drivers, window cleaners, bus drivers, etc. are bound to contribute significantly to raising living standards in the local community. Second only to the government, PIMM will be the largest employer and investor in Panama. According to Katz, “The canal expansion project constitutes a $5.2bn investment, and PIMM is a $700m investment. There is nothing in between.” International expansion plans Katz is already thinking beyond the region with an ambitious expansion plan to establish PIMMs in various key locations around the world. “My goal is

PIMM to become a city of trade and commerce

to open one PIMM in South Africa, which is a stable country. We can open one or two in India – in Bombay or New Delhi – because India is also a stable country, and they need this kind of mart. We can open one or two in the Middle East, one in Kuwait or Saudi Arabia or Qatar, one in Brussels in Europe, one in South Asia; in Malaysia or Vietnam, and one in Australia. I am already in discussions with a big American group to open a PIMM in the United States, in New Jersey. The point is that we can open one wherever there is already a significant amount of trade taking place that can be further organised.” PIMM searching for local partners It is estimated that each PIMM is going to cost $700m - $1bn depending primarily on land prices in the individual countries. Katz is already in talks with New York Stock Exchange to launch an IPO in 2008. For each PIMM outside of Panama, Katz is planning to supply half of the financing while a local partner in each location is to provide the other half. Explains Katz, “My idea is that I am trying to find a local partner in each country, who knows the culture, who knows the people, and who knows how to get the permit.” Thus, on a final note, Katz encourages Middle Eastern investors to consider Panama as an important emerging investment destination, “I think that Middle Eastern businesses have to expand, and they can start with Latin America, because in Latin America it is cheaper to invest than in the US. If you buy a big building in the States, it costs $100m. In Panama, the same kind of building costs $20m. In Latin America you will have a high return on your investment, because the laws are very friendly, there are no taxes here, no taxes on profit. This is a key advantage. People from the Middle East do not have to be afraid to come. If they come, they will bring wealth to Panama, and the money will come back to them with returns. I believe that Panama is the place to be for bankers, investors, exporters, and manufacturers from the Middle East.”

Special opportunities for Arab exporters
PIMM founder and CEO Reynald Henry Katz, lived for six year in Iraq while working with business partners across the Middle East. Over the years, he has developed close ties with the Arab culture, possesses an excellent insight of its business world and speaks Arabic fluently. Explains Katz, “I used to live six years in Middle East. And I love the people there, they are very intelligent, and they are the best I have met in my life. When they give you their word, and their heart and friendship, they are fantastic. And I mean it. I really have a good connection with them. I don’t know why, but I connect very well with them.”
Katz is convinced that the Panama International Merchandise Mart can stand as a premium stepping-stone for Middle Eastern companies who want to grow and develop their businesses internationally. When asked about the potential of operating at PIMM for Arab exporters of products such as jewellery, electronics, and leather goods, Katz elaborates, “The jewellery industry can be very profitable in Latin America. We have designed a specific pavilion of around 200 showrooms dedicated to the jewellery industry for a wide range of bijous and gems. We will also have between 200 and 400 showrooms just for leather and leather derivatives like jackets, pants, etc. A lot of Latin American countries produce leather so the Middle Eastern companies will be able to enter into an already established market. Many people believe that the leather industry is not profitable in Latin America because of the mild and hot weather conditions. But this is wrong. e.g., in a city like Bogota with an altitude of 2,700m, or in a city like Mexico at 2,000m, the weather can be quite cold, and the people wear leather. So leather and its products can be easily consumed in Latin America.” Katz, moreover, emphasises that there is still space for additional facilities on his 530 hectares of land. Besides the 34 buildings with permanent showrooms in particular categories, Katz is now planning to build pavilions with a special focus on individual countries or regions. Notes Katz, “There can be pavilions

for the Middle East or for specific nations or emirates, for example Abu Dhabi. Abu Dhabi can then every month send 5, 10 or 20 manufacturers in a special sector, to show their products or services for 10 or 15 days. If the market is good, they may subsequently consider moving into the permanent showrooms.” When it comes to services, whether it be in real estate, finance or consultancy, Katz believes that Arab companies in these sectors may also benefit from setting up a presence at PIMM, e.g., by buying or leasing offices rather than showrooms. Service providers too can enjoy the benefits of promoting themselves at PIMM, given its low operating costs, convenient facilities, and exposure to 3,000-5,000 daily visitors. Latin America’s economy is growing fast, and there is plenty of room for expansion for the Arab firms who want to seize this opportunity. Says Katz, “I think it is a good opportunity for them to buy or lease offices at PIMM. They can use Panama to expand in Latin America. If they can grab some of PIMM’s visitors and start doing business with them, then they can also go to Colombia, to Guatemala, to Mexico. From Panama they can expand through all of Latin America.” Katz believes that the most exciting aspect of PIMM for the Arab

businessmen will be the directness and face-to-face commercial contacts that can be established among business partners. That fits Middle Eastern culture and values well. “PIMM is a place where you can see the vendors, you can speak about the products, you can negotiate, you can touch the products, and you have eye contact. The eye contact is the best way to do business because it allows you to better understand the buyer and his personality, you can convince him and make friends with him, because businesses is based on

friendship and trust. I know the Middle East, because I lived there for six years, and everything I did in terms of business was based on trust. In the Middle East people are wonderful when it comes to trust, because when they give you their word, they always keep it.” Katz identifies great opportunities for future collaboration between the prestigious real estate development firms of the Middle East and his PIMM holding company in the global expansion of PIMM that includes the construction of 10 commercial cities throughout Asia,

Africa, USA, and Europe. “I want to make a call. I want to say to the investors in the Middle East, who are doing fantastic jobs, come to Panama - you will feel welcome here, and help me to open PIMM around the world, as partners. Partnership means that we own a big pie, and to me it matters more to have a share of a big pie than 100 per cent of nothing. So all those big investors in the Middle East, they are more than welcome to come with me and open PIMM not only in Panama but around the world,” concludes Katz.

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