This action might not be possible to undo. Are you sure you want to continue?
Why Choose U.A.E.? ........................................................................................................................................... 1 Quick History of Major Events ....................................................................................................................... 1-2 Geography and Climate .................................................................................................................................. 2-3 Population ....................................................................................................................................................... 3-4 Economy .......................................................................................................................................................... 4-6 Government ..................................................................................................................................................... 6-8 Political Climate .............................................................................................................................................. 8-9 Local and Traditional Government ................................................................................................................... 9 Legal Climate ................................................................................................................................................ 9-12 Barriers to Trade ......................................................................................................................................... 12-19 Physical, Cultural, Religious Barriers ........................................................................................................ 12-13 Political Barriers ....................................................................................................................................... 15-19 Free Trade Zones ........................................................................................................................................ 19-20 People and Culture ...................................................................................................................................... 20-21 Cultural Practices ........................................................................................................................................ 22-23 Dependency on Resources ............................................................................................................................ 23-25 Global Trade Environment ......................................................................................................................... 25-26 Major Trading Partners and Organizations .............................................................................................. 26-29 Major Exports and Imports ........................................................................................................................ 29-32 Currency and Exchange Rates .................................................................................................................... 32-33 PPP and SPPP .............................................................................................................................................. 34-35 GDP and GNP ............................................................................................................................................. 36-39 Efforts to Promote Green Technology .............................................................................................................. 39 Common Mistakes a Company Makes ............................................................................................................. 40 Unsuccessful Companies ................................................................................................................................... 40 Conclusion ................................................................................................................................................... 41-42 Bibliography ................................................................................................................................................ 43-48
Why choose the U.A.E.? The United Arab Emirates is a very wealthy country founded on the oil and pearling industries. It is a great place to do business if because it is a very safe country that has a number of natural resources and skills that other countries do not. The central location in the Middle East and Africa provide the U.A.E. access to over a billion consumers. It also has a number of large free-trade zones that make it even easier to import and export while doing business. When doing business in the United Arab Emirates and in other countries there are many things to be considered. What kind of culture do they have? What is their government like? What is their currency worth in U.S. dollars? These questions will all be answered in the following business guide. Let us take you from A to Z on how to do business in the U.A.E.
Quick History of Major Events The United Arab Emirates was formed nearly forty years ago of seven small emirates of Abu Dhabi, Dubai, Sharjah, Ras Al-Khaimah, Ajman, Umm Al-Qaiwain, and Fujairah. Before the U.A.E. was formed, many different countries had control of the land. It was first controlled by the Portuguese in the 16th century, followed by the Ottoman Turks and the British (Wikipedia, 2009). A lot of the culture of the U.A.E. is influenced by the British and as we will discuss later some of their laws and government resembles the British. To the British, this area was known as the pirate coast because of the numerous raids on the shipping industry from the 16th to 19th century. This meant they had to provide extra protection if a business wanted to ship goods through the U.A.E. In the late 19th century, the British signed an agreement with 9 of the newly named 'trucial' states to provide them protection from piracy. Finally the U.A.E. was formed after the British withdrew their presence in the country in the 1971.
Oil is one of the largest portions of the revenue generated by the U.A.E. and was first harvested in the 1930's (Wikipedia, 2009). Profits from the oil skyrocketed from that point on greatly increasing the country's wealth (Encyclopedia Britannica, 2009). The rulers around the area used this money to better their society by building schools, houses, hospitals and roads. This wealth helped the U.A.E. become a financially sound country that is recognized as one of the wealthiest in the Middle East. It is also known as the banking capital of the Middle East, and after 9/11, it cooperated with the United States and froze the assets of suspected terrorist members of Al- Qaeda (Wikipedia, 2009).
Geography and Climate
The United Arab Emirates (U.A.E) is located in the Middle East, on the Persian Gulf. The U.A.E is proximate to the Straits of Hormuz, in-between the Oman Gulf and Persian Gulf. Most of the land in the U.A.E is desert and sand dunes can be seen in some parts. The climate in the U.A.E is hot and dry, with maximum average temperatures reaching 118°F. Average minimum temperatures in winter are between 50°F and 57°F. The cooler season is the best time for traveling. In the desert areas, groundwater
sometimes enables oases to from, where date palms, acacia, and eucalyptus grow. However, most of the land supports only grasses and thorn brushes. Native animals include Leopards and the Arabian
Oryx, but over-hunting has brought their numbers close to extinction. Even though the U.A.E is close to the coast line, it does not rain a lot, but the humidity level is usually at least 80%. Sandblasting by wind and sand sometimes occur, making it impossible to go outside.
This chart represents average temperature levels in Dubai throughout the year.
The population in the United Arab Emirates is around 4.8 million (data current as of 2009) (Wikipedia, 2009). About 1/5th of the country are ³foreigners´ because a large portion of the country is migrant workers. The U.A.E. has one of the most diversified populations in its region. For that reason this is a great place to conduct international business because there are many different international companies already successfully conducting business in the U.A.E. Oddly enough there are just about two males for every female in the U.A.E. which means that it will be easier to market towards the men of the country. (U.A.E. fact book, 2009)A majority of the population lives in the major cities of Dubai and Abu Dhabi, while the rest live in small towns throughout the desert.
Business Impact on population is recently modernized society with a highly urbanized population means there should be a high demand for technology and home entertainment products, also extremely high number of working foreigners means may be demand in that market for phone calls home, low-cost food and clothing. (CIA, 2009) They have high income per-capita means the citizens have more discretionary income to spend on products and very high number of males means that products should be targeted towards male use, or items that a male would buy as a gift for a female. (Wikipedia, 2009) The UAE has a high growth rate means birth rate must be high, so baby products should be in demand and nearly complete Muslim population means that products should be compatible with Muslim faith and practices. It would be important to avoid product areas which are offensive to Muslims like alcohol, provocative clothing, swimsuits, music & movies & games with nudity or obscenity, etc.
The UAE used to be dominated by pearl production, fishing, agriculture and herding prior to exporting oil. Oil provides the economy for a large portion of its earnings and can provide investors to come due business with them. The amount of oil they have is said to last well over 150 years (U.S Department of State 2007). In 2006 they produced about 2.8 billion barrels of oil every day; this amount of oil production is huge and has been very profitable to the economy. The United Arab Emirates is a well open economy and has been emerging in the globalization and in the international trade in the Arabian Gulf. It is increasingly its trade and commerce between the east and west. The U.A.E has had grown within its imports of 31% as the average between 2003 and 2007 to $116.6 billion. Mean while the exports had risen to 28% 178.9 billion over the same time.
United Arab Emirates 23 4.92 31 rank in the Global Competitiveness this rank it out of 134 countries.
According to the CIA the UAE has a high per capita income and a sizable annual trade surplus. There has been in increase in their imports as far as in manufactured goods and machinery, and transportation equipment that accounted for 70% of total imports. Abe Dhabi is the wealthiest emirate and manages $600 billion overseas investments.
The UAE has been a bankrupt region to a modern state since the discovery of oil thirty years ago; this finding has changed the UAE in a good way. The government has been able to put more money towards creating jobs, and expanding infrastructures. Another good thing is in April 2004, they signed a Trade and Investment Framework Agreement with Washington. The TIRA is where the South African Customs Union, United States-Icelandic Forum, as a discussion for the U.S and other specified countries to make things better for trade and investments. (U.S Trade Representative 2008) In November 2004 also agreed to make
negotiations toward a Free Trade Agreement with U.S a good quality that the UAE as to offer investors is Free Trade Zone, offering 100% foreign ownership and zero taxes; this is good for outside investors. The down side of the free trade zone is that the UAE wants at least 51% local citizen ownership in all businesses operating in the country. Although this is what the government would like this is still under review and most likely will stay around because the WTO regulations come in to play. Some may disagree with this and find it to be too much of the government is taking ownership of individuals companies. Although things have been going well and moving up, the current economy has affected the UAE in the aspect of oil revenues are going down, and tight international credit market the growth for 2009 is going to be low. This is a
problem for the UAE because a large portion of their income is from oil in the long run is going to be a challenge.
The UAE is involved in the Gulf Cooperation Council, this committee focuses on economic issues, and this is great benefit for the UAE. As an investor I see it being important for a country to understand the economy and you can better help your country.
