Table of ContentsWhy Choose U.A.E.?.................................................................................................................................................... 1

Quick History of Major Events .............................................................................................................................. 1-2

Geography and Climate .......................................................................................................................................... 2-3

Population ................................................................................................................................................................. 3-4

Economy ................................................................................................................................................................... 4-6

Government .............................................................................................................................................................. 6-8

Political Climate ....................................................................................................................................................... 8-9

Local and Traditional Government ........................................................................................................................... 9

Legal Climate ......................................................................................................................................................... 9-12

Barriers to Trade ................................................................................................................................................. 12-19

Physical, Cultural, Religious Barriers ............................................................................................................... 12-13

Political Barriers................................................................................................................................................ 15-19

Free Trade Zones ................................................................................................................................................. 19-20

People and Culture .............................................................................................................................................. 20-21

Cultural Practices ................................................................................................................................................ 22-23

Dependency on Resources.................................................................................................................................... 23-25

Global Trade Environment ................................................................................................................................. 25-26

Major Trading Partners and Organizations .................................................................................................... 26-29

Major Exports and Imports ................................................................................................................................ 29-32

Currency and Exchange Rates ........................................................................................................................... 32-33

PPP and SPPP....................................................................................................................................................... 34-35

GDP and GNP ...................................................................................................................................................... 36-39

Efforts to Promote Green Technology .................................................................................................................... 39

Common Mistakes a Company Makes .................................................................................................................... 40

Unsuccessful Companies ........................................................................................................................................... 40

Conclusion ............................................................................................................................................................ 41-42

Bibliography ......................................................................................................................................................... 43-48

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Why choose the U.A.E.?

The United Arab Emirates is a very wealthy country founded on the oil and pearling

industries. It is a great place to do business if because it is a very safe country that has a number

of natural resources and skills that other countries do not. The central location in the Middle East

and Africa provide the U.A.E. access to over a billion consumers. It also has a number of large

free-trade zones that make it even easier to import and export while doing business. When doing

business in the United Arab Emirates and in other countries there are many things to be

considered. What kind of culture do they have? What is their government like? What is their

currency worth in U.S. dollars? These questions will all be answered in the following business

guide. Let us take you from A to Z on how to do business in the U.A.E.

Quick History of Major Events

The United Arab Emirates was formed nearly forty years ago of seven small emirates of

Abu Dhabi, Dubai, Sharjah, Ras Al-Khaimah, Ajman, Umm Al-Qaiwain, and Fujairah. Before

the U.A.E. was formed, many different countries had control of the land. It was first controlled

by the Portuguese in the 16th century, followed by the Ottoman Turks and the British

(Wikipedia, 2009). A lot of the culture of the U.A.E. is influenced by the British and as we will

discuss later some of their laws and government resembles the British. To the British, this area

was known as the pirate coast because of the numerous raids on the shipping industry from the

16th to 19th century. This meant they had to provide extra protection if a business wanted to ship

goods through the U.A.E. In the late 19th century, the British signed an agreement with 9 of the

newly named 'trucial' states to provide them protection from piracy. Finally the U.A.E. was

formed after the British withdrew their presence in the country in the 1971.

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Oil is one of the largest portions of the revenue generated by the U.A.E. and was first

harvested in the 1930's (Wikipedia, 2009). Profits from the oil skyrocketed from that point on

greatly increasing the country's wealth (Encyclopedia Britannica, 2009). The rulers around the

area used this money to better their society by building schools, houses, hospitals and roads. This

wealth helped the U.A.E. become a financially sound country that is recognized as one of the

wealthiest in the Middle East. It is also known as the banking capital of the Middle East, and

after 9/11, it cooperated with the United States and froze the assets of suspected terrorist

members of Al- Qaeda (Wikipedia, 2009).

Geography and Climate

The United Arab Emirates (U.A.E) is located in the Middle East, on the Persian Gulf.

The U.A.E is proximate to the Straits of Hormuz, in-between the Oman Gulf and Persian Gulf.

Most of the land in the U.A.E is desert and sand dunes can be seen in some parts. The climate in

the U.A.E is hot and dry, with maximum average temperatures reaching 118°F. Average

minimum temperatures in winter are between 50°F

and 57°F. The cooler season is the best time for

traveling. In the desert areas, groundwater

sometimes enables oases to from, where date palms,

acacia, and eucalyptus grow. However, most of the

land supports only grasses and thorn brushes.

Native animals include Leopards and the Arabian

Oryx, but over-hunting has brought their numbers close to extinction. Even though the U.A.E is

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close to the coast line, it does not rain a lot, but the humidity level is usually at least 80%.

Sandblasting by wind and sand sometimes occur, making it impossible to go outside.

This chart represents average temperature levels in Dubai throughout the year.

Population

The population in the United Arab Emirates is around 4.8 million (data current as of 2009)

(Wikipedia, 2009). About 1/5th of the country are “foreigners” because a large portion of the

country is migrant workers. The U.A.E. has one of the most diversified populations in its region.

For that reason this is a great place to conduct international business because there are many

different international companies already successfully conducting business in the U.A.E. Oddly

enough there are just about two males for every female in the U.A.E. which means that it will be

easier to market towards the men of the country. (U.A.E. fact book, 2009)A majority of the

population lives in the major cities of Dubai and Abu Dhabi, while the rest live in small towns

throughout the desert.

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Business Impact on population is recently modernized society with a highly urbanized

population means there should be a high demand for technology and home entertainment

products, also extremely high number of working foreigners means may be demand in that

market for phone calls home, low-cost food and clothing. (CIA, 2009) They have high income

per-capita means the citizens have more discretionary income to spend on products and very high

number of males means that products should be targeted towards male use, or items that a male

would buy as a gift for a female. (Wikipedia, 2009) The UAE has a high growth rate means

birth rate must be high, so baby products should be in demand and nearly complete Muslim

population means that products should be compatible with Muslim faith and practices. It would

be important to avoid product areas which are offensive to Muslims like alcohol, provocative

clothing, swimsuits, music & movies & games with nudity or obscenity, etc.

Economy

The UAE used to be dominated by pearl production, fishing, agriculture and herding

prior to exporting oil. Oil provides the economy for a large portion of its earnings and can

provide investors to come due business with them. The amount of oil they have is said to last

well over 150 years (U.S Department of State 2007). In 2006 they produced about 2.8 billion

barrels of oil every day; this amount of oil production is huge and has been very profitable to the

economy. The United Arab Emirates is a well open economy and has been emerging in the

globalization and in the international trade in the Arabian Gulf. It is increasingly its trade and

commerce between the east and west. The U.A.E has had grown within its imports of 31% as the

average between 2003 and 2007 to $116.6 billion. Mean while the exports had risen to 28%

178.9 billion over the same time.

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United Arab Emirates 23 4.92 31 rank in the Global Competitiveness this rank it out of 134

countries.

