In more than 20 years of doing business overseas, I have worked in 16 countries of the world, from North America to the Far East. The area where I have spent the most time is the Middle East. I am fond of this territory for many reasons, not the least of which is the warmth and hospitality of the people. In this post, I set forth five key principles for doing business in the region. Naturally, each nation differs in terms of its laws, norms, and business culture, so the intent here is not to suggest that the region is a monolith, but rather to highlight a few key principles that will facilitate your market entry.
- Establish Trust — The Arab world is rooted in tribal society, where your word is your bond. No business is done without first establishing trust between parties, a process that takes extensive time and effort. It is important to establish a relationship with your potential partner and build trust over weeks, months, and years. Deals do not happen overnight. In meetings, it is common to talk about one’s family, background, health, and other personal matters before any business terms are discussed. The willingness to engage in this type of dialogue helps build a personal relationship. If your partner recognizes that you are committed to the region and not just there to “make a quick buck,” you are more likely to be successful.
- Exercise Patience — The pace at which business moves in the Middle East is much slower than in the West. Meetings do not always start or finish on time and deals often take much longer than anticipated. One must be patient and willing to play the waiting game. For this reason, it may be necessary to have an in-country presence, either through a local office or an agency relationship that can represent your interests. On the positive side, patience can pay off, as large deals can be very lucrative.
- Understand Commitments — Establishing a verbal commitment with your business partner is equally as important, if not more, than a written one. While contracts are absolutely necessary for all business transactions, the most important element of the deal is the “meeting of the minds” and a verbal commitment. I have seen many well-written agreements fail because the foreign party relied simply on the letter of the agreement. Moreover, contract enforcement can be difficult, especially against government entities. In many cases, foreign partners will choose to back out of the deal rather than undergoing costly litigation that could damage their reputation.
- Negotiate with Dignity — In the Middle East, it is very important to negotiate with dignity and allow the opposing party to “save face,” even when you firmly believe in your position. The direct approach used in the West does not work and can be viewed as offensive and overbearing. While the indirect approach may seem tedious at times, it is a nuanced style that allows all parties to walk away from the negotiating table without shame. Further to point number one above, this is another way to establish trust and long-term relationships, which can yield dividends in the long run.
- Leverage Connections — Most transactions in the Middle East are conducted through personal connections with influential people. The more that you can identify and leverage such influence, the greater your chances of success. In fact, there is an Arabic word for this, wasta, which loosely translates to influence, power or authority. Wasta can be used to secure a business license, meet with a government official, win a contract, or any number of things. It is an essential component of the business culture and not considered illegal or immoral. In the West, it closely approximates the maxim “it’s not what you know, but who you know.” Be sure to understand who has wasta, and for what purpose, to avoid wasting time.
The Middle East can be a very rewarding experience, both personally and professionally. And we haven’t even started talking about the amazing cuisine …