The future plans the UAE has is to focuses on diversification and private sector employment. This plan is the next few years and is a good plan. This is good because they are looking at their risk within investments and putting it into one portfolio
The UAE exports are $210.5 billion (2008) country comparison to the world: 21 and exports for crude oil 45% natural gas, re-exports, dried fruits, and dates. The imports are $145.8 billion (2008) country comparison to the world: 29. Companies that work in the oil industry will find the UAE a good match and a place to invest.
The stability of government can show a buyer or an investor what to the country is really like by how their government is being run and how things are going overall. This gives an overall view in what to expect of the country since every country can be run differently and having different sets of rules. Understanding the different rules and how they do business is extremely important. The United Arab Emirates is a Federation of emirates. There are seven emirates and each one has its own ruler. Although every emirate has its own ruler there is one set ruler (US. Department of State 2007). The capital of UAE is Abu Dhabi. The flag is three horizontal bands of green on the top white and black with wider vertical red band on the hoist
side. The president of Abu Dhabi is Sheikh Khalifa bin Zayed Al Nahyan. Sheikh became president November 3, 2004; he had been acting as president since his dad was ill. In December of 1971 he became the duty of Prime Minister of the Federal State, and then in 1976 he was the deputy of Commander of the Armed Forces, he also heads the Supreme Petroleum Council (Wikipedia 2009). The country became independent in December 2, 1971. The country is trying to expand on airlines and going green how this affects the stability of the government, this could affect the government stability if the government puts too much money into going green and gets no benefits. With the airlines, this is a huge finical burden especially if they did not make any money on the new airplanes.
The UAE is liberal laws compared to other countries. They have a civil law jurisdiction. Shari¶a or Islamic law is used for family law and criminal acts also. This affects doing business with the UAE and their legal system can be difficult because the Shari¶a and Islamic law includes politics and economics, business and more. If an outside investor is from the U.S this can be a conflict in the aspect that one would need to read up on how there laws work and what the regulations are.
They have a strong emphasis on human rights and equality. This is good for investors who care about people have equality, and human rights. I think this can bring a different kind of investor to the UAE. It is impor The UAE has three branches, executive, legislature, and judiciary. The executive branch includes the President, vice president, Prime Minister federal supreme council, and council of Ministers. The president and prime minister are hereditary.
The UAE is a federation of seven monarchies each with its own ruler: Abu Dhabi, Ajman, Fujairah, Sharjah, Dubai, Ras al-Khaimah, Umm al-Qaiwain. Since the UAE consist of
seven monarchies this gives investors many places to choice from when they decide to invest. The UAE was formed in 1971, after obtaining independence from the United Kingdom. It has a constitution.
The UAE government combines three different types of government:
presidential, and elective monarchy. As in the U.S., there are three branches of government: executive, legislative, and judicial. The executive branch has a head of state, called the President, and a head of government, called the Prime Minister.
Political Climate The U.A.E. does not have political parties. The rulers hold power on the basis of their dynastic position and their legitimacy in a system of tribal consensus. There are no elections, except for a restricted 20 member committee election in the Federal National Council (legislative branch) and no formal mechanisms through which the people can participate in public-policy decisions. The most important branch is called the Federal Supreme Council. It composes of Supreme Council Members, Crown Princes¶, Deputies of the rulers, and the Members of the cabinet. (United Arab Emirates, 2008) The Federal Supreme Council Composed has responsibility for formulation and supervision of all U.A.E policies, ratification of federal laws, and oversight of the union's budget. The rulers of the seven emirates elect a President and a Vice-President from amongst their number, to serve for a five-year renewable, term in office. The president is assisted by the council of Ministers. The ministers are represented in the cabinet in numbers relative to their size and importance, headed by the prime minister or Vice President. The Prime minister or Vice
President then selects the ministers. Usually the emirates with larger population will have more ministers drawn (Levels Of Govt, 2008). The Federal National Council (FNC) has 40 members drawn from the emirates on the basis of population. The FNC has a legislative, as well as a supervising role under the constitution. It is responsible for examining, and amending, if necessary, all proposed federal legislation, and may question any federal minister regarding their performance. (Levels Of Govt, 2008). Local Government Each of the emirates has its own local government. The most developed, most influential, and most populous emirate, Abu Dhabi, has its own central governing organ, the Executive Council, chaired by the Crown Prince, under which are a number of separate departments, equivalent to ministries (Levels Of Govt, 2008).
Traditional government of UAE has a rule that people have an open access to the rulers or sheikhs of their tribes. In smaller emirates, rulers hold councils, where people and expatriates have access to discuss or voice opinions with sheikhs (Forms Of Govt, 2009).
Legal Climate UAE is a Muslim country therefore their legal system is taken from the Sharia (Islamic law), a large part of the legislation is composed of a blend of European and Islamic ideas. (Legal System, 2008). Civil Law is largely based on statute law. UAE has embodied commercial and
civil codes that enable the simple principles covering agencies, labor law, intellectual property and company law. In the official gazette, laws are published in Arabic (Legal System, 2008).
There is no federal tax legislation in the UAE; instead each Emirate has its own tax law. Personal income tax, capital gain tax, value-added tax, withholding tax, and corporate tax are not applicable in the UAE. The only companies that are required to pay taxes are of oil, gas, petrochemical, and branches of foreign banks (Tax Laws, 2008).
The UAE does not have any personal tax laws. Municipality service charges are held in place instead. Individuals living in the UAE will pay up 5 to 10% on food purchases in restaurants as well as hotels with charge 10 to 15% on your room rates (Tax Laws, 2008).
Sharjah Tax Law:
Every chargeable person who conducts trade or business shall be subject to sliding scale up to 55%
Income < Dhs.1,000,000
Income =< Dhs.1 000,000 to > Dhs.2 000,000 10% Income =< Dhs.2 000,000 to > Dhs.3 000,000 20% Income =< Dhs.3 000,000 to > Dhs.4 000,000 30% Income =< Dhs.4 000,000 to > Dhs.5 000,000 40% Income < Dhs.5 000,000 55%
Taxable income is computed after the deduction of all costs and expenses, including the acquisition cost of goods, the costs of operating the business, allowances for depreciation, obsolescence and exhaustion of tangible and intangible assets and losses (Tax Laws, 2008).
Sharjah Free Zones 2:
1. Sharjah Airport International Free Zone: World¶s first ISO Certified airport free zone, 100 per cent exemption from corporate and personal income taxes, for companies, investors, and their employees
2. Hamriyah Free Zone: 100% import, export tax emption, repatriation of capital and profits allowed, No corporate profits tax and no personal income tax (Tax Laws, 2008):
The Federal Labor Law
The Federal Labor Law, having the power to succeed over the Free Zone Labor Laws, is most commonly used throughout the seven Emirates. Considering immigrant workers make up about 90% of the workforce, there are many prerequisites in order to work in the UAE including Employment Visas, Labor cards and Medical tests. There is no legal minimum wage, and they are paid monthly, weekly or daily. Although there are many aspects of UAE's Labor Laws that are comparable to the rest of the world, there are many distinctive elements as well (Personnnel labor laws, 2008).
Laws for juveniles and women Juveniles must be 15 years of age to be employed; they are subject to limitations such as the amount of hours and conditions in which they work (MOL, 2008). Women are eligible for
employment in general; they are prohibited to work from the hours of 10 pm to 7 am or working in dangerous or difficult positions. (MOL, 2008)
All seven of the Emirate governments have differently defined individual proscriptions against bribery, but the Federal Penal Code is binding throughout the country. While bribery is nowhere legally defined as a legal term, Sections 234 to 239 of the United Arab Emirates Penal Code specifically makes it illegal to ³offer, to give, or to agree to give any gratification to a person who is«expected to be a public servant as an inducement or reward for performing any official act.´ (Arab Law Quarterly, Vol. 15, No. 4, 2000)
Barriers to Trade
The main physical barrier to trade in the U.A.E is the desert. The desert poses as a problem because some cities are far away from the coast line and roads serve as the only mode of transportation between them.
The U.A.E doesn¶t have many railroad tracks linking some cities with others, making the transportation of oil is slow. To help solve this the U.A.E¶s Union Railway is currently in talks with ADNOC to explore transportation, via rail, over seven million tons of granulated sulphur annually from the Shah and Habshan oil and gas fields to Ruwais. This would help increase the transportation of oil, which in turn will help the countries oil, gas and petrochemical industries in the country (Morris, 2009).
Cultural Barriers: The U.A.E has many cultural barriers to trade (as we will see more later) there are many things that influence these cultures. Some of the major influences in the U.A.E are.
