The United Arab Emirates has become one of the rising global markets, attracting a wide range of businesses. The country presents an array of expansion opportunities due to its strategic location and friendly trade policies. The UAE has also emerged as a business hub, connecting entities from the east and west. However, if you want to leverage this market, you need a thorough understanding of the UAE policies and business standards. Keeping this in mind, we have created this guide that can help you to lay down a foolproof UAE market entry strategy.
Overview of the UAE Market
The UAE has rapidly emerged as a favorite player in the Middle Eastern region. International businesses and corporate titans prefer the country for setting up their base in the area. It is due to the long list of business opportunities available and the relaxed entry norms in the UAE. Sectors like finance, tourism, entertainment, infrastructure, education, healthcare, and manufacturing are rising.
The country also ranked 11th in the World Bank’s Ease of Doing Business Report of 2019 and is also the only Middle Eastern country in the top 45. The UAE’s Free Zones also favor international ventures. Special tax norms, import norms, and customs duty regulate the businesses in these 45 Free Zones. Additional benefits of these Free Zones in the UAE are:
- 100% ownership of the foreign entity.
- Tax exemption on imports and exports.
- Corporate tax exemption for a particular period.
- Tax-free fund transfer.
- Favorable leasing.
UAE Market Entry Strategy
If you want to access the diverse markets of the UAE, you need to have a winning plan. A detailed UAE market entry strategy is the only way to establish your presence in this market successfully. Let’s have a look at what does a foolproof market entry strategy comprises:
Expansion into any international territory requires a detailed business plan. A business plan defines your goals and projections for at least the next five years. To enter the UAE market successfully, you must design a robust plan that lays down your understanding of the industry. It must also include your competitor analysis, proposed products or services, marketing plan, means of revenue, and your financial predictions.
Extensive Market Study
To survive in a complex and culturally diverse market of the UAE, you need to have its in-depth understanding. Since many nationalities and cultures co-exist in the country, the market trends and demands can change in a jiffy. Thus, the market study is a crucial step in your UAE market entry strategy. Market research can enable you to understand how your products or services would perform. It can also help you to:
- Know the viability of your business.
- Understand the existing products or services.
- Examine the existing competition and its features.
- Acquisition channels that work.
- Understand the demographics of the market.
- Develop your product or service as per the market.
UAE Market Entry Strategy: Knowing the Laws
Another essential step you need to take is to have a firm grasp of the UAE laws and regulations. To enter the UAE market, you must know the laws applicable to foreign entities, tax norms, HR ethics, and regulations, etc.
Right Business Structure
Setting up an entity in the UAE can allow you to directly connect with the market and assess the audiences’ preferences. However, entry to any global market and setting up your presence is not an easy task. Opting for the easiest or cheapest option depends on your business conditions, and consulting local experts can help you make the right choice.
Representative Office or Branch Office
You can open a representative office or branch office in the UAE to carry out your business activities in the country. However, such offices can perform only certain activities, such as marketing, promotions, and branding. In the UAE, a representative office is not allowed to conduct commercial transactions or sell its products. Both these entities also need to appoint a local services agent who must be a UAE citizen. Without this, such offices cannot carry out their activities.
The most common UAE market entry strategy chosen by international businesses is the business licensing option. In this option, you can set up your business in the UAE to sell your products or extend your services directly. However, obtaining a business license is a lengthy and complicated process and may not be feasible for small-sized businesses or startups.
Partnering with a local entity is another way to enter the UAE market. This way, you can pool your resources and expertise with the local partner. The local partner can also help you understand the applicable laws, customer demand, and culture. However, you become utterly dependent on your local partner, and your existence relies on the partnership. Though the market risks reduce by opting for this business structure, risks associated with your investment, profits, and leadership become much higher.
Associating with local distributors or vendors is another UAE market entry strategy. You can find and hire distributors, suppliers, wholesalers, online sellers, and retailers to distribute your products in the market at a mush local scale. This way, you do not set up a legal entity; instead, you rely on the distributors to carry out your sales.
Large corporates or brand chains can franchise their business to local entities for their global expansion. Business franchising involves drafting a Franchise Agreement with local entities, and franchising is another popular model to enter the UAE market. However, this model is prevalent mostly in the food sector.
While there are many business structures to choose from to enter the UAE market, an alternative option is associating with an international PEO.
How PEOs Help With UAE Market Entry Strategy
PEOs or Professional Employer Organizations are licensed entities that help you with your market entry strategy and employment management. Consider a PEO like your employer on record that takes care of your hiring, payroll, and compliance needs, while also guiding you to choose the right entry channels for your global expansion.
A PEO simplifies the channels and entry regulations by providing you with an alternative to setting up a legal entity in the UAE. You can efficiently run your office remotely in the country by hiring local experts via a PEO. This way, you can speed up your operations up to 90% and save up on the extra expansion costs.
The primary benefit of associating with a PEO like Horizons is that you can prepare a robust UAE market entry strategy for your business and hire the best talent in the UAE with our business and HR experts’ help.
Our local network of experts can help you execute your entry strategy and setting up your brand in the UAE. We can also help you hire the best talent in the UAE on your behalf and take care of their overall management and local compliance. With Horizons, you can continue to control and operate your business freely, while we take care of your market entry and employment needs.
Contact us today to find customized solutions for your UAE market entry.