Doing business with United Arab Emirates

 

Contents

Foreword

The Arab world
History of the region
The oil factor
The United Arab Emirates
Commercial history
Characteristics of the UAE market?
Some key points
The Gulf Cooperation Council (GCC)
Demographics

Australia and the UAE
Australia's commercial future in the UAE

Foreign Trade
Assessment of growth prospects
Industry-based opportunities

Australian services opportunity grid

Review of key industry sectors
Oil and gas
Business and financial services
Engineering
Health care
Tourism development
Sports and entertainment
Infrastructure
Road transport
Sea ports
Air
Water
Information and communications technology (ICT)
Building and construction
Food and agribusiness
The UAE retail sector

UAE consumer expenditure by nationality group
Automotive
Business practice

Practical advice on entering markets
Where to start
Developing a strategy
Components of a successful strategy
The price factor
Finding opportunities

Opportunity funnel
Contact the buyer quickly
Present well
Tailor the enquiry
Assess the buyer's responsiveness
Demonstrate that you are serious
Identifying the best contacts
The airport lounge or the golf club?
Research
Referrals
Trade exhibitions
Trade missions
Agents and representatives
Publications
Austrade
State government agencies
Chambers of Commerce
UAE Chambers of Commerce
ABIG (Australian Business in the Gulf)

Islam and business
Arab customs
The Arab meeting-what to expect
Arranging meetings
Business communications
South Asians in the UAE
Dealing with Arab family companies
Who can help you?
The UAE Free Trade Zones
Import procedures
Import documentation
Licences and permits
Payments
Legal issues
Tax matters
Visas
Language
Translations

Establishing a local office and sponsors

Getting around
Hire cars
Taxis
Addresses
Accommodation
Health and safety
Phone numbers

In summary…

Case studies

Reference websites

Acknowledgments

 

Foreword

The Council for Australian–Arab Relations (CAAR), funded by the Australian Government, is an initiative designed to promote greater mutual understanding and acceptance of Australian and Arab cultures, values, beliefs and diversity. The Council's focus is on commercial and people-to-people links. It also works to strengthen academic and educational ties.

Australians have a growing range of interests in the Middle East and North Africa and increasingly travel to the region. The Council encourages closer ties with Arab countries and helps to build on the impressive growth in Australia's trade with the Middle East. The Council recognises, however, that many Australian SMEs still know very little about Australia's trade relationships with, and opportunities for new business in, the Arab world. In seeking to address the need for a better understanding of the region, we commissioned the first three in what we hope will be a series of reports designed to help Australian SMEs do business in the Arab world. These first three reports focus on the United Arab Emirates (UAE), Saudi Arabia and Qatar.

Australia has sound relations and strong commercial links with Saudi Arabia and is well placed to expand its trade with the Kingdom. The UAE, as a regional commercial and transport hub with an open and welcoming business environment, is already a popular destination for Australian SMEs. Although small, Qatar is growing rapidly. The scale and speed of development of its physical and social infrastructure make it an attractive start-up market for Australian companies.

There are, of course, risks associated with any business activity. These reports contain practical advice and market analysis which not only highlight current trade successes and opportunities but also provide information on impediments and barriers to trade. In seeking to do business overseas, companies should give consideration to the security environment. They will find the country-specific travel advisories issued by the Department of Foreign Affairs and Trade-www.smartraveller.gov.au-helpful in making their judgments.

I commend the 'Doing Business with…' series to those looking to enter markets in the Arab world and seeking a better understanding of the nature of the trade and future growth potential.

Brendan Stewart
Chairman
Council for Australian–Arab Relations

 

This business brief is an initiative of the Council for Australian–Arab Relations (CAAR), funded by the Australian Government.

This brief is one of a series of market studies designed to give practical advice on building durable business relationships in the Arab world.

The Arab world

There are more than 300 million people living in 22 Arab states stretching across North Africa and the Middle East, from the Atlantic Ocean through to the Red Sea and Gulf regions, and on to the Arabian Sea and the Indian Ocean.

Language and culture are key unifying factors, with Islam providing an overarching body of belief and a strong sense of identity and community. Arabs share a sense of kinship, history and destiny.

History of the region

Arab influence came to prominence with the spread of Islam in the seventh century AD. Arabic, formerly a tribal language of the Arabian Peninsula, soon became the primary language for a large part of the world, as Islamic culture spread across the Middle East and Northern Africa, as far as Spain.

Following World War I and the end of 400 years of Turkish rule across much of the Middle East, the Arab states were formed, significantly influenced by Britain, France and Italy.

The oil factor

Oil exploration and production in the Middle East began in Iran before World War I. Saudi Arabia, Kuwait and the Gulf states established major production only after World War II.

The 'oil boom' in 1973–75 was a watershed. Producer states asserted control over their oil. The introduction of pricing policies, reflecting the economic value of oil, injected unprecedented wealth into the resource rich Arab countries.

The United Arab Emirates

For Australians seeking business in the Arab world, an excellent place to start is the United Arab Emirates (UAE). It is a nation that offers an open and welcoming business environment. It is the pre-eminent distribution and logistics hub for the Gulf.

The UAE delivers for the Middle East, commercial capabilities
similar to those provided by Singapore in South East Asia.

A good litmus test for Australians is that if they are already doing good business in Singapore, they can probably replicate that success in the UAE.

Nevertheless, just as there are strong parallels with the way business is done in Singapore and the UAE, there are also discernible differences.

Commercial history

Before the oil boom of the early 1970s, the United Arab Emirates (UAE) was a small group of separate and competitive coastal and desert communities, precariously dependent on trade, pearling or subsistence farming.

Since independence in 1971, the ruling families of the Emirates have provided visionary leadership. In less than a generation these scattered communities have created an advanced nation.