Religion Images of people and animals are forbidden by Islamic law. High offense is taken in the pictorial rending of any religious figure, such as Allah or Mohammed. Therefore, calligraphic art is used as an alternative form of creative expression. (GPI, 2008). For instance the JyllandsPosten Muhammad cartoons controversy (Cartoons Controversy, 2007), sparked riots around the world, including in the U.A.E (Gall, 2006).
Religion should be especially considered when marketing products. An example which was given in the report ³The Role of Multinational Companies in Dubai´ was of an advertisement which was inappropriate for the Arabian region is an ad by President Cheese, and it pictured Jesus reaching up to the sky in a pose similar to that of the Statue of Liberty and grabbing the cheese. Kamal Khoder of Fortune Promoseven said that the local Arab could not relate to the ad¶s religious context. ³If you show them an angel, they do not know what to think. An image of an angel will not work here, not because people hate it, but because they cannot grasp the idea. It doesn¶t mean anything to them,´ he said. (Singer & Boryana, 2006)
Uncertainty Avoidance One of the predominant characteristics of the country is its high uncertainty avoidance. The U.A.E has an uncertainty avoidance score of 68 in comparison with other Arab Countries
due to shared religion (Islam). This indicates a low level tolerance for uncertainty (Slide Share, 2009). From a business perspective, the high level uncertainty avoidance in the U.A.E implies that: People don¶t like to take risk even when they are calculated. They are very fatalistic and they don¶t like to make decisions when some elements are unknown. New idea and concepts are more difficult to introduce. So, if a company wanted to come up with a new product they shouldn¶t expect the market to embrace immediately. They should allow time to the market so that it will develop and understanding of the new product. Due to a need to negate uncertainty, proposals and presentation are examined in details, so as an advice: back it up with facts and statistics (Uncertainty Avoidance, 2009). A recent study showed that uncertainty avoidance slowed down the development of technology infrastructure (Cardon, 2008).
While conducting business in the U.A.E, unique dress code requirement need to be considered. In the U.A.E most of the body always remains covered. A jacket and tie are usually required for men at meetings, along with long pants and a shirt. Long-sleeved shirts that are buttoned up to the collar would also be preferred. Men should avoid wearing jewelry, particularly around the neck. The appropriate business dress during the day for men is a shirt with a collar and trousers. In the evening a man would simply add a tie to his daytime attire (Men Clothing, 2008). Females should make an effort not to wear too figure hugging clothes and to cover up their skin, a shirt and trousers or long skirt would be fine (Clothing).
Even when marketing, clothing needs to be considered. An example of this is taken from the report ³The Role of Multinational Companies in Dubai´ when it comes to marketing skin care products and jewelry, it can be challenging to appeal to women without showing female
bodies in advertisements. Intermarkets Madco, Managing Director Saad El Zein in the report talked about the way skin care advertisements are localized according to the values of Muslim culture. He said that these ads are often edited to show a little more clothing, covering parts of the body that are considered too revealing. (Singer & Boryana, 2006).
Import/export prohibitions exist in the United Arab Emirates for several reasons ranging from environmental, health and safety, religious and even moral reasons. The prohibitions are regulated by the GCC and are imposed on all kinds of items ranging from drugs, counterfeit money, certain toys and even several types of waste.
Tariffs Most goods in the United Arab Emirates have a 5% tariff rate. The tariff is based on The GCC and no import tariffs apply to imports from within the GCC (HSBC, 2008). Many imperative items are duty free such as agricultural, raw materials, food products, pharmaceutical products and others. Exceptions to the 5% tariff are for alcohol and tobacco products with 50% and 100% respectively. (U.A.E. Trade Barriers, 2008)
Licenses A trading license is required in order to conduct trade in the United Arab Emirates (U.A.E). The license can be obtained from the economics department at the emirates and is only valid where it is issued. Trading licenses are held by exclusive commercial ³agents.´ The
advantage of having an exclusive commercial ³agent,´ is for networking reasons. (U.A.E. Trade Barriers, 2008). Trade Licenses include: Import and Export Licenses.
To export goods from the U.A.E, exporters must complete an export declaration and have the original invoice which is provided to customs. (U.A.E. Trade Barriers, 2008). Administering customs and setting rates are responsibilities of each individual emirate therefore the duties and rules maybe different among them. All items exported or re-exported for the U.A.E are required to have the necessary documentation distributed by the Ministry of Economy and Commerce and the assorted Chambers of Commerce in the particular emirate. U.A.E¶s trading environment is relatively open and liberal with its policies. Re-export shipment procedures include: (Export Restrictions, 2008)
Re-export bill of entry from customs during clearance
4% CIF Import duty deposit given to customs
Re-exportation must occur within 180 days with shipments inspected before the reexport
Reimbursement of the duty deposit is available for 30 days
Import licenses are not generally required for goods intended for personal usage. However, if importing goods for resale only bring in what items you are licensed for. Imports from the GCC generally receive favorable treatment. Licenses are available for one year, and can be renewed (U.A.E: Import Restrictions, 2008). In order to import, the agency must be registered with the Ministry of Economy and Planning. The Trade Agencies Law is a system that regulates
the majority of imports. There are several thousand agencies that are registered (U.A.E. Trade Barriers, 2008)
The U.A.E subsidies up to $10 per barrel of gasoline, however the country does not have any subsidy on diesel prices. The United Arab Emirates has the lowest subsidies on fuel prices among oil producers, and experts believed that this has contributed to the accelerating inflation rate in the country (Bernama, 2008). There have been allegations that Emirates airlines have been receiving fuel subsidies from the Dubai Government (Gale, 2008). The airline has argued against the allegation (Emirates, 2009) however it¶s hard to say if there is some truth to the allegation or not.
Embargos All imports and exports to and from Israel are prohibited (HSBC, 2008). There are prohibitions on the import or export of currencies into the U.A.E from Israel and countries subject to United Nations sanctions (Money, 2001). The U.A.E imposed an arms embargo on Iran (Arms embargo, 2009) recently with the seizing of a ship with North Korea arms bound for Iran (Charbonneau, 2009). U.A.E. also has a specific ban on Indian meat imports due to health and hygiene concerns relating to that area. (Vasudeva, 2000).
Many previously saw Coca-Cola as NIMEP Insights an Israeli company because it had branches that operated in Israel. With this marketing strategy, however, Coca-Cola effectively related to the cultural and traditional views of U.A.E residents, and was able to overcome the ban
that had previously been put on its operations due to its connections with Israel (Singer & Boryana, 2006).
The labeling restrictions stated that the following information must be printed in Arabic on the original product label or packaging: brand name, product name, ingredients (in descending proportion, additives, origin of all anime fats and oils, net content in metric units, production and expiry dates, country of origin, manufacturer¶s address and special storage or preparation instructions.
Labels may not contain pictures of pork or alcohol, nor can they contain recipes requiring these products. Bilingual labels are permitted (such as, Arabic/English), but information printed in Arabic must have the same prominence as information printed in the other language (Marketing Restrictions, 2008).
Food products intended for use in Institutional purposes (hotel, restaurant, catering, etc.), Manufacturing, and Re-export are exempt from the Arabic labeling requirement, provided their original labels contain all the required information in English (Marketing Restrictions, 2008).
Barriers to Entry The U.A.E revoked the monopoly rights of the Emirates Telecommunications Corporation (Etisalat) and allowed for the creation of a second telecommunications company. The Telecommunications Regulatory Authority (TRA) announced that it had approved the establishment of a second, largely government-owned, telecommunications company, Emirates
Integrated Technology Company, which will operate under the trade name Du. Local press reports have quoted the TRA Director General as stating that the duopoly will continue until 2015 when the market will be further liberalized (ustr.gov, 2006).
Except for companies located in one of the Free Zones, at least fifty-one percent of a business must be owned by a national. A business engaged in importing and distributing a product must either be a 100% U.A.E owned agency/distributorship or a fifty-one percent national / forty-nine percent foreign limited liability company (LLC) (ustr.gov, 2006). Mc Donald¶s is 100% owned and operated by the Amman- Jordan: Emirates Fast Food Company (McDonald's U.A.E, 2009).
