Know your Market

Originally published here

 

The GCC is not a single homogenous market. There are very different commercial approaches and market requirements throughout the region, coupled with very different laws and regulations in each state, so don’t assume that what works in Kuwait will also be successful in Oman, for example.

Even the different emirates in the UAE have separate commercial drivers and individual commercial laws. It pays to do extensive research about the demand for your particular product or service and the requirements of the prevailing regulatory regime rather than make broad assumptions.

 

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There is a huge reservoir of readily available regional knowledge, goodwill and experience which start-ups can access. Most embassies have a dedicated business development arm mandated to provide practical support for businesses and individuals from their country to expand in the region.

Often linked to these national trade bodies, the professional business groups provide a more social and informal way of getting to know more about doing business in the region and are an excellent way to network and meet people.

Finally, with the growing trend of social media, excellent forums exist on sites such as LinkedIn where you can very quickly establish connections, find like-minded SME contacts and ask questions directly to groups of knowledgeable professionals.

Do your research

Do not add to your risk burden by making hasty decisions or taking short-cuts when it comes to establishing your business in the correct jurisdiction with the right company incorporation model.

It might be quicker and cheaper to set up in a free zone in the UAE. However, by doing so you cannot trade with businesses or consumers based onshore.  You would be surprised how often this specific situation occurs, only for the business then to find out it is unable to trade where it wants to. It is then saddled with huge costs to unravel the venture and re-establish the business correctly. By understanding the regulatory requirements and limitations from the outset, a huge amount of time and money can be saved.

Take legal advice

Having professional legal support is always an essential component for any business formation – never a luxury.  Most SMEs are on very tight budgets, especially at the start-up stage. But given the fluid nature of the legal environment in the GCC and the consequences of getting things wrong, it absolutely pays to engage and retain legal counsel. They can assist your business across the spectrum of company formation, labour law, and commercial and contractual matters. Look at it like an investment. The local business groups mentioned above are a good place to ask for lawyer recommendations.

Engage, engage, engage

There is no substitute for being here on the ground and getting to know your suppliers, customers, competitors and industry. Doing things at arm’s length from overseas rarely pays dividends and will almost certainly prove to be a ceiling to growth and success.

Do not underestimate the preference among local businesses to deal with other local businesses. Having a local presence is also the greatest possible affirmation of your own company’s credentials and commitment to the market.

There are ways for SMEs to set up in the UAE that are fast, compliant and cost-efficient, so barriers to entry are low. Rather, consider the commercial cost of not establishing a commercial presence, especially if your rivals already operate here.

Article by Links Group on Oct 29th 2012
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