According to the CIA the UAE has a high per capita income and a sizable annual trade

surplus. There has been in increase in their imports as far as in manufactured goods and

machinery, and transportation equipment that accounted for 70% of total imports. Abe Dhabi is

the wealthiest emirate and manages $600 billion overseas investments.

The UAE has been a bankrupt region to a modern state since the discovery of oil thirty

years ago; this finding has changed the UAE in a good way. The government has been able to

put more money towards creating jobs, and expanding infrastructures. Another good thing is in

April 2004, they signed a Trade and Investment Framework Agreement with Washington. The

TIRA is where the South African Customs Union, United States-Icelandic Forum, as a

discussion for the U.S and other specified countries to make things better for trade and

investments. (U.S Trade Representative 2008) In November 2004 also agreed to make

negotiations toward a Free Trade Agreement with U.S a good quality that the UAE as to offer

investors is Free Trade Zone, offering 100% foreign ownership and zero taxes; this is good for

outside investors. The down side of the free trade zone is that the UAE wants at least 51% local

citizen ownership in all businesses operating in the country. Although this is what the

government would like this is still under review and most likely will stay around because the

WTO regulations come in to play. Some may disagree with this and find it to be too much of the

government is taking ownership of individuals companies. Although things have been going well

and moving up, the current economy has affected the UAE in the aspect of oil revenues are going

down, and tight international credit market the growth for 2009 is going to be low. This is a

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problem for the UAE because a large portion of their income is from oil in the long run is going

to be a challenge.

The UAE is involved in the Gulf Cooperation Council, this committee focuses on

economic issues, and this is great benefit for the UAE. As an investor I see it being important for

a country to understand the economy and you can better help your country.

The future plans the UAE has is to focuses on diversification and private sector

employment. This plan is the next few years and is a good plan. This is good because they are

looking at their risk within investments and putting it into one portfolio

The UAE exports are $210.5 billion (2008) country comparison to the world: 21 and

exports for crude oil 45% natural gas, re-exports, dried fruits, and dates. The imports are $145.8

billion (2008) country comparison to the world: 29. Companies that work in the oil industry will

find the UAE a good match and a place to invest.

Government

The stability of government can show a buyer or an investor what to the country is really

like by how their government is being run and how things are going overall. This gives an

overall view in what to expect of the country since every country can be run differently and

having different sets of rules. Understanding the different rules and how they do business is

extremely important. The United Arab Emirates is a Federation of emirates. There are seven

emirates and each one has its own ruler. Although every emirate has its own ruler there is one set

ruler (US. Department of State 2007). The capital of UAE is Abu Dhabi. The flag is three

horizontal bands of green on the top white and black with wider vertical red band on the hoist

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side. The president of Abu Dhabi is Sheikh Khalifa bin Zayed Al Nahyan. Sheikh became

president November 3, 2004; he had been acting as president since his dad was ill. In December

of 1971 he became the duty of Prime Minister of the Federal State, and then in 1976 he was the

deputy of Commander of the Armed Forces, he also heads the Supreme Petroleum Council

(Wikipedia 2009). The country became independent in December 2, 1971. The country is trying

to expand on airlines and going green how this affects the stability of the government, this could

affect the government stability if the government puts too much money into going green and gets

no benefits. With the airlines, this is a huge finical burden especially if they did not make any

money on the new airplanes.

The UAE is liberal laws compared to other countries. They have a civil law jurisdiction.

Shari’a or Islamic law is used for family law and criminal acts also. This affects doing business

with the UAE and their legal system can be difficult because the Shari’a and Islamic law

includes politics and economics, business and more. If an outside investor is from the U.S this

can be a conflict in the aspect that one would need to read up on how there laws work and what

the regulations are.

They have a strong emphasis on human rights and equality. This is good for investors

who care about people have equality, and human rights. I think this can bring a different kind of

investor to the UAE. It is impor The UAE has three branches, executive, legislature, and

judiciary. The executive branch includes the President, vice president, Prime Minister federal

supreme council, and council of Ministers. The president and prime minister are hereditary.

The UAE is a federation of seven monarchies each with its own ruler: Abu Dhabi,

Ajman, Fujairah, Sharjah, Dubai, Ras al-Khaimah, Umm al-Qaiwain. Since the UAE consist of

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seven monarchies this gives investors many places to choice from when they decide to invest.

The UAE was formed in 1971, after obtaining independence from the United Kingdom.  It has a

constitution.

The UAE government combines three different types of government:  federal,

presidential, and elective monarchy. As in the U.S., there are three branches of government: 

executive, legislative, and judicial. The executive branch has a head of state, called the President,

and a head of government, called the Prime Minister.

Political Climate

The U.A.E. does not have political parties. The rulers hold power on the basis of their

dynastic position and their legitimacy in a system of tribal consensus. There are no elections,

except for a restricted 20 member committee election in the Federal National Council (legislative

branch) and no formal mechanisms through which the people can participate in public-policy

decisions. The most important branch is called the Federal Supreme Council. It composes of

Supreme Council Members, Crown Princes’, Deputies of the rulers, and the Members of the

cabinet. (United Arab Emirates, 2008)

The Federal Supreme Council Composed has responsibility for formulation and

supervision of all U.A.E policies, ratification of federal laws, and oversight of the union's budget.

The rulers of the seven emirates elect a President and a Vice-President from amongst their

number, to serve for a five-year renewable, term in office. The president is assisted by the

council of Ministers. The ministers are represented in the cabinet in numbers relative to their size

and importance, headed by the prime minister or Vice President. The Prime minister or Vice

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President then selects the ministers. Usually the emirates with larger population will have more

ministers drawn (Levels Of Govt, 2008).

The Federal National Council (FNC) has 40 members drawn from the emirates on the

basis of population. The FNC has a legislative, as well as a supervising role under the

constitution. It is responsible for examining, and amending, if necessary, all proposed federal

legislation, and may question any federal minister regarding their performance. (Levels Of Govt,

2008).

Local Government

Each of the emirates has its own local government. The most developed, most influential,

and most populous emirate, Abu Dhabi, has its own central governing organ, the Executive

Council, chaired by the Crown Prince, under which are a number of separate departments,

equivalent to ministries (Levels Of Govt, 2008).

Traditional Government

Traditional government of UAE has a rule that people have an open access to the rulers

or sheikhs of their tribes. In smaller emirates, rulers hold councils, where people and expatriates

have access to discuss or voice opinions with sheikhs (Forms Of Govt, 2009).

Legal Climate

UAE is a Muslim country therefore their legal system is taken from the Sharia (Islamic

law), a large part of the legislation is composed of a blend of European and Islamic ideas. (Legal

System, 2008). Civil Law is largely based on statute law. UAE has embodied commercial and

9

civil codes that enable the simple principles covering agencies, labor law, intellectual property

and company law. In the official gazette, laws are published in Arabic (Legal System, 2008).

Taxation Laws

There is no federal tax legislation in the UAE; instead each Emirate has its own tax law.

Personal income tax, capital gain tax, value-added tax, withholding tax, and corporate tax are not

applicable in the UAE. The only companies that are required to pay taxes are of oil, gas,

petrochemical, and branches of foreign banks (Tax Laws, 2008).