The seven Emirates are Abu Dhabi, Dubai, Sharjah, Ras Al Khaimah, Ajman, Fujairah and Umm Al Quwain. Abu Dhabi is the largest and most affluent of the states of the UAE. It occupies more than 80% of the land area-and has most of the oil wealth.

Abu Dhabi is the national capital and major centre for the oil and gas industry. Dubai is the commercial and shipping hub of the country. Dubai has built on its trading foundation to create the region's premier port and airport facilities, warehousing, tourism, ICT and financial infrastructure.

Sharjah is the third most important emirate and the centre for manufacturing. Similar to Abu Dhabi and Dubai, it has an entrepreneurial business culture, and an energetic business community seeking closer links with Australia.

Characteristics of the UAE market

• It is Australia's second-largest market in the Gulf, with excellent growth prospects.
• It has a sound economy, with a fast-growing and youthful population.
• There are low barriers to entry.
• It has a well-managed banking system.
• It also has excellent infrastructure-hotels, air travel and telecommunications.
• Its business community is familiar with Western practices.
• It is intensely competitive.

Some key points

The UAE weekend is Thursday to Friday which, combined with time zones (the UAE is six hours behind Australian EST), may create communications difficulties.

Many businesses (but not government offices) are open on Thursday. It is recommended that you check the precise working week for your contacts when arranging a visit program.

Some offices work a split shift from 8 am to 1 pm and then 4 pm to 7 pm. Others work a straight shift of 8 am to 5 pm and others 9 am to 6 pm.

The summer season (May to September) is uncomfortably hot and not the ideal time for visiting. It is, however, a good time for Emiratis to visit Australia.

Business activity slows during the month of Ramadan. Office hours during Ramadan are usually 8 am to 3 pm.

The Gulf Cooperation Council (GCC)

The Gulf Cooperation Council or GCC, was formed in 1981, to provide a basis for economic integration of the Gulf States. Members are Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates (UAE).

The GCC Customs Union was implemented in January 2003 and provides for liberalised trade between members.

There may be market access advantages deriving from rules of origin as the Customs Union develops.

Demographics

The UAE has a young and ethnically diverse population. The demographic profile is crucial to appreciating local consumption patterns.

With a median age of 28 years, the 'oil boom' generation increasingly shapes market characteristics.

The UAE population growth rate of 3% (7.6% between 2001 and 2002) is considerably higher than that of the developed world.

Emiratis represent 19% of 4 million residents. They are the most affluent and rapidly growing segment of the population. Other Arabs and Iranians represent another 23%. South Asians, especially Indians, are the largest individual ethnic group, and comprise some 50%. Western and East Asian expatriates account for 8%. Foreigners account for over 90% of the UAE workforce.

Government agencies, however, are largely staffed by Emiratis.

Australia and the UAE

Australia's profile in the UAE is high. There is an increasing recognition of Australian companies and capabilities. The rapid increase of UAE visitors to Australia and of students studying in Australia are also prime drivers in this new business engagement.

Word-of-mouth referrals are particularly important in building awareness of Australia. Opinion leaders in the UAE form a tightly knit community. They have shown a keen desire to visit Australia and gain an appreciation of the country, and their experiences have been highly favourable.

Over 70 Australian companies are based in the UAE. Many use Dubai as a regional base in view of its world-class transport, financial and communications infrastructure.

Australia's commercial future in the UAE

Highly complementary economies produce a good fit. Australia's advanced engineering capability is ideal for the UAE's huge infrastructure programs.

Australian small and medium sized enterprises (SMEs) offer world class services that can be readily adopted in the UAE government and private sector.

'Australia is good at providing what the UAE needs.'

Australia has well-developed programs for the delivery of government services-a high growth area in the UAE.

Foreign Trade

The UAE's exports reached A$72 billion in 2003 while imports were A$56 billion.

The UAE imports most of its requirements for capital goods and consumables, as well as services. The ports of the UAE, notably Dubai and Sharjah, have been traditional transhipment centres servicing the African east coast, Iran, Red Sea ports as well as other GCC countries and Iraq.

'Dubai re-exports 72% of its imports.'

Australia's exports to the UAE were A$1.121 million in 2003. The UAE ranked as Australia's twentieth largest export market.

Australia ranks as the fourteenth largest supplier of imports to the UAE. Japan, China and the USA are the largest suppliers. China and European countries have experienced strong growth in their trade with the UAE.

Services are not reflected in the merchandise trade statistics. The high growth in services trade is difficult to quantify.

The most dramatic change in the composition of Australian exports to the UAE has been passenger motor vehicles. Australian Toyota, Holden and Mitsubishi vehicles are now common sights on the roads of the UAE. Motor vehicles account for 16% of Australian exports to the UAE.

Commodities such as dairy products, grains, meat and alumina also continue to form an important element of Australia's export mix. Elaborately transformed manufactures (ETMs) and services are the areas where dynamic growth and diversification are forecast.

Assessment of growth prospects

The Economic Intelligence Unit (EIU) has forecast GDP growth of 4.3% in 2004, increasing to 4.9% in 2005. Oil and gas will continue to underpin the UAE economy, but additional growth can be expected in the transport, tourism and construction sectors.

Twenty years ago, the oil and gas sector accounted for 60% of the UAE's GDP. In 2002 it was 21%.

Industry-based opportunities

Services

Australia's services exports to the UAE are diversified and include the business, educational, engineering and financial sectors.

