Identifies common practices to be aware of when selling in this market, e.g., whether all sales material need to be in the local language.
Even with increasing social media, direct marketing, and online shopping, the commercial tradition of the UAE is that of the middleman or trader acting as a conduit for goods from large manufacturers to consumers largely in South Asia, the Gulf, and East Africa. The UAE still serves those traditional markets along with those of North, South, West, and Central Africa, and the rest of the Middle East. However, the COVID-19 pandemic brought changes to the prevailing selling practices and increased the number of emerging channels for sales and distribution such as online retail, delivery services, and take-away services.
Culturally, the UAE is relatively less conservative than some other Gulf States. English is widely spoken but sensitivity to local traditions and Islamic beliefs remains essential. The use of Arabic in packaging and advertising is both desirable and effective (and sometimes mandatory) in marketing consumer goods.
The UAE business style emphasizes personal relationships and integrity, though there continues to be growing emphasis on quality, after-sales service, maintenance requirements, and cost. Because the personal relationships emblematic of the UAE business environment take time to nurture, U.S. firms are advised to invest time in the market with a local presence or, at the very least, frequently make contacts and visits. Face-to-face contact and participating in local trade events is essential.
U.S. products and services have an excellent reputation for advanced technology, quality, and durability. However, American companies face tough competition from European and Asian companies in the UAE that generally have a larger presence in the region and offer lower prices. For many products, providing after-sales maintenance services is essential, and in such cases U.S. companies should consider establishing a presence in the UAE or appointing a trained service agent. U.S. firms should seek a local sponsor, agent, or partner with sufficient access and influence in relevant business circles.
For U.S. firms selling to traders, the dominant business model in the UAE, there is no substitute for being price competitive, and even more so since COVID-19 and the recent fall in oil prices. Government procurement also places heavy emphasis on selection of the low bidder and bidders with a presence in the UAE market, as long as the lowest price bidder is compliant with all technical and vending specifications.
As mentioned in previous sections, companies continue to report an increasing number of business disputes. Those include but are not limited to unclear tenders, challenges with in-country value, as well as slow or non-payment issues. While the payment process has never been streamlined with the UAE government, there has been a reported overall lack of responsiveness to queries surrounding payments.
Trade Promotion and Advertising
The UAE, and Dubai in particular, serves as the commercial center for the region. From late September through May, the UAE hosts many well-attended trade exhibitions and conferences. These trade events attract an impressive number of exhibitors from the region and around the world, providing all international firms the opportunity to research the local market and evaluate the potential of their products or services before making a business decision.
Advertising plays a significant role in sales promotion. About 40% of the UAE’s population is native Arabic speaking, and Arabic serves as the official language of the nation. However, given the diverse population of the UAE and the large number of non-Arabic speaking residents, English serves as the business language of the UAE. Although the language of business is English, Arabic is the official language and is required for all governmental documentation. In addition, combined English and Arabic usage is common on signage and for many publications. English-only promotional literature is acceptable, but those that are in both English and Arabic have a decided edge. Arabic speakers in key decision-making positions appreciate the extra effort and sensitivity to their culture that bilingual publications imply. Arabic labeling for consumer products, especially foodstuffs, is an important requirement and an advantage in competitive marketing. Moreover, all foods and products claiming to be halal (often a prerequisite when selling to the 76% of Muslims making up the UAE) must bear the Halal National Mark and have certification to be sold.
There are several Arabic and English language daily newspapers and weekly and monthly magazines that are effective for consumer market promotion. Third-country language publications are also available. Below is a list of English and Arabic newspapers in the UAE. The mostly widely circulated English-Arabic newspapers are Gulf News, the National, and Khaleej Times. The Emirates News Agency (WAM) is the official news agency of the UAE. It provides daily news coverage of official and other events throughout the country. It is also a reference for UAE news for all mass media.
By law, the National Media Council, which is appointed by the President, licenses all publications and issues press credentials to editors. Laws also govern press content and proscribed subjects. The National Media Council reviews and censors all imported media for content. This includes establishments in free zones such as Dubai Media City (DMC), twofour54 in Abu Dhabi, and RAK Media City in Ras Al Khaimah. These free zones are intended to attract media and marketing services, business and information services, news media, multimedia and internet, broadcasters, music companies, and production firms. In addition to tax benefits, companies operating in these free zones have been guaranteed that the government will not censor their news and information content, provided certain relatively liberal guidelines of taste and propriety are met. The content should not criticize leadership in the region, disparage religion, foment religious or ethnic hatred, or invade a person’s privacy. U.S. firms are strongly urged to consider cultural sensitivities in all promotional activities. Online advertising is increasingly prevalent throughout the nation and serves as the second-largest advertising medium in terms of revenue after newspapers. Social media has played a significant role in online advertising. UAE residents spend an estimated 3 hours and 11 minutes a day on social media, the highest average in the MENA region and 6th highest globally. This is largely due to the UAE’s significant 173% mobile penetration rate, which is the largest globally. Radio and television broadcasts are primarily in Arabic, English, Hindi, and Urdu and can also be considered as a medium for advertising.
