What do I need to be aware of when entering the Middle East? Are there risks to doing business there?

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August 2016

The Middle East has some distinct differences to doing business compared to Australia. Understanding how these differences could impact your business and where any risks may lie is crucial before entering any markets in the region.

Cultural considerations

  • It is crucial to be aware of cross-cultural differences when doing business in the Middle East to avoid making a mistake that could damage a potential partnership.
  • For example, the culture of the Middle East 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 are often likely to take a lot longer than we are used to in Western business culture.

Local law

  • A significant proportion of laws in the region are based on Islamic principles.
  • For example, freedom of expression is notably limited compared to other cultures.
  • Local laws can have an impact on how businesses and business people need to operate, and so it is crucial for any SME operating in the Middle East to be fully aware of the legal environment in which they are operating.

Political pressures  

  • A number of countries have experienced political instability in recent years.
  • Political turmoil affects economic conditions that attract business and investment, and also has the potential to affect business operations.
  • For example, a trade embargo could affect delivery of goods; civil war or political violence could affect the safety of staff and partners; and political instability could result in defaults on payments, confiscation of assets and blockages in transfer of earnings.

Financial factors

  • Understanding the financial implications of selling your product or service into a new market is important, so that you avoid being caught out with an unexpected cost.
  • For example, product listing fees apply in many markets in the region.
  • For SMEs exporting to the Middle East, financial support is available from a number of sources and your banker can advise you on where to start for export finance.

You need to think long term. Do not try to close a speculative or average deal for the sake of gaining
revenue. Business, socialising, getting to know people are all intertwined in the Middle East. You may need to do multiple trips before you even start talking about a potential business deal.
Adam Malouf, Senior Manager, Business Performance and Development, Arab Bank Australia.