The United Arab Emirates is considerably more modern than the rest of the Middle East and the business practices here are very much reflective of those in the West. Doing business in UAE is done pretty much according to Western standards, except for the prime importance given to religion, even in business.
Islam dominates life in the Middle East – it dictates how one behaves, dresses or interacts, and Islam influences how business is done in the UAE as well. This is not necessarily something you as a foreign business looking to form a business partnership in the UAE should be wary of, but it does help to have a basic knowledge of Islam, Islamic culture and etiquettes of behavior. This would help you considerably during a business negotiation with a prospective business partner in the UAE.
The economy of the United Arab Emirates is the second largest in the Arab world, with a gross domestic product of $403.2 billion in 2014. The United Arab Emirates has been successfully diversifying its economy.
Creating and maintaining a sustainable and diversified economy is a component of ‘United in Knowledge, a pillar of Vision 2021. Vision 2021 states: (By the year 2021,) The UAE will benefit from a sustainable and diversified economy, flexible in adopting new economic models, and capitalising on global economic partnerships to guarantee long-term prosperity for current and future generations of Emiratis.
Developing a ‘competitive knowledge economy’ is one of the pillars of National Agenda in line with Vision 2021. The Government is focussing on the UAE becoming the economic, touristic and commercial capital for more than two billion people. To achieve this, the Government has set 12 Key Performance Indicators (KPIs).
According to the Economic Report 2015 released by the UAE’s Ministry of Economy, the estimated GDP for 2014 at current prices amounted to AED 1.46 trillion and the contribution of non-oil sectors to the national economy reached 69 per cent.
The UAE enjoys a strategic location between Asia, Europe and Africa. Thousands of Chinese businesses use Dubai as a hub for trading in Africa. Indian traders use the emirate to access the world. Latin Americans see the country as a launching platform into South Asia. Western nationals use Dubai as a hub for the Middle East.
Importance of Status in the UAE
The importance of status in the UAE cannot be underestimated. There is a strong sense of hierarchy that runs through all businesses in the UAE and it’s important to treat those at the higher levels of the hierarchy in an organization with the respect and deference expected by them. Often, this is critical if you are to have a good business relationship with them.
Often, members of an organization are from the same family or clan in the UAE. All employees expect to be addressed by their full titles, with those at higher levels in an organization having “Shaikh” attached as a prefix to their names.
Importance of Relationships and Doing Business in UAE
Personal relationships, face-to-face meetings are very important while finalizing a deal with a local business partner in the UAE. Just an interaction on Skype will never suffice. It’s important to go there and form a personal connection.
Also, connections and relationships form an important role in the world of UAE business, so it’s always advisable to find someone to introduce you to a prospective business partner. Business in UAE functions through references and favors – no favor is ever forgotten or allowed to be so.
How Business is done in the UAE
Business meetings in the UAE have to be scheduled weeks in advance, and before a meeting is actually organized, it is important to have a short telephone conversation about what would be discussed in it. Businessmen in the UAE don’t like being caught unaware by an unexpected development in a business meeting, and this is often a deal breaker. This is important when doing business in UAE.
Nothing is decided in a single business meeting, usually many meetings are held. The initial ones are only supposed to get the counterparts in the business negotiation to know each other better, to break the ice, so to speak.
What to Wear in the UAE
It’s important when doing business in UAE to be fully covered in the Middle East, but don’t ever make the mistake of wearing the traditional Arab costume. Foreigners are not supposed to wear the Arab costume in the UAE, and it is seen as an insult when they do so. Formal Western clothes are recommended, even in the oppressive heat of the place. Women should be fully covered and no part of the body should be left exposed. Don’t wear jewelry and cover tattoos, if any.
Cultural Mistakes to Avoid in the UAE
When doing business in UAE you need to know that islam is the largest and the official state religion of the UAE. The government follows a policy of tolerance toward other religions and rarely interferes in the activities of non-Muslims. By the same token, non-Muslims are expected to avoid interfering in Islamic religious matters or the Islamic upbringing of Muslims.
The government imposes restrictions on spreading other religions through any form of media as it is considered a form of proselytizing. There are approximately 31 churches throughout the country, one Hindu temple in the region of Bur Dubai, one Sikh Gurudwara in Jebel Ali and also a Buddhist temple in Al Garhoud.
Based on the Ministry of Economy census in 2005, 76% of the total population was Muslim, 13% Christian, and 11% other (mainly Hindu). Census figures do not take into account the many “temporary” visitors and workers while also counting Baha’is and Druze as Muslim. Among Emirati Muslim citizens, 85% are Sunni, while Shi’a are 15%, mostly concentrated in the emirates of Sharjah and Dubai. Omani immigrants are mostly Ibadi, while Sufi influences exist too.
- Never admire an item in your host’s home too much when doing business in UAE, as this would compel him to gift it to you, despite your protestations. And if he offers something, don’t refuse – this will be seen as an affront by your host.
- Strictly avoid alcohol and pork in the UAE, at least in public or in Arab company.
- Never shake hands with an Arab woman unless she extends her hand first, and don’t maintain eye contact for too long with a female business executive in the UAE.
- Never discuss religion or politics – it would never end well.
This article is a part of our ongoing series on “Doing Business in the Middle East and North Africa.” Our goal is to inform people about the right way to form a business partnership with local business partners in the region, and to offer a better understanding of the business culture and etiquette followed in that part of the world. The intention is to ensure that you are comfortable and know what to expect during a business negotiation with a business partner in the Middle East or North Africa. Please send us your suggestions on how we may help to serve you better.