The Roadmap to Successful Ventures in the Middle East Series

There will be no quick fix economic recovery for businesses following the Covid 19 pandemic. However, looking towards the Middle East for medium to long term growth may be a wise strategic consideration as the price of Brent Crude struggles to rise above $40 dollars a barrel from a February 2020 high of $60.

Structuring a business venture in the Middle East Region requires, above all, patience. It’s not the panacea for those experiencing unparalleled trading conditions in other geographies. But businesses with patience and perseverance may find that each can bring their own reward in expansion in an area which has historically low production costs in less hostile conditions than other zones.

Finding local partners (LP) is the first step in a Middle East expansion strategy.

The right LP with the right deal is one of the keys to success in this region: their contribution to market verification/connectivity, legal compliance, localisation and logistics/services support can be crucial.

There are some golden rules to be followed in finding the right local partners.

  • Go territory by territory NOT regionally: local connections and knowledge are critical LP inputs.
  • Be realistic with timelines: a 5-year contract with appropriate break clauses is a good starting point. Less than 2-3 years is simply insufficient time to build the venture and relationship up and out.
  • Ensure the commercial arrangements are WIN/WIN: if the LP is not incentivised and treated openly and fairly the venture the relationship will quickly run into the long grass or turn negative.
  • Communicate proactively: regular review meetings however informal are needed to develop the relationship, to spot opportunities and to avoid friction points.
  • Agree in advance the circumstances in which either party may call time on the deal: failure to achieve vendor registrations with a reasonable period and failure to achieve minimum initial sales and/or minimum annual sales once momentum has been gained should be cornerstones.