Australian services opportunity grid-UAE

Service	Market needs	Australian capability	New business potential
Engineering	Consulting services	Civil	Moderate-strong competition. Project and asset management in niche areas offers good potential.
		Transport
		Mechanical & Electrical
		Project management
		Environmental
Building services	Contracting	High rise and complex building projects	Good for well established players.
Business services	Management consulting	An increasing number of Australian expatriates are employed in UAE companies and are valuable contacts for new business.	A strong growth area but competition is strong, notably from established UK companies. Recruitment and training are excellent areas for Australia.
	Project management
	ICT
	Communications
	Recruitment
	Training
	Meetings, incentives, conferences and exhibitions (MICE)
Entertainment	Fireworks displays	The UAE places strong emphasis on attracting major events and top class entertainment is a key accompaniment.	Sound potential, particularly for 'name' and icon events. Growth prospects are excellent, as the UAE has built a strong brand as a premier destination.
	Laser shows
	Event management
	Music-live shows
Sports & recreation	Sports training	Australians are well recognised and accepted in this sector.	The UAE supports sporting activities strongly. Expect sound growth from this area.
	Facility design
	Event management
	Sports medicine
	Equestrian
	Extreme sports
	Lifeguard training
	Diving services
	Motor sports
Financial and legal services	Accounting/audit	Australian offering is sound, but standard services are usually provided by lower-cost countries.	Selective but not always easy to access. Best potential lies in specialised services where reference sites are critical to establish buyer confidence.
	Investment services
	Legal services
	Equities
	Mergers and acquisitions
Building	Facility management	Australian engineering and design expertise is being increasingly recognised.	Many new projects coming up but it is important to gain early introductions and seek selective opportunities, not always public tenders. References from other projects, eg in Asia, are highly valuable.
	Landscaping
	Surveying
	Asset management
	Building code development
	Interior décor
	Water features
Health	Training	Australian capability is well-regarded however smaller firms may find market entry hard. Australia's competitors are strong and well established.	Dubai is establishing a 'Health City' development that may provide opportunities. New business can sometimes be accessed through institutional associations.
	Sports medicine
	Hospital and clinic management
	Telemedicine
	Surgery in Australia
	Personnel supply
	Health insurance
Education	Graduate courses	Australia is now well recognised as a capable supplier of educational services. The University of Wollongong campus in Dubai has raised Australia's profile.	One of the high potential areas for development, with many collateral benefits. Important for the Australian brand to be reinforced. Word of mouth recommendation is critical in the UAE.
	Post graduate courses
	Vocational training
Fashion	Street and beach wear	Australia is well identified with this sector and a strong 'western' brand is critical.	A developing market with limited but growing volumes.
Hospitality	Training	Australian expertise is recognised through expatriate Australians working in the UAE hospitality industry.	Sound and growing potential-but a highly competitive and fragmented market.
	Menu creation
	Restaurant design
	Facility management
Transport	Maritime	Many competitors but Australia has developed business in areas such as airport services as well as port maintenance and marine logistics.	All areas subject to strong competition and referrals are important in gaining new business.
	Air services
	Road and highway design
Social services	Policy advice	Australian expertise is not widely known, but Australian models are well suited to local adaptation.	Not an easy market to access and intensive on-the- ground effort is required, including visits to Australia by UAE counterparts.
	Program design
	Training
Tourism	Cruises	Australia is increasing in popularity as a destination.	Travel market is highly competitive with many established, low-cost operators. Look at the high end of the market for new business.
	Land tours
	Adventure tours
	Outbound sales
Franchises	Fast food	Primary global franchises are well established. Australia has developed a range of products and services suitable for franchise.	Second-tier franchises have good potential, but considerable pre-marketing work is required and risks are high.
	Hairdressing salons
	Child play centres
	Cleaning services
	Pool maintenance
	Auto service
	Business services
	Personal care
	Training & coaching
Veterinary	Pets	Australian capabilities are well recognised, particularly in the equestrian sector.	Many companies and individuals are well established. Referrals are critical.
	Horses
Environmental management	Water	Australia has the expertise required, notably in coastal work.	A fertile field and 'name' global companies are active. Powerful local relationships are essential to market entry.
	Solid waste
	Air pollution
	Coastal development

Review of key industry sectors

Oil and gas

Oil remains the core of the UAE economy. Crude oil production is running at 2.3 million barrels per day (mbpd). Abu Dhabi produces the bulk of this-2 mbpd. Abu Dhabi's reserves are substantial-about 100 years at current estimates.

Dubai's resources are limited and will be depleted in ten years.

The UAE's natural gas reserves of 212 trillion cubic feet are the world's fourth largest after Russia, Iran and Qatar. The bulk of these deposits are in Abu Dhabi.

There are many Australians working in the UAE oil and gas industry. Opportunities for Australian companies are specialised. They include oil field services and logistics as well as engineering infrastructure associated with oil and gas developments.

Business is usually based on referrals from the 'oil patch' where performance-based recommendations are the usual point of entry.

Business and financial services

Demand for management training and the delivery of advanced IT-based business systems is expected to increase.

Opportunity areas include Mergers & Aquisitions advice, company structuring and financial planning. This is a competitive area, where international players are established. Entry to this market is best accessed through referral from a client who is known to your Arab prospect.

Australians are well accepted as trainers in the UAE, with a reputation for professionalism and an open and friendly style.

Engineering

Australian consulting engineers have been active in the UAE for many years. Primary activities include road design, water supply, mechanical and electrical services and infrastructure development.

Australia's competitors are well established and highly competitive. Niches are increasingly hard to find. Other Arab countries often present opportunities where competition is less intense.

Health care

The UAE government provides free health care for UAE citizens at government-operated clinics and hospitals. There are also private hospitals and clinics, many catering to expatriates.

Australian firms have succeeded in providing services and medical equipment. The public tender process results in a highly competitive bidding environment.

Service opportunities range from facility design and operation to the provision of medical staff. SMEs may find this area hard to access without support from an industry group or an Australian institution.

