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Business Practices in the UAE Chapter 3&4 Prepared By Dr. Rashad Al-Saed Skyline University
Fact and figures Business as usual • Despite the impact of the global financial crisis resulting in an inevitable contraction in 2009, the UAE economy remains robust (Strong), shielded by significant overseas financial assets garnered during the era of high oil revenues. • Substantial public expenditure, made possible by those assets, allied with strong fundamentals and sound fiscal policies, has served to minimize the impact of the crisis and receding petrodollar income on the UAE's economy, and is expected to speed up its recovery in 2010. • In particular, the government has pledged to maintain its investment budgets at high levels, especially for core long-term infrastructure projects, in order to rekindle growth.
UAE General Information • • Official name – United Arab Emirates Population – 2, 602, 713 (July 2006 est. ) Official Language – Arabic Currency – Emirati Dirham (AED) Capital city – Abu Dhabi GDP – purchasing power parity $115. 8* (2005) GDP Per Capita - purchasing power parity $45, 200* (2005 est. )
Reasons for Doing Business in the UAE
• Robust open economy • The UAE has a vibrant (vital)free economy, • a significant proportion of its revenues arising from exports of oil and gas. • Successful efforts have been made to diversify away from dependence on hydrocarbons and a solid industrial base has been created, together with a very strong services sector. • The establishment of free zones has been an important feature of this diversification policy and reform of property laws gave a major boost to real estate and tourism sectors.
• Security and stability • Since its establishment in 1971, the UAE has enjoyed an enviable degree of political stability, unequalled in the region. • This has enabled the implementation of consistent sound economic policies and the reinforcing of the country’s social structure to produce one of the most tolerant, prosperous, secure and safest societies in the world. • Dubai and Abu Dubai have been ranked the top two cities in the Middle East region for quality of life, according to the latest edition of a global survey. • Long-time investors include a wide range of multinational companies headquartered across the globe.
Tax-efficient business environment • Special economic zones and free zones offer 100 per cent ownership, repatriation (back to home) of profit and capital as well as exemptions from taxes. • Outside of these areas, significant incentives are being offered to investors and corporate governance provisions ensuring transparency and accountability are being enforced. • A negligible 5 per cent tariff is imposed on goods imported from non-Gulf Cooperation Council (GCC) countries, • although tobacco and alcohol products are subject to 50 per cent customs duties
Solid infrastructure • Infrastructure in the UAE is second to none. • Telecommunications, including mobile and fixed telephony as well as internet access is on par, if not better, than the world’s largest international business hubs. • The road network is constantly upgraded and ports and airports are of world-class standards. • UAE is creating one of the world’s biggest and most efficient cargo handling centers. • To date, the Government has invested heavily in infrastructure development, but it has also opened up its utilities and other infrastructure to greater private sector involvement, so much so that public-private partnerships are now the norm.
Proximity to growth regions • The UAE’s strategic location between Asia, Europe and Africa is a major advantage to investors, particularly the country’s proximity to some of the world’s fastest growing economies in Asia. • India and China alone comprise almost 40 per cent of the world’s total population and support a combined GDP in excess of US$5 trillion, providing significant economic and trading opportunities. Intellectual property protection • Intellectual property, including patents and trademarks, is legally protected in the UAE • The country is also a member of international bodies, treaties including the World Intellectual Property Organization (WIPO), World Trade Organization (WTO), Paris Convention.
Business practices in the UAE
Emirati Culture – Key Concepts and Values • Islam – Religion has played an important and influential role in shaping the society and culture of the UAE. • Islam is the official and majority religion and pervades almost every aspect of life. • Laws, education, food, clothes, daily routines and even conversations are all strongly influenced by Islam. • The Islamic faith places great emphasis on behaviors such as generosity, respect and modesty which most Emiratis will display.
Emirati Culture – Key Concepts and Values • Understanding Islam and the influence it has on everyday life and Emirati business culture is the first step to conducting successful business in the UAE. • Family – Family and tribal connections form the basis of Emirati social structure. • The family and tribe are highly influential and play a role in shaping a person’s values and behavior. • The family comes before anything else and its honor is protected by doing whatever necessary.
Emirati Culture – Key Concepts and Values • Loyalty between family and tribe members carries over into business where it is not uncommon for companies to be run by and employ several members of one family or tribe. • Hospitality – Hospitality is an essential part of Emirati culture and applies to both social and professional contexts. • Guests will be received with enormous generosity. In the home this usually comes in the form of a feast of traditional Emirati food, especially during the holidays.