The government portrays its conservative side, but rarely chooses to enforce strict Islamic ideals on foreign investment. For now the common motivator of money seems to keep everyone in line; but big investors and western businesses will remain vulnerable to future cultural clashes. (Cultures Business Strengths/Weaknesses, 2008)
Free Trade Zones
The U.A.E. is home to a number of different free trade zones that can be very appealing for doing business inside the country. Some of the benefits to doing business in these trade zones is that, you are able to have 100% foreign ownership in your company and avoid 100% of the tariffs on importing and exporting. (U.A.E. Embassy, 2009) You are also not subject to any sort of income tax or even corporate taxes while operating in these free zones, which can add a lot of profit to your business. Some of the major free trade zones in the U.A.E. are the Jebel Ali Free
Zone and the Dubai Airport Free trade zone. (U.A.E. Embassy, 2009) These are a great way to get your business in the country in order to make a significant amount of money.
People and Culture
The United Arab Emirates has a very diverse culture and is very tolerant of other people's views and beliefs. This is great place to do business in because they are more than willing to do business with people of another culture than their own. The majority of people that live there are Emeriti, Iranian, Pakistani, and Indian. Only about one fifth of the people in the U.A.E. are citizens, the rest are immigrants and extended visitors. The Emeriti people are the native inhabitants of the U.A.E. and are predominantly follow the Muslim religion (Wikipedia, 2009). Arabic is the official language in the U.A.E. and other languages include: English, Hindi, and Persian. It would be a very wise idea to hire an interpreter so you do not run into any unforeseeable misunderstandings about the language and even the culture while doing business there. Emiratis are a very hospitable people who feel honored to have guests (Everyculture, 2009). They treat their guests with the utmost respect and assume the guests will return their kindness and respect.
To do business in the United Arab Emirates you must be aware that their workweek is different then in the United States. Its official work week is from Sunday to Thursday and its office hours are from 7:30 am to 3:00 pm. The weekend for most companies falls upon Friday and Saturday, as is customary for a number of Muslim countries. During the religious holiday of Ramadan, the work week is shortened by about two to three hours per day and shifts may even be split between the morning and night.
The official religion of the United Arab Emirates is Muslim, of which a majority follows the Sunni division of Islam. There are also a number of different religions such as Christianity and Hinduism present throughout the country. Religious tolerance is practiced throughout the U.A.E. which is shown by the presences of churches and temples. Most of the country is affected by Islam because of the fact that it plays a major part in the U.A.E.'s legal system. All matters that have to deal with marriage, divorce, land disputes and other various things are dealt with by religious law, which we will discuss later. (Encyclopedia Britannica, 2009).
Society in the U.A.E. has two main categories, if you are a national of the country you are called Al-Muwateneen and the other is if you are an immigrant, you are referred to as AlWafedeen (Encyclopedia Britannica, 2009). After that if you are a national to the country, there are smaller sub categories, sheikh families, merchant class, middle class, and low-income. If you are born into a sheikh family you will inevitably hold power over the merchant and middle class workers, and therefore if you want to do business in the U.A.E. you will want to befriend someone from a sheikh family, perhaps even a king. Immigrants are divided into the top professionals, middle range professionals and semi skilled professionals. These range from factory workers to high level businessman (Everyculture, 2009). The middle class of the U.A.E. is rapidly expanding with the increase in foreign trade and education. This is a great country to do business in if you need to access the rest of the Middle East because it is one of the largest and most advanced countries.
Cultural Practices The United Arab Emirates is similar to the rest of the Middle East when it comes to cultural practices. They use a number of the same greetings and gestures. While doing business in the U.A.E. you are expected to be respectful, patient and courteous. Most people use the traditional Islamic greeting of Al-salam alaykom, which men will follow with a quick nose-tonose touch and a handshake, while Women greet each other by kissing several times on both cheeks. (Encyclopedia Britannica, 2009) While at meetings you must always be on time and be patient if someone else becomes late or does not show at all. Before conversation, it is customary to ask about the health and wellbeing of the other person's family (if you already know them of course). This simply shows them that you care, allows them to feel more comfortable when talking, and establishes a relationship with them so you know that you are there for more than just business. When doing business with multiple people in a company, you must always greet and address the senior business partner first and work your way down depending on their title as a sign of respect. If you are invited to a household in the U.A.E. you will have a different experience depending on your sex. A man visiting a U.A.E. household you will be invited into the main living room while women will be taken into a smaller room off somewhere in the house. This is because in the U.A.E. women are still treated differently than men although this has been changing recently. (Encyclopedia Britannica, 2009). Like many countries of the area you should always dress conservatively for meetings and attempt to cover most of your body. Never schedule your meetings during prayer times or religious holidays.
One example of a successful company that really realized the potential that changing and developing its product around the U.A.E. and other Muslim countries culture is OnePure
cosmetics. OnePure is a very successful Canadian cosmetics company that uses a pork-free formula when producing its makeup (Arabian Business, 2009).It does this because they have a strong understanding of the Muslim culture and realized that devout Muslims in the U.A.E. needed a product that they could use without breaking some of the main laws of their religion. Products similar to these are branded Halal, which means lawful in Arabic. They were able to attain success by paying attention and putting to use ideals that many Muslims use.
Most of the food in the U.A.E. consists of fish, rice, bread, homegrown vegetables, and meat (sheep, goats, and camels) this however is changing due to their emergence into the global economy, now they're importing food from various different countries. (Wikipedia, 2009) Restaurants are beginning to offer a larger variety of ethnic food and some fast food restaurants are coming to the U.A.E. such as McDonalds and Burger King. This is really a great place to expand and franchise if you are looking to expand into the Middle East. A large part of the country observes the strict Muslim culture of not consuming alcohol or eating pork which you must be considerate of when traveling and doing business in the U.A.E.
Dependency on Resources and Its Problems The U.A.E¶s economy has been sustained by foreign labors from Asian countries because the U.A.E encourages the hiring of a large number of immigrants and migrant workers. Due to these labors¶ contributions, the U.A.E economy has achieved spectacular economic growth compared to neighboring Gulf countries. However, this over-dependency by businesses on foreign workers has brought on various problems. For instance, the number of foreign workers accounts for 20% of the population in the U.A.E, and the economic discrepancy among foreign labors has become widened. This intensifies ethnic discrimination. Indian workers make up the
highest percentage of immigrants. Other Asian labors are from Pakistan, Sri Lanka, Nepal, and the Philippines. Immigrants and migrant workers should be treated equally, but Indian workers are more highly valued because of their higher education. The ratio of competent Indian
business people and technical experts has increased gradually. On the other hand, other foreign workers cannot keep up with the conditions of the current labor market. India historically has a strong bond with the U.A.E, and Indians can expand their business easily in U.A.E marketplace and business world. Other foreign workers work as janitors and maids. The main reason for the wide economic disparity is that salaries are subject to socioeconomic factors and nationality. Indians receive special treatment. In their country, the development of computing technology has become highly distinguished among other Asian countries. Overpopulation of immigrants and migrant workers will bring another serious problem. The U.A.E cannot guarantee that it can protect its own culture if its traditional ethnic group becomes a minority. To maintain their own culture, the U.A.E government encourages a higher birthrate. (Wikipedia, 2009). The government also knows that U.A.E has to depend on foreign labor, but they have to be concerned about who will be able to cooperate in the development of the U.A.E economy. The working conditions of foreign workers are a major concern for the U.A.E. One Nepali national worked as a janitor for 8 months, but the boss did not pay the correct wage even though he was permitted to work in U.A.E. The worker could not even afford to buy his meals. This type of case is very common in U.A.E, and has often been published in U.A.E newspapers. Another case involves a boss confiscating the passports of migrant workers who then cannot changes their jobs. A working visa can be issued for specific companies and occupations, so workers have a difficult time changing to another job. If they change jobs, they would be
regarded as people who live in the U.A.E illegally. Staying illegally would certainly expose them to being expelled from the U.A.E. The owner who hired illegal foreign residents would also be punished. The only way to change their workplace is for foreign workers to pay a forfeit charge to the previous owner so that they can get their passport back. The worst problem is that illegal foreign residents whose working visa is already expired would affect the good relationship with Asian countries. U.A.E needs migrant labors to improve its economic standard, but Asian countries that send foreign workers to the U.A.E to help in the development of its economy would surely stir up feelings of antipathy if the U.A.E clamped down on these illegal foreign residents. The low percentage of food self-sufficiency in U.A.E is another remarkable problem. In the gulf region, vast desert areas entirely cover the majority of the national land and cultivated zones and aquatic resources are restricted. Thus, the U.A.E has to import most of its food supplies. However, the population has skyrocketed, so the deficiency of food threatens the political situation. Nowadays, the U.A.E depends on other countries for 85% of its food. The Abu Dhabi investment fund has launched a plan to expand large corn fields in Sudan:
Global Trade Environment
As we will explain shortly, the U.A.E. is very active in the global trade environment. It is able to do so because of the large number of free trade zones and its centralized location in the Middle East and the world. According to the WTO, the United Arab Emirates placed in the top 30 for world trade. Global trade has many affects on a country; it can increase its wealth, add to its cultural diversity, increase its technology and build relationships with other countries. Some of the results of the U.A.E.¶s trading in the global environment is helped increase the country¶s
wealth and modernized it to be one of the most advanced in the Middle East. The U.A.E. also benefited from the increased amount of immigration because it relies on a number of migrant workers for production.