Tourism development

The UAE attracts over 5 million foreign visitors per year, mainly to Dubai. Dubai has 270 hotels offering 30 000 rooms. More facilities are being constructed, notably the US$5 billion Dubailand-a theme park twice the size of Disneyworld in Florida.

Sports and entertainment

Australia enjoys a high sporting profile in the UAE. The sporting services market has excellent growth potential as the UAE government encourages participation in sports including soccer, tennis, sailing, athletics, golf and volleyball.

Australian sports trainers have earned a good reputation in the UAE, ranging from golf and tennis pros, to lifeguards and gym instructors.

Dubai has a high profile in horse racing and equestrian events. Australians are already well entrenched in this sector, with activities ranging from veterinary services to race calling, administration, training and stable services.

Infrastructure

The first-time visitor to the UAE finds it hard to imagine that the country was little more than a series of villages until the early 1970s. A massive investment in civil infrastructure has included freeways, power plants and world-class port facilities-not to mention new buildings in stunning architectural styles.

While much of the country's basic infrastructure needs have been fulfilled, the UAE government's push for growth has resulted in plans for yet more roads, hotels, shopping and office complexes and amusement parks.

Road transport

The UAE has a network of modern highways linking the major commercial and administrative centres.

Road and highway design projects are extremely competitive. Australian companies considering entering this market should study recent tenders closely to gain an appreciation of prices at which business is being written.

Sea ports

Dubai's Port of Jebel Ali and its free trade zone represent one of the world's major infrastructure projects. Jebel Ali is the world's largest man-made port. Port Rashid in Dubai is also a major point of entry with extensive ship repair facilities.

Dubai's ports are ranked the world's third busiest after Singapore and Hong Kong. Jebel Ali and Port Rashid handled 5.1 million TEUs (twenty foot container equivalent units) in 2003, compared with Melbourne's 1.6 million.

Air

Each of the seven emirates has an international airport. Dubai International is the largest. Opened in 2000, Dubai handles 19 million passengers annually.

Another terminal of similar size is being constructed, due to open in 2006.

Dubai is the base for Emirates Airlines. Emirates has daily direct flights to Sydney, Perth and Melbourne as well as daily flights to Brisbane.

Gulf Airlines, a major regional and international carrier, operates daily services between Bahrain and Sydney.

Water

The UAE has one of the highest per capita rates of water consumption in the world. Much of this water is desalinated.

Annual rainfall in UAE is low and erratic, with an annual average of 75 to 100 mm. Sydney's average is 1200 mm.

The UAE has blended traditional water conservation methods with modern techniques. Recycling of wastewater is an area of commercial opportunity.

Information and communications technology (ICT)

Etisalat (60% government-owned) is the primary telecommunications provider. Etisalat has enjoyed a monopoly but the UAE government issued a decree in April that will open the market to new mobile phone and ISP operators.

The UAE is highly IT literate, and Internet connectivity is the highest in the Gulf. Dubai's Internet City provides a well-serviced industrial cluster for ICT companies.

The UAE is conscious of software copyright obligations and is increasing its surveillance and prosecution of software pirates.

Building and construction

A number of Australian companies are established in this burgeoning market sector. Multiplex cranes are a common sight on the Dubai landscape. Boral is a key player, operating a distribution centre for its plaster-board products. Clipsal has an assembly plant in the free trade zone at Sharjah.

Food and agribusiness

Australia is a long-standing food supplier, with a strong reputation for product wholesomeness.

Australia is not only a bulk commodity supplier of grains, dairy products and meat but is exporting a range of branded consumer products. Australian brands are prominent in canned foods, cheese, sauces, fresh fruit and vegetables, rice and many more food lines.

Visits from UAE buyers to the Australian Fine Foods show have resulted in many new Australian lines being introduced.

Wine and beer is sold through licensed importers. While a small market, Australian wine and beer brands are prominent in this market sector.

The UAE retail sector

UAE retail sales are estimated at US$9.4 billion. Dubai accounts for 60%. Hypermarkets, superstores and supermarkets have captured about half of retail sales.

Consumption patterns vary with the ethnic mix of the UAE. Asian expatriates represent the largest consumer segment and are also the most price conscious.

UAE consumer expenditure by nationality group

Automotive

Australian passenger vehicles have been a major success in the UAE and Gulf markets.

As these vehicles move out of warranty, the aftermarket will be increasingly attractive. The UAE has a high proportion of 4WD vehicles, which provides a good market for off road accessories. Desert driving is a popular pastime in the UAE.

Aluminium

Dubai is home to Dubal (Dubai Aluminium Company Limited), one of the world's largest aluminium smelters. Dubal recently announced an expansion of its smelter from 686 000 mt per year to 761 000 mt per year. This compares with Australia's largest smelter at Gladstone (522 000 mt per year).

Dubal is reported to contribute around 6.5% to Dubai's GDP.

A number of Australian companies with specialist expertise in the aluminium industry provide services to the smelter. The alumina feedstock is supplied from Australia.

Business practice

Local businesspeople are global in outlook and are familiar with the Western business environment. The UAE has an open business style; however, knowledge of Islamic religious traditions and customs is highly desirable.

Practical advice on entering markets

Developing a strategy

• Several characteristics of the UAE market impact on strategy development.
• Statistics and market data are frequently imprecise.
• Transactions tend to take longer than expected.
• Time and care are needed to assess the claims of prospective agents.
• When relationships are established, principals may want to move quickly, sometimes on no more than a handshake.
• More frequent and longer market visits are required, at least initially.
• Complex business procedures are common.

Components of a successful strategy

A sound UAE business plan will:

• expand sources of information
• include advice from seasoned practitioners
• incorporate realistic budgets
• use conservative timelines and factor in slippage
• use a sequential model to determine 'go' or 'no go'
• avoid open-ended commitments, notably for after sales service.