Emirati Culture – Key Concepts and Values • while in a business context, meetings are almost always accompanied by traditional • Arab coffee and pastries. The emphasis placed on hospitality is closely connected to the importance of relationships. • Foreigners should show their gratitude and dedicate time to cultivating relationships with their Emirati counterparts.
Working practices in the UAE • The working week traditionally starts on Saturday and ends on Wednesday. Thursday and Friday are the official days of rest, though in some cases, people will work Thursday and take off Saturday instead. • Office hours tend to be 0900 -1300 and 1630 -2000 though today work often goes even later as a result of the immense construction boom. • Meetings should be scheduled in advance with extra time allocated in case it should go on longer or start later than anticipated. • Often meetings are cancelled at the last minute, so it is important to be flexible and come prepared with either a business card or letter to let them know you were there. • Attitudes to time in the UAE are much more relaxed than in many Western cultures.
Working practices in the UAE • People and relationships are more important than schedules and punctuality. • It is not uncommon, therefore, for your Emirati counterparts to arrive late but foreigners are expected to arrive on time. • The Emirates are a considerably modern state in relation to the rest of the Middle East. • As such, many traditional attitudes and business practices are evolving towards a more Westernized approach. • Nevertheless, it is still important to be aware and respectful of some of the differences that might exist
Working relationships in the UAE • People in the UAE prefer to do business • • • in person. Relationships and mutual trust are paramount (basic) for any successful business interaction and can only be developed through face-to-face meetings. It is important to spend time with your Emirati business counterparts and ensure future meetings take place to continue cultivating the relationship. It is important to have connections to someone in the UAE who can introduce you before attempting to do business there on your own. Emirati people prefer to do business with those they know, so having someone to introduce you will be of immense benefit to your business relationship. Family and friends come before anything else. As a result, it is not uncommon for an Emirati to reschedule or cancel something to accommodate their needs or wishes.
Do &Don't • The customary greeting is “As-salam alaikum, ” (peace be upon you) to which the reply is “Wa alaikum as-salam, ” (and upon you be peace). • When entering a meeting, general introductions will begin with a handshake. You should greet each of your Emirati counterparts individually. In line with Muslim customs. • Avoid shaking hands with a woman unless they extend their hand first. • Initial business meetings are often a way to become acquainted (know) with your prospective counterparts. They are generally long in duration and discussions are conducted at a leisurely pace over tea and coffee.
Do &Don't • Time should be allocated for such business meetings, as they are an essential part of Emirati business culture. • Business cards are common but not essential to Emirati business culture. If you do intend to use business cards whilst in the UAE, ensure that the information is printed in both English and Arabic. • DO address your Emirati counterparts with the appropriate titles followed by his or her first name. • If unsure, it is best to get the names and correct form of address of those you will be doing business with before hand. DO dress conservatively.
• While the UAE is more Westernized than many other Middle Eastern countries and therefore home to many Western style clothes, it is still important to dress modestly. • As a sign of respect, men should wear a conservative suit and women should ensure their clothing covers their legs and arms. • Doing Business in the UAE © Communicaid Group Ltd. 2007 DO accept an invitation to a meal or social event. • Relationships are an integral part of doing business in the Emirates. • Spending time with your Emirati counterparts is the best way to build trust and mutual understanding. • DON’T schedule business meetings during prayer times or any of the major Islamic holidays such as Ramadan or Eid. • These are extremely important periods for the majority of native Emiratis who are Muslims.
• Business is usually put on hold during these occasions as it is a time for reflection and celebration. • DON’T expect a one-on-one meeting to only include yourself and the other person. Often there will be other people present in the office or meeting room waiting their turn to meet with that person. • When you arrive, it is polite to greet the person, take a seat and accept any coffee served until it is your turn. • DON’T assume that the person who asks the most questions in meetings holds the most responsibility. In the UAE, this person is considered to be the least respected or least important. • The decision maker is usually a silent observer and will only speak when discussions come to a close. • DON’T ask about a person’s wife or daughters. It is polite to enquire about a person’s family or health, but never ask specifically about any female members. • Family life which involves female members is kept extremely private.
• Business Dress Visitors are expected to abide by local standards of modesty (humility) however, do not adopt native clothing. • Traditional clothes on foreigners can be offensive. Despite the heat, most of the body should always remain covered. • A jacket and tie are usually required for men at business meetings. Men should avoid wearing visible jewelry, particularly around the neck. • Women should wear modest clothing in public. High necklines sleeves at least to the elbows are expected. Hemlines, if not ankle-length should at least be well below the knee. It is a good idea to keep a scarf handy, especially if entering a Mosque.