Major Trading Partners The United Arab Eremite¶s major trading partners are Japan, the US, Britain, Germany, and China. Japan is the main trading partner for import and export. No significant natural recourses are found in Japan, so Japan depends on importing resources to sustain its industrial and high-tech economy. Therefore, Japan depends on oil from the U.A.E and more than 100 companies from Japan have expanded to the U.A.E
One of the oil companies from Japan, COSMO Oil, has been trying to build a committed relationship with the U.A.E since 1967 in order to import oil. An example of this effort is the launching in August 2007 by COSMO Oil of a Japanese language program in U.A.E. This program aims to increase interest in Japanese culture among the people of the U.A.E:
A second example of Japanese relationship building in the U.A.E is the COSMO Oil project to provide state-of-the-art technology in the area of electricity production. Mitsui
Engineering and Shipbuilding Co Ltd, one of the big Japanese ship building companies, was commissioned to build a system for verification of concentrating photovoltaic (CPV):
This COV is capable of absorbing solar light precisely because it can follow the movement of the sun. Abundant sunshine strikes the entire surface of the U.A.E throughout the year, enabling the production of cheap electricity. Such a climate can lead the U.A.E to an efficient and environmentally friendly economy.
Another well represented Japanese oil company, the Nippon Oil Corporation (NOC), also works to build a strong bond between the U.A.E and Japan in order to secure Japan¶s oil supply. NOC developed the Recosul: Recosul is a modified-sulfur concrete for construction material: Plenty of sulfur by-product is discharged from oil factories. To recycle and leverage this, NOC reprocesses sulfur to Recosul. Recosul has strong water-barrier features and high-level acid resistance features, so this is suited to the construction of sewer systems, huge flume facilities, and hot spring facilities. Compared to normal concrete, the amazing durability of Recosul can be seen in the graphic. On the acid-resistance experiment, the graphic indicates that the cement concrete cylinders fully collapsed after three months. Surprisingly, Recosul cylinders still maintain their original shapes.
NOC decided that the best partner for oil business expansion is the U.A.E. NOC has already started to observe the market research for profitability there, and is planning on creating a Recosul business there. In addition to these latest technologies, Japan exports machinery, home appliances, steel, and transport machines to the U.A.E. With respect to trade between the US and U.A.E, the US is the major import partner:
The US exports products to U.A.E similar to those that Japan exports: The graph shows that the percentage of export from the US surpasses the percentage of import from U.A.E.
The second graph shows that all states export products to U.A.E. Washington State is one of the main states.
One example of the trade between the US and the U.A.E is the arrangement of nuclear cooperation agreement in January 2009: Uranium enrichment reveals the danger of nuclear proliferation, with nuclear components being diverted to military use. The US¶s purpose of arrangement is discouraging the U.A.E from moving toward nuclear development. Instead of enriching uranium and disposing of plutonium in the U.A.E, the US offers the atomic fuel and the advanced technology of nuclear energy development.
Trade Organizations The United Arab Emirates is a member of the World Trade Organization. It is also part of the Council of Arab Economic Unity (CAEU), which is devoted to complete economic unity between its member¶s countries. With the help of the CAEU, the Greater Arab Free Trade Agreement (GAFTA) was created (Wikipedia, 2009). This agreement is very similar to ASEAN or NAFTA, and is a free trade zone to allow these countries to import and export without having to worry about duties and other forms of protectionism. The United Arab Emirates is also a member of OPEC, or the Organization of the Petroleum Exporting Countries. OPEC helps to stabilize the international oil market and to safeguard the interests of its members (Encyclopedia Britannica, 2009).
Major Exports: In 2008 U.A.E had an estimated $210.5 billion worth of exports and is the 20th largest export market globally. The U.A.E has quickly risen to become the 14th largest GDP per capita and has one of the fastest growing GDP's in the world. The U.A.E¶s main export commodities are crude oil, natural gas, re-exports, dried fish and dates. Oil and gas represent over half of the country¶s exports. (U.A.E. Major Exports, 2008)
The U.A.E exports many of its goods to countries in the Southeast Asian region, including Japan 25.5%, South Korea 8.6%, Thailand 5.8%, and India 4.8%. Japan is by far the U.A.E¶s biggest export partner; it receives nearly 62% of the U.A.E¶s crude oil exports and comprises almost all of its natural gas exports. (U.A.E. Major Exports, 2008)
(ADNOC), a state owned oil company in the U.A.E, with access to country's oil and gas reserves, considered to be the world's fourth largest (ADNOC, 2009). In 2008 ADNOC
estimated it had a net export revenue of US$72 billion (Baxter, 2009).
The U.A.E is the largest export market for the United States in the Arab World. Exports to the United States rose by 38 percent between 2000 and 2007, from $971.7 million to $1.34 billion.
Exports from the U.A.E to the U.S include: Aluminum, Crude oil, Uncut or unset diamonds, Cotton apparel and household goods, advanced iron and steel products, other petroleum products, Cloth, fabrics, cords and threads, Non-cotton apparel and household goods, Fish and shellfish, Boxes, belting, glass and abrasives.
The U.S depends far less on U.A.E oil and gas products than it does on other Middle Eastern countries, with Petroleum products including oil and gas represent a little over 20% of U.A.E¶s exports to the U.S. in 2007. (Workman, 2008)
The U.A.E has the third-largest non-oil GDP, in the Arab world, only behind Egypt and Morocco, as of 2005. With Re-Exported goods being a third of the country¶s overall trade; this being a result of the customs union created by the GCC. The city of Dubai has risen in the ranks
to become one of the primary ports for re-exports to countries surrounding the Persian Gulf. Iran is the U.A.E¶s biggest buyer of the re-exports. (U.A.E. Major Exports, 2008)
The U.A.E¶s Major Imports:
Imports totaled in $145.8 billion in 2008 on a free on board basis. Oil imports to the U.A.E in 2007 were measured at 192,900 barrels/day. Natural Gas imports measured in 2008 were at 16.75 billion cubic meters. United Arab Emirates imports include mainly machinery, transport equipment, chemicals, and food. (U.A.E. Major Imports, 2008)
One of the biggest markets in the U.A.E is the exotic sports car industry. In past year, the Middle East has gained huge profits when the oil prices soared to record levels. Although the current status of the world¶s financial sectors is in decline, many car manufactures are betting that the demand will increase for exotic sports cars.
BMW, known for its high luxury automobiles, announced a 21% rise in sales in the Middle East from the first half of 2008 over the same period last year (Auromotive major import in U.A.E, 2008). Abu Dhabi saw the biggest rises in growth with a jump in sales of 56%. Dubai led the way in terms of highest overall sales volumes with the Emirate accounting for nearly 25% of the total sales across the region in the six month period (Roberts, 2007). Because of the increasing number of high luxury automobiles on the road, many young Emirates are showing interest in other brands including Maseratis, Lexus and Porsche (Kim & Irish, 2008).
Aside from the countries in the trade groups the U.A.E is a member of, other major countries traded with as of 2008 included: China 13.5%, India 9.8%, US 9.2%, Germany 6.8%, Japan 6.4%, Turkey 4.7%, Italy 4.5%. (U.A.E. Major Imports, 2008)
The U.A.E buys products from every state in the United States. Of U.A.E imports from the U.S in 2007, the following product categories had the highest values: Civilian aircraft, New and used passenger cars, Drilling and oilfield equipment, Non-monetary gold,
Telecommunications equipment, other industrial machines, Industrial engines, Parts for militarytype goods, Gem diamonds, excavating machinery. A closer look at the U.A.E¶s trade statistics with the United States reveals that the Middle Eastern country had a $10.3 billion trade deficit with American in 2007. The most recent deficit statistic represents a 432% increase since 2003. (Workman, 2008)
Various states in the US import items from the U.A.E. every year. The state of Washington led the way with almost $3 billion worth of goods, and Texas and New York followed with over $1 billion each (U.A.E Embassy, 2009).