The UAE does not have any personal tax laws. Municipality service charges are held in

place instead. Individuals living in the UAE will pay up 5 to 10% on food purchases in

restaurants as well as hotels with charge 10 to 15% on your room rates (Tax Laws, 2008).

Sharjah Tax Law:

Every chargeable person who conducts trade or business shall be subject to sliding scale up to

55%

Income < Dhs.1,000,000 0%

Income =< Dhs.1 000,000 to > Dhs.2 000,000 10%

Income =< Dhs.2 000,000 to > Dhs.3 000,000 20%

Income =< Dhs.3 000,000 to > Dhs.4 000,000 30%

Income =< Dhs.4 000,000 to > Dhs.5 000,000 40%

Income < Dhs.5 000,000 55%

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Taxable income is computed after the deduction of all costs and expenses, including the

acquisition cost of goods, the costs of operating the business, allowances for depreciation,

obsolescence and exhaustion of tangible and intangible assets and losses (Tax Laws, 2008).

Sharjah Free Zones 2:

1. Sharjah Airport International Free Zone: World’s first ISO Certified airport free zone, 100 per

cent exemption from corporate and personal income taxes, for companies, investors, and their

employees

2. Hamriyah Free Zone: 100% import, export tax emption, repatriation of capital and profits

allowed, No corporate profits tax and no personal income tax (Tax Laws, 2008):

The Federal Labor Law

The Federal Labor Law, having the power to succeed over the Free Zone Labor Laws, is

most commonly used throughout the seven Emirates. Considering immigrant workers make up

about 90% of the workforce, there are many prerequisites in order to work in the UAE including

Employment Visas, Labor cards and Medical tests. There is no legal minimum wage, and they

are paid monthly, weekly or daily. Although there are many aspects of UAE's Labor Laws that

are comparable to the rest of the world, there are many distinctive elements as well (Personnnel

labor laws, 2008).

Laws for juveniles and women

Juveniles must be 15 years of age to be employed; they are subject to limitations such as

the amount of hours and conditions in which they work (MOL, 2008). Women are eligible for

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employment in general; they are prohibited to work from the hours of 10 pm to 7 am or working

in dangerous or difficult positions. (MOL, 2008)

Bribery Laws

All seven of the Emirate governments have differently defined individual proscriptions

against bribery, but the Federal Penal Code is binding throughout the country. While bribery is

nowhere legally defined as a legal term, Sections 234 to 239 of the United Arab Emirates Penal

Code specifically makes it illegal to “offer, to give, or to agree to give any gratification to a

person who is…expected to be a public servant as an inducement or reward for performing any

official act.” (Arab Law Quarterly, Vol. 15, No. 4, 2000)

Barriers to Trade

Physical Barriers:

The main physical barrier to trade in the U.A.E is the desert. The desert poses as a

problem because some cities are far away from the coast line and roads serve as the only mode of

transportation between them.

The U.A.E doesn’t have many railroad tracks linking some cities with others, making the

transportation of oil is slow. To help solve this the U.A.E’s Union Railway is currently in talks

with ADNOC to explore transportation, via rail, over seven million tons of granulated sulphur

annually from the Shah and Habshan oil and gas fields to Ruwais. This would help increase the

transportation of oil, which in turn will help the countries oil, gas and petrochemical industries in

the country (Morris, 2009).

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Cultural Barriers:

The U.A.E has many cultural barriers to trade (as we will see more later) there are many

things that influence these cultures. Some of the major influences in the U.A.E are.

Religion

Images of people and animals are forbidden by Islamic law. High offense is taken in the

pictorial rending of any religious figure, such as Allah or Mohammed. Therefore, calligraphic art

is used as an alternative form of creative expression. (GPI, 2008). For instance the Jyllands-

Posten Muhammad cartoons controversy (Cartoons Controversy, 2007), sparked riots around the

world, including in the U.A.E (Gall, 2006).

Religion should be especially considered when marketing products. An example which

was given in the report “The Role of Multinational Companies in Dubai” was of an

advertisement which was inappropriate for the Arabian region is an ad by President Cheese, and

it pictured Jesus reaching up to the sky in a pose similar to that of the Statue of Liberty and

grabbing the cheese. Kamal Khoder of Fortune Promoseven said that the local Arab could not

relate to the ad’s religious context. “If you show them an angel, they do not know what to think.

An image of an angel will not work here, not because people hate it, but because they cannot

grasp the idea. It doesn’t mean anything to them,” he said. (Singer & Boryana, 2006)

Uncertainty Avoidance

One of the predominant characteristics of the country is its high uncertainty avoidance.

The U.A.E has an uncertainty avoidance score of 68 in comparison with other Arab Countries

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due to shared religion (Islam). This indicates a low level tolerance for uncertainty (Slide Share,

2009). From a business perspective, the high level uncertainty avoidance in the U.A.E implies

that: People don’t like to take risk even when they are calculated. They are very fatalistic and

they don’t like to make decisions when some elements are unknown. New idea and concepts are

more difficult to introduce. So, if a company wanted to come up with a new product they

shouldn’t expect the market to embrace immediately. They should allow time to the market so

that it will develop and understanding of the new product. Due to a need to negate uncertainty,

proposals and presentation are examined in details, so as an advice: back it up with facts and

statistics (Uncertainty Avoidance, 2009). A recent study showed that uncertainty avoidance

slowed down the development of technology infrastructure (Cardon, 2008).

Clothing

While conducting business in the U.A.E, unique dress code requirement need to be

considered. In the U.A.E most of the body always remains covered. A jacket and tie are usually

required for men at meetings, along with long pants and a shirt. Long-sleeved shirts that are

buttoned up to the collar would also be preferred. Men should avoid wearing jewelry,

particularly around the neck. The appropriate business dress during the day for men is a shirt

with a collar and trousers. In the evening a man would simply add a tie to his daytime attire (Men

Clothing, 2008). Females should make an effort not to wear too figure hugging clothes and to

cover up their skin, a shirt and trousers or long skirt would be fine (Clothing).

Even when marketing, clothing needs to be considered. An example of this is taken from

the report “The Role of Multinational Companies in Dubai” when it comes to marketing skin

care products and jewelry, it can be challenging to appeal to women without showing female

14

bodies in advertisements. Intermarkets Madco, Managing Director Saad El Zein in the report

talked about the way skin care advertisements are localized according to the values of Muslim

culture. He said that these ads are often edited to show a little more clothing, covering parts of

the body that are considered too revealing. (Singer & Boryana, 2006).

Political Barriers:

Import/export prohibitions exist in the United Arab Emirates for several reasons ranging

from environmental, health and safety, religious and even moral reasons. The prohibitions are

regulated by the GCC and are imposed on all kinds of items ranging from drugs, counterfeit

money, certain toys and even several types of waste.

