Middle East Business Environment

Middle East Business Environment Prof. Chris Abraham Sr. Vice President SPJCM – Dubai & Singapore

Countries in the Middle East: - Turkey - Cyprus - Iran - Iraq - Kuwait - Syria - Lebanon - Israel - Jordan - Egypt - Saudi Arabia - Oman - Qatar - Yemen - UAE - Bahrain

The Middle East in the Twenty-First Century • Regional conflicts – Security issues • Bilateral trade agreements with the US and EU (e.g., Saudi Arabia, Israel, Jordan) • Gulf Cooperation Council

The Middle East in the Twenty-First Century • Restrictions and trade sanctions (e.g. Iran) • Dependence on oil revenues and state- sponsored subsidiaries • Large cultural/economic/political differences among countries in the Middle East. (e.g. Turkey, Israel, Saudi Arabia)

Potential Economic Opportunities • Policies intended to attract FDI and to diversify economically. • Privatization of traditionally state owned enterprises. • Progress on building institutional infrastructure (e.g., Israel, Turkey, Kuwait)

Potential Economic Opportunities • Population growth. • Regional integration efforts. • Reconstruction efforts in Iraq.

Key Points • Middle East is culturally, economically and politically diverse (Arabs, Kurds, Iranians, Turks). • Resource rich countries with stable governments with high rates of economic development (e.g. Saudi Arabia, Qatar, Kuwait).

Key Points • Countries with close trade relationship with the rest of the World (e.g., Turkey, United Arab Emirates). • Potentially lucrative market but typical developing country market environment. • Less fortunate countries of the Middle East (e.g., Syria, Iran, Iraq, Jordan).

Key Points • Region’s rich history, culture and religion, and their implications. • Critical role of government in the Middle East. • The role of skepticism in the Middle Eastern World.

Key Points • Islam is the glue of the Middle Eastern social fabric. • Collectivist, hierarchical and close knit societies. • The importance of shame / face / honor / consensus / respect for authority / seniority.

Key Points • GCC Common Currency • GCC Central Bank • GCC Customs Union

Some tips… • Who you know is key. Relationships and connections are vital. • Get personal and understand face. • Invest time in building relationships. • Get used to informal agreements. • Appreciate the intertwining of religion and law. • Speak English when making deals. Speaking English is a status symbol. • Show compassion for a business in trouble. • Entertainment and hospitality in business dealings.

The Middle East – a region of opportunities • UAE (Dubai), Qatar and Saudi Arabia are providing senior managers with the highest disposable incomes in the world1

The Middle East – a region of opportunities quot;The high demand and low supply of qualified executive talent is here to stay for at least the next five years“ Magdy Al Zein Managing Director of Boyden Middle East at the opening of quot;GCC Executive Talent Shortage Summit“ in Dubai

The Middle East Cultural Context • Values • Motivators • Central management concept • Importance of status • Method of change

The Middle East Cultural Context • Method of control • Fundamental approach to development of new ideas • Focus of performance evaluation • Attitude to inequality • Conflict resolution • Emotions

MYTHS ABOUT THE REGION 1 IT’S ALL ABOUT OIL 2 EVERYBODY IS RICH 3 GCC CUSTOMERS HATE “OTHERS/US” 4 WOMEN DON’T MATTER 5 MARKETS ARE ENTIRELY ARAB

REGION’S SUCCESS STORIES- A SAMPLING EMIRATES LULU GROUP DAMAS ETIHAD AIRLINES JUMBO GROUP UP QATAR AIRWARS NMC GROUP ARAMEX AIR ARABIA GEMS THE ONE EMARAT SOBHA AME INFO RAK BANK KHIMJI RAMDAS ZAWYA MASHREQ BANK HAWAA WORLD JUMEIRAH GROUP DU ETISALAT

UAE – THE REGIONAL HUB iSignificant visitor , and ex-pat markets iDevelopment of Jebel Ali & Taweelah Ports iGrowth of Emirates & Etihad Airlines iDubai is world’s third largest re-export centre iDubai handled around 73% of UAE foreign trade (2004)

