The Art of Doing Business in the Middle East
By Gary Bedian
The Middle East: Words that provoke simultaneous mystery and myth.
It is a region that carries many stereotypes in the West; broad generalizations about a diverse and expansive culture. To be honest, in my twenty years of shuttling between North America and my former homeland, I have found plenty of stereotypes held on both sides.
Yet, people from East and West are able to find enough commonality to work around the fiction and establish durable relationships and sustainable partnerships - many of which have been very profitable. How? The answer to that question has fueled my ambitions and my business for almost a quarter century.
Let me be very clear, local prosperity depends upon global business. There are undoubted opportunities to be had. Currency fluctuations coupled with rebounding economies (and they are rebounding, by the way), means that this is an excellent time to venture out into the Middle East for new opportunities.
For the well-prepared entrepreneur, the Middle East offers substantial opportunity to build business and grow wealth. This is one of the developing economies where expansion is projected to continue unabated into the foreseeable future. And so that we are clear, this is not all about oil. We will see continued and significant demand for European and American products - especially for commodities, but also for durables, perishables, and a broad range of services.
However, as always, if you wish to do business in a place where you are unfamiliar and innative, it is imperative that you learn as much as you can about the history, the culture, the etiquette, and the protocols of negotiations present in your host nation. Let me emphasize – this is a vital prerequisite.
Through knowledge, stereotypes dissolve. Armed with awareness, you can overcome barriers to communication and bridge those simplistic generalizations that keep people apart. Ah, but here's where the hard work comes in.
The Middle East is a region with an estimated population of more than 360 million people. The economies range from very poor (examples: West Bank/Gaza and Yemen) to extremely wealthy (example: Qatar, United Arab Emirates, Saudi Arabia). Still considered “emerging” economies, the Middle Eastern nations represent almost $2 trillion in GDP. Admittedly, some economies rely heavily on hydrocarbons (oil). But most others – almost half of the total GDP – is highly diverse.
The Arabic speaking Middle East includes the countries of Lebanon, Syria, Jordan, Egypt, Bahrain, Saudi Arabia, United Arab Emirates, Oman, Kuwait, Qatar, and Iraq. Other countries considered to be in the Middle East include, Israel, Turkey, Afghanistan, Iran, Armenia, Libya, Gaza, and the West Bank.
While there are many subtle differences within the Arabic speaking Middle Eastern countries, there are vast differences among most non-Arabic speaking countries. As such, this article will deal mostly with the Arabic speaking countries only.
When doing business in the Middle East, it is wise to bear in mind the contradictions.
While there are huge differences within the region, nowhere else in the world will you find a region as vast as the Middle East that shares a common religion, language and culture.
It may seem obvious that when entering any country to do business, it is best to leverage established ties rather than attempt to build new ones. But in the Middle East, this is clearly vital. As difficult as it may be to accomplish, once a relationship is established, your Arab partner will want to be your friend and will be unlikely to change. As it turns out, they are quite similar to the rest of us: they tend to stick with people they know and trust.
You will never complete successful business ventures in the Middle East via long distance. Arabs hold a keen value on personal relationships. Much emphasis is given to family ties, friendships, trust and most importantly honor. It is crucial for a foreigner doing business in the Middle East to understand not only the value of business and personal relationships but also the time it will take for these relationships to develop as they are built on mutual friendship and trust. That is one of the reasons that you need to send the same representative each time you go there. And yet - your host will likely drop changes on you at the drop of the hat.
Although Arabs place a high emphasis on punctuality of their foreign guests, they rarely practice it themselves. And yet, Arabs may say 'mow'id inglizee' (translation: 'English meeting') to stress that an appointment will be strictly observed. By the way, if you find that you cannot avoid being late, prepare a polite explanation and all will be forgiven.
