According to the World Bank’s Ease of Doing Business Index in 2018, the UAE ranked 21st among 190 countries. Credit for this ranking must go to the pro-business policies introduced by the UAE government. Before deciding to enter any market, having a thorough knowledge and understanding of government’s policies and prevalent business environment is an integral part of formulating a winning entry strategy. This is no different for the UAE.
A winning entry strategy is a well-defined path that helps establish businesses successfully in a new business environment. An entry strategy planned for one jurisdiction may not work when applied to another. This applies as much to the UAE as to any other country. The UAE is situated at the junction of Africa, Asia and Europe, adding a massive competitive advantage to its business landscape. Other major advantages of the country include significant energy reserves, a rapidly growing population, superlative infrastructure of roads, telecommunication, digital connections, largely tax-free environment and an innovative and progressive government mindset. These are some of the local factors that must be considered whilst making the decision to set up a presence in the UAE.
So, whether a business is planning for international expansion, launching a start-up or even considering re-entering after a retreat, a well thought out entry strategy is a must.
A Step-by-step Guide to Developing A Winning Entry Strategy
Step 1: Market Research and Feasibility Study
The UAE hosts a diverse range of nationalities and has an innovative culture that is being led by on-going government initiatives. Essentially, this has a significant impact on businesses trying to establish their presence in the country.
Market research and a feasibility study is about gathering, analysing, and interpreting information about a specific market and the demand for and supply of a product or service. This includes research related to competitors, consumer behaviour, pricing, demand and supply drivers and other such indicators. This helps to determine how successful the product or service will be in the current market conditions.
A growing number of effective techniques are available for market research which can be performed in-house or by outsourcing. The activities such as in-depth interviews, group discussions, online surveys, observations, video conferences, mystery surveys and shopping are generally included as part of market research.
Step 2: Development of a Business Plan
After conducting a comprehensive market research, awareness of the current market conditions will help to develop a business plan accordingly. A business plan provides a strategic way through which business will enter and operate successfully in the UAE market. This includes details of products and services, modes of operation, cash flow and capital requirements and the potential financial results.
Here is a brief description of what a good and effective business plan should include:
- Objectives – Define objectives and the methods to plan and achieve them. This will provide a clear vision of goals.
- Human Resources – Have a list of the key personnel, including in-house members and any other external consultants along with their expertise and skills. With the availability of a skilled team, an organization can overcome any weaknesses by proper strategic planning. It makes sense to hire local staff through which one can expand knowledge of cultural awareness.
- Products & Services – Build a Unique Selling Point for a business that wins in the competitive market.
- Sales & marketing – Draw up a strategy to successfully market and sell products and services to prospective consumers.
- Budget Planning – Develop a financial budget for funding the establishment and operations of the company. Identify sources of finance and how finance will be raised and serviced.
- Business Forecast – A business forecast will help to identify the profitability of the business over time. This is an essential component of securing investment for the future.
Step 3: Determining a Commercial Structure
Determining the commercial structure of an entity is one of the key elements of entering the UAE market successfully. This in turn is dependent on the type of business that is to be set up. There are two principal modes of incorporation in the UAE – mainland and free trade zones. Different commercial structures and licences are possible in the mainland such as on-shore LLCs, branches, private joint stock companies, professional licences, etc. There are around 40 free zones in the UAE catering to different industries. Free zones offer the advantage of 100% foreign ownership along with other attractive features for businesses. Different modes like direct investment, distribution partners, franchising, etc., can be chosen for investing into the UAE
Registering a local entity is the preferred choice for expanding rapidly in the UAE. On the other hand, franchising works well for entities that enjoy a strong brand reputation and recognition. It is best to work with a local consultancy firm which has the necessary experience and expertise to guide the businessman through the process in a timely and cost-efficient manner.
Step 4: Understanding the Business Policies of the UAE Government
An entity in the UAE must adhere to many rules and regulations for operating a business efficiently and fairly. A responsible entrepreneur is obliged to comply with laws that:
- Govern business
- Protect consumer rights, labour rights and intellectual property rights
- Ensure safety and protect the environment
- Protect data and confidentiality and respect Intellectual Property
There are many ways in which an entity can enter the UAE market. PKF UAE entry strategists can help an entity plan a winning strategy to enter and thrive in the UAE.
PKF UAE has deep-rooted knowledge about the different jurisdictions and free zones in the UAE and can advise entities on the best way forward in forming a suitable entity with the right licence, in an appropriate jurisdiction which will help the entity to conduct its business efficiently and in compliance with local laws.
In addition, PKF UAE also provides end to end support during the registration process, thus saving time, effort and cost and freeing up management time to concentrate on their core business.
Please contact PKF UAE to conduct a market and financial feasibility study or assistance with setting up an entity in the UAE. We will be pleased to assist you in your vision.