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How to do business in the Gulf

Why is this important?
 

The Gulf area has become one of the world's great business destinations and offers an abundance of opportunities for interested Australian businesses.  Doing business in the area, which encompasses the Arab states bordering the Persian Gulf, has become easier with recent and ongoing business reforms.
 
The Arab states of the Persian Gulf, Gulf States, or Gulf Arab states are all terms that refer to this area and include Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. These countries make up the economic and political block of the Gulf Co-operation Council (GCC).
 
The Middle East is not a destination for ad-hoc or quick and easy sales, but if you are an Australian business interested in doing business in the Gulf, the key to ease of entry depends upon: 
 

  • making informed planning decisions
  • making business connections and networks
  • undertaking due diligence by having a good understanding of the  market
  • having patience and being prepared for the long term commitment

 
In many Middle East destinations it is becoming easier for women to participate in business with correct advice and guidance.
 
What to do

A checklist of things that will make doing business in the Gulf easier and more likely to be successful.
 

  1. Make sure that you are very familiar with the business culture and ethics.
     
  2. Develop a basic understanding of Islam as a religion and a way of life, since it permeates all aspect of living and working.
     
  3. Do your homework regarding whom you will be dealing with in a relationship, i.e. companies, agents, distributors, individuals etc… social standing, education, networks, family ties, company profile, history … all these aspects and more are critical to your success in this region.
     
  4. Build strong relationships with reliable partners that are preferably local nationals to guide you and facilitate ease of entry.
     
  5. Get good legal advice before entering into a binding business relationship.
     
  6. Appreciate that in the Arab World, all business is personal. Use the personal relationship to your best advantage.
     
  7. Manage memorandums of understanding (MOUs) well, as the breakdown of a business relationship can be both costly and acrimonious. Local partners love MOUs, documents that describe a bilateral or multilateral agreement between parties, but they can be difficult to manage.
     
  8. Look at developing symbiotic, commercial synergies with partners. You will find these will have a good chance of being long- lasting relationships.
     
  9. Do your due diligence and look to partner local foreign companies, professionals and organisations who are recognised and trusted for their good judgement. Choose a local partner with whom you feel comfortable working and create a relationship where you feel your interests are protected.
     
  10. Learn a few phrases - some throw away lines and some good words in Arabic. Your effort will be richly rewarded. To them this will appear more than just another deal or another dollar.


A checklist of pitfalls to avoid
 

  1. Generally Arabs will only do business with people they know and like. They are high relationship- driven people and there can often be a blurring of lines with respect to business and friendship. Always be engaging in your conversation and enthusiastic, but do not cross the line of disrespect. It’s very hard to mend a relationship afterwards if this occurs. 
     
  2. Unlike Western corporations, Arab organisations are not structurally visible to outsiders. So work closely with experienced, respected local businesses or business people to identify and reach the decision makers who will be influential in you being able to close the deal.
     
  3. Patience is a precious virtue. It gives others extra space and shows you are accommodating. Be flexible and do not express frustration or ill manners. You will reap the rewards.
     
  4. You are always being observed, and your body language and non-verbal communication are being interpreted through an Arabic value system just as if you are talking. Learn the signs, and reciprocate with hospitality. This will bring you closer to the decision and deal makers.
     
  5. During negotiations Arabs always speak in vague terms, generalities, tell distraction stories, metaphors and throw in words with double meanings. Nodding and smiling do not signify agreement, they are signs of politeness. So keep It “short and simple” so that you don’t lose them with the detail and take your time to be understood. A culturally sensitive Arabic business negotiator with you can read the situation and pass on or pass back helpful signs.
     
  6. Understand that you do not have a business opportunity if you are more than three feet from your customer. Forget phone calls, e-mails, Facebook and twitter. Nothing replaces a personal visit.
     
  7. Arabs may have the one language but it has many shades when it comes to history and culture, so know whom you are dealing with and take the cues from a trusted local intermediary, e.g. reputable trade advisers.
     
  8. “Kick a Few Goals” and “Small is Beautiful’. These phrases aptly describe recommended points of entry for new SMEs. Do not be dazzled by the numbers and enormity of some of the large projects. Look for opportunities which match your capability.
     
  9. Arabs are hospitable and warm and the new generation is highly educated from the best universities in the West. They are hard-nosed negotiators, so be prepared for some ‘argy bargy’ and give and take to the final end. Once you have closed a good deal with them, you will be always favoured.


On a final note

Certain markets such as Saudi Arabia are difficult to travel to, and visas are challenging since there are many parties involved e.g. Ministry of Foreign Affairs in Saudi Arabia, local Embassies and Consulates, Agents, Chambers of Commerce, Letters of invitation, certification and stamping etc. All of these things can be daunting, not to mention costing money and time. But on the positive side, these obstacles will filter out much of your competition who are not bothered to go through the process.

However, you can successfully do business in the area if you seek advice from a professional and experienced organisation, like Australian Business International Trade who know what it takes to operate in the Gulf area. Australian Business Consulting & Solutions gives you access to professional advice, mentoring, briefings, and business partner identification, screening, introductions, market visits, licencing and professional legal advice. If you want to know more about exporting to the Middle East contact Camil Gereis at - camil.gereis@australianbusiness.com.au

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Camil Gereis
Manager, Middle East
International Trade
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