Exporting to the Middle East

An exchange program, designed to build trade connections between Australia and the Arab world, has been given the thumbs up by visiting delegates.

Trying to get a visa to travel to Australia is difficult if you live in Mauritania, a rich oil and gas country nestled into west Africa. 

For Mauritanian Boubacar Diop it was a dream come true—to be selected as one of 17 Arab business leaders who travelled to Australia in February and March as part of the Council for Australian-Arab Relations (CAAR) Young Professionals Exchange Program.

Australia hosted the group, which included managing directors, chief financial officers, human resource managers, engineers and telecommunication specialists representing Algeria, Bahrain, Comoros, Egypt, Iraq, Jordan, Kuwait, Lebanon, Mauritania, Morocco, Oman, Saudi Arabia, Syria, UAE, and Yemen.

The program is an initiative to build further connections between Australian and Arab businesses. More importantly, it’s a relationship, says chairman of CAAR, Dr Glen Simpson, that offers great strategic value for Australia.

“Our relationship with the Arab world will be one of the most important for Australia to manage over the coming decades, and has already been a key focus in the first decade of this century.

“The CAAR Young Professionals Exchange Program has been, since 2004, a long-term investment in developing a positive and lasting relationship between Australia and the Arab world. That goal continues to be achieved through the links that will be forged from the sharing of ideas and culture during this latest exchange program.”

For Algerian Hakim Zeboudji, a telecommunications specialist for Orascom Telecom Algeria, it is a chance to tell his fellow participants and his Australian hosts that Algeria, while a relatively new economy on the world stage, has much to offer.

“My country’s human capital and natural resources make it an attractive proposition for Australian businesses. Our young people are well educated and keen to create and develop projects with the assistance of outside companies.”

His belief that the CAAR program will see new relationships forged with Australia and closer ties between all his colleagues in the program and their respective countries, is a sentiment expressed by all participants.

“I would like to build a bridge between our countries to help boost our cultural, environmental, educational and business exchanges so that we can have a mutual understanding of each other and how we think and operate,” he says.

Growing Trade

Trade between Australia and countries of the Arab League accounts for $10 billion a year. As many of the Arab nations begin liberalising their economies, trade with Australia is expected to grow significantly in the future.

According to the general manager of Australian Business International Trade Services, Christine Gibbs-Stewart, many Arab countries are initiating reforms to encourage privatisation, liberalise their foreign trade, and reform investment regimes. “Privatisation and economic diversity are becoming more evident. Many of the Arab countries, such as Saudi Arabia and Kuwait, are rich in oil and gas reserves. However, their dependency is limited.

“As a result, new industries are emerging especially in the tourism and finance sectors, particularly with the relaxation in foreign investment restrictions, a review of taxes on foreign companies, and the ability for foreigners to buy real estate in many of these countries,” she adds.

“Some of the smaller countries in the Arab world also have immature markets and with the huge upheaval towards social market economies in the world, these countries need to attract both foreign investment and partnerships.” Australia’s trade with the Arab world has grown exponentially in the construction, education, and tourism sectors with Australians building hospitals, redeveloping airports, building projects and supplying building products.

“The CAAR program is aiming to encourage the exchange of knowledge, technology and innovation so that trade opportunities between Australia and the Arabic world continue to grow,” says Gibbs-Stewart. “The program will increase the participants’ understanding of business practices and culture in Australia as well as help our understanding of business practices and cultures in the Arab nations.”

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Opportunities Galore

Lebanese Ziad Haddad, a partner in an architectural and engineering firm, believes there are many opportunities for Australian businesses in his country.

“Our economy is based largely on agriculture and tourism and more recently the introduction of soft industries such as IT.

“The Lebanese banking system is both advanced and extensive stretching out into neighbouring African and Arab countries offering opportunities for Australian banks to form associations.

“Many benefits can be drawn from a serious cultural exchange between the two countries considering Lebanon’s strong bonds with Europe, its diverse culture, multilingual citizens, and geographical location.”

Lebanon is, as are many of the Gulf countries, transforming itself through construction and engineering. According to Haddad, numerous Australian consulting businesses have tapped into this wealth via joint ventures, acquisitions, and so on.

Many of the participants said that their countries were eager to increase their knowledge and skills in industries such as agriculture (farm management and animal husbandry), IT and telecommunications, water and energy, mining, construction, health, tourism, finance, food, and the shipbuilding industry.

Education, in particular higher education and vocational training, is considered crucial to continuing the prosperity of the Arab league economies.

Lebanon’s ties with the West over the past century have also seen the establishment of a large number of western missionary-style schools and universities, in particular a glut of private teaching institutions.

“In the last 10 years, many of these institutions have developed links with foreign universities and similar opportunities may well be available to Australian institutions that can provide resources and modern management techniques,” says Haddad.

Acquisitions, joint ventures, shareholding, and management will be critical to the modernisation of many of these countries.

It is best summed up by Mamoun Al-Sibai, a telecom specialist from Kuwait: “Australia is in a position to establish unprecedented economic, political, and social ties with all Arab countries including Kuwait.

“I'm expecting a lot from the CAAR program and I'm optimistic that this event will be a landmark to achieving mutual benefits between all countries involved.”