The price factor

Selling benefits is critical to any deal, but the seller in the UAE must work on delivering tangible price outcomes.

Price drives most Arab business negotiations.

Re-tendering in the public sector is common. Companies should be prepared for lengthy negotiations for public tenders.

Finding opportunities

Many export opportunities are developed through sheer serendipity. This particularly applies in the less structured markets of the Arab world.

A lead may come from a friend or colleague, a chance meeting in an airport, a magazine item, an unsolicited enquiry from a trader or advice from a chamber of commerce or trade development agency.

Developing an extensive catchment area for business opportunities is critical. A blended opportunity flow is necessary to build a portfolio of qualified leads.

Expanding your contact base in Australia and offshore to expose your company to a variety of leads is also highly important.

Leads must then be transformed into qualified opportunities that can be critically analysed and pursued.

Opportunity funnel

Pursuing sales leads is expensive and needs valuable resources.

Some companies pursue poorly defined opportunities in their enthusiasm to chase what they believe is a hot prospect.

These tips may help:

Contact the buyer quickly

Make sure you are speaking to the key specifier and determine who will be making the buying decision-when and how.

Present well

• Send a confident introduction on your company.
• Don't overload the buyer with data-tailor it.
• Pitch your approach on experience in similar situations.
• Be brief-no long letters.

Tailor the enquiry

Explore the buyers' needs before promoting your expertise.

Offer to send a draft proposal for acceptability before moving to more detail. This can save time in validating the buyer and eliminates 'tyre kickers' with minimal effort.

Assess the buyer's responsiveness

Use specific techniques-'May I phone you in two weeks' rather than accept 'We'll get back to you'.

Do not pester the buyer with a barrage of calls or emails. Be patient, and work to milestones.

Demonstrate that you are serious

Offer to visit if:

• your proposal captures genuine interest
• the buyer requests a personal presentation of your capabilities.

Is a buyer visit to Australia an option? An Austrade EMDG grant may be possible.

Identifying the best contacts

The best leads come from trusted sources that have the knack of defining a business opportunity early in the deal cycle. Experience and quality time in the market place will help you to build a network of contacts who are 'feeders' of quality business leads.

The airport lounge or the golf club?

These venues can be the source of the best and worst business leads.

Try to associate with people with direct experience in the UAE-no matter what industry they are in. Question them on their marketing techniques. How did they get started? What did they do wrong? Most Australian business people are willing to share their experiences-with non-competitors! The Australia Arab Chamber of Commerce and Industry is a good source of useful contacts.

Tell your business associates with experience in the UAE about your company. Attempt to get referrals from them when they are visiting or in contact with their networks.

Research

Sound market research is essential. Learn about the country, its business culture and your industry sector.

This foundation will prepare you for market exploration-and define areas for first-hand analysis.

Referrals

Referrals are a most valuable entry point for the UAE. Arab buyers place high emphasis on referrals to ensure a foundation of trust in the transaction.

Who does the referring? It may be one of your suppliers, a friend or associate in a completely different industry-but it needs to be someone who is experienced and successful in the market.

Major family companies in the UAE are usually diversified conglomerates. Referrals between their business units can deliver good prospects.

Trade exhibitions

There are many quality trade shows held in the UAE. Ensure that any event you are considering has a track record and a quality organiser.

Exhibiting in a trade show as your first visit to the market is not always a wise strategy. You will gain more benefit with first-hand market knowledge. Austrade and State government offices in Dubai can advise on the best choice of trade exhibitions.

Consider timing a market visit to coincide with a trade show. It allows you to watch your competitors perform in a neutral environment, and provides local market intelligence at low cost.

Trade missions

Trade missions are a regular event in the UAE and a useful tool for companies new to the market. Government or chamber of commerce endorsements work in the Arab world and experience gained from other delegates is invaluable.

Trade missions can help you cover a lot of ground quickly, particularly in the early stages of market development.

Try to extend a visit beyond the mission program to follow up leads while they are fresh.

Agents and representatives

Agency law in the UAE, like most Gulf states, is onerous. Most exporters appoint a commercial agent. This term covers both agents and distributors. Most commercial agents are registered with the Ministry of Economy and Commerce. Federal law provides considerable rights to commercial agents. This emphasises the need for careful selection of a business partner, as termination of agreements can be protracted and expensive.

Only companies operated by UAE nationals can be registered as commercial agents. It is important to research whether one company can cover all seven Emirates or whether separate companies should be appointed for different regions.

The WTO has established a uniform obligation of transparency for internationally traded services (GATS) that will simplify agency law. It is most unlikely that these far-reaching changes will take place by 2005 but the UAE will be under increasing pressure to make its agency laws less restrictive and protective of local firms.

Publications

There are excellent business publications on the Middle East and many are online, providing instant market intelligence.

Austrade

Austrade has a major office in Dubai, with a range of marketing specialists covering various industry sectors. Austrade provides first hand advice on market conditions, prospects for your product or service, tailored market research, introductions to buyers and visit programs.

State government agencies

Three Australian states operate offices in Dubai-Victoria, South Australia and Western Australia. These offices also provide a range of business support services and promote investment in their states. State governments operate trade missions to the UAE.

Chambers of Commerce

The Australia Arab Chamber of Commerce and Industry is the peak association for Australian companies with business interests in the Arab world. The Chamber has state branches with a national secretariat based in Canberra.

The Chamber provides a variety of services, many of them essential for exporters to the UAE. They include certification of documents and invoices, notification of trading opportunities, and hosting visiting delegations in Australia. Networking functions operated by the Chamber provide a valuable introduction to business in the Arab world.

UAE Chambers of Commerce

The local Chambers of Commerce in the UAE are powerful. Their membership embraces the local business community. The Australia Arab Chamber of Commerce and Industry provides the formal interface with chambers in the UAE and can assist with introductions to business partners through UAE counterparts.

