ENTERING THE EMIRATI MARKET

The UAE is a magnet for foreign investment and workers, but there are inevitably issues when complying with the relevant employment legislation. In the UAE, this revolves around the Labor Law, amended in February 2022, in many key areas, including employment contracts. These laws lay down the employers’ obligations and their employees’ statutory rights.

Opening a business in any overseas territory can be challenging. Moving staff worldwide means lengthy processes to obtain visas and work permits. When employees are in place, who will handle payroll? How will your company deal with regulations on taxation, entitlements and benefits, termination, and severance? Drawing up an expansion blueprint is not enough; your business plan must answer all these questions. By partnering with a PEO and EOR such as Bradford Jacobs, companies can plot a time-efficient and cost-effective path to locating and employing staff in the UAE. But for those who want to ‘go it alone’, here are some of the necessary steps.

Finding an office in the Emirates

The United Arab Emirates (UAE) is a federation of seven states offering attractive and prosperous destinations for business. The government has implemented many policies to promote a healthy and thriving commercial environment. Deciding where to locate your office while setting up your company is essential to success in the UAE. A physical office is a legal requirement for obtaining a company license in most Emirates; plus, it can be linked to the visa quota companies are allocated to onboard foreigners. However, locating in one of the many Free Trade Zones can provide solutions such as co-working spaces and shared facilities.

Taking advantage of all this country has to offer to optimise profits, and comply with regulations, means researching and looking for the expertise needed to steer you in the right direction. As a PEO, we can assist you by utilising our local know-how and applying our 20 years of global experience.

When looking for an office in the UAE, some of the considerations are:

• What government funding, grants, subsidies, or tax benefits exist for start-ups and new companies in the seven emirates?
• Are the premises near wholesalers, manufacturers, and distributors, and do they need to be?
• What do the 47 Free Trade Zones in the UAE have to offer?
• Are there any nearby business hubs or clusters offering business space, and what benefits do they offer?
• How active and vibrant is the locale?
• Is the area clean and suitable for mental health, providing services and accommodation for staff?
• Will it make a good impression on clients with good transport links if you need to move goods?
• Is it fit for purpose, within budget but still has room for expansion?
• Does it have good infrastructure with appropriate services?

What the four largest Emirates have to offer:

Abu Dhabi is the largest Emirate and the richest, the capital city with 95% of the country’s oil production. Its infrastructure is second to none and has the facilities to accommodate international commerce with companies such as Deloitte, EY, PwC and KPMG, to name a few. The Industrial City of Abu Dhabi (ICAD) spans over 40 sq. km., providing companies with excellent roads and access to ports and airports. Hubs and business clusters benefit from good communications, connectivity and manufacturing facilities in engineering, construction, and chemicals, as well as high-tech companies with cutting-edge factory space available. Six Free Trade Zones (FTZ) offer diverse finance, media, technology, renewable energy, and industry specialities.

Dubai has a dominant oil and gas sector but also shines in construction, real estate, recruitment, and e-commerce; in fact, Dubai is a digital city with businesses thriving online. It welcomes businesses, and start-ups flourish due to high demand and buying power. It has some of the most iconic modern buildings in the world! Attractions for companies include more than 20 FTZs, world-class financial centres, a multinational educated workforce with an easy atmosphere for business, low set-up costs, and no physical office needed.

Sharjah should be seen as an opportunity for go-getting entrepreneurs as it has excellent potential with lower costs, such as affordable property prices. It offers the same benefits as Abu Dhabi and Dubai, with policies welcoming investment but no need for capital to set up a business. However, it has relaxed business regulations with unlimited visa issuance; therefore, companies can onboard more global talent. They also rely on more sustainable energy solutions rather than the hydrocarbons in the oil and gas production areas of other emirates.

Ras Al Khaimah has richly diverse in history and economy. It has the fourth largest population of the seven Emirates but can still draw investors and businesses to its shores and into the Ras Al Khaimah Free Trade Zone. It is close to Dubai for business but has ready access to Port Saqr and UAE’s principal airports. It offers easy and quick company set-up processes and can supply licenses for industry, consultancy, trading, and commerce. There is no tax on income or profits or on capital repatriation. Additionally, there are affordable office facilities in any of the four dedicated enterprise parks such as the Business Park, Industrial Park, Academic Zone and Technology Park One.

