international business project on u.a.e
Post on 18-Nov-2014
1.119 Views
Preview:
DESCRIPTION
TRANSCRIPT
Table of ContentsWhy 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
0
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.
1
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
2
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.
Population
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 “foreigners” 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.
3
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.
Economy
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.
4
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
5
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.
Government
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
6
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
7
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: federal,
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
8
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
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
9
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).
Taxation Laws
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 0%
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%
10
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
11
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)
Bribery Laws
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 “offer, 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
Physical Barriers:
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).
12
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 Jyllands-
Posten 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 “The 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. “If 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
13
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).
Clothing
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 “The 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
14
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).
Political Barriers:
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 “agents.” The
15
advantage of having an exclusive commercial “agent,” 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 re-
export
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
16
the majority of imports. There are several thousand agencies that are registered (U.A.E. Trade
Barriers, 2008)
Subsidies
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
17
that had previously been put on its operations due to its connections with Israel (Singer &
Boryana, 2006).
Labeling conditions
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
18
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).
Investment Barriers
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
19
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.
20
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).
Social Status
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 Al-
Wafedeen (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.
21
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-to-
nose 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
22
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
23
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
24
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
25
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):
26
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:
27
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.
28
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)
29
The Abu Dhabi National Oil Company (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)
30
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
31
and used passenger cars, Drilling and oilfield equipment, Non-monetary gold,
Telecommunications equipment, other industrial machines, Industrial engines, Parts for military-
type 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)
Exchange rates
1 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)
32
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):
33
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
34
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
(Coleman, 2008)
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
35
The GDP of the U.A.E ranks second in the CCASG (after Saudi Arabia), third in the
Middle East — 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)
36
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
37
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 Country GDP (millions of USD)
- World 60,917,477
- European Union 18,387,705
1. United States 14,441,425
2. Japan 4,910,692
35. Ireland 267,579 36
36. United Arab Emirates 262,150 37
37. Portugal 244,640
179. Kiribati 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,
38
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.
39
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 “loops” 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
40
than 1% of the posts on Boing Boing) of their information and posts on their site are deemed
“pornography” 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.
Conclusion
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
41
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.
42
Bibliography
(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-ACHIEVE-OVER.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&Itemid=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/S2008_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
43
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-most-expensive-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.php%3Fid%3D835%26pdf%3D1+danish+embassy+attacked+in+dubai&hl=en&gl=us&pid=bl&srcid=ADGEESjvVAF_jXZs3o41MJmo_C3S3rlZisupcYVlkElr2u1uUtIxi6auFpLQ1qmXJxgKaOkdjAcKY1aUMMCaNa-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-from-september-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
44
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_estimates
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-Emirates-MONEY.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
45
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/ec6rvfeqrkfz7oo3bnf3jpdbigmtg3vwsnhwfqv2hch6zzh67hlfkp7rwx32a44jt2vgb54yl4sv6qo7d5yqymaf3id/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.pdf
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://import-export.suite101.com/article.cfm/top_U.A.E_exports_imports#ixzz0WQq7wAZc
Dubai Weather. Dubai Information site. Retrieved 2009 fromhttp://www.dubai-information-site.com/dubai-weather.html
Outline of the Oil Business. Cosmo Oil. Retrieved 2009 fromhttp://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-4ea7-9152-c8243d97cc37&newid=162&mid=162
46
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 fromhttp://www.eneos.co.jp/company/ir/shiryo/annual/2008/pdfs/ar2008_12.pdf
USA & U.A.E. Industrial Supply Marketplace. Foreign Tradex. Fromhttp://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/2009-01/2009-01-15-voa71.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=73350439777988
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
47
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
48
top related