Our clients often ask us: “What do I need to know about doing business in the Middle East? I’d like to get started but I don’t know where to begin”.
This is a fair question. While the Middle East and North Africa markets hold excellent opportunities for exporters, it is a region which is foreign to the vast majority of Australian firms and only a very small percentage of Australian companies trade there.
As a result, the region is often overlooked by exporters and investors in favour of Asian markets.
A comprehensive answer to the question would take up far more space than we have available here. However, the following 10 points will give you an indication of the sorts of things you need to consider before embarking on your foray into this fascinating and challenging part of the world.
1. The Middle East is like Europe
For the uninitiated, the Middle East often appears as a vast sandy region, of oil, sand and camels. Nothing could be further than the truth. Although oil, sand and camels all have their place in the Middle East and North African (MENA) markets, this geographically and culturally diverse region stretches from Morocco to Yemen and comprises about 20 countries, each of which has its own unique cultural features. It has a population of about 381 million people, or 6 percent of the world’s population.
The (MENA) is also like Europe in that it is an economically diverse region that includes both the oil-rich economies in the Gulf and countries that are resource-scarce in relation to population, such as Egypt, Morocco, and Yemen.
Where you choose to start your business operations in the MENA region depends on what you sell and who your target customers are.
2. The Middle East is not Australia, or China
Before deciding whether or not to launch into business in the MENA, it is important to recognize the significant differences between business culture in Australia and the cultures of the MENA markets. Simply transplanting western business practices (however successful you may have found them to be in Australia or elsewhere) will not yield dividends in the Qatar, Morocco or Egypt.
We recommend investing in professional advice and experience to understand the social and business culture across the region and in your chosen market.
3. Know your host
The MENA countries share some common history and culture, yet there are also many differences in terms of their social outlook and approach to business. Treating all Arabs alike smacks of arrogance, and coming across as arrogant is one of the worst things a western businessperson can do in this part of the world. If in doubt, err to the cautious and take your cues from the locals.
It is always worthwhile hiring an intermediary to help guide you. Local chambers of commerce in the country you are in or a reputable local law firm can always help you out. Your local Austrade or State trade office will also be a smart port of call.
4. It’s who you know, not what you know, that counts
Connections make or break deals in this part of the world much more than any other. If you have good friends working with you in the region, you can find that the normal rules of business are bent or broken to accommodate you. If, on the other hand, you approach the MENA markets from a western business perspective, you may find that doors, which should logically be open are well and truly locked.
5. Business and personal friendships are one and the same
Arabs generally prefer to do business with people they know and like. Small talk is more than just a courtesy, it is a way of finding out whether you would be a suitable business partner. Engage in conversation freely and enthusiastically, and have a few stories in your back pocket to break the ice.
6. Organizations can be many-tiered and difficult to penetrate
If you don’t have a business associate who can help you find a way to prospective customers, consider hiring a professional intermediary with clout to save you time, money and frustration. That person will help you identify and reach the real decision makers you want to connect with. Teaming up with experienced, local business people and firms to close a big deal also makes a lot of sense.
7. Decisions can take a long time
Don’t be impatient, as this will reflect poorly on your character. Be flexible and prepared to accommodate shifting schedules. In fact, patience is the most valuable virtue you can demonstrate throughout your business and social life living and working in the Middle East. If you can apply this quality, even in the most frustrating of business situations, you will reap the rewards.
8. The best way to communicate is always face-to-face
If you can’t meet your counterpart in person, make a phone call. The written word is considered less personal and less important, and you could find your letters and e-mails go unanswered for some time if you don’t at least follow up by phone. This is certainly the case with email.
Some countries, like Saudi Arabia, don’t really do serious business by phone with Westerners, so a personal visit is your only option.
Body language is just as important as the spoken word.
Your opposite number may be telling you with a raised eyebrow, reclined posture or tone of voice that it’s time to change tack. Your instinct will usually be enough to guide you provided you’re on the lookout for non-verbal signals.
9. Test the waters
If you’re just starting out in the MENA region, it’s a good idea to put together a few small, quick deals to see which companies are serious about doing business with you.
If you want to do business with a particular company and see immense potential for significant business, just hang on before you go and pitch for a mega project. Aim for the low-hanging fruit first. Suggest pilot projects or try and close smaller deals.
Once you have established a true meaningful relationship with the client, and succeeded in completing an initial small project, you can be more comfortable in spending your time and resources on the more strategic, high-value deals. Working with local partners to is a great way to get an accurate view of the landscape and enable you to better target your energies.
10. Don’t be lulled into a false sense of security by warm hospitality
Arabs can drive as hard a bargain as anyone else, so you should be prepared to be tough, yet respectful. A senior dealmaker will often demand concessions from you in order to demonstrate his authority, so be prepared for plenty of give and take even at a late stage in negotiations.
Want to find out more about doing business in the Middle East? Join us at the 2014 Australian Arab Businesswomen’s Forum in Sydney on March 6-7. Register now at: www.abfgroup.com.au.
* Cynthia Dearin is the Managing Director of Dearin & Associates, a boutique consultancy specializing in international market entry services. Her firm specialises in export strategy, cross-cultural management and relationship management, with a special focus on emerging markets. Cynthia began her career after law school as a junior diplomat for the Australian Department of Foreign Affairs and Trade with postings in Cairo, Egypt and the United Arab Emirates. She completed a two-year Arabic language program at the American University and played a key role in drafting regional free trade agreements. Most recently, she served as the first female CEO of the Australia Arab Chamber of Commerce and Industry.