Currency: The United Arab Emirates dirham was introduced in 1973. The ISO 4217 code1 for the United Arab Emirates dirham is AED. Unofficial abbreviations include DH or Dhs. The dirham is subdivided into 100 fils. (U.A.E Currency, 2009)
The U.A.E dirham is particularly vulnerable to the influence of external factors. As of 2005, recent increases in the prices of imported goods, depreciation of dollar, and an increase in liquidity have all contributed to domestic inflation. (GOCURRENCY, 2005)
ISO 4217 is the international standard describing three-letter codes (also known as the currency code) to define the names of currencies established by the International Organization for Standardization (ISO). (ISO 4217, 2009)
Exchange rates 1 U.S.D = 3.6725 dirham¶s, which is approximately 1 dirham = 0.272294 dollar. The government has maintained the above exchange rate since the late 1980s. The maintenance of the exchange rate helps reassure businesses and governments that there is protection from currency devaluation (U.S Chamber of Commerce). Note: officially pegged to the US dollar since February 2002 (U.A.E Currency, 2009)
Issues with fraud By late 2006 it became publicly known that the Philippine one peso coin is the same size as one dirham. As 1 peso is only worth 8 fils, this has led to vending machine fraud in the U.A.E. The Australian ten cent coin, the Pakistan's 5 Rupee coin, Omani 50 Baisa coin and the Moroccan Dirham are also approximately the same size, shape and weight as the U.A.E. one Dirham coin. (U.A.E Currency, 2009).
Inflation of the dirham is very dependent on the value of the U.S. Dollar. Recent events in the World's financial markets have increased the value of the dollar, and therefore much of these losses of purchasing power have been negated. Inflation for 2007 in U.A.E was at a staggering 11.1 percent. Due to the substantial increase in the value of the dollar, the 2008 number stands to be significantly better. (Currency, 2008)
For the foreseeable future it seems that the dirham will remain pegged to the dollar. In June, Sultan Nasser al-Suweidi reaffirmed his intention to keep the dirham pegged to the dollar despite speculation to the contrary Due to the increased value of the U.S. dollar and al-Suweidi's stance on the issue any change in the near future is highly unlikely (Currency, 2008).
Purchasing Power Parity (PPP): GDP (purchasing power parity) is $184.3 billion (2008 est.), The U.A.E ranks 56th in Comparison to the world. Note: data are in 2008 US dollars (U.A.E, 2009)
The GDP (PPP) per capita United Arab Emirates in 2009 is estimated to be $38,893.684. Estimate for the future GDP (PPP) per capita of the U.A.E are: 38,625(2010), 39,318 (2011), 40,540(2012), 42,074(2013), 43,791(2014). All estimates were based on the 2009 figures. (List of countries by future GDP (PPP) per capita estimates, 2009)
For purchasing power parity comparisons, the US Dollar is exchanged at 3.65 Dirham¶s only. Average wages in 2007 hovered around $210-254 per day (Wikipedia, 2009). The depreciation of the dollar has had the biggest impact on the purchasing power parity of the U.A.E. dirham against other currencies because of its direct peg against the dollar. (GOCURRENCY, 2005)
Dubai Cost of Living Basket For each aspect of cost of living Dubai is ranked Out of 228 international locations, ranked from highest cost of living to lowest cost of living:
Alcohol & Tobacco (Alcoholic Beverages and Tobacco Products): 104th Clothing (Clothing and Footwear Products): 4th Communication (Telephone, Internet, and Mobile Communication): 221st Education (Crèche, Primary, Secondary and Tertiary Fees): 127th Furniture and Appliances (Furniture, Household Equipment and Household Appliances): 159th
Groceries (Food, Non-Alcoholic Beverages and Cleaning Material): 91st Healthcare (General Healthcare, Medical and Medical Insurance): 28th Household (Rent, Mortgage, Water, Electricity, Gas, Fuel, Local Rates & Residential Tax): 5th Miscellaneous (Stationary, Linen, General Goods and Services): 32nd Personal Care (Personal Care Products and Services): 97th Recreation & Culture (Books, Cinema, DVD, Sports Goods etc): 50th Restaurants, Meals Out and Hotels: 1st Transport (Public Transport, Vehicle - Costs, Fuel, Insurance and Maintenance): 159th
Salary Purchasing Power Parity (SPPP) A salary of $75 000 in Dubai is equivalent to: $67 980 in Beijing $57 812 in Johannesburg $96 089 in London $71 239 in New Delhi $79 533 in Paris France This means that an organization with a head office in Dubai, and an international office in New Delhi would pay a position that is paid $75 000 in Dubai, $71 239 in New Delhi in order to achieve the same salary purchasing power in each location. (Coleman, 2008).
The Gross Domestic Product The GDP of the U.A.E ranks second in the CCASG (after Saudi Arabia), third in the Middle East ² North Africa region after Saudi Arabia and Iran, and 36th in the world ahead of Portugal (U.A.E. Gross Domestic Product, 2008). In 2008 the GDP of the U.A.E grew by 23% to 934 billion Emirati Dirham¶s. (U.A.E Interact, 2009)
Combined G.D.P. by Sector
The current Gross Domestic Product of the United Arab Emirates 934 billion Emirati Dirham¶s (2008 estimate) and is growing at a rate of 7.5% annually. (U.A.E. Gross Domestic Product, 2008). The GDP can be divided by each sector of the economy (shown in the graph above). The United Arab Emirates is mostly an industry (60.6%) based country with a large service sector (37.6%) and a very small agriculture sector (1.8%). (U.A.E. Gross Domestic Product, 2008)
Contribution of Gross Domestic Product by Emirate
The following is the Gross Domestic Product of each Emirate in the U.A.E. (shown in graph above). All data is estimated from 2007. (U.A.E. Gross Domestic Product, 2008)
Abu Dhabi - 110 billion American dollars or 404.03 billion Emirati Dirham¶s. Annual Growth rate: 12% (U.A.E. Gross Domestic Product, 2008). Abu Dhabi's GDP grew 30% in 2008 (U.A.E Interact, 2009)
Dubai - 54.315 billion American dollars or 199.5 billion Emirati Dirham¶s. Annual Growth rate of 19.2%
Sharjah - 18.622 billion American dollars or 68.4 billion Emirati Dirham¶s. Annual Growth rate of 13.2%
Ajman - 2.722 billion American dollars or 9.99 billion Emirati Dirham¶s. Annual Growth rate of 27%.
The other remaining Emirates (Umm al-Qaiwain, Ras al-Khaimah and Fujairah) contribute very little to the overall Gross Domestic Product of the U.A.E. and, therefore, their GDP is not
calculated often. The difference between the GDP for the entire United Arab Emirates and the GDP of the four Emirates listed above is about 7 billion American dollars (U.A.E. Gross Domestic Product, 2008).
The United Arab Emirates' GDP in Relation to Other Countries The U.A.E. has a fairly high Gross Domestic Product when compared to the rest of the world. They currently rank #36 in the list of countries by GDP (U.A.E. Gross Domestic Product, 2008). The following is an edited list of countries sorted by GDP from the 2008 List by the International Monetary Fund (in USD) (IMF, 2009):
Rank 1. 2. 35. 36. 37. 179.
Country World European Union United States Japan Ireland United Arab Emirates Portugal Kiribati
GDP (millions of USD) 60,917,477 18,387,705 14,441,425 4,910,692 267,579 36 262,150 37 244,640 137
Gross National Product:
According to Dr, Giyas Gokkent, Chief economist of the national bank of Abu Dhabi, the GNP for 2009 is an estimated $200 billion, which is a decline from 2008¶s $250 billion. (Haider,
2009) The U.A.E Minister of State Maitha Al Shamsi has stated that the U.A.E donated 3.6% of its GNP to developing countries. (Arabian Business, 2008)
In 2006 the non-oil sectors contributed over 60% of the countries GNP (Goliath, 2006) and in 2005 the GNP per capita was estimated at $24213 (Student Of The World, 2006).