Destination Total City Projects Dubai 342 Top Five Global London 287 Destination Cities, 2008 Shanghai 264 Beijing 206 Paris 190

Destination CAPEX City ($BN) Dubai 21 Top Five Global London 17 Destination Cities, 2008 Shanghai 16 Tunis 15 Bucharest 13

Destination New Jobs City Created Bucharest 86, 173 Top Five Global Dubai 58, 161 Destination Cities, 2008 Shanghai 48, 605 Moscow 44, 985 St. 44, 558 Petersburg

Destination Total Country Projects UAE 480 Top Five Destination KSA 106 Countries in the Qatar 80 Middle East, 2008 Bahrain 64 Oman 53 Other 186

Destination CAPEX Country ($BN) UAE 35 Top Five Destination KSA 21 Countries in the Middle East, 2008 Iraq 20 Qatar 19 Oman 14 Other 45

Destination New Jobs Country Created UAE 87, 097 Top Five Destination KSA 28, 763 Countries in the Oman 21, 034 Middle East, 2008 Jordan 20, 035 Qatar 18, 254 Other 61, 885

LEADING TRADING FAMILIES Al Futtaim Al Gurg Al Ghurair Gulf Extrusions IKEA, ToysRUs, M&S Al Gurg Tyres, Batteries Dubai Polyfilm Al Futtaim Motors & Automobile Arabian can Industry Al Futtaim Electronics - Accessories Burjuman Shopping Sanyo Al Gurg Cigarette Div Center Al Futtaim Auto & Mac Al Gurg Al Ghurair City Machinery (FAMCO) Arabian Explosive Co Mashreq Bank Al Futtaim Real Estate Al Gurg Al Laing Paint Dome Café Benetton Franchise Printing & Publishing www.al-futtaim.com ID Design www.Algurair-pvt.com

LEADING TRADING FAMILIES Al Naboodah Al Habtoor Al Majid Al Naboodah Cont. Al Habtoor Eng. Ent Al Majid Property Al Naboodah Cargo Al Habtoor Motors EMW Lifts & Escalators Travels & Tourism Bentley GENAVCO SMKA Electric Co Aston Martin GULFCO Al Naboodah Laing Mack Truck Taj Hotel O’Rourke Real Estate Skyline Travels Swaidan Trading Hotel Metropolitan Group EPS Publishing-Al Shindagha www.alnaboodah.com www.al-majid.com www.habtoor.com

LEADING TRADING FAMILIES Al Tayer Al Rostamani Al Tayer Motors-Jaguar Thomas Cook Exchange Abb Industries Arabian Automobiles Co Fashion & Jewellery Dubai Int’l Securities Aati Contracts Co Emirates Electrical Eng. Perfume & Cosmetics Federal Bldg Industries Al Nisr Publishing Envo Gulf Steel Motivate Publishing United Diesel www.Altayer.com www.alrostamani.com

LEADING TRADING FAMILY Lootah Galadari Lootah Industries Khaleej Times National Aluminium Mazda Lootah Building & Baskin Robbins Construction Galadari Travel Group Lootah General Trading Dubai Intercontinental Hotel National Readymix Galadari Columbo Galadari Industrial www.lootahgroup.com www.Gabros.com

UAE MAJOR PROJECTS Palm Island Projects, Healthcare City Dubai International Finance Centre The World, Dubailand, Airport Expansions & New Airports Over 100 New Hotels Dubailand, with seven fully themed worlds with 45 mega projects, including another massive $1 billion indoor snow park Burj Tower Business Bay Yas Island

UAE MAJOR PROJECTS (Contd…) A new national grid linking all power stations & distribution networks in Dubai & Abu Dhabi (valued at US$164million) Dolphin Gas Project linking Qatar , UAE & Oman Light Rail system throughout Dubai Dept for Economic Development-New Projects to encourage the development of manufacturing industry over the next 5 years

KEY ISSUES Don’t forget the growing Northern Emirates & Abu Dhabi Niche opportunities for companies Have a Middle East Strategy (and beyond?) not just UAE Understand the wider pricing issues Take legal advice with M.E knowledge Research , research , research

DOING BUSINESS IN UAE Direct Export - Agent/Distributor Representative Office Branch Office Limited Liability Joint Venture/Participation Freezone or Sponsor/Partner?

