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 Tackling business

The Middle East is a vast and complex region that can be highly rewarding for exporters with deep pockets prepared to make multiple visits.

BY:  Yoke Har Lee

You may have to sit around the table and stomach eating sheep’s eye, or do a quick read of the ancient Persian tale “A Thousand and One Nights”.  But getting to know the Middle Eastern market cannot be done in a single trip, or in a hurry.

Considered one of the most complex, strategically, economically and culturally sensitive regions of the world, the Middle East is best tackled over time, through many visits and earnest cultivation of contacts and relationships.

A good place to start in the economically diverse region is The Cooperation Council for the Arab States of the Gulf, also commonly known as Gulf Cooperation Council (GCC). GCC members are United Arab Emitates (UAE), Bahrain, Qatar, Kuwait, Oman and Saudi Arabia.

The GCC came into being in 1981 and is a loose political and economic market whose member countries control half of the world’s oil reserves.

Expertise, Time, Money

Underestimating the expertise, time and money required to gain credibility and build a business in the Middle East is one of the most common mistakes New Zealand companies make in the region, says Jo Mullins, general manager business development at education consultancy Cognition Consulting, a successful Kiwi operator in the region.  Cognition has over 100 staff in Qatar and 200 in Abu Dhabi, and has done projects in Saudi Arabia, Egypt and Oman.

This view is echoed by another Gulf old-hand, Norm Morgan, director and consultant for Tradex Exhibition, who has been helping Kiwis to exhibit in the Gulf region since the 1980s. “In the Gulf, you make friends before you do business. The best deals I have seen are those that have taken at least a Tackling business takeaways-0000year to broach,” Morgan says.

Richard Laverty, regional director for New Zealand Trade and Enterprise for Europe, the Middle East and Africa, has this advice: “Often people come through and don’t come back for a year.” He says the market is lucrative and dynamic but distribution networks are not well established. Deep pockets and regular visits are a must.

“The process is not to fly to the Middle East, sign up a deal at a trade show and leave. You want to be based in Dubai,” Laverty adds.

Morgan warns against using the “elevator speech” that US management schools promote when making a pitch. “That’s all rubbish. It is one of those things you do not do. It usually takes a while for the guy [you are dealing with] to decide what he wants to do.”

Cultural Sensitivities

Be prepared to work at your relationships hard, and swot up on cultural sensitivities. In Saudi Arabia, for instance, Kiwis need to be mindful of the segregation of society, so a certain level of study is needed before tackling the market, Laverty adds.

Morgan says: “In the more traditional areas, if you are a man doing business with a woman, don’t offer to shake hands unless she extends her hand first.”

But if you are a woman doing business with a man, it is acceptable to be the first to extend your hand in greeting.

Dressing in a culturally insensitive way is definitely unacceptable. Women and men cover their arms and legs, says Cognition’s Mullins.

Saudi Arabia is the trickiest. Women are not allowed to “man” the exhibition stands, the only place in the Gulf with this practice, says Morgan.

He says of all the Gulf countries, Oman is the most laid-back and friendly. Qatar is inching towards a Dubai model while Abu Dhabi is conservative although changing to be more like Dubai. Abu Dhabi is oil-rich and has one of the world’s highest per capita incomes.

Costs

Operating costs are high in the Middle East. Success is very much a result of having the resources to invest significant funds to get started in those countries, says Mullins, of Cognition’s progress in the region.

“Upfront costs are very high. Our staff members are generally senior educationalists who expect to be paid Tackling business 1-0001accordingly. Accommodation and other living expenses are very high in these countries. Other financing costs are very high, as well, so only substantial entities can manage these large contracts.

“The way of doing business there is different from the New Zealand environment. You have to be prepared to learn the processes and understand the customs. It is very important to engage good local legal advice to help you through the complex and often opaque business environment and regulatory framework,” Mullins says.

Pricing is important, says Tradex’s Morgan. Negotiations are not straight forward. “No matter what your offer is, you will be told it is too dear.”

Locals love to bargain so build in an amount to discount so all can feel good. When asked to quote a price, spell out the terms up front rather than change the price later to avoid the perception you cannot be trusted with an initial price, Morgan says.

Recently, leading Kiwi law firm Kensington Swan announced plans to set up its maiden overseas office in Abu Dhabi, UAE.

Kensington Swan’s UAE managing partner, Quentin Lowcay, says the move was a demonstration of how you need to do business in the region.

“We have been working in the United Arab Emirates for more than five years on a remote fly-in, fly-out model, but our clients were constantly asking us when we would be here permanently. Eventually it became clear that to grow the business, we needed to demonstrate a real commitment to region.

“The authorities are naturally careful about who they allowed to set up business in the region … It was a very Tackling business 2-0000stringent process – even involving a very thorough interview so they could gauge whether we were truly serious about the venture,” Lowcay says.

“To do business in the UAE successfully, you need to show you are prepared to be part of their community, care about their needs and have a long-term view. You can’t just fly in and expect work to be handed to you,” Lowcay adds..

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