Much of the Middle East is very modern, but there are exceptions – some of them are a bit amusing for the uninitiated. While on a business trip to Aleppo, Syria, I checked into a hotel with one of my investors late at night. I told him that I would get him in the morning to have breakfast. When I went to pick him up in the morning, I saw a cat lying on his bed, I asked what the cat was doing there and that I didn't know he liked cats so much. He told me that he heard a mouse running around in his room at night and called the front desk. Ten minutes later, they delivered a cat to his room. His comment, “No more mouse.”
You will also find a sense of pride and humor imbedded in the Arab logic. For that reason, I strongly advise against making overt comparisons between the United States and any of the countries in the Middle East – even on obvious issues like freedom of speech. While on a business tour recently for a property investment firm, my client commented to our host that in the United States citizens can speak freely against government and its policies. “Same here,” quipped our host. “We also speak freely against the United States government and their policies.”
Despite some of the little speed bumps you may confront, consider this point: Arabs are easier to read than the Chinese. A friend of mine complained that he spent considerable effort to set up a manufacturing deal in Shanghai. But he could not get a firm reaction about his proposed terms and pricing from his host. “They kept smiling and nodding,” he said. They happily responded “yes” and eagerly nodded when he asked if they had read his proposal. He thought he had clinched his deal, but as it turns out, their obedient “yes” only meant that they received it; they had rejected the proposal long before he had arrived.
Arabs will give you a clear cue if your deal is in trouble. They will raise their hands and respond pleasantly, “In šā Allāh” which translated means “God Willing.” If you hear that, you’d better be ready to roll out your plan “B.”
Misunderstandings happen all the time. A great many of them are caused by miscue. One of the things that I find surprising, even among folks who have considerable business experience, is how frequently the value of nonverbal communication is ignored. During any negotiation, a major part of the communication between the parties is totally nonverbal and indirect. I believe that this is true in any society. Here in the U.S., researchers have long since established that the vast majority of all interpersonal communication is nonverbal – the way you hold your hands, how you stand, the expressions on your face – these are all part and parcel to the total communication.
Nonverbal communication is also telegraphed by the ambience of the meeting place, the time of day (or night), the choice of entertainment (or not), and even the choice of beverages and appetizers served. Clothing, hairstyles, and jewelry play important roles in communicating who we are. They most certainly communicate how well we are attuned to local culture and style. For instance, do we not react to someone differently when they wear a suit as opposed to a Hawaiian shirt? I’ll tell you now though, that folks in Hawaii are more likely to attend a business meeting in their very best “Aloha” shirt than an Italian tailored gabardine. Well, here goes another one of those “When in Rome, do as the Romans do” questions – would you show up to a NASCAR race in your Sunday-School suit?
Please do not wear a thobe or kurta (robe). Shoot for modesty in your attire. You may leave simple cues if you like, but if you are unsure that they will be misread, go the safe route and leave them home.
Business folks in the Middle East have an even higher appreciation for nonverbal cues than in the U.S. or Europe. So, as they are constantly on the lookout for symbols, you should be too. Watch for raised eyebrows or a tapping finger on a table; which are often cues that you need to drop your own topic and pay very close attention to your host.
Which brings me to the art of business diplomacy – negotiating with your Arab partners.
I have found that in negotiating price with Middle Easterners, they will tend to discount by a meaningful percentage. I don't agree with people who start with artificially high numbers thinking it will be negotiated down anyway. It is more effective to take your time and explain why the price is what it is and make sure they understand the realities of the situation.
The key is to be patient and negotiate from a strong position. Good relationships start from a strong proposal. For instance, do not negotiate with the idea of discounting at the start.
Remember that Arabs were a trading people long before the United States existed. Culturally, they are excellent negotiators. Haggling takes places everywhere, whether at the shop or in the boardroom. But keep in mind that all decisions are made slowly. Bureaucratic formalities tend to add to delays. Do not use high-pressure tactics, as they will be counter-productive.
Of course, we cannot have a discussion about the Middle East without mentioning the importance of Islam. What I could write about Islam and the Middle East would alone take up a whole series of articles – a book even. I strongly urge that you pursue gainful research before embarking on any business in the Middle East. However, I can offer a few pointers.