Tariffs

Most goods in the United Arab Emirates have a 5% tariff rate. The tariff is based on The

GCC and no import tariffs apply to imports from within the GCC (HSBC, 2008). Many

imperative items are duty free such as agricultural, raw materials, food products, pharmaceutical

products and others. Exceptions to the 5% tariff are for alcohol and tobacco products with 50%

and 100% respectively. (U.A.E. Trade Barriers, 2008)

Licenses

A trading license is required in order to conduct trade in the United Arab Emirates

(U.A.E). The license can be obtained from the economics department at the emirates and is only

valid where it is issued. Trading licenses are held by exclusive commercial “agents.” The

15

advantage of having an exclusive commercial “agent,” is for networking reasons. (U.A.E. Trade

Barriers, 2008). Trade Licenses include: Import and Export Licenses.

To export goods from the U.A.E, exporters must complete an export declaration and have

the original invoice which is provided to customs. (U.A.E. Trade Barriers, 2008). Administering

customs and setting rates are responsibilities of each individual emirate therefore the duties and

rules maybe different among them. All items exported or re-exported for the U.A.E are required

to have the necessary documentation distributed by the Ministry of Economy and Commerce and

the assorted Chambers of Commerce in the particular emirate. U.A.E’s trading environment is

relatively open and liberal with its policies. Re-export shipment procedures include: (Export

Restrictions, 2008)

Re-export bill of entry from customs during clearance

4% CIF Import duty deposit given to customs

Re-exportation must occur within 180 days with shipments inspected before the re-

export

Reimbursement of the duty deposit is available for 30 days

Import licenses are not generally required for goods intended for personal usage.

However, if importing goods for resale only bring in what items you are licensed for. Imports

from the GCC generally receive favorable treatment. Licenses are available for one year, and can

be renewed (U.A.E: Import Restrictions, 2008). In order to import, the agency must be registered

with the Ministry of Economy and Planning. The Trade Agencies Law is a system that regulates

16

the majority of imports. There are several thousand agencies that are registered (U.A.E. Trade

Barriers, 2008)

Subsidies

The U.A.E subsidies up to $10 per barrel of gasoline, however the country does not have

any subsidy on diesel prices. The United Arab Emirates has the lowest subsidies on fuel prices

among oil producers, and experts believed that this has contributed to the accelerating inflation

rate in the country (Bernama, 2008). There have been allegations that Emirates airlines have

been receiving fuel subsidies from the Dubai Government (Gale, 2008). The airline has argued

against the allegation (Emirates, 2009) however it’s hard to say if there is some truth to the

allegation or not.

Embargos

All imports and exports to and from Israel are prohibited (HSBC, 2008). There are

prohibitions on the import or export of currencies into the U.A.E from Israel and countries

subject to United Nations sanctions (Money, 2001). The U.A.E imposed an arms embargo on

Iran (Arms embargo, 2009) recently with the seizing of a ship with North Korea arms bound for

Iran (Charbonneau, 2009). U.A.E. also has a specific ban on Indian meat imports due to health

and hygiene concerns relating to that area. (Vasudeva, 2000).

Many previously saw Coca-Cola as NIMEP Insights an Israeli company because it had

branches that operated in Israel. With this marketing strategy, however, Coca-Cola effectively

related to the cultural and traditional views of U.A.E residents, and was able to overcome the ban

17

that had previously been put on its operations due to its connections with Israel (Singer &

Boryana, 2006).

Labeling conditions

The labeling restrictions stated that the following information must be printed in Arabic

on the original product label or packaging: brand name, product name, ingredients (in

descending proportion, additives, origin of all anime fats and oils, net content in metric units,

production and expiry dates, country of origin, manufacturer’s address and special storage or

preparation instructions.

Labels may not contain pictures of pork or alcohol, nor can they contain recipes requiring

these products. Bilingual labels are permitted (such as, Arabic/English), but information printed

in Arabic must have the same prominence as information printed in the other language

(Marketing Restrictions, 2008).

Food products intended for use in Institutional purposes (hotel, restaurant, catering, etc.),

Manufacturing, and Re-export are exempt from the Arabic labeling requirement, provided their

original labels contain all the required information in English (Marketing Restrictions, 2008).

Barriers to Entry

The U.A.E revoked the monopoly rights of the Emirates Telecommunications

Corporation (Etisalat) and allowed for the creation of a second telecommunications company.

The Telecommunications Regulatory Authority (TRA) announced that it had approved the

establishment of a second, largely government-owned, telecommunications company, Emirates

18

Integrated Technology Company, which will operate under the trade name Du. Local press

reports have quoted the TRA Director General as stating that the duopoly will continue until

2015 when the market will be further liberalized (ustr.gov, 2006).

Investment Barriers

Except for companies located in one of the Free Zones, at least fifty-one percent of a

business must be owned by a national.  A business engaged in importing and distributing a

product must either be a 100% U.A.E owned agency/distributorship or a fifty-one percent

national / forty-nine percent foreign limited liability company (LLC) (ustr.gov, 2006). Mc

Donald’s is 100% owned and operated by the Amman- Jordan: Emirates Fast Food Company

(McDonald's U.A.E, 2009).

The government portrays its conservative side, but rarely chooses to enforce strict Islamic

ideals on foreign investment. For now the common motivator of money seems to keep everyone

in line; but big investors and western businesses will remain vulnerable to future cultural clashes.

(Cultures Business Strengths/Weaknesses, 2008)

Free Trade Zones

The U.A.E. is home to a number of different free trade zones that can be very appealing

for doing business inside the country. Some of the benefits to doing business in these trade zones

is that, you are able to have 100% foreign ownership in your company and avoid 100% of the

tariffs on importing and exporting. (U.A.E. Embassy, 2009) You are also not subject to any sort

of income tax or even corporate taxes while operating in these free zones, which can add a lot of

profit to your business. Some of the major free trade zones in the U.A.E. are the Jebel Ali Free

19

Zone and the Dubai Airport Free trade zone. (U.A.E. Embassy, 2009) These are a great way to

get your business in the country in order to make a significant amount of money.

People and Culture

The United Arab Emirates has a very diverse culture and is very tolerant of other people's

views and beliefs. This is great place to do business in because they are more than willing to do

business with people of another culture than their own. The majority of people that live there are

Emeriti, Iranian, Pakistani, and Indian. Only about one fifth of the people in the U.A.E. are

citizens, the rest are immigrants and extended visitors. The Emeriti people are the native

inhabitants of the U.A.E. and are predominantly follow the Muslim religion (Wikipedia, 2009).

Arabic is the official language in the U.A.E. and other languages include: English, Hindi, and

Persian. It would be a very wise idea to hire an interpreter so you do not run into any

unforeseeable misunderstandings about the language and even the culture while doing business

there. Emiratis are a very hospitable people who feel honored to have guests (Everyculture,

2009). They treat their guests with the utmost respect and assume the guests will return their

kindness and respect.

