Why should businesses consider exporting
There are several reasons why businesses can benefit from exporting. Businesses that export tend to grow faster than those which remain purely in domestic markets, and each are more resilient through diversification across several markets.
Businesses which operate internationally also open operations up to a much larger customer base, and can minimise the effects of seasonal fluctuations in sales. In addition it can be a chance to increase sales in times when the home market is experiencing low growth.
How should businesses go about deciding which market to target
Sometimes we see cases of “accidental” exporting, whereby a company receives an order for products from overseas and thereby becomes an exporter. However, for many companies, exporting will be a strategic part of the growth strategy.
For any product or service, a business needs to be confident that the demand exists in their new market. The Santander Trade Portal can help find the demand and potential partners there are 2500 importers in the UAE alone on the Trade Portal. Business leaders then need to do as much preparation as possible in home markets to understand the new market and to establish local connections. Identifying where there is demand for a product is not always easy, and it is here that Santander is trying to help.
For example, we have seen that there is strong demand for UK food and drink products in the UAE, particularly due to their limited “home grown” food and drink capacity. We recently ran a “meet the buyer” event for UK food and drink customers, where we put them in front of the largest hypermarket chain in the Middle East, LuLu Group. The businesses pitched products to senior buyers from the group and discussions are now being held for the UK businesses to get products on the shelf within the next six months.
And why should UK businesses consider the UAE in particular
The country hosts rich opportunities for exporters, and in a diverse range of sectors. Oil and gas may be the first industries to come to mind, however, if we look at Dubai, in 2015, oil and gas contributed less than three per cent of its GDP.
The Emirates has a diverse economy with expatriates making up a large proportion of the population. With around 120,000 UK residents living there, it is not surprising that there are already over 5,000 UK companies operating there. Another benefit for UK companies is that English is widely spoken which can make business meetings easier when on the ground.
The geographic positioning of the UAE is also a strength of the market, it can act as a gateway to other Middle-Eastern countries and beyond with the UAE having established itself as a bridge between Europe, Africa and Asia. The UAE also benefits from having one of the most liberal trade regimes in the region and of course, there is no taxation on personal income or capital gains, making it an attractive market for investors.
In addition, the UAE benefits from good international transport links and infrastructure. It is home to two of the worlds largest airlines, Emirates and Etihad, and it is currently constructing what will be the worlds largest airport, Al Maktoum International. In fact the existing Dubai airport became the worlds busiest in 2014 by international passenger numbers overtaking the likes of London Heathrow, Hong Kong and Singapore.
What do you consider as the main challenges for businesses operating in the UAE?
As with any export destination, the UAE comes with some challenges, but these can be overcome. One of the main challenges for UK businesses looking to set up in the UAE is that there are restrictions on company ownership. Any company established in the UAE must have one or more UAE nationals as partners, who have at least 51 per cent share of the company. This can make it difficult for UK businesses, as finding the right partner can be challenging. It is here that local knowledge and networks are key.
Santander recently signed a partnership agreement with the British Centre for Business (BCB) in the UAE to support our customers when entering the market. The BCB work with the local government, and are able to act as the local partner that UK businesses need to help them get set up in the market for a period of 24 months. This allows businesses to take the time to find the local partner who is right for that particular operation.
Another challenge of operating in the UAE is the regulatory environment. Each Emirate has control of regulatory powers and the interaction of laws, including federal, individual emirate and free zone laws, which can be difficult to navigate. Again, this is where local knowledge and on-the-ground support comes in. In addition to our partnership with the BCB, we also have an alliance with Abu Dhabi Commercial Bank (ADCB). ADCB can provide the local expertise and support that is needed to help businesses successfully enter the market.
The UAE can provide a wealth of opportunity for UK businesses and with the right support, the results can be extremely rewarding.
If you would like to find out more about exporting to the UAE, please visit the Santander Trade Portal.