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Exporters turn to Middle East for growth

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The Middle East holds significant opportunity for Australian SME exporters, but it is often seen to be shrouded in mystery when it comes to doing business there.

There is no doubt that language, and the region’s distinct cultural differences to Australia, may act as deterrents to Australian SME exporters with limited knowledge about the market. 

However, many Australian SMEs that have expanded into the region are already enjoying the benefits.

Breaking down the barriers to doing business in the Middle East, while understanding where potential risks may lie, will give more Australian SME exporters the confidence to capitalise on the many opportunities available in the region.

Export opportunities

The Middle East, which compromises of Bahrain, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Palestinian Territories, Qatar, Saudi Arabia, Syria, United Arab Emirates and Yemen, presents some strong export opportunities for Australian SMEs.

Strategically located between Europe and Asia, the region has historically been well placed to act as a trading hub for Australian companies operating there.

Australia has a strong relationship with a number of markets in the Middle East, with the United Arab Emirates and Saudi Arabia our strongest export partners in the region.

These countries were ranked 11th and 18th respectively as the most important export markets for Australian businesses in the recent Australian International Business Survey 2015.

Some of Australia’s key export industries have a strong demand from the Middle East, including mining, agriculture and services such as education and tourism.

Overcoming barriers

The Middle East has some distinct differences to doing business compared to Australia.

Understanding how these differences could impact an export business, and where any risks may lie, is crucial before entering any markets in the region.

For example, cross-cultural differences can have a big impact on how SMEs should conduct business in the Middle East.

The business culture of the Middle East nations tends to be much more flexible and relaxed when it comes to time and schedules than Western culture. Pushing for a meeting at a specific time may not be well received, and negotiations often take longer than we are used to in Western business culture.

Likewise, local laws, many of which are based on Islamic principles, can be very different to what Australian businesses are used to.

Local laws can have an impact on how businesses need to operate, so it is critical for any SME exporter looking to do business in the Middle East to be fully aware of the legal environment in which their business is operating.

Preparation is key

Understanding the financial implications of selling a product or service into a new market is also important, in order to avoid being caught out with an unexpected cost.

For example, product listing fees apply in some markets in the Middle East, which is something most Australian SMEs will not be used to.

The Middle East is growing and offers huge potential for Australian SME exporters.

Learning about any potential risks and knowing where to go for help is crucial for any exporters considering entering the region, to ensure they set themselves up for success.

*Andrew Watson is Executive Director, Australian Export Finance and Insurance Corporation (Efic)

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