Despite the global economy’s uncertainties, the Middle East market is poised to grow steadily. Large-scale investment projects, bullish energy market, and optimistic consumers inspire many businesses to expand to the region.
Expanding to the market shouldn’t be hard if you are familiar with Middle East culture. But breaking into the market might be challenging if you are a Ukrainian fintech startup or an Australian fashion label.
“Business leaders from the western countries are usually unfamiliar with the business culture of the Middle East,” says Cynthia Dearin, international business strategist and founder of Dearin & Associates.
“Middle Eastern approaches to time and negotiations are different and often they have trouble developing and maintaining productive business relationships. They struggle with cultural differences and aren’t up to speed on the fine detail of regulatory requirements,” adds Dearin.
We spoke with experts who shared a checklist of factors businesses must consider when expanding to the region.
LEARN ABOUT THE BUSINESS CULTURE
Educate yourself on the region’s culture. According to Allan Sengadi, founder and CEO at RARL, consumers in the Middle East are conservative. “If you make them uncomfortable, they aren’t ones to express their sentiment. They will forget you exist.”
Businesses should be aware of the region’s reliance on trust.
“Сlients want to know that you can deliver. Relationship-building and face-to-face meetings help build that trust. Clients want to ensure senior management are involved with projects personally,” says David O’Sullivan, Managing Director, MENA, at Astound Commerce. “Some companies will always try to tackle the market remotely, but this can add to the challenges during business negotiations.”
Also, being clear about delivery dates and what is required from the client to meet those dates should be watertight from the start
IT’S NOT A SINGLE MARKET
The Middle East market is a collection of various markets. Despite the similarities of the economies, each country offers different business opportunities. It is vital to break down and understand the market of the country you are trying to enter.
According to Saad Belda, founder of STAGEXX, a UAE-based design agency, population, jurisdiction and governmental controls, wealth gaps, brands and conglomerates ownerships, supply chain, digital penetration, distribution networks and channels, and tax implications are factors companies must consider.
Be thorough about industry specifics. Many businesses make the same misstep—not learning enough about their segment—when expanding to this region. “For big-ticket enterprise sales, expect a long time to conclude a deal, to have a physical presence and onsite resources to establish trust,” Belda adds.
Stressing an industry’s verticals’ in-depth analysis to understand market dynamics, O’Sullivan says it is better to grasp business nuances before signing a contract.
“We take time to consult with our valued partners and have a leadership team in the market. There are market preferences. For example, we see a lot of activity in Saudi Arabia and a preference that potential service providers can access the market quickly.”
PREPARE YOURSELF FOR THE COMPETITION
Achieving success can be challenging; businesses often underestimate the competition. “Assumptions such as ‘people will buy my product because it’s better from a technical standpoint’ are wrong. New products and services are not easy to market. Moreover, people in the Middle East are loyal to well-known brands,” says Sengadi.
Foreign brands must be ready to demonstrate their uniqueness and show people they can eliminate their pain points. “Work hard on differentiating yourself and creating a superior customer experience,” says Sengadi.
Also, never assume. Belda emphasizes how the most obvious things cannot be straightforward. “They mistake treating their assumptions about people and the market as facts rather than best-guess estimates to be evaluated. Before spending time and resources, establish why the venture is profitable and whether it can deliver substantial returns.”
“Adjust to feedback and do not force-fit your product or service. Your customer value proposition might differ in the Middle East due to strong competition, alternatives, or the existing landscape or infrastructure. What sounds as a ‘nice-to-have’ might be perceived as a ‘must-have,’ and vice versa,” Belda says.
BE REASONABLE; START SMALL
Many firms make the error of starting at a monumental scale. Unless you are a new branch of a pre-established multinational chain, your business will most likely crumble under the weight of unexpected challenges you aren’t ready for.
One of the biggest challenges is the temptation to cut a deal they can’t handle yet, says Belda. “Stick to opportunities that match your capabilities, or else you damage your reputation. Build small goals and work your way up, especially SMEs. Things take time, so prepare to be in it for the long term.
NETWORKING IS KEY
In the Middle East, the approach of ‘know me first and then let’s talk business’ drives business relationships. It is a common convention.
Business confidentiality is paramount. “Obtaining accurate and up-to-date data and market insights has traditionally been challenging. So, insider knowledge and networking are must-haves to stay updated and get in front of the right decision-makers,” Belda adds.
FOCUS ON BUILDING RELATIONSHIPS
Betting on immediate results and a quick payoff might result in financial losses. Brand identity and equity matter most in the Middle Eastern markets.
Belda says that people in the region are brand conscious. “A brand equity capital is usually built on the loyalty of partners and the strength of personal relationships. Therefore, businesses should look beyond the immediate transaction and focus on long-term sustainable business relationships. Earned reputation precedes any communication or introduction,” he says.
FOLLOW SOCIAL AND RELIGIOUS NORMS
Awareness of religious and social aspects is essential. “Prayer times are important. Friday is the Muslim holy day, and common greetings include references to God,” Belda says. Businesses should consider religion, expected codes of conduct, and customs and avoid disgracing societal norms.
“Savvy businesses reflect these codes in their commercial practices through compliant advertising,” he adds.
BE PREPARED TO INVEST
Another facet that makes expansion in the Middle East time-consuming and complicated is failing to understand the importance of investing in the region. “Businesses are keen to see that you have a physical footprint in the Middle East and have Arabic collateral to support your business activities. Many legal and procurement departments request bilingual contracts; having these ready is valuable,” says O’Sullivan.
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