The Middle East GCC countries Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates have all made an immense progress in areas of business reform. They are doing away with protectionist barriers and are liberalizing businesses and industries. The GCC Middle Class are growing fast and they are developing taste for global brands.
The GCC countries do not have strong local brands and competition and an international brand will find a ripe market for their products and services. Having said that, it does not mean that large global multinational corporations will not face challenges.
The international companies that do their homework and are prepared will make billions of sales and profits. So what are the obvious challenges?
The first challenge for multinationals will face is justifying a significant investment in small pocket of consumers for example, a small country like Bahrain. The market is there but it is very small, so how would you justify spending millions of dollars in such a small market? The way to go about it is to identify similar consumers across GCC countries. For example, let us say your product is high-end Australian Steak. You look consumers across all six GCC countries. In this way you can scale fast and investment can be justified.
The second challenge that the global companies face is local knowledge, distribution and positioning. This is where international companies need to figure out reliable , knowledgeable local partners that can handle the distribution, logistics and product positioning. Companies need to approach their diplomatic mission in the country. Most advanced countries have business representatives that have decades of experience and they can help in introducing you to a reliable local partners. Another useful approach is to find a large established local partner with the Royal families. Most of the Royal families in the GCC own large conglomerates and business groups that span across industries. They are very reliable partners and they protect their reputations very strongly. Also associating with these group companies come with the added benefit of making the process of registration and doing business more more transparent.
The third challenge faced by multinational companies is one of culture. The way family, religion, time and business interact is a vexing problem for multinational companies. The GCC attitude towards time is relaxed and they value relationships more than schedules and punctuality. However, even when locals arrive late, foreigners are always expected to be on time. Business meetings without much notice may be get cancelled or rescheduled. In Saudi Arabia weekend is Friday and Saturday and in Oman weekend is Thursday and Friday.
The GCC countries are devout Muslim conservatives. Their value system, dress code, ways of speaking all reflect these conservative values. Foods and drinks such as alcohol, pork, and political and sexual in nature discussions are off-limits.
In the GCC countries they have very strong national identity. Therefore, their religion, leaders and national values must be acknowledged and respected by business people and visitors alike.
The family and tribe are highly influential and play a role in shaping a person’s values and behavior. Do not be surprised to find family members working for the same company and also for the supplier or distributor. It is a fact of life, the concept of conflict of interest in the familial relationships in companies will seem alien to multinationals. In fact, sometimes hiring decisions are made by the local companies by who can facilitate something with a government department or company and that is usually based on tribe or family affiliations.
One must be very cautious to engage a gossips with a national regarding another national even when he initiates the gossip. It is very important to not disapprove or approve either way. Stay neutral because these relationships change from day to day.
People take extreme care to save face. Avoid and never expose someone to situations that would threaten their dignity. Public criticism is highly condemned behavior so even if you have to do it, do it privately, or let a local do it for you or advise you how to do it. I have witnessed multi-million dollar contracts cancelled because someone at the international company due to lack of cultural knowledge made a local lose face.