Efforts to promote Green Technology Green technology is very present in the Emirates. Emirates Airlines for instance has launched the world's longest green flight trial. (They have worked closely with the governments of the United States, Russia, Iceland, and Canada to plot an environmentally friendly flight. This flight would save around 2,000 gallons of fuel and 30,000 pounds in carbon emission. It will take the most efficient path through countries and will cut down on power by using electrical power while on the ground. This goes to show that the U.A.E. is devoted to the current push for green technology. In 2006, the government of sanctioned the building of Masdar city, which will be a city completely devoted to renewable resources and solar energy. (Wikipedia, 2009). The city will house around 50,000 people in a 6 square mile radius. Cars will not be allowed in the city and they will have to rely completely on mass public transportation and walking. This is an incredible strive to promote green technology and shows that any business in this city that wants to do business should be willing to promote green technology.
Common Mistakes Companies Make There are a number of common mistakes that occur when doing business in the U.A.E. and most of them can be easily avoided. One of the main reasons why companies are unsuccessful when doing business in the U.A.E. is because they underestimate the amount of time it takes to start a business (U.A.E. Embassy, 2009). It can be a lengthy process establishing your company in the U.A.E. because of a number of regulations and ³loops´ you need to go through from the government. Plan on a long start up time and release your product and information in phases. A good idea is to hire a business development consulting firm in the country you are going to expand into. Another major mistake is that their product or service does not mesh with the cultural practices of the U.A.E. (U.A.E. Embassy, 2009). We will explain this in more detail later on.
Unsuccessful Companies When doing business internationally a company must be aware of the cultural differences and what might be offensive in a particular country. One example of a company which failed to do this is Boing Boing. When Boing Boing tried to expand into the U.A.E. they ended up getting censored. The company originally started as a magazine and eventually turned into a web blog with the development of the internet. (Wikipedia, 2009) This means that anyone can post whatever information they want because the site cannot be moderated 100% of the time. Boing Boing has been banned in several countries including Qatar and the U.A.E. because a small portion (less
than 1% of the posts on Boing Boing) of their information and posts on their site are deemed ³pornography´ and related to nudity (Boing Boing, 2009). Nudity and showing any part of women is considered taboo in the Muslim religion and since the U.A.E.¶s main religion is Muslim, this website was banned. This is just another example of how you must be very careful what kind of image you have in another country and make sure that your product or service is not considered offensive. Several other social networking and blogging sites also failed when they tried to enter into Middle Eastern countries. Both Facebook and Myspace have been banned in the U.A.E. as well as twitter and several other similar websites. To be effectively used in these countries they need to add filtering programs into their website that will help to filter out any material that could possibly be deemed as profane or wrong.
So, you might be asking yourself what does it take to be successful in the United Arab Emirates? It is important to know the culture and how to interact in both the business environment but also on a personal level with your business partner and their families. You must also make sure your product can fill a need that the people of the U.A.E. might have. If they do not then there is no point in being there. Know the lay of the land and how you are going to get your products in and out, as well as the barriers to trade so that you do no run into any problems with importing and exporting. In the U.A.E. you must have an understanding of the legal system or befriend someone, such as a sheikh, who does know it. This can be immensely helpful because you will be able to do business much smoother without wasting time jumping useless hoops. Figure out all the trade laws and the best way to conduct business in the United Arab Emirates before you even start expanding, if you start expanding and realize that your product
does not fit or is not allowed you will have wasted precious time and money. If you are aware of all this information you can become very successful in the U.A.E. and take advantage of its prime location and resources.
(2005). Retrieved 11 2009, from GOCURRENCY: www.gocurrency.com/countries/U.A.E.htm (2006, 10 10). Retrieved November 2009, from Student Of The World: http://www.studentsoftheworld.info/pageinfo_pays.php3?Pays=U.A.E&Opt=economy (2006, October 02). Retrieved 11 12, 2009, from Goliath: http://goliath.ecnext.com/coms2/gi_0199-5815229/NON-OIL-SECTORS-ACHIEVEOVER.html (2008, 07 03). Retrieved 11 2009, from Bernama: http://www.bernama.com/bernama/v5/newsindex.php?id=343610 (2008, May 21). Retrieved 11 12, 2009, from Arabian Business: http://www.arabianbusiness.com/index.php?option=com_content&view=article&id=519939&Ite mid=1 (2009, 11 05). Retrieved 11 2009, from U.A.E Interact: http://U.A.Einteract.com/docs/Abu_Dhabis_GDP_grew_30_in_2008_Report/38315.htm (2009, Nov 01). Retrieved Nov 15, 2009, from Slide Share: http://www.slideshare.net/myuutsuu/dubai-united-arab-emirates ADNOC. (2009). Retrieved 11 15, 2009, from Wikipedia: http://en.wikipedia.org/wiki/ADNOC Arms embargo. (2009, March). Retrieved 11 13, 2009, from Wikipedia: http://en.wikipedia.org/wiki/Arms_embargo#Iran Baxter, K. (2009, Sep 14). Oil Inductry Giants: ADNOC. Retrieved 11 15, 2009, from Arabian Oil and Gas: http://www.arabianoilandgas.com/article-6172-oil-industry-giants-adnoc/1/ Cardon, P. W. (2008). Impact of UA. Retrieved Nov 15, 2009, from Google Docs: http://docs.google.com/gview?a=v&q=cache:ufAkcchuZfgJ:www.iacis.org/iis/2008_iis/pdf/S20 08_920.pdf+introduction+of+technology+in+U.A.E+uncertainty+avoidance&hl=en&gl=us&sig =AFQjCNG3L-KAZq7Coqx7nrYWqG9fR4X-Ng Cartoons Controversy. (2007, March 15). Retrieved Nov 15, 2009, from Wikipedia: http://en.wikipedia.org/wiki/Jyllands-Posten_Muhammad_cartoons_controversy Charbonneau, L. (2009, 08 28). U.A.E seized ship with N.Korea arms bound for Iran. Retrieved 11 12, 2009, from Forbes: http://www.foxnews.com/story/0,2933,544240,00.html