You must understand that Islam is not only a faith it is also a culture found in the very fabric of the Middle East. Islam permeates all levels of Arab society. It guides social lives, it gives value to relationships, and it offers rules and guidelines in the way people govern their personal lives as well as their business. I guarantee that Islamic values and rules will influence every aspect of your business.
Muslims, people who are adherents to the faith, tend to take their congregational obligations more seriously than the average American. For instance, you’ll find that many Muslims pray five times a day. So it is a good idea, if you can at all help it, to schedule your appointments and meetings around prayer times. If you cannot get a schedule in print from your host, you’ll hear the call to prayer (azan) from the mosques. Not everybody will go to the mosque. Some will pray at home or in the office. But on Friday, most Muslim males are obliged to attend the mosque.
I tend to avoid doing business in the Middle East during the month of Ramadan and two major festivals, often called the “Eids.” Eid al-Fitr follows Ramadan and Eid al-Adha follows the annual pilgrimage, or hajj. During Ramadan, Muslims fast from dawn till dusk; they refrain from eating, drinking or smoking. The Eid holidays last approximately three days apiece, but it is not uncommon for governments to extend the holiday period. The exact dates of Islamic holidays are determined by the Islamic lunar calendar – the expected visibility of the hilal (waxing crescent moon following a new moon).
As mentioned earlier, one element that works to your advantage: Arabic is the first language throughout the region. Even better: most of the business sector speaks English or has good access to interpreters. This will help pave the way for your negotiations and subsequent discussions; at least it will minimize the frustrating language gaffes that one can expect in Asia and Europe. It is also ideal to learn some basic greeting phrases that will help garner further respect from your host.
Speaking of language, even as negotiations are concluded, I advise that my clients retain a trusted interpreter. I say this not because your host could take advantage of you, but because it is good policy. At the least, it helps balance the playing field when someone on your side speaks their language. Note that whenever you deal with the public sector, not only will you need an interpreter; you will also need a guide adept in the local political structure. For instance, not many people realize that, despite all of the capitalistic endeavors, much of the entire region features a mix of socialism – an often overlooked fact that often produces some interesting results when mixed with the aforementioned cultural attenuations of Islam. Moreover, each locality will also have their own way of doing things.
The one word that many Westerners who have done business in the Middle East use to describe their endeavors is “chaotic.” They may also say “frustrating” and “irritating.” One very good friend of mine, a well-traveled man who has done business all over the world, counters with, “refreshing, enlightening, bold.” So, how you feel about it is totally a matter of personal preference. Business meetings are all about relationship building: establishing trust and compatibility. Towards this end, your Arab partner will likely want to engage in personal conversation in an effort to get to know you as much as the deal you are pursuing.
Trust and honor are held in such high regard that they are treated as commodities; invaluable, imperishable, impermeable. As such, people tend to prioritize personal matters above all else. Business is therefore one of the social spheres with which well-found relationships and family ties are constructed. This system known as 'wasta,' is not only a manner of course, it is prerequisite. If you have friends or contacts in the right places then rules can be bent or things done more quickly. The system works on the basis that favors are reciprocated and never forgotten. Although it may seem biased, it is something that makes doing business in the Middle East among the most satisfying of my professional endeavors.
For me, I find Arabs to be personable, hospitable, and warm people. They are among the most family oriented in the world – they do not separate their professional life from their personal one. Given some of my experiences in the last several years, America could use a little touch of ‘wasta’ in its business practices. With such an emphasis on family and close relationships, the business culture places more value on your word than on a written agreement. Consequently, contracts are often viewed as ‘memorandums of understanding’ or ‘protocols’ rather than binding, fixed agreements.
Like all business endeavors, you must be determined to succeed. Let the culture define your anticipation and goals, otherwise you will be frustrated. Arm yourself with knowledge and a clear understanding of expectations and limitations. If you are patient, the Middle East will become a place of beauty, adventure, and success.
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