Language for business • Arabic is the official business language. Most government forms and official contracts – e. g. tenancy, residence visa – are in Arabic. • Official documents (e. g. university diploma, marriage certificate) that have to be submitted to a government agency for processing or authentication also frequently require translation into Arabic. • However, English is commonly used in business circles. Working hours • Working hours are either ‘straight shift’ or ‘split shift. ’ The former normally requires eight working hours beginning from 7: 30 a. m. or 9: 00 a. m. with a lunch break lasting 30 minutes to an hour. The latter comprises eight to nine working hours that typically commence between 9: 00 a. m. and 10: 00 a. m. and ends between 8: 00 p. m. and 9: 00 p. m. , with a three- to four-hour break in between. The split shift is thought to be an efficient means of addressing the extremely hot weather during the summer months, particularly for laborers. Working hours are shortened during the holy month of Ramadan, usually by two to three hours.
Multi-national human resources • Investors benefit from an abundant supply of human resource skills, courtesy of professionals migrating to the emirate from nearly every country in the globe, as well as the increasing number of UAE nationals that are joining the private sector. Efficient government services • E-government websites, free zone authorities as well as chambers of commerce and industry provide new entrants with helpful information and guidance. • Federal e-government www. government. ae/ Dubai e-government www. dubai. ae Federation of UAE Chambers of Commerce and Industry www. fcciuae. ae/ UAE Ministry of Economy www. moe. gov. ae UAE Central Bank www. centralbank. ae Mubadala www. mubadala. ae/ UAE Offsets Group www. offsets. ae/ Abu Dhabi Investment Authority www. adia. ae/ Abu Dhabi Chamber of Commerce Online Services www. abudhabionlineservices. ae Abu Dhabi Department of Planning and Economy www. dpeportal. adeconomy. ae
• Women and Business Professional women are commonplace in the UAE and are generally treated seriously, particularly if the woman acts in a confident and self-assured manner. • It is advised to dress conservatively and here again good grooming (ready) is essential – you will find that all business people, male and female, are impeccably dressed. Patience and good humor will carry you through most situations.
• Communication Guidelines Do not discuss the subject of women, not even to inquire the health of wife or daughter. The topic of Israel should also be avoided. Sports is a perfect topic for conversation. • Names are often confusing. It's best to get the names in English. Learn both their full names and how they are to be addressed in person before you meet. • Communication is a bit slow, do not feel obligated to speak during periods of silence. "Yes" usually means "possibly". • Meetings are commonly interrupted by phone calls and visits from friends and family. • One who asks the most questions in a meeting is likely to be the least important. The decision maker is a silent observer. • A customary greeting is salaam alaykum. Shaking hands and saying kaif halak follows.
• Business Visa Rules for UAE Business visas are issued only by UAE Embassy, and requires company letter and sponsor in UAE to send a fax or telex to UAE Embassy confirming the trip and accepting financial responsibility. • A single-entry visa is valid within two months from the date of issuance for stay of up to 30 days. • To receive a visa, submit 2 application forms, 2 passport size photographs and prepaid envelope for return of passport by certified/registered mail. • Public Holidays : Festival Date Detail New Year's Day January 1 Mount Arafat Day Date Varies Eid al Adha (Feast of Sacrifice) Celebrated 3 Days. Date Varies Islamic New Year Date Varies The Prophet's Birthday Date Varies Sheikh Zayed's Accession Date Varies The Prophet's Ascension Date Varies Eid al Fitr (End of Ramadan) Celebrated 2 Days. Date Varies National Day December 2
Travel Tips • Though tipping is not expected but it is a common practice. Most of the restaurants include service charges in the bill. If it is not included, add 10% to the total. Taxi drivers are not tipped. • Supermarket beggars, bag carriers and the windscreen washers at the petrol stations are usually given Dh 2. • There are no departure tax. • A passenger can carry without incurring customs duty, 2000 cigarettes and 400 cigars and 2 kg of tobacco; 2 l of spirits of more than 22 per cent alcohol, and 2 l of wine (non-Muslims over 18 years only); a reasonable amount of perfume for personal use (1 l of eau-de-toilette and 150 g of perfume for those visiting Dubai and/or Sharjah).
Travel Tips • Ask for permission before photographing people in general. Do avoid taking photographs of Muslim women • Electricity is 220 volts. • Standard of food hygiene and water quality is very high. • Water is generally produced by desalination, hence it is safe to drink. Drink plenty of water in the heat