United Arab Emirates
Distribution & Sales Channels

Discusses the distribution network within the country from how products enter to final destination, including reliability and condition of distribution mechanisms, major distribution centers, ports, etc.

Last published date: 2019-10-13
The most common way of selling goods and services in the UAE is through a commercial agent.  U.S. exporters sometimes find it advantageous to appoint different commercial agents or partners in each emirate.  Multiple agencies and distributors may also be appointed to handle diverse product lines and/or services.  Many UAE companies manage numerous product lines, making it sometimes difficult to focus on all products in an efficient and effective manner. 

Alternatively, under UAE law, there are several types of business establishments applicable to foreign entities interested in establishing a more formal presence in the UAE: Joint Ventures/Licensing, Establishment of Branch Offices, Free Trade Zones, and Civil Companies. 

The Commercial Companies Law requires that each limited liability company established in the UAE have one or more UAE national partner(s) who hold at least 51 percent of the company’s capital.  Certain companies that undertake stipulated activities are exempt from the 51 percent requirement, including oil companies with concession agreements, companies involved in the oil and gas industry, companies that produce electricity and gas, companies involved in treatment of water and transmission and distribution.  Foreign banks are exempt from having to appoint a sponsor.  Companies established in free zones are, as noted above, also exempt from the 51 percent requirement.  Other sales methods include direct sales to the end-user, establishment of a joint venture with a local firm, contracting with non-exclusive resellers, or selling through a licensing or franchising agreement. 

In 2018, the UAE government has allowed 100 percent ownership in certain categories in non-free zone areas. However, such regulation does not apply to companies that fall under the “negative list” category: Oil exploration and production; Investigation, security, military (including manufacturing of military weapons, explosives, dress, and equipment); Banking and financing activities; Insurance; Pilgrimage and Umrah services; Certain recruitment activities; Water and electricity utility companies; fishing and related services; Post, telecommunication and other audio visual services; Road and air transport; Printing and publishing; Commercial agency; Medical retail (including pharmacies); Blood banks, quarantines and venom/poison banks. 

Products imported in the UAE are typically handled by firms specializing in import and distribution of products to wholesalers, retailers and institutions.  Big groups may choose “centralized” delivery of goods to their warehouse for distribution to branches internally or companies may advise suppliers to supply goods directly to stores against Locally issued Purchase Orders (or LOPs). 
Irrespective of how goods are sold (at stand-alone private retail stores, company-owned retail stores, hypermarkets and supermarkets, mall kiosks, promotional booths or at exhibitions and/or at Global Village), the obligation to adhere to product quality and to provide after-sales-service lies on local agents.