May 10, 2010
Harrods has been bought by the Qatari royal family, the House of Thani, for a reported £1.5bn. Which is a lot of money, but amusingly is even more in Qatari Riyals – 8.1bn.
The reason I think this is interesting is that it is yet another symptom of a reversal in the flow of value between the different conceptual regions of the world. Sounds exciting doesn’t it?
So it should. OK, so Harrods was clearly already owned by the Fayed brothers since 1985, from House of Fraser who’d owned it since 1959; it’s not like it was a salt-of-the-earth emporium run by Arkwright and G-G-G-Granville.
But consider how the shop (and the ‘fancy goods’ consumerism it fed) grew in the first place. Harrods actually started out as a small room in Stepney specialising in tea – which ranks with sugar, coffee, diamonds & timber as one of the world’s most politicised commodities. All of these My First Empire (TM) building blocks were fundamental in delineating the difference between the developed (like we’ve stopped – eerie) and developing worlds. Check out Dan Carlin’s excellent podcast on the topic.
My point is that the global model from the 15th century until 6pm on Thursday the 1st of December 1955 was essentially going to countries where the local definition of natural resource was something like “cunning” or “the ability to survive in a desert for 50 generations”, setting up infrastructure to systematically remove raw materials which were of little or no apparent value in their native setting, and then taking those materials home to create value out of them.
So the value creation was not in the mine but in the Cartier ring, not in the forest but in the workshop of Thomas Chippendale.
Fast forward to 2010: in a lot of cases, by no means all, the infrastructure of production is integrated into the economy of the country of origin. I’m not saying that the principal beneficiary of Brazilian logging are the Tupi indians whose house is now under the 40-tonne crane – I’m saying that the licensing fees and profit shares paid by commercial logging firms are in no small way responsible for the fact that Brazil is the world’s 8th largest economy by GDP. The point is that the gap between production & value no longer stretches across the world.
The fact is we in the Western world aren’t really in much of a position to create any kind of value – the UK alone owes more than £900bn, a number so big that’s ceased meaning anything numerical and practically become another language. Our banks – institutions founded on the principal that other people give them money – still can’t make any money, and the Euro looks frankly buggered (old economist’s term). There was a lot of crowing in Western media a few months ago about how Dubai’s dreams were in tatters – all because they have accrued a paltry £59bn in debt through the sheer scale of their investment. So they could lend us £800bn, and still be better off.. In fact we should try asking.
So yes, Harrods was already shiny enough to have attracted the notoriously magpie-esque attentions of the Middle East – but what about MGM? Metro-Goldwyn-Mayer, bona-fide Hollywood royalty, the studio responsible for some of the most successful films of all time – has managed to achieve a debt level of $3.7bn – about the same as Russia’s national debt (sort of). The new Bond film is being delayed until a buyer is found.
My conclusion is this: although the other major US media corporations are sniffing around, we now live in a world where is actively possible that one of the crown jewels in the Hollywood mechanism responsible for spreading the Word of Western cultural supremacy is bought up by the government either a Middle-Eastern islamic state or a Far Eastern communist totalitarian regime.
That is amazing.