Opportunities in the UAE

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The United Arab Emirates is a confederation of seven Emirates which was formed in 1971 following independence from Britain. Abu Dhabi is the political capital of the UAE and it is the largest and richest, and it is generally recognised as being the economic capital of the UAE. Dubai is the commercial capital of the UAE as well as being a very important global trading centre. The other Emirates include Sharjah, which along with Ras Al Khaimah are fast becoming industrial centres, and Fujairah, which is being developed as an important international shipping and containerisation centre. The total population of the UAE is currently under 3 Million. A key characteristic of this population is its multicultural nature. It is estimated that locals form about 20% of the population, whilst the rest are drawn from the Indian subcontinent and the Arab world, with a growing number of Europeans especially in Dubai and Abu Dhabi.

The market in the UAE remains highly buoyant but competitive, and this is due to a number of reasons. Firstly, value for money is considered to be very important by Arabs and to the extent that you will find that there are many good øMe Too" products, imitations and fakes throughout the market. Secondly, traders in the UAE have become experienced in sourcing goods from all over the world. Thirdly, trade and especially re-export has become a way of life especially in Dubai leading to bigger orders and lower prices. Indeed, many traders in the Gulf find it cheaper to import international goods from Dubai rather than going straight to the manufacturers. At the same time, and whilst there is a tradition of brand loyalty, it cannot be taken it for granted. Against this, price differentials between Western goods and, say, Asian goods, need to be justified and constantly monitored. Indeed, the stigma that used to be associated with Asian or locally produced goods is fast disappearing. Notwithstanding this competitive environment, the UAE market continues to be the richest and most stable markets in the whole of the Arab world. There are many good reasons for this including a moderate expenditure on arms, a reasonably successful investment portfolio and diversification away from oil.

As with all the Arab Gulf states, the key to success in the UAE market lies in long-term commitment, willingness to develop personal relationships with clients and the ability to spend time and effort in cultivating the market. Culturally, it takes a lot of time and effort to form personal relationships, but once these relationships are there, personal loyalty takes the place of brand loyalty in the Western context. Hospitality, high personal disclosure, discreteness, flexibility, respect, saving face, patience and the system of intermediaries are some of the key concepts and practices that underpin business at every level. At the same time, respect for time, competence and productivity are some of the most important characteristics that Arabs admire in Westerners. Although English is widely spoken throughout the UAE, learning some Arabic is still a good idea. The degree and level one may require to achieve will vary from one job to another, but at the most basic level, learning Arabic is courteous to the culture and the people one is visiting. Should people decide to learn colloquial Arabic, they ought to ensure that it is Gulf Arabic, as opposed to Egyptian or North African Arabic.

As time goes by, the legal and cultural barriers that used to limit the ability of Westerners from operating the UAE are fast disappearing. It is now much easier and more common to see women in key business positions than used to be the case, say, 15 years ago. Government departments are constantly trying to simplify and restrain the impact of the agent and agency systems that restricted the ability of foreign companies from operating in the UAE. This is especially true for large companies. It may not be far away before we see certain concessions being given to foreign investors and exporters to encourage them to relocate to the UAE.

Whilst trade missions are always welcome in the UAE, they are only good in as far as introducing the potential exporter to the marketplace. It is advisable that these exporters must do their homework before going on these missions. Firstly, they must research for themselves potential clients with the help of various organisations such as the Arab British Chamber of Commerce, the Middle East association and the UAE based British Businessmen Associations. Secondly, culture as a source of competitive advantage need to be addressed whether in the training process prior to departure or in the way products are developed, presented or positioned. Thirdly, the increasing multicultural nature of the UAE means that those operating in the market must possess the right skills and mindset to operate in multinational teams.

To sum up, the UAE market continues to be buoyant, competitive and multicultural. The UAE market offers British exporters many advantages including stability and a relatively high per capita income. At the same time, it brings with it many challenges, which are primarily cultural in nature requiring the ability to communicate across cultures, operate within multinational teams and work under different cultural time zones.

December 2002