To do business in the United Arab Emirates you must be aware that their workweek is

different then in the United States. Its official work week is from Sunday to Thursday and its

office hours are from 7:30 am to 3:00 pm. The weekend for most companies falls upon Friday

and Saturday, as is customary for a number of Muslim countries. During the religious holiday of

Ramadan, the work week is shortened by about two to three hours per day and shifts may even

be split between the morning and night.

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The official religion of the United Arab Emirates is Muslim, of which a majority follows

the Sunni division of Islam. There are also a number of different religions such as Christianity

and Hinduism present throughout the country. Religious tolerance is practiced throughout the

U.A.E. which is shown by the presences of churches and temples. Most of the country is affected

by Islam because of the fact that it plays a major part in the U.A.E.'s legal system. All matters

that have to deal with marriage, divorce, land disputes and other various things are dealt with by

religious law, which we will discuss later. (Encyclopedia Britannica, 2009).

Social Status

Society in the U.A.E. has two main categories, if you are a national of the country you

are called Al-Muwateneen and the other is if you are an immigrant, you are referred to as Al-

Wafedeen (Encyclopedia Britannica, 2009). After that if you are a national to the country, there

are smaller sub categories, sheikh families, merchant class, middle class, and low-income. If you

are born into a sheikh family you will inevitably hold power over the merchant and middle class

workers, and therefore if you want to do business in the U.A.E. you will want to befriend

someone from a sheikh family, perhaps even a king. Immigrants are divided into the top

professionals, middle range professionals and semi skilled professionals. These range from

factory workers to high level businessman (Everyculture, 2009). The middle class of the U.A.E.

is rapidly expanding with the increase in foreign trade and education. This is a great country to

do business in if you need to access the rest of the Middle East because it is one of the largest

and most advanced countries.

21

Cultural Practices

The United Arab Emirates is similar to the rest of the Middle East when it comes to

cultural practices. They use a number of the same greetings and gestures. While doing business

in the U.A.E. you are expected to be respectful, patient and courteous. Most people use the

traditional Islamic greeting of Al-salam alaykom, which men will follow with a quick nose-to-

nose touch and a handshake, while Women greet each other by kissing several times on both

cheeks. (Encyclopedia Britannica, 2009) While at meetings you must always be on time and be

patient if someone else becomes late or does not show at all. Before conversation, it is customary

to ask about the health and wellbeing of the other person's family (if you already know them of

course). This simply shows them that you care, allows them to feel more comfortable when

talking, and establishes a relationship with them so you know that you are there for more than

just business. When doing business with multiple people in a company, you must always greet

and address the senior business partner first and work your way down depending on their title as

a sign of respect. If you are invited to a household in the U.A.E. you will have a different

experience depending on your sex. A man visiting a U.A.E. household you will be invited into

the main living room while women will be taken into a smaller room off somewhere in the

house. This is because in the U.A.E. women are still treated differently than men although this

has been changing recently. (Encyclopedia Britannica, 2009). Like many countries of the area

you should always dress conservatively for meetings and attempt to cover most of your body.

Never schedule your meetings during prayer times or religious holidays.

One example of a successful company that really realized the potential that changing and

developing its product around the U.A.E. and other Muslim countries culture is OnePure

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cosmetics. OnePure is a very successful Canadian cosmetics company that uses a pork-free

formula when producing its makeup (Arabian Business, 2009).It does this because they have a

strong understanding of the Muslim culture and realized that devout Muslims in the U.A.E.

needed a product that they could use without breaking some of the main laws of their religion.

Products similar to these are branded Halal, which means lawful in Arabic. They were able to

attain success by paying attention and putting to use ideals that many Muslims use.

Most of the food in the U.A.E. consists of fish, rice, bread, homegrown vegetables, and

meat (sheep, goats, and camels) this however is changing due to their emergence into the global

economy, now they're importing food from various different countries. (Wikipedia, 2009)

Restaurants are beginning to offer a larger variety of ethnic food and some fast food restaurants

are coming to the U.A.E. such as McDonalds and Burger King. This is really a great place to

expand and franchise if you are looking to expand into the Middle East. A large part of the

country observes the strict Muslim culture of not consuming alcohol or eating pork which you

must be considerate of when traveling and doing business in the U.A.E.

Dependency on Resources and Its Problems

The U.A.E’s economy has been sustained by foreign labors from Asian countries because

the U.A.E encourages the hiring of a large number of immigrants and migrant workers. Due to

these labors’ contributions, the U.A.E economy has achieved spectacular economic growth

compared to neighboring Gulf countries. However, this over-dependency by businesses on

foreign workers has brought on various problems. For instance, the number of foreign workers

accounts for 20% of the population in the U.A.E, and the economic discrepancy among foreign

labors has become widened. This intensifies ethnic discrimination. Indian workers make up the

23

highest percentage of immigrants. Other Asian labors are from Pakistan, Sri Lanka, Nepal, and

the Philippines. Immigrants and migrant workers should be treated equally, but Indian workers

are more highly valued because of their higher education. The ratio of competent Indian

business people and technical experts has increased gradually. On the other hand, other foreign

workers cannot keep up with the conditions of the current labor market. India historically has a

strong bond with the U.A.E, and Indians can expand their business easily in U.A.E marketplace

and business world. Other foreign workers work as janitors and maids. The main reason for the

wide economic disparity is that salaries are subject to socioeconomic factors and nationality.

Indians receive special treatment. In their country, the development of computing technology

has become highly distinguished among other Asian countries.

Overpopulation of immigrants and migrant workers will bring another serious problem.

The U.A.E cannot guarantee that it can protect its own culture if its traditional ethnic group

becomes a minority. To maintain their own culture, the U.A.E government encourages a higher

birthrate. (Wikipedia, 2009). The government also knows that U.A.E has to depend on foreign

labor, but they have to be concerned about who will be able to cooperate in the development of

the U.A.E economy.

The working conditions of foreign workers are a major concern for the U.A.E. One

Nepali national worked as a janitor for 8 months, but the boss did not pay the correct wage even

though he was permitted to work in U.A.E. The worker could not even afford to buy his meals.

This type of case is very common in U.A.E, and has often been published in U.A.E newspapers.

Another case involves a boss confiscating the passports of migrant workers who then cannot

changes their jobs. A working visa can be issued for specific companies and occupations, so

workers have a difficult time changing to another job. If they change jobs, they would be

24

regarded as people who live in the U.A.E illegally. Staying illegally would certainly expose them

to being expelled from the U.A.E. The owner who hired illegal foreign residents would also be

punished. The only way to change their workplace is for foreign workers to pay a forfeit charge

to the previous owner so that they can get their passport back.

The worst problem is that illegal foreign residents whose working visa is already expired

would affect the good relationship with Asian countries. U.A.E needs migrant labors to improve

its economic standard, but Asian countries that send foreign workers to the U.A.E to help in the

development of its economy would surely stir up feelings of antipathy if the U.A.E clamped

down on these illegal foreign residents.

