Once a U.S. firm appoints a manufacturer’s representative or agent, the agent generally expects the principal’s full support with respect to providing literature, sharing technical information, and advertising materials. Potential public sector buyers and private sector importers should receive product catalogs and other marketing literature clearly displaying the name and address of the local representative or distributor. A common and highly effective support practice is to invite the representative or agent to the principal’s country every year for annual sales and technical support meetings and training. Agents, and if possible, their principals, should periodically visit existing and new customers since the importance of personal contacts cannot be overemphasized. U.S. exporters often fail to win or keep contracts, because of their relationships with the customers.
In order to be competitive in the local market, key selling factors include price, quality, effective and convenient after-sale service and support, payment terms, discounts, and commitment to the business relationship. Payment installment plans and discounts are common pricing tools in a market that exhibits price sensitivity driven demand.
Marketing schemes vary and include commercial discounts, free service for equipment purchased over a limited offer period, giveaways, warranties, trade-in opportunities, and promotional events. For consumer products, Kuwait inaugurated a local shopping festival called “Hala Febrayer” (Welcome February). Special offers and promotional campaigns are common during this period, with hotels and other entertainment centers offering special rates and deals to attract shoppers from the region. Companies are reminded that all sales discounts require prior approval from the Ministry of Commerce and Industry.
Exhibitions in Kuwait are local and regional in nature. The widely attended regional trade shows tend to be in the United Arab Emirates. The support of a local representative or agent will go a long way in establishing a presence for the U.S. partner. Participating in the trade shows alongside your local representative makes good business sense.
Trade Promotion & Advertising
The Kuwait International Fair (KIF) holds several exhibitions annually. Though it hosts primarily local events, the KIF allows attendees an opportunity to meet with local sales agents and account executives. For information on the Kuwait International Fair, please visit the Kuwait International Fair (KIF) website.
The U.S. Embassy organizes several international buyer delegations to major U.S. trade events each year. These include but are not limited to: World of Concrete (construction), SEMA Show (automotive), International Franchise Expo (franchising) and Offshore Technology Conference (oil and gas). The U.S. Commercial Service in Kuwait also participates in regional shows such as Arab Health, the Dubai Air Show, International Defence Exhibition and Conference (IDEX), and SEMA Middle East.
Payment installment plans and discounts are common pricing tools. Until a strong and trusting relationship is developed, we recommend utilizing secure payment methods such as cash in advance or Letters of Credit.
Marketing promotions include commercial discounts, sales, free service for equipment purchased over a limited offer period, giveaways, warranties, trade-in opportunities, and promotional events.
Most products imported into Kuwait from a non-GCC member state will be assessed a duty of 5%. This will need to be included in any pricing calculation.
There is currently no Value Added Tax (VAT). However, GCC member states have adopted a draft VAT framework agreement that will form the basis of the GCC VAT regime to be implemented across the member states. It has already been implemented in Saudi Arabia and the UAE. It is expected to be implemented in Kuwait in 2021. The VAT tax will be 5%.
In addition to the Cost, Insurance and Freight (CIF) price quotation plus import duty, U.S. exporters should be mindful of the Kuwaiti agent’s commission (averages between 1-10%), other transportation costs, and any installation costs or training that may be part of the agreed upon terms of delivery. Many U.S. exporters find Kuwait to be a more expensive export destination than expected.
Sales Service/Customer Support
U.S. suppliers should identify local representatives or distributors with the necessary service and maintenance capability. Companies should include follow-on maintenance clauses, if the products or equipment will require it.
Consumer warranties are often provided for electronic goods, appliances, vehicles, tires, and a variety of consumer products. Warranties can range from 90 days to upto 3 years. There are several independent service and repair centers in Kuwait that make frequent use of non-original equipment components or maintenance procedures.
Principal Business Associations
After-sales service and customer support are especially critical in the automotive and consumer appliance industries. Automobile dealers offer multi-year warranties with vehicle purchases. Appliance dealers will offer either repair or replacement over a particular period. Some dealers will carry out repairs at the end-users’ location.
Kuwait Chamber of Commerce and Industry
American Business Council-Kuwait
Local Professional Services
English-speaking attorneys specializing in commercial law, investment legislation, joint ventures, corporate law, tax law, bankruptcy, public finance, banking corporations, criminal and civil law are available for consultation with U.S. businesses. Internationally recognized accounting firms are also present. A list of specialized attorneys and accounting firms is available from the U.S. Commercial Service in Kuwait upon request.
Resources
For additional information on entering the Kuwaiti market, or if you have specific questions pertaining to your product or market niche, please visit: