There are numerous misconceptions surrounding doing business in the Middle East. The social conservatism attributed to the region, coupled with the perceived risk of possible business disruption from political or social unrest, has made many business leaders fearful of expanding into this part of the world.
But the Middle East encompasses an enormous geographical area as well as a vast and diverse mix of cultures, and boasts both rapidly modernizing markets and an educated workforce. Over the past 10 years, most countries within the region have improved their infrastructure, increased security, and implemented business regulatory reforms that make it easier than ever for companies to do business. With the right product, attitude, and strategic partnerships, the Middle East can provide you with an extremely lucrative market and be an excellent vehicle for exponential growth.
In order to be successful, it is imperative to first become as familiar as possible with Middle Eastern business practices. Although specifics will vary across countries and cultures, there are some key points to keep in mind when doing business in this region.
Relationships are everything
To be successful in the Middle East you first need to understand that, more than perhaps anywhere else in the world, business and personal relationships are one and the same.
Businesspeople in the Middle East want to deal with people who they know and trust. No matter how great a product or price your company is offering, if you do not have a connection with the right people within the organizations you are dealing with, you will have difficulty finding success.
Meeting potential customers or clients face-to-face is imperative when building your business in the Middle East. Meet them, shake their hand, let them get to know you, and don’t be surprised if they invite you to their house for dinner. This also gives you the opportunity to do the same. The more you know on a personal (and business) level about your potential customer, the more successful you will be.
Once you have met face to face for the first time, then you can use phone calls and on-line video conferencing to continue to build your business. However, you will still have to meet in person from time to time to further solidify your relationship.
Multi-tiered and difficult to break in to
Decisions can take a long time in most companies, because they require approvals at many levels. It is important to find out as much as you can about the company that you want to do business with before you start. Get to know every possible person that you can in the organization, do your research using social media or LinkedIn. When interviewing potential partners to represent your product, make sure they are aligned or have contacts with the companies you are targeting. Don’t be surprised if their contacts are a brother, uncle, or old family friend—this is a good thing and this is the way things get done.
Patience is key when dealing with companies in the Middle East.
Find the right companies to represent
No matter how you structure your business in the Middle East, you will need a partner. Most companies use the services of an independent sales agent or stockist’ to get their products to market.
Trust, but verify. Most potential partners will promise the world just to get you to sign with them. If you want to set up directly in the Middle East whether utilizing a Free Zone or not, you will need a sponsor. All sponsors will charge a sponsorship fee that they claim will remain in place for the duration of your agreement. More often than not, sponsors (the not so good ones) will raise the fees indiscriminately as your business grows, essentially choking off your profits.
There are a few good firms that specialize in setting up foreign companies in the Middle East who have proven and trustworthy sponsors. These firms offer the quickest, easiest and safest way for your company to set up shop.
Prepare for tough negotiations
Be prepared for a significant amount of give and take in a negotiation. Allowing the person you are dealing with to exert their authority in order to show their boss that they are doing their job will go a long way.
Communication style and body language may determine your success or failure. Loud or rude behaviour on your part is a sign of disrespect and will sour a deal. It is also very important to pay attention to the body language of the people around you. A raised eyebrow or shift in posture could be an indication that a change in course is required. It is OK to be firm but remember their distain for rude or loud people. Ensure you are respectful.
Engage a Middle East specialist
These companies will have local contacts and relationships, as well as a solid understanding of the varying cultures and business climates within the Middle East. By contracting them you leverage their relationships and regional knowledge at a fraction of the cost and time of setting up your own team.
Like Rome, a Middle Eastern market presence will not be built in a day. You will require patience as you build trust and connections within the local business communities. As a general rule, assuming you are utilizing the right expert partners in the region, you should be able to start the orders flowing within four to six months.
Tom Greenwood is president of Factum Partners, a hands-on business advisory firm that develops and implements cost-effective business improvement and market expansion strategies for small to medium-sized enterprises.
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Have you done business in the Middle East? What would you add to this list? Share your experiences and strategies using the comments section below.