DOING BUSINESS IN UAE Direct Export - Agent/Distributor No distinction between agent & distributor Cultural aspects – research , research , research Registered or Unregistered agent ? Exclusivity can be via product line / specific service Dubai and Abu Dhabi separate agencies ? Agreement subject to UAE law ? Ensure “getoutability” of contract

DOING BUSINESS IN UAE Representative Office Branch Office Sponsor generally needed – registration/formalities Sponsors – no liability , investment , management Fees are fairly established Specialist UAE firms offer matching service Termination may be difficult

DOING BUSINESS IN UAE Limited Liability Company - LLC At least 51% to be held by UAE national/company Initial share capital 150k dhs/300k dhs for Dubai Profit share may be disproportionate to shares All or most share capital provided by foreign Investor Vast majority of profits passed to foreign investor

DOING BUSINESS IN UAE Joint Venture/Participation UAE Companies Law permits joint participation 2 or more partners agree to share profits/losses Does not need to be formally registered Establishment immediate JP would use name/trade license of local registered Disadvantage – independent financing limited ?

DOING BUSINESS IN UAE Free Trade Zones 40+ FTZ’S – existing & proposed No customs duties No restrictions – profit transfer / capital repatriation Exemption – corporate , withholding , inheritance taxes No personal income tax or currency restrictions BUT need local agent to trade in UAE ICAD may circumvent this – with Executive Council

iResearch , research , research iUnderstand cultural issue iDevelop a regional strategy iMaintain personal contact iPlan for the long term , not a quick fix

DUBAI – Located in the Center of Future World Economy Dubai, UAE

Within 8 hours flight distance Dubai can reach: The world’s 2nd strongest economy‐ Western Europe 3 out of 4 “Golden BRIC” countries*‐ Russia, India, and China 2 of the newest emerging economies‐ Eastern Europe and South Eastern Asia The future star of world economy ‐ Africa

DUBAI – the World’s Fastest Growing City • From 1996 to 2006, Dubai's GDP has grown 270%

DUBAI – the World’s Fastest Growing City • The ongoing construction projects cost around 700 billion USD, including: – The tallest building in the world- Dubai Tower – The largest airport in the world

DUBAI – the World’s Fastest Growing City – World’s 3 largest manmade islands (Palm island) – The eighth miracle in the world- the World Island – The world’s largest shopping mall- Dubai Mall – The world’s largest theme park- Dubai Land

DUBAI – the World’s Fastest Growing City

DUBAI – a land of opportunity • International professionals can easily get a working visa in Dubai • 90% of population in Dubai are expatriates

DUBAI – a land of opportunity • No income tax- what you earn is what you get • No foreign exchange control • UAE is the most liberal country in the middle east

DUBAI – a land of opportunity Global companies in existing and • forthcoming free zones are aggressively hiring talents

•Internet City •Media City •Knowledge Village •International Financial Center

•Investment Park •Business Bay •International Academic City •Outsourcing Zone

•Health Care City •Silicon Oasis •Technology Park •Media Production Zone

•Airport Free Zone •Car and Automotive Zone •Maritime Zone •Biotechnology Zone

• Companies in UAE are booming and they are seeking MBAs in large numbers.

The Middle East is looking for future business leaders….

Enjoy the experience & make use of the opportunity…….

http://fuquaccl.wordpress.com	145
http://cclblog2011.fuqua.duke.edu	103
http://www.slideshare.net	31
http://209.85.229.132	1
http://translate.googleusercontent.com	1
https://bbprod.rollins.edu	1

Middle East Business Environment

by elizach on May 01, 2009

Accessibility

Categories

Tags

Upload Details

Usage Rights

6 Embeds 282

Statistics

Middle East Business Environment — Presentation Transcript