Fundamentals of Doing Business in the UAE

DUBAI, UAE - OKTOBER 10: Modern buildings in Dubai Marina, Dubai

The UAE is undoubtedly a booming hub with a lot of business opportunities. To top it, the country inspires risk taking — a term every successful entrepreneur is too familiar with. You see this everywhere; from constructing the tallest building in the world to celebrating with extravagant fireworks.

Combining the country’s adventurist aura with the notion that every resident seems to be very rich, new businesses come into the country with the opinion that success would come easy. Not quite so! As a matter of fact, “easy” is not an appropriate word to describe any business. For instance, in the US (ranked by World Bank as the 7th easiest economy to do business), only 1 out of 10 start-ups succeed on the long run. The same statistics ranks UAE as 31st, which highlights how “not-so-easy” it could be to sustain a business in the country. So should this discourage you? Well, according to entrepreneurship 101, not at all. Interpreting odds with the entrepreneurial mind only tells you why everyone else is not in your line of job; if success were high, everyone would be a businessman.

All that being said, just like every endeavor in life, the basics form the building blocks for a solid foundation. The fundamental in relation to establishing a business in the UAE is what this post is all about. Majority of businesses that fail in the UAE do so because they build their foundation with bricks made from “general opinion” of the region. So whether you are planning for a startup, a branch, or thinking to test the UAE waters before you finally decide to fully establish a company, don’t contribute to the statistics of the odds—use these basics as your stepping stone to success.

  1. Be aware of the laws. Business laws in this region is very unique so regardless of how seasoned you are in your home country’s laws, establishing out here would require you to go back to the books. For a start, you have to be aware that as a foreign entity interested in a formal presence, you have five options: a permanent establishment, a branch office, an entity in a UAE free zone, a civil company (currently limited to Sharjah and Dubai), or a commercial agency agreement. Of all these, only the free zone allows you to own 100% of the establishments; every other option would typically require at least 51% ownership by a UAE national. But mind you, free zones are usually located in remote areas, so you would not be able to locate your establishment in city centers if you decide to take this route.
  2. Always have someone else on ground. The need to work “ON” not “IN” your business cannot be stressed enough. To succeed in the UAE, it is very important to always maintain a broad perspective of the whole business in order to navigate your strategy according to the vision of the country. The country’s leadership is very keen on meeting their targets so aligning your business with their goals can facilitate success. Don’t get caught up in rendering services, writing proposals, ordering supplies etc. The business needs you to focus on the “deeper why” i.e. assess strategies, decide on new products and develop ideas inline with trends. On the other hand, down here, nothing gets done when you don’t have an active presence. If you don’t have a competent representative dedicated to the daily requirements of the business, it would only be a matter of time before it all comes crumbling down.
  3. Culture is everything. Arabs take their culture very seriously. Including an Arabic flavor to your product or service would definitely be an attraction. If you are involved in servicing an industry, you might want to infuse an Arab flavor to peak the interest of the decision makers who are most often locals. However, as the UAE contains a large proportion of foreigners, this strategy does not directly apply to consumer goods. For such products, a target market would have to be decided upon and infusing flavors inline with the cultural inclination of this subset of people should be the focus.

There you go! The ABCs of doing business in the UAE. Keep your eyes on this blog as we are soon to launch our guide on doing business in the UAE. Whatever you do, make sure it puts you on the profitable lane.