ABIG (Australian Business in the Gulf)

The ABIG business group in Dubai provides a forum for the Australian business community to network on a regular basis and to promote Australian business views in the UAE.

ABIG has over 200 members and provides an excellent forum to meet with experienced Australian businesspeople working in the Gulf. Timing a business visit to coincide with a monthly ABIG meeting can provide valuable market intelligence.

Islam and business

Islam permeates most aspects of life in the UAE.

Some considerations when planning business visits are:

• On Fridays, the Islamic Sabbath, the community gathers for prayers at noon. Offices and many shops are closed on Fridays.
• The holy festival of Ramadan occupies the ninth month of the Islamic calendar and the dates vary each year. During this month Muslims observe a period of abstention (fasting during daylight hours), reflection and purification.
• Ramadan and its ending, or breaking of the fast (Id al-Fitr, a three-day holiday) impact strongly on business activities. If visiting during Ramadan, be aware that there may be limited time for business meetings.
• Study and observe the Islamic calendar in planning business visits.

Arab customs

A number of expressions punctuate conversation in the UAE and the most common is the term Insh'allah ('if God wills'), which underlines a strong belief that the course of events cannot be controlled by the individual.

The term Bukra Insh'allah ('tomorrow, God willing') conveys the sense that 'We will do things as soon as possible but God will determine when that may be'.

Customs that are common throughout the Islamic world are well known. Some of these are not unique to the Arab environment, but are standard behaviours in a range of international situations.

• Use your right hand, particularly for eating. If unsure, put your left hand in your pocket or behind your back. Never point.
• Avoid postures where you may show the soles of your feet and generally avoid crossing your legs.
• Avoid any display of anger or impatience.
• Maintain eye contact with your host. Rapid shifts in eye contact may be construed as a lack of trust.
• Handshakes may often be a clasp. Do not offer to shake hands with an Arab woman, unless she offers her hand to you. Even then, only a gentle touch is appropriate
• When offered tea, coffee or snacks, always accept, even if you do not consume it all.
• The offer of strong black coffee is a feature of Arab meetings and a mark of hospitality and should not be refused. The cups are small and when you have enough, a polite 'wiggle' of your cup signifies to the server that you have had sufficient.
• Learn the art of polite small talk, which will open most meetings, particularly introductory sessions.
• Learn to relax and not exhibit signs of tension, which may transmit uncertainty.
• Assume a calm demeanour, avoid brash conversation and maintain a body posture that is non-aggressive.

The Arab meeting-what to expect

Arab meeting settings in the UAE vary but it is best to be prepared. In many instances, you may be meeting with an expatriate executive and the meeting will follow standard international practice.

Some of the characteristics of Arab meetings in the UAE are:

• Your host may interrupt the meeting at any time to answer any one of a number of phones, fixed and mobile, or respond to an assistant seeking a signature or advice.
• Other people may enter the meeting-often quite unrelated to your business. This is part of the accessible nature of Arab society. Adopt a passive role, unless you are invited into the conversation.
• Remain unaffected by what you perceive to be interruptions-be patient and await an appropriate opportunity to resume your presentation.
• Other interruptions may occur-a call to prayer or a side conversation with another visitor.
• Arabs place a great deal of emphasis on words-sometimes as a substitute for action. Be prepared for expansive conversations.
• Avoid comments on politics.
• Never exhibit impatience or tension if the meeting is not following your expectations.
• Do not look for western style structure in meetings-particularly a direct flow of discussion topics.
• Make sure you keep your three 'must win' points in play during the meeting. Do not get distracted from your objectives by what, in the Arab world, are standard meeting dynamics.
• Develop a negotiating style that is calm but firm.
• Sincerity and trust are the primary factors your host will be looking for when assessing your company as a business partner.

Arranging meetings

For the first visit, arranging quality meetings is crucial. Using Austrade, a State government or business adviser in the UAE is the most effective technique for companies new to the UAE. Try to make contact with a 'vertical slice' of the market (end-users, government agencies, banks, consultants) so you receive a variety of views-not just those from distributors or agents.

It is common for meetings to be rescheduled or delayed, so ensure you have other contacts in your visit plan to fill any gaps.

While your host may delay the meeting, this does not suggest that the visitor can do the same. Always be punctual-it is expected of you.

The sense of flexibility is due to a variety of factors ranging from a call from a 'higher authority', family business or prayer times.

Managing geography is important. Local advice from Austrade or a State government representative office can assist.

If your host is unavailable, try to reschedule the meeting with a personal assistant. Personal assistants, however, may not have the power or discretion they have in Australia.

It can be useful to leave behind a brief (pre-prepared) note on company letterhead, regretting that you were disappointed to miss your contact. Outline your willingness to meet at an alternative time, along with your hotel and telephone details. This generally works.

As visits may involve rescheduled meetings, it is important to operate flexibly. It is unrealistic to plan a two-day visit with five calls per day and presume your itinerary will run to time. Always allow an extra day.

Business communications

The Arab business environment may feel very different for the newcomer. Experience and sensitivity to local customs will soon build confidence in the operating environment.

Similarly to Asia, personal relationships with Arabs are paramount. Trust must be established and proven. Any indication of a lack of trust will be apparent and can frustrate business relationships.

Like Asia, 'yes' can mean 'perhaps.' Avoid a series of closed questions that force your host into a Yes/No response. Suggest alternatives if your initial proposition does not resonate, such as prefacing your proposal with 'How would you feel if…' or 'Can you outline your three major needs so we can tailor a proposal to suit…'

Learn to become an active listener and when you speak, do so with brevity, confidence and empathy, maintaining concentration on your paramount objectives.

A friendly and open approach to business will always be appreciated.