FOREIGN EXCHANGE

The exchange program was organised by Australian Business International Trade Services with sponsors including Etihad Airways, the national airline of the United Arab Emirates, and local Australian supporters Oz Jet Boating, BridgeClimb, Taronga Zoo, and Unilodge. Etihad Airways commenced services from Abu Dhabi to Sydney and Brisbane in 2007, creating more opportunities to develop business synergies between Australia and the Arab world.

Participants took part in a four-week professional development program that included:

•         work experience placement with an Australian company

•         workshops and seminars on topics such as ‘doing business in Australia’ and ‘understanding the Australian business culture’

•         briefing on foreign policy and the trade and investment relationship

•         meetings with key Arab and Australian business and community leaders

•         attending cultural and social activities.

 * Ron Krueger is public relations manager for NSW Business Chamber (nswbusinesschamber.com.au)

UAE Tools, Tips and Traps

Phillip Waite offers some tips on doing business in the UAE

The United Arab Emirates (UAE) was formed on December 2 1971 as a federation of seven Emirates including Abu Dhabi (the capital), Ajman, Dubai, Fujairah, Sharjah, Umm Al Quwain and Ras Al Khaimah.

The United Arab Emirates should be the first port of call for Australians seeking to do business with the Arab world. It is a nation that is liberal and open in its business dealings. Similar to Singapore as a hub to the rest of Asia, the UAE is positioning itself as a distribution and logistics hub for the Middle East and Africa region.

The UAE is a cosmopolitan society that is familiar with the methods and means of doing business worldwide. However, there are a few points that people new to the Arabian business environment should keep in mind.

Business is conducted on the basis of personal relationships and mutual trust. It is crucial to build on these. Companies are often a family affair, with the ultimate decision-maker being, in most cases, the patriarchal head of the family. Even if this is not the case, it is essential to clearly identify the decision-maker.

However, your initial meetings are likely to be at a lower level and probably with an expatriate South Asian senior or middle manager. Business cards should be printed in English and Arabic. Brochures and presentation material should be delivered in colour and be of exceptional quality.

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Etiquette

Etiquette is important in the UAE, and by making an effort to understand local custom and culture many doors will open for you. Although you will be expected to be on time for an appointment, don’t expect the same in reverse. Be prepared to be kept waiting for an appointment, or even for a last-minute postponement that you will only be notified of on your arrival for the meeting.

Never refuse refreshments offered, as this will be taken as an insult to your host. Once you have received your refreshment, you may however, just take a sip and leave the rest in the glass or cup.

Saving Face

Arabian culture is usually non-confrontational. ‘Saving face’, as in China, is a way to solve conflicts and avoid embarrassing situations. For example, pressure sales tactics can cause discomfort.

Also, avoid contentious discussions about religion, the status of women, and the politics of the Middle East. Remember that you are a "resident guest" of the United Arab Emirates and as such need to respect their way of life. Locals are generally hospitable and courteous. Aggression and rudeness are seldom seen; authority and calm are the norm.

Working Hours

There are no set business hours in the United Arab Emirates. Companies will either choose to work ‘straight’ which is between 0800hrs and 1700hrs, or ‘shift’ which is anytime between 0700hrs and 1300hrs, and then again between 1600h and 2100hrs or even 2200hrs.

Government departments are open from 0700hrs until 1400hrs, Sundays to Thursdays. Most shopping malls are open 10am until 10 or 11pm every day.

Work Dress Code

Men: A tie or smart open-necked shirt is recommended for office work. A suit is not necessary, unless visiting high profile locals.

Women: May wear knee length skirts or dresses, or trousers. Sleeves must cover the upper arm.

Local Office

Companies establishing a local office must use a resident sponsor. A sponsor may be a UAE citizen or an institution. The sponsor may be directly involved in the business, or may only provide legally required administrative services.

Currently companies undertaking direct business in the UAE must be at least 51 percent owned by a UAE national. However, this is under review and a lesser percentage is likely to be introduced sometime in the near to medium term.

Given the high level of local ownership, finding the right partner is paramount to success. Avoid plunging into relationships. It should be noted that many Emiratis make their living from these partnership arrangements and it is not uncommon for them to be involved in several if not hundreds of partnership agreements. Be prepared to take time to build enduring relationships and develop trust.

Establishing in one of the UAE free trade zones (FTZs) provides a number of exemptions, particularly the provision for 100 percent foreign ownership. Additionally, companies providing offshore services or regional representation may be allowed a higher level of foreign equity.

Addresses

Most business addresses in the UAE are straightforward, with many companies located in landmark office blocks in the major commercial centres, or in well-defined industrial areas.

Street signs are usually in English and Arabic, although in residential districts the numbering system can be confusing, and directions are usually via a map or set of directions.

Language

Although Arabic is the official language, English is widely used in business transactions.

Gifts

When Arabs receive gifts, it is a custom not to open it in front of the giver. The same is expected when they give someone else a gift.

Conclusion

The UAE is a fast developing and potentially lucrative market for many Australian businesses. It is important, however, that care is taken in the method of market entry and in selection of local partners. Equally important is an understanding of the local culture, especially the concept of saving “face”. The Australian Government also has good representation in the UAE and representatives are always available to give advice to Australian business. There are also some 4,000 expatriate Australians living in the Emirates and most would be happy to give advice.

 * Phillip Waite is a business adviser for the Australian Industry Productivity Centre (www.nswbusinesschamber.com.au)

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