The low percentage of food self-sufficiency in U.A.E is another remarkable problem. In

the gulf region, vast desert areas entirely cover the majority of the national land and cultivated

zones and aquatic resources are restricted. Thus, the U.A.E has to import most of its food

supplies. However, the population has skyrocketed, so the deficiency of food threatens the

political situation. Nowadays, the U.A.E depends on other countries for 85% of its food. The

Abu Dhabi investment fund has launched a plan to expand large corn fields in Sudan:

Global Trade Environment

As we will explain shortly, the U.A.E. is very active in the global trade environment. It is

able to do so because of the large number of free trade zones and its centralized location in the

Middle East and the world. According to the WTO, the United Arab Emirates placed in the top

30 for world trade. Global trade has many affects on a country; it can increase its wealth, add to

its cultural diversity, increase its technology and build relationships with other countries. Some

of the results of the U.A.E.’s trading in the global environment is helped increase the country’s

25

wealth and modernized it to be one of the most advanced in the Middle East. The U.A.E. also

benefited from the increased amount of immigration because it relies on a number of migrant

workers for production.

Major Trading Partners

The United Arab Eremite’s major trading partners are Japan, the US, Britain, Germany,

and China. Japan is the main trading partner for import and export. No significant natural

recourses are found in Japan, so Japan

depends on importing resources to sustain

its industrial and high-tech economy.

Therefore, Japan depends on oil from the

U.A.E and more than 100 companies

from Japan have expanded to the U.A.E

One of the oil companies from Japan, COSMO Oil, has been trying to build a committed

relationship with the U.A.E since 1967 in order to import oil. An example of this effort is the

launching in August 2007 by COSMO Oil of a Japanese language program in U.A.E. This

program aims to increase interest in Japanese culture among the people of the U.A.E:

A second example of Japanese relationship building in the U.A.E is the COSMO Oil

project to provide state-of-the-art technology in the area of electricity production. Mitsui

Engineering and Shipbuilding Co Ltd, one of the big Japanese ship building companies, was

commissioned to build a system for verification of concentrating photovoltaic (CPV):

26

This COV is capable of absorbing solar light precisely because it can follow the

movement of the sun. Abundant sunshine strikes the entire surface of the U.A.E throughout the

year, enabling the production of cheap electricity. Such a climate can lead the U.A.E to an

efficient and environmentally friendly economy.

Another well represented Japanese oil company, the Nippon Oil Corporation (NOC), also

works to build a strong bond between the U.A.E and Japan

in order to secure Japan’s oil supply. NOC developed the

Recosul: Recosul is a modified-sulfur concrete for

construction material:

Plenty of sulfur by-product is discharged from oil

factories. To recycle and leverage this, NOC reprocesses sulfur to Recosul. Recosul has strong

water-barrier features and high-level acid resistance features, so this is suited to the construction

of sewer systems, huge flume facilities, and hot spring facilities. Compared to normal concrete,

the amazing durability of Recosul can be seen in the graphic. On the acid-resistance experiment,

the graphic indicates that the cement concrete cylinders fully collapsed after three months.

Surprisingly, Recosul cylinders still maintain their original shapes.

NOC decided that the best partner for oil business expansion is the U.A.E. NOC has

already started to observe the market research for profitability there, and is planning on creating

a Recosul business there. In addition to these latest technologies, Japan exports machinery, home

appliances, steel, and transport machines to the U.A.E.

With respect to trade between the US and U.A.E, the US is the major import partner:

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The US exports products to U.A.E similar to those that Japan exports: The graph shows that the

percentage of export from the US surpasses the percentage of import from U.A.E.

The second graph shows that all states export products to U.A.E. Washington State is one of the

main states.

One example of the trade between the US and the U.A.E is the arrangement of nuclear

cooperation agreement in January 2009: Uranium enrichment reveals the danger of nuclear

proliferation, with nuclear components being diverted to military use. The US’s purpose of

arrangement is discouraging the U.A.E from moving toward nuclear development. Instead of

enriching uranium and disposing of plutonium in the U.A.E, the US offers the atomic fuel and

the advanced technology of nuclear energy development.

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Trade Organizations

The United Arab Emirates is a member of the World Trade Organization. It is also part of

the Council of Arab Economic Unity (CAEU), which is devoted to complete economic unity

between its member’s countries. With the help of the CAEU, the Greater Arab Free Trade

Agreement (GAFTA) was created (Wikipedia, 2009). This agreement is very similar to ASEAN

or NAFTA, and is a free trade zone to allow these countries to import and export without having

to worry about duties and other forms of protectionism. The United Arab Emirates is also a

member of OPEC, or the Organization of the Petroleum Exporting Countries. OPEC helps to

stabilize the international oil market and to safeguard the interests of its members (Encyclopedia

Britannica, 2009).

Major Exports:

In 2008 U.A.E had an estimated $210.5 billion worth of exports and is the 20th largest

export market globally. The U.A.E has quickly risen to become the 14th largest GDP per capita

and has one of the fastest growing GDP's in the world. The U.A.E’s main export commodities

are crude oil, natural gas, re-exports, dried fish and dates. Oil and gas represent over half of the

country’s exports. (U.A.E. Major Exports, 2008)

The U.A.E exports many of its goods to countries in the Southeast Asian region,

including Japan 25.5%, South Korea 8.6%, Thailand 5.8%, and India 4.8%. Japan is by far the

U.A.E’s biggest export partner; it receives nearly 62% of the U.A.E’s crude oil exports and

comprises almost all of its natural gas exports. (U.A.E. Major Exports, 2008)

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The Abu Dhabi National Oil Company (ADNOC), a state owned oil company in the U.A.E, with

access to country's oil and gas reserves,

considered to be the world's fourth largest

(ADNOC, 2009). In 2008 ADNOC estimated it

had a net export revenue of US$72 billion

(Baxter, 2009).

The U.A.E is the largest export market for the United States in the Arab World. Exports

to the United States rose by 38 percent between 2000 and 2007, from $971.7 million to $1.34

billion.

Exports from the U.A.E to the U.S include: Aluminum, Crude oil, Uncut or unset

diamonds, Cotton apparel and household goods, advanced iron and steel products, other

petroleum products, Cloth, fabrics, cords and threads, Non-cotton apparel and household goods,

Fish and shellfish, Boxes, belting, glass and abrasives.

The U.S depends far less on U.A.E oil and gas products than it does on other Middle

Eastern countries, with Petroleum products including oil and gas represent a little over 20% of

U.A.E’s exports to the U.S. in 2007. (Workman, 2008)

The U.A.E has the third-largest non-oil GDP, in the Arab world, only behind Egypt and

Morocco, as of 2005. With Re-Exported goods being a third of the country’s overall trade; this

being a result of the customs union created by the GCC. The city of Dubai has risen in the ranks

to become one of the primary ports for re-exports to countries surrounding the Persian Gulf. Iran

is the U.A.E’s biggest buyer of the re-exports. (U.A.E. Major Exports, 2008)

30

The U.A.E’s Major Imports:

Imports totaled in $145.8 billion in 2008 on a free on board basis. Oil imports to the

U.A.E in 2007 were measured at 192,900 barrels/day. Natural Gas imports measured in 2008

were at 16.75 billion cubic meters. United Arab Emirates imports include mainly machinery,

transport equipment, chemicals, and food. (U.A.E. Major Imports, 2008)

One of the biggest markets in the U.A.E is the exotic sports car industry. In past year, the

Middle East has gained huge profits when the oil prices soared to record levels. Although the

current status of the world’s financial sectors is in decline, many car manufactures are betting

that the demand will increase for exotic sports cars.