For consumer goods, price is the main consideration for middle and lower-income groups in the UAE. These market segments are served through small shops (referred to as “B-Category” stores) in traditional souks or markets, also known as baqalas. Retailers in this category operate under relatively lower margins and rely on fast-selling brands. The UAE Government has promulgated consumer protection laws to monitor the prices of consumer goods, advocate for healthy competition, and fight monopoly and commercial fraudulence in this sector.
At the other end of the spectrum are the segments of the society with high purchasing power, made up of largely of UAE nationals, white collar workers, businesspeople, and tourists. For this group, pricing is not always the primary buying factor and such retail outlets generally retain a high margin. These segments are serviced through Western-style malls and specialty shops (referred to as “Modern Trade Outlets”).
The UAE is home to some of the largest malls in the world, providing air-conditioned comforts in a harsh climate include dining and entertainment as well as shopping establishments. U.S. exporters must be ready to use pricing aggressively to encourage market acceptance of their products while keeping in mind various pricing factors, namely, listing fees (applicable per SKU’s), annual rebate (percent), non-return Fee (percent), and annual promotional commitment ($ or percent), etc.
Once products are listed and depending on product categories, local agents frequently have to negotiate space charges and need to appoint merchandisers for maintaining shelf space in stores and to ensure product facing. U.S. companies entering the market must be mindful of such costs, which may add approximately 25% to product costs, depending on turnover volume. The retail chain would then add another 20-25% profit margin to recover their costs.
The 5% VAT has been in effect since 2018 on most categories of goods with limited exceptions including basic food items, healthcare, and education. While there is no VAT on exports in the UAE, there is a 5% VAT on imports and domestic supplies with some exemptions.
As a stable economy with minimal inflation, fluctuation of prices are generally not accepted by major retail stores unless substantiated with valid rationale. Even with circumstantial evidence for price increases, retail chains often insist on verification that such changes have been incorporated by their competitors before accepting any change.
American companies may leverage UAE consumer perception of higher quality and higher transport costs for products from the United States., enabling pricing relatively higher than Indian, Chinese, Korean, and Japanese suppliers (which are competing against each other in this market). European companies are known to offer quality products as well and are tough competitors when the Euro currency is relatively low. The strength of the Euro versus the Dollar (though in decline), and the peg of the AED to the Dollar ($1 = AED 3.67), which offers pricing and exchange consistency for buyers, currently favors U.S. products and services.
Sales, Service, and Customer Support
Doing business in the UAE is increasingly competitive, which may present a variety of challenges. Given increased competition and availability of quality products, providing need-based customer support and after sales service is of paramount importance. Having satisfied consumers who keep returning and recommending others is critical to business success.
- Product availability and display. Companies selling through supermarkets and hypermarkets must be prepared to engage merchandisers to ensure prominent shelving displays and to optimize inventory reordering.
- Appointed local UAE agents must be willing to undertake annual category management planning with retailers and participate in their national promotions and campaigns for greater product awareness and visibility.
- Training of agent staff to ensure timely after-sales service is also of prime importance.
The principle of ‘consumer sovereignty’ is applicable in the UAE.
According to the Consumer Protection Law, UAE consumers are granted the following rights:
- Right to Safety: to be protected from products, production processes, and services that may cause harm to health and safety.
- Right to Know: to know accurate information concerning the goods and services (ex: origin of products, expiry date, ingredients of food items, etc.).
- Right to Choose: to have multiple options of items and services at competitive prices and quality.
- Right to Representation: to express opinions to develop the goods, services, prices, and availability.
- Right to Be Informed: to acquire knowledge and skill and awareness of consumer rights and responsibilities through continuous awareness programs.
In 2019, the UAE Cabinet approved a consumer protection law to align with the Unified Law on Consumer Protection of the Gulf Cooperation Council Countries (GCC). The new law aims to:
- Guarantee the protection of consumers and stability of prices.
- Ensure the delivery of goods and services according to production and distribution patterns tailored to the consumers’ needs.
- Limit practices that may have a negative impact on consumers and control increase in prices.
- Encourage sustainable consumption.
- Provide adequate protection to consumers in the area of eCommerce.
- Regulate the work of suppliers, advertisers, and commercial agents regarding consumer protection.
- Provide the necessary conditions for creating a free market where consumers are granted the right to choose freely with fair prices.
- Encourage the creation of a code of ethics for producers and distributors of goods and services.
Consequently, companies wanting to do business in the UAE are advised to:
- Avoid misleading advertising and provide consumers accurate information. Establish clear policies regarding refunds, replacement, warranties for defective or damaged products and incomplete services.
- Display prices clearly in UAE currency (AED) for goods and services in Arabic in addition to any other language.
- Label the product condition visibly and clearly for sellers of used or repaired goods.
- Offer products with valid guarantees and warrantees.
- Guarantee service quality for a period of time. If services are not carried out with due care, the service must be provided again for free or refunded.
- Ensure that employees knowledge is sufficient for the range of products and services offered.
The current business environment thus favors foreign companies that deal with local distributors with adequate parts inventory, regular maintenance capabilities. and after sale care.