Arabs favour direct discussion and do not place the same emphasis on written communications as in Australia. A phone call will have more impact than a series of emails.

South Asians in the UAE

South Asians (especially Indians and Pakistanis) occupy senior and middle management positions in UAE companies. This proportion is higher than most other Gulf states. It is common for an exporter to conduct business with a South Asian manager with occasional contact with the Arab owner.

Trading links between South Asia and the UAE are strong and long standing. Many prominent Indian and Pakistani families have been based in the UAE for several generations and enjoy close relationships with their Arab associates.

Dealing with Arab family companies

In the Middle East, most major family companies rely on financial 'gatekeepers' to advise them on investment strategy and to screen business proposals and propositions. A typical 'gatekeeper' will have an investment banking background, sound global credentials and connections.

The transition from an entrepreneurial culture to a professionally managed culture is one of the most demanding challenges for Arab family businesses.

The UAE Free Trade Zones

There are 13 free trade zones in the UAE. Jebel Ali Free Zone in Dubai is the most prominent.

Foreign companies are permitted to establish wholly-owned branches in these zones. These branches are exempt from the requirement to appoint a national agent (sponsor).

A variety of trading, distribution, warehousing and manufacturing operations may be performed in the free zones.

Import procedures

Import procedures in the UAE follow standard international practice. Customs clearance at the various ports in the UAE is usually straightforward. Importers must have a trade licence for the goods being imported. Customs duties, 5% on most items, are calculated on the CIF value of the goods. Foods and pharmaceuticals as well as some other commodities enter duty free. Check with Austrade for these rates.

Import documentation

Originals of standard trade documentation will include a commercial invoice, bills of lading, certificates of origin and insurance, legalised by the UAE Embassy.

The Australia Arab Chamber of Commerce and Industry is the organisation that provides certification before legalisation by the UAE Embassy. The chamber's website, http://www.austarab.com.au/ provides comprehensive advice and a schedule of costs.

Licences and permits

Import restrictions apply to a small range of items. They include illicit drugs, pornography and books, videos and graphics offensive to religious beliefs. A complete list is available on the DFAT website.

Payments

Advice from a credit insurer is recommended before entering into firm negotiations. Usual terms are letter of credit.

Legal issues

Legal practice is undertaken by UAE nationals.

Foreign law firms are only allowed to practice as legal consultants, and are not permitted to plead cases in the courts. Nevertheless, sound legal advice is available and reference to these services is highly recommended.

Court proceedings in the UAE are time-consuming. There are no juries, and a single judge or a three-judge panel, depending on the nature of the dispute, hears cases. All evidence submitted to the court must be in Arabic.

Tax matters

There is no federal tax legislation in the UAE. Decrees governing tax apply in each of the Emirates. However, with the exception of banks, oil, gas and petrochemicals, no corporate income tax is payable by firms in the UAE. Personal income tax is not levied in the UAE, nor is there a withholding tax.

Visas

Australian visitors receive a visa on arrival in the UAE, valid for a 30-day stay.

Language

Arabic is a complex language. As much business is conducted in English, an inability to speak Arabic is not a major disadvantage.

It is of value, however, to gain an understanding of the nature of Arabic and learn some phrases. These include standard greetings.

A useful exercise is to learn the Arabic numbers, both their form and sound. This can help in office buildings (and lifts) to understanding numbers when negotiations are being conducted in Arabic.

Translations

Translations for business meetings are not required but there is often a requirement for company documentation to be translated, particularly for government permits and registrations.

There are many translation services in the UAE. It is best, however, to check the credentials of translators with Austrade or the Australian Embassy.

Establishing a local office and sponsors

Companies establishing a local office must use a resident sponsor. A sponsor may be a UAE citizen or an institution. The sponsor may be directly involved in the business, or may only provide legally required administrative services.

Companies undertaking direct business in the UAE must be at least 51% owned by a UAE national. Companies providing offshore services or regional representation may be allowed a higher level of foreign equity.

Establishing in one of the UAE's free trade zones (FTZs) provides a number of exemptions, particularly the provision for 100% foreign ownership.

Getting around

Hire cars

Hire cars are numerous and service is of a high standard. Most major rental agencies offer chauffeured cars.

Taxis

Taxis are plentiful, air-conditioned, clean and metered. The bulk of the taxi fleet is now made up of Toyota Camrys manufactured in Australia. Fares are very reasonable.

Addresses

Most business addresses in the UAE are straightforward, with many companies located in landmark office blocks in the major commercial centres, or in well-defined industrial areas.

Street signs are usually in English and Arabic, although in residential districts the numbering system can be confusing, and directions are usually via a map or set of directions.

Accommodation

There is a vast range of business and tourist hotels in the UAE, with many more planned. Most major accommodation groups are represented.

Health and safety

Public health standards in the UAE are high. In the event of illness, there are many doctors, mostly expatriates, as well as private hospitals. It is important to carry travellers' medical insurance, as costs can be high in the event of hospitalisation or evacuation.

Consult the DFAT Travel Advisory service for the latest travel information before arranging a visit.

A high standard of personal behaviour is important. Alcohol is not served in most of the Emirates. Where alcohol is served (e.g. in Dubai), excessive consumption is frowned upon and public drunkenness can result in heavy and embarrassing penalties.

Phone numbers

The UAE phone system is efficient. Obtain mobile numbers for your prime contacts. Emiratis are technology and gadget literate.

In summary…

• The UAE presents an ideal market for the first-time exporter to the Arab world.
• Contact with successful companies can provide valuable tips to make the market entry process easier.
• Care in the selection and appointment of a local representative is critical.
• Avoid rushing into agreements to achieve a quick sale.

Case studies

 

Reference websites

Comprehensive websites

Council for Australian Arab Relations
www.dfat.gov.au/caar
Includes reference material for this publication.