Clothing. (n.d.). Retrieved 11 14, 2009, from GRAPE SHISHA: http://www.grapeshisha.com/U.A.E-National-clothing.html Coleman, S. (2008, March 24). Retrieved 11 2009, from ArticlesBase: http://www.articlesbase.com/international-business-articles/expatriate-pay-dubai-mostexpensive-place-in-world-for-restaurants-meals-out-and-hotels-367735.html Cultures Business Strengths/Weaknesses. (2008, Oct 28). Retrieved Nov 15, 2009, from Wikia: http://internationalbusiness.wikia.com/wiki/U.A.E._Cultures_Business_Strengths/Weaknesses Emirates. (2009). Retrieved 11 13, 2009, from Emirates: http://www.emirates.com/english/about/public_affairs/q_a.aspx# Export Restrictions. (2008, 10 31). Retrieved 11 12, 2009, from Wikia: http://internationalbusiness.wikia.com/wiki/U.A.E._Export_Restrictions Gale, I. (2008, June 04). Rivals attack Emirates over fuel. Retrieved 11 13, 2009, from The National: http://www.thenational.ae/article/20080604/BUSINESS/732074142/1002 Gall, C. (2006, Feb 07). Protests. Retrieved Nov 15, 2009, from Google Docs: http://docs.google.com/gview?a=v&q=cache:9fE5aW18WkgJ:www.gees.org/documentacion.ph p%3Fid%3D835%26pdf%3D1+danish+embassy+attacked+in+dubai&hl=en&gl=us&pid=bl&sr cid=ADGEESjvVAF_jXZs3o41MJmo_C3S3rlZisupcYVlkElr2u1uUtIxi6auFpLQ1qmXJxgKaO kdjAcKY1aUMMCaNa-pLKP GPI. (2008, June). GPI. Retrieved Nov 15, 2009, from ShOP.org: http://www.shop.org/c/document_library/get_file?folderId=153&name=DLFE-479.pdf Gulf News. (2006, May 16). Retrieved 11 14, 2009, from Gulf News: http://gulfnews.com/news/gulf/U.A.E/general/friday-saturday-weekend-in-U.A.E-fromseptember-1.237326 Haider, H. (2009, 05 26). U.A.E Economist. Retrieved 11 12, 2009, from menafn: http://www.menafn.com/qn_news_story_s.asp?StoryId=1093250554 HSBC. (2008). Retrieved 11 12, 2009, from HSBC Net: http://www.hsbcnet.net/transaction/attachments/pcm/pdf/U.A.E.pdf IMF. (2009, 11 09). Retrieved from IMF: http://imf.org/external/pubs/ft/weo/2009/02/weodata/index.aspx ISO 4217. (2009, 11 05). Retrieved 11 14, 2009, from Wikipedia: http://en.wikipedia.org/wiki/ISO_4217
List of countries by future GDP (PPP) per capita estimates. (2009). Retrieved 11 2009, from Wikipedia: http://en.wikipedia.org/wiki/List_of_countries_by_future_GDP_%28PPP%29_per_capita_estima tes Masdar City. (2009). Retrieved 11 2009, from Wikipedia: http://en.wikipedia.org/wiki/Masdar_City BoingBoing Banned in U.A.E.. (2009). Retrieved 11 2009, from BoingBoing: http://boingboing.net/2006/02/27/boingboing_banned_in.html United Arab Emirates. (2009). In Encyclopedia Britannica. Retrieved November 08, 2009, from Encyclopedia Britannica Online: http://www.britannica.com/EBchecked/topic/615412/United-Arab-Emirates Marketing Restrictions. (2008). Retrieved Nov 16, 2009, from Wikia: http://internationalbusiness.wikia.com/wiki/U.A.E._Marketing_Restrictions McDonald's U.A.E. (2009). Retrieved 11 15, 2009, from McDonald's Arabia: http://www.mcdonaldsarabia.com/index.php?option=com_content&view=article&id=61&Itemid =122&lang=en_ae Men Clothing. (2008, October 31). Retrieved 11 14, 2009, from Wikia: http://internationalbusiness.wikia.com/wiki/U.A.E._Men_Clothing Money. (2001). Retrieved 11 13, 2009, from nations encyclopedia: http://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/United-Arab-EmiratesMONEY.html Morris, M. (2009, October 12). Retrieved Nov 15, 2009, from Arbian Business: http://www.arabianbusiness.com/570270-U.A.Es-union-railways-eyes-sulphur-transport-deal Singer, T., & Boryana, D. (2006). Advertising Case Studies. Retrieved Nov 16, 2009, from tuftsgloballeadership: http://www.tuftsgloballeadership.org/files/resources/nimep/v2/INSIGHTS06_DamyanovaSinger. pdf U.A.E. Gross Domestic Product. (2008). Retrieved 11 2009, from Wikia: http://internationalbusiness.wikia.com/wiki/U.A.E._Gross_Domestic_Product U.A.E. Major Exports. (2008). Retrieved 11 2009, from Wikia: http://internationalbusiness.wikia.com/wiki/U.A.E._Major_Exports
U.A.E. Major Imports. (2008). Retrieved 11 2009, from Wikia: http://internationalbusiness.wikia.com/wiki/U.A.E._Major_Imports U.A.E. Trade Barriers. (2008). Retrieved 11 2009, from Wikia: http://internationalbusiness.wikia.com/wiki/U.A.E._Trade_Barriers U.S Chamber of Commerce. (n.d.). United Arab Emirates. Retrieved 11 2009, from U.S Chamber of Commerce: http://www.uschamber.com/NR/rdonlyres/ec6rvfeqrkfz7oo3bnf3jpdbigmtg3vwsnhwfqv2hch6zz h67hlfkp7rwx32a44jt2vgb54yl4sv6qo7d5yqymaf3id/U.A.E12criteria.pdf U.A.E. (2009). Retrieved 11 2009, from CIA: World FactBook: https://www.cia.gov/library/publications/the-world-factbook/geos/ae.html U.A.E Currency. (2009). Retrieved 11 2009, from Wikipedia: http://en.wikipedia.org/wiki/U.A.E_currency U.A.E Embassy. (2009, July 07). Business & Trade. Retrieved 11 2009, from U.A.E Embassy: http://www.U.A.E-embassy.org/business-trade/trade-export U.A.E: Import Restrictions. (2008, October 31). Retrieved 11 12, 2009, from Wikia: http://internationalbusiness.wikia.com/wiki/U.A.E._Import_Restrictions Uncertainty Avoidance. (2009, April). Retrieved November 14, 2009, from Wikia: http://internationalbusiness.wikia.com/wiki/U.A.E._Uncertainty_Avoidance ustr.gov. (2006). Foreign Trade Barriers. Retrieved Nov 16, 2009, from ustr.gov: http://www.ustr.gov/sites/default/files/uploads/reports/2007/NTE/asset_upload_file676_10988.p df Vasudeva, P. K. (2000, Aug 5 - 11). Indian Meat Banned. Retrieved Nov 15, 2009, from Jstor: http://www.jstor.org/pss/4409586 Workman, D. (2008, 06 25). Top U.A.E Exports & Imports. Retrieved 11 2009, from Suite101.com: http://importexport.suite101.com/article.cfm/top_U.A.E_exports_imports#ixzz0WQq7wAZc Dubai Weather. Dubai Information site. Retrieved 2009 from http://www.dubai-information-site.com/dubai-weather.html Outline of the Oil Business. Cosmo Oil. Retrieved 2009 from http://www.cosmo-oil.co.jp/eng/oilbusiness/crude.html (2007, August 16) ADNOC Signs MOU with JBIC. Abu Dhabi National Oil Company. Retrieved August 16, 2007 from
http://www.adnoc.ae/AdnocNews_Details.aspx?NewsID=e7c20ac9-c73d-4ea7-9152c8243d97cc37&newid=162&mid=162 Japanese Language Course. Embassy of Japan in the United Arab Emirates. http://www.U.A.E.emb-japan.go.jp/japaneselanguagecourses.htm (2008) Overseas Operations. Nippon Oil Corporation. Retrieved 2008 from http://www.eneos.co.jp/company/ir/shiryo/annual/2008/pdfs/ar2008_12.pdf USA & U.A.E. Industrial Supply Marketplace. Foreign Tradex. From http://www.foreigntradeexchange.com/countries/U.A.E.html (2009, January 1) Trade and Export. United Arab Emirates in Washington DC. Retrieved January 1, 2009 from http://www.U.A.E-embassy.org/business-trade/trade-export Gollust, D. (2009, January 15) US Signs Civilian Nuclear Deal With U.A.E. Voice of America.Com. Retrieved January 15, 2009 from http://www.voanews.com/english/archive/2009-01/2009-01-15voa71.cfm?moddate=2009-01-15 Salama, V. (2008, October 19) U.A.E examines farm future. The National. Retrieved October 19, 2008 from http://www.thenational.ae/article/20081019/BUSINESS/587700451/1005 (2006, November 11) IV. Migrant Construction Workers in the United Arab Emirates. Human Right Watch. Retrieved November 11, 2006 from http://www.hrw.org/en/node/11123/section/5 (2008) NEVER EVER make any payments for job promises Employers never ask for payment, and if they do, be aware that it might be a scam. Dubai Jobs Network. 2008 From http://www.dubaijobsnetwork.com/Job_Search/about.php (2009, September 13) Passport Confiscation Still Rife in Middle East. Migrant Rights. Retrieved September 13, 2009 from http://www.migrant-rights.org/2009/09/13/446/ McMeans, A. (2009, April 5) Praise for declining fertility rate. The National. Retrieved April 5, 2009 from http://www.thenational.ae/article/20090405/NATIONAL/242768629&SearchID=733504 39777988 Levels Of Govt. (2008). Retrieved Nov 17, 2009, from Wikia: http://internationalbusiness.wikia.com/wiki/U.A.E._Levels_of_Government
Forms Of Govt. (2009). Retrieved Nov 17, 2009, from Wikia: http://internationalbusiness.wikia.com/wiki/U.A.E._Form_of_Government United Arab Emirates. (2008). Retrieved Nov 17, 2009, from edinformatics: http://www.edinformatics.com/travel/uae_dubai.htm (2000). Arab Law Quarterly, Vol. 15, No. 4. In Arab Law Quarterly (pp. pp. 363-367). Brill. Legal System. (2008). Retrieved 11 17, 2009, from Wikia: http://internationalbusiness.wikia.com/wiki/U.A.E._Type_of_Legal_System MOL. (2008). MOL. Retrieved `` 17, 2009, from MOL: http://www.mol.gov.ae/molinfo/index.aspx Personnnel labor laws. (2008). Retrieved 11 17, 2009, from Wikia: http://internationalbusiness.wikia.com/wiki/U.A.E._Personnel_and_Labor_Laws Tax Laws. (2008). Retrieved 11 17, 2009, from Wikia: http://internationalbusiness.wikia.com/wiki/U.A.E._Tax
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.