Local Professional Services
List of vetted professional service providers, from our Business Service Provider program, including:
- Accounting, Auditing and Tax Services (1)
- Advertising (1)
- Building and Construction Services (1)
- Business Administration Services (2)
- Business Associations (1)
- Business Consulting (4)
- Business Development (2)
- Car Services and Rentals (1)
- Distributors, Sales Agents and Importers (1)
- Engineering Services (1)
- Entertainment Services (1)
- Event Management, Conference Equipment and Facilitation (4)
- Export Management (1)
- Hospitals, Clinics and Health Services (1)
- Hotels and Meeting Facilities (5)
- Human Resources (1)
- Legal Services (6)
- Market Research (2)
- Marketing, Public Relations and Sales (1)
- Office Furniture (1)
- Other Business Services (1)
- Real Estate Services (1)
- Regional Economic Development (1)
- Relocation services (1)
- Restaurants and Catering (1)
- Security and Personal Safety (1)
- Telecommunications (1)
- Trade Show and Exhibition Services (2)
- Vetting/Due Diligence (2)
Principal Business Associations
P.O. Box 662, Abu Dhabi, UAE
Tel: +971-2-621-4000, Fax: +971-2-621-5867
P.O. Box 43710, Abu Dhabi, UAE
Tel: +971-2-631-3604, Fax: +971-2-633-0489
P.O. Box 74648, Dubai, UAE
P.O. Box 662, Ajman, UAE
Tel: +971-800-70, Fax: +971-6-747-1222
P.O. Box 1457, Dubai, UAE
Tel: +971-4-228-0000, Fax: +971-4-202-8888
P.O. Box 3014, Abu Dhabi, UAE
Tel: +971-2-621-4144, Fax: +971-2-633-9210
P.O. Box 738, Fujairah, UAE
Tel: +971-9-223-0000, Fax: +971-9-222-1464
1201 15th Street NW, Suite 200
Washington, D.C. 20005
Tel: (202) 289-5920, Fax: (202) 289-5938
P.O. Box 87, Ras Al Khaimah, UAE
Tel: +971-7-226-0000, Fax: +971-7-226-0112
P.O. Box 580, Sharjah, UAE
Tel: +971-6-530-2222, Fax: +971-6-530-2226
P.O. Box 436, Umm Al Quwain, UAE
Tel: +971-6-765-1111, Fax: +971-6-765-5055
2001 K Street, NW Suite 201 North
Washington DC 20006
Tel: (202) 863-7285, Fax: (202) 863-7289
Limitations on Selling U.S. Products and Services
Establishing an Office
Ownership restrictions may pose a challenge for American companies wishing to do business in the UAE.
Companies that are seeking to open an office and operate from the UAE with a physical presence and employees are required to obtain a company license, either 1) in a Free Trade Zone with 100% business ownership, requiring the appointment of a local service agent to sell products in the UAE; or, 2) open an office within the UAE mainland, requiring 51% local UAE shareholder or investment in one of the 122 approved categories and do business anywhere in the country.
Finding a Distributor
American companies looking to do business in the UAE without establishing an office can do so through a local agent or distributor who will act as their representative. However, finding the right distributor might be time-consuming and tedious especially due to UAE Commercial Agency and Transaction Law intricacies and related dispute resolution mechanisms.
Federal Laws and Individual Emirate Rules
Each emirate retains certain local regulatory powers. This includes commercial activities such as the issuance of trade licenses and the incorporation of corporate entities, where the activity is not already regulated under federal legislation. The interaction of federal laws, individual emirate laws, and free zone laws can be complex and confusing. U.S. companies are advised to seek experienced professional advice before embarking on any significant business venture.
Business and government contracts must be in Arabic or Arabic and English. In cases of inconsistency or ambiguity in terms contained in English documents, the Arabic document would prevail. This may be challenging for foreign companies as they are dependent upon local support for translation work and documentation.
Work week and time difference:
The UAE follows a Sunday to Thursday work week, providing a 3-day (Tuesday-Thursday) timeframe to work with American counterparts based in the United States.
Comply with UAE Safety Law
The Emirates Authority for Standardization and Metrology (ESMA) is responsible for implementation of the Product Safety Law, in coordination with UAE customs authorities. The law is applicable to all products sold in the UAE market, both manufactured locally or imported into the country, including free zones.
This may put pressure on foreign companies as they need to ensure that their products comply with any applicable standards issued by ESMA, or by a foreign regulator that has been approved by ESMA. Companies not meeting the criteria must file with ESMA for a risk assessment for their product.
The UAE is home to over 45 free trade zones, and more are under construction. For foreign companies, free trade zones may pose challenges with the enforcement of IP rights since control procedures and administrative authority may differ from one to another. Also, free zones may provide space for storage of goods confiscated in the mainland for breach of IP rights, instead of destruction, further complicating jurisdictional oversight.
Consequently, any action for infringement in a free trade zone would require verification of the enforcement authority within that free zone in question and then identification to determine if processes are in place for logging complaints. American companies entering the UAE market are therefore advised to seek IPR registration guidance to avoid ambiguities and complications.