BMW, known for its high luxury automobiles, announced a 21% rise in sales in the

Middle East from the first half of 2008 over the same period last year (Auromotive major import

in U.A.E, 2008). Abu Dhabi saw the biggest rises in growth with a jump in sales of 56%. Dubai

led the way in terms of highest overall sales volumes with the Emirate accounting for nearly 25%

of the total sales across the region in the six month period (Roberts, 2007). Because of the

increasing number of high luxury automobiles on the road, many young Emirates are showing

interest in other brands including Maseratis, Lexus and Porsche (Kim & Irish, 2008).

Aside from the countries in the trade groups the U.A.E is a member of, other major

countries traded with as of 2008 included: China 13.5%, India 9.8%, US 9.2%, Germany 6.8%,

Japan 6.4%, Turkey 4.7%, Italy 4.5%. (U.A.E. Major Imports, 2008)

The U.A.E buys products from every state in the United States. Of U.A.E imports from

the U.S in 2007, the following product categories had the highest values: Civilian aircraft, New

31

and used passenger cars, Drilling and oilfield equipment, Non-monetary gold,

Telecommunications equipment, other industrial machines, Industrial engines, Parts for military-

type goods, Gem diamonds, excavating machinery. A closer look at the U.A.E’s trade statistics

with the United States reveals that the Middle Eastern country had a $10.3 billion trade deficit

with American in 2007. The most recent deficit statistic represents a 432% increase since 2003.

(Workman, 2008)

Various states in the US import items from the U.A.E. every year. The state of

Washington led the way with almost $3 billion worth of goods, and Texas and New York

followed with over $1 billion each (U.A.E Embassy, 2009).

Currency:

The United Arab Emirates dirham was introduced in 1973. The ISO 4217 code1 for the

United Arab Emirates dirham is AED. Unofficial abbreviations

include DH or Dhs. The dirham is subdivided into 100 fils.

(U.A.E Currency, 2009)

The U.A.E dirham is particularly vulnerable to the influence of external factors. As of

2005, recent increases in the prices of imported goods, depreciation of dollar, and an increase in

liquidity have all contributed to domestic inflation. (GOCURRENCY, 2005)

Exchange rates

1 ISO 4217 is the international standard describing three-letter codes (also known as the currency code) to define the names of currencies established by the International Organization for Standardization (ISO). (ISO 4217, 2009)

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1 U.S.D = 3.6725 dirham’s, which is approximately 1 dirham = 0.272294 dollar. The

government has maintained the above exchange rate since the late 1980s. The maintenance of the

exchange rate helps reassure businesses and governments that there is protection from currency

devaluation (U.S Chamber of Commerce). Note: officially pegged to the US dollar since

February 2002 (U.A.E Currency, 2009)

Issues with fraud

By late 2006 it became publicly known that the Philippine one peso coin is the same size

as one dirham. As 1 peso is only worth 8 fils, this has led to vending machine fraud in the U.A.E.

The Australian ten cent coin, the Pakistan's 5 Rupee coin, Omani 50 Baisa coin and the

Moroccan Dirham are also approximately the same size, shape and weight as the U.A.E. one

Dirham coin. (U.A.E Currency, 2009).

Inflation of the dirham is very dependent on the value of the U.S. Dollar. Recent events

in the World's financial markets have increased the value of the dollar, and therefore much of

these losses of purchasing power have been negated. Inflation for 2007 in U.A.E was at a

staggering 11.1 percent. Due to the substantial increase in the value of the dollar, the 2008

number stands to be significantly better. (Currency, 2008)

For the foreseeable future it seems that the dirham will remain pegged to the dollar. In

June, Sultan Nasser al-Suweidi reaffirmed his intention to keep the dirham pegged to the dollar

despite speculation to the contrary Due to the increased value of the U.S. dollar and al-Suweidi's

stance on the issue any change in the near future is highly unlikely (Currency, 2008).

Purchasing Power Parity (PPP):

33

GDP (purchasing power parity) is $184.3 billion (2008 est.), The U.A.E ranks 56th in

Comparison to the world. Note: data are in 2008 US dollars (U.A.E, 2009)

The GDP (PPP) per capita United Arab Emirates in 2009 is estimated to be $38,893.684.

Estimate for the future GDP (PPP) per capita of the U.A.E are: 38,625(2010), 39,318 (2011),

40,540(2012), 42,074(2013), 43,791(2014). All estimates were based on the 2009 figures. (List

of countries by future GDP (PPP) per capita estimates, 2009)

For purchasing power parity comparisons, the US Dollar is exchanged at 3.65 Dirham’s

only. Average wages in 2007 hovered around $210-254 per day (Wikipedia, 2009). The

depreciation of the dollar has had the biggest impact on the purchasing power parity of the

U.A.E. dirham against other currencies because of its direct peg against the dollar.

(GOCURRENCY, 2005)

Dubai Cost of Living Basket

For each aspect of cost of living Dubai is ranked Out of 228 international locations, ranked from

highest cost of living to lowest cost of living:

Alcohol & Tobacco (Alcoholic Beverages and Tobacco Products): 104th

Clothing (Clothing and Footwear Products): 4th

Communication (Telephone, Internet, and Mobile Communication): 221st

Education (Crèche, Primary, Secondary and Tertiary Fees): 127th

Furniture and Appliances (Furniture, Household Equipment and Household Appliances):

159th

Groceries (Food, Non-Alcoholic Beverages and Cleaning Material): 91st

34

Healthcare (General Healthcare, Medical and Medical Insurance): 28th

Household (Rent, Mortgage, Water, Electricity, Gas, Fuel, Local Rates & Residential

Tax): 5th

Miscellaneous (Stationary, Linen, General Goods and Services): 32nd

Personal Care (Personal Care Products and Services): 97th

Recreation & Culture (Books, Cinema, DVD, Sports Goods etc): 50th

Restaurants, Meals Out and Hotels: 1st

Transport (Public Transport, Vehicle - Costs, Fuel, Insurance and Maintenance): 159th

(Coleman, 2008)

Salary Purchasing Power Parity (SPPP)

A salary of $75 000 in Dubai is equivalent to:

$67 980 in Beijing

$57 812 in Johannesburg

$96 089 in London

$71 239 in New Delhi

$79 533 in Paris France

This means that an organization with a head office in Dubai, and an international office in

New Delhi would pay a position that is paid $75 000 in Dubai, $71 239 in New Delhi in order to

achieve the same salary purchasing power in each location. (Coleman, 2008).