Department of Foreign Affairs and Trade
www.dfat.gov.au
Essential advice on countries, trade developments, travel advisories.

Austrade
www.austrade.gov.au
Valuable information on preparing for export, data on overseas markets.

Australia Arab Chamber of Commerce and Industry
www.austarab.com.au
Essential site for Australian exporters to the Arab world.

Australian–­Arab Communities Council
www.arabcouncil.org.au
The Australian Arab community. Cross-cultural awareness seminars.

Gulf Co-operation Council
www.gcc-sg.org
Home page for the GCC.

Country Commercial Guide-UAE
http://strategis.gc.ca/epic/internet/inimr-ri.nsf/en/gr00001e.html
Industry Canada site. Access Country Commercial Guides by US Department of Commerce.

Canada Department of Foreign Affairs and International Trade
www.dfait-maeci.gc.ca/middle_east/doing_business-en.asp
A good guide to doing business and business culture in the Middle East.

General information on the Arab world

The Countries and Peoples of Arabia
www.hejleh.com/countries
Excellent introduction to the Arab world.

NITLE Arab Culture and Civilization
http://arabworld.nitle.org
Good material on Arab culture.

Arab World Documentation Unit
www.ex.ac.uk/awdu/index.htm
Economics, politics, history, and social issues in the Gulf.

World Press Review
www.worldpress.org/mideast.htm
Press articles on current events in the Middle East.

Middle East maps
www.lib.utexas.edu/maps/middle_east.html
Maps of the Middle East.

Executive Planet
www.executiveplanet.com
Guide to international business culture and etiquette.

ArabDataNet
www.arabdatanet.com
Business and political information.

ArabNet
www.arab.net
News and opinions on the Middle East. Country profiles.

UAE websites

UAE Interact
www.uaeinteract.com
UAE Ministry of Information and Culture site. Download the UAE 2004 Yearbook.

The UAE pages
www.uae.org.ae
A wide range of topics on the UAE.

Motivate Publishing
www.motivatepublishing.com
UAE publishing house. Magazines and books on the UAE and the Gulf.

National Bank of Dubai
www.nbd.com
The 'Financial Outlook' tab provides economic and market information.

UAE Government website
www.uae.gov.ae
The UAE Government's website, includes links to government agencies.

UAE News
http://guide.theemiratesnetwork.com
News and general information on the UAE.

Australian Business in the Gulf (ABIG)
www.abiguae.com
Australian business group in Dubai.

ExpatSite
www.expatsite.com
Information for expatriates living in the UAE.

Arab business websites

AME-Info
www.ameinfo.com
One of the best business websites for the Middle East.

WN MidEast
www.wnmideast.com
A comprehensive news service on the Middle East.

MEED (Middle East Economic Digest)
www.meed.com
Authoritative business magazine covering events in the Middle East.

Zawya Arab Business
www.zawya.com
First class site for commercial and industry news.

Company websites dealing with business in the Middle East

Ernst & Young Middle East
www.ey.com/GLOBAL/content.nsf/Middle_East/Home_-_Welcome
Advice on company formation and tax.

Economic data

International Monetary Fund (IMF)
http://www.imf.org
See the IMF World Economic Outlook 2004 for country data.

Oxford Business Group
www.oxfordbusinessgroup.com
Economic and political analysis on a range of countries.

Travel

Asinah Travel Guide
www.asinah.net
A global travel guide, with good country summaries on the Arab world.

Direct Rooms-UAE
www.directrooms-uae.com
Accommodation guide and booking service for the UAE.

Oil

Oil.com
www.oil.com
All you need to know about oil and energy.

Portals for Arab world news

Middle East Information network
www.mideastinfo.com/news.html
Middle East news services.

al-bab.com
www.al-bab.com
News on the Arab world.

ArabView
www.arabview.com
Articles from leading Middle East journalists.

Al bawaba Middle East gateway
www.albawaba.com
Good country profiles.

Middle East newspapers and magazines

Gulf News
www.gulf-news.com
UAE daily newspaper.

Aljazeera
http://english.aljazeera.net/
Qatar-based Arab online news service.

Khaleej Times Online
www.khaleejtimes.com
UAE daily newspaper.

Arab News
www.arabnews.com
English language daily, published in Saudi Arabia.

Gulf Business
www.gulfbusiness.com
UAE Business monthly with regional coverage.

Middle East Times
www.metimes.com
Egypt-based daily with regional coverage.

Legal websites

Afridi and Angell
www.afridi-angell.com
Click on 'Publications' to view articles on doing business in the UAE.

Gulf Law
www.gulf-law.com
Information on law in the Arab Middle East. Includes Shariah law.

Defence

Middle East Newsline
www.menewsline.com
Mainly defence news.

Jane's Middle East News
www.janes.com/regional_news/africa_middle_east
Business news with emphasis on defence and transport.

Other sites

Halal helpline
www.halalhelpline.org
Islamic dietary custom and laws.

Islamic Co-ordinating Council of Australia
www.icca.org.au
Halal foods and certification in Australia.

Australian–Arabic Council
www.aac.org.au
Human rights and community relations issues affecting Arabic culture.

CAAR

Council for Australian Arab Relations
http://www.dfat.gov.au/caar/
email: caar@dfat.gov.au
CAAR Secretariat
Middle East and Africa Branch
Department of Foreign Affairs and Trade
Barton ACT 0221
t: (02) 6261 2090 f: (02) 6261 2640

Acknowledgments

This booklet was prepared by Bayliss Associates.
Maps by the XYZ Digital Maps Company.
Photographs provided courtesy of the Government of Dubai, Department of Tourism and Commerce Marketing.
Editorial and artwork by WHH Publishing.
December 2004
ISBN: 1 920959 11 4

© Commonwealth of Australia 2004

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