Finding a manufacturer in the Emirates

The United Arab Emirates is ideally located to service the Arabian Peninsula, Africa and South Asia as a manufacturing centre. The UAE was ranked the most competitive sector in the region for industrial performance by the United Nations Industrial Development Organisation (UNIDO), and 28^th in the world for ‘value added’ manufacturing per capita.

As of 2021, manufacturing accounted for AED 133bn (USD 36bn) with ambitions to reach AED 300bn (USD 82bn) by 2031 with policies aimed at important sectors such as food and agricultural technology, petrochemicals, medical and space technology with bank investment of AED 30 billion (USD 8 billion) to stimulate employment and productivity.

Manufacturing opportunities exist for new and start-up companies but finding the best manufacturer to partner with is the first step. Choosing wisely can mean the difference between success and failure. A good partnership can build client relationships and assist with cultural and language difficulties, especially when launching a new product into the marketplace. A good manufacturer can be a boon for business and essential when hitting targets for quantities and quality.

However, at the start of any relationship, especially amid new customs and commercial climates, it is prudent to seek references when vetting a company and to practice due diligence when placing orders. Here are some questions to consider when looking for a manufacturer in the Emirates:

• Are they licensed and quality assessed?
• Can they produce your goods in the quantities needed?
• Can they deliver directly to your customer or distributor?
• Have they made similar products, and can they provide recommendations?
• Can they keep pace with your expansion plans?
• Are they financially sound, and can they give a previous audit?
• Do they have payment terms and require a deposit?
• Will there be a language problem?
• Will you have a single point of contact, for example, an account manager?
• How are their supply chains for sourcing or outsourcing their raw materials?
• What are their potential lead times to deliver?
• Processes for dealing with poor quality or missed deadlines?
• Do they provide sampling or a prototype?
• Is their manufacturing equipment up to date?

Other considerations:

• Running market research to avoid saturating the market.
• Finding a company to both manufacture and distribute.
• Legalities in the country to protect your intellectual property rights.
• Regularly monitor your manufacturers’ performance.

Finding a distributor in the Emirates

After setting up your company, locating an office and partnering with a local manufacturer, you now have a product to sell. The best approach in the UAE is to use a local agent for a specific Emirate or a large distribution company to cover the whole of the country, especially if your office is in one of the Free Trade Zones to manage product registration. The main areas of distribution rest with wholesalers, and major retailers such as supermarkets, department stores and shopping malls, with the trend swaying towards telephone and online sales, which have increased to keep up with demand.

A top-rated distributor will be experienced with the larger markets and distribution channels and supply chains of other Middle East nations, Africa, and South and West Asia. They will have a handle on any changes in the marketplace or emerging trends, such as online shopping. A good partner can help formulate goals according to your business plan and budget and inform you of rules and changes in the law to stay compliant before distributing.

Vetting a distributor can be problematic for new companies in a new country; here are a few considerations:

• Do they provide good storage facilities and have up-to-date machinery for handling goods before distributing them to customers?
• How do they track changes in market trends?
• How does your product match or fit in with their existing product line?
• Do they have well-trained and enthusiastic marketing and sales teams with excellent customer service that can assist with customs, cultural differences and the language?
• See their plans for your product distribution, and have they worked with foreign companies before?
• Look at their processes and logistics for distribution.
• Check out their customers’ history, satisfaction, and financial stability.

Finding the right distributor can mean success for both of you. It is not just about getting your merchandise from one place to another; it’s also about growing and developing together, expanding your horizons into new markets farther afield and increasing your market share. Tips on finding your distribution partner include the following:

• Check out Trade missions which are usually organised to encourage mutual trade. They can target relevant companies more efficiently, arrange face-to-face meetings, and be aware of the best trade fairs or conferences. They may offer financial incentives if this is a new market for your company.
• Networking: Joining B2B groups, Chambers of Commerce, exploring social media, e.g., LinkedIn, and Facebook – all good vehicles to become familiar with your new country or to elicit experiences or recommendations
• Check out the local expatriate community. Some will have magazines or social clubs, attend embassy functions, and many expatriates occupy top positions with international companies.
• Accessing local directories and magazines, and online websites. Many in-country embassies produce country guidelines.
• Why not ask your manufacturer? They could be your first port of call.