The Gross Domestic Product

35

The GDP of the U.A.E ranks second in the CCASG (after Saudi Arabia), third in the

Middle East — North Africa region after Saudi Arabia and Iran, and 36th in the world ahead of

Portugal (U.A.E. Gross Domestic Product, 2008). In 2008 the GDP of the U.A.E grew by 23% to

934 billion Emirati Dirham’s. (U.A.E Interact, 2009)

Combined G.D.P. by Sector

The current Gross Domestic Product of the United Arab Emirates 934 billion Emirati

Dirham’s (2008 estimate) and is growing at a rate of 7.5% annually. (U.A.E. Gross Domestic

Product, 2008). The GDP can be divided by each sector of the economy (shown in the graph

above). The United Arab Emirates is mostly an industry (60.6%) based country with a large

service sector (37.6%) and a very small agriculture sector (1.8%). (U.A.E. Gross Domestic

Product, 2008)

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Contribution of Gross Domestic Product by Emirate

The following is the Gross Domestic Product of each Emirate in the U.A.E. (shown in graph

above). All data is estimated from 2007. (U.A.E. Gross Domestic Product, 2008)

Abu Dhabi - 110 billion American dollars or 404.03 billion Emirati Dirham’s. Annual Growth

rate: 12% (U.A.E. Gross Domestic Product, 2008). Abu Dhabi's GDP grew 30% in 2008 (U.A.E

Interact, 2009)

Dubai - 54.315 billion American dollars or 199.5 billion Emirati Dirham’s. Annual Growth rate

of 19.2%

Sharjah - 18.622 billion American dollars or 68.4 billion Emirati Dirham’s. Annual Growth rate

of 13.2%

Ajman - 2.722 billion American dollars or 9.99 billion Emirati Dirham’s. Annual Growth rate of

27%.

The other remaining Emirates (Umm al-Qaiwain, Ras al-Khaimah and Fujairah) contribute

very little to the overall Gross Domestic Product of the U.A.E. and, therefore, their GDP is not

37

calculated often. The difference between the GDP for the entire United Arab Emirates and the

GDP of the four Emirates listed above is about 7 billion American dollars (U.A.E. Gross

Domestic Product, 2008).

The United Arab Emirates' GDP in Relation to Other Countries

The U.A.E. has a fairly high Gross Domestic Product when compared to the rest of the

world. They currently rank #36 in the list of countries by GDP (U.A.E. Gross Domestic Product,

2008). The following is an edited list of countries sorted by GDP from the 2008 List by the

International Monetary Fund (in USD) (IMF, 2009):

Rank Country GDP (millions of USD)

- World 60,917,477

- European Union 18,387,705

1. United States 14,441,425

2. Japan 4,910,692

35. Ireland 267,579 36

36. United Arab Emirates 262,150 37

37. Portugal 244,640

179. Kiribati 137

Gross National Product:

According to Dr, Giyas Gokkent, Chief economist of the national bank of Abu Dhabi, the

GNP for 2009 is an estimated $200 billion, which is a decline from 2008’s $250 billion. (Haider,

38

2009) The U.A.E Minister of State Maitha Al Shamsi has stated that the U.A.E donated 3.6% of

its GNP to developing countries. (Arabian Business, 2008)

In 2006 the non-oil sectors contributed over 60% of the countries GNP (Goliath, 2006)

and in 2005 the GNP per capita was estimated at $24213 (Student Of The World, 2006).

Efforts to promote Green Technology

Green technology is very present in the Emirates. Emirates Airlines for instance has

launched the world's longest green flight trial.

(They have worked closely with the governments

of the United States, Russia, Iceland, and Canada

to plot an environmentally friendly flight. This

flight would save around 2,000 gallons of fuel and

30,000 pounds in carbon emission. It will take the

most efficient path through countries and will cut down on power by using electrical power

while on the ground. This goes to show that the U.A.E. is devoted to the current push for green

technology. In 2006, the government of sanctioned the building of Masdar city, which will be a

city completely devoted to renewable resources and solar energy. (Wikipedia, 2009). The city

will house around 50,000 people in a 6 square mile radius. Cars will not be allowed in the city

and they will have to rely completely on mass public transportation and walking. This is an

incredible strive to promote green technology and shows that any business in this city that wants

to do business should be willing to promote green technology.

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Common Mistakes Companies Make

There are a number of common mistakes that occur when doing business in the U.A.E.

and most of them can be easily avoided. One of the main reasons why companies are

unsuccessful when doing business in the U.A.E. is because they underestimate the amount of

time it takes to start a business (U.A.E. Embassy, 2009). It can be a lengthy process establishing

your company in the U.A.E. because of a number of regulations and “loops” you need to go

through from the government. Plan on a long start up time and release your product and

information in phases. A good idea is to hire a business development consulting firm in the

country you are going to expand into. Another major mistake is that their product or service does

not mesh with the cultural practices of the U.A.E. (U.A.E. Embassy, 2009). We will explain this

in more detail later on.

Unsuccessful Companies

When doing business internationally a company must be aware of the cultural differences

and what might be offensive in a particular country. One example of a company which failed to

do this is Boing Boing. When Boing Boing tried to expand into the U.A.E. they ended up getting

censored. The company originally started as a

magazine and eventually turned into a web blog

with the development of the internet. (Wikipedia,

2009) This means that anyone can post whatever

information they want because the site cannot be

moderated 100% of the time. Boing Boing has

been banned in several countries including Qatar and the U.A.E. because a small portion (less

40

than 1% of the posts on Boing Boing) of their information and posts on their site are deemed

“pornography” and related to nudity (Boing Boing, 2009). Nudity and showing any part of

women is considered taboo in the Muslim religion and since the U.A.E.’s main religion is

Muslim, this website was banned. This is just another example of how you must be very careful

what kind of image you have in another country and make sure that your product or service is not

considered offensive. Several other social networking and blogging sites also failed when they

tried to enter into Middle Eastern countries. Both Facebook and Myspace have been banned in

the U.A.E. as well as twitter and several other similar websites. To be effectively used in these

countries they need to add filtering programs into their website that will help to filter out any

material that could possibly be deemed as profane or wrong.

Conclusion

So, you might be asking yourself what does it take to be successful in the United Arab

Emirates? It is important to know the culture and how to interact in both the business

environment but also on a personal level with your business partner and their families. You must

also make sure your product can fill a need that the people of the U.A.E. might have. If they do

not then there is no point in being there. Know the lay of the land and how you are going to get

your products in and out, as well as the barriers to trade so that you do no run into any problems

with importing and exporting. In the U.A.E. you must have an understanding of the legal system

or befriend someone, such as a sheikh, who does know it. This can be immensely helpful

because you will be able to do business much smoother without wasting time jumping useless

hoops. Figure out all the trade laws and the best way to conduct business in the United Arab

Emirates before you even start expanding, if you start expanding and realize that your product

41

does not fit or is not allowed you will have wasted precious time and money. If you are aware of

all this information you can become very successful in the U.A.E. and take advantage of its

prime location and resources.

42

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