United Arab Emirates Case Study
The United Arab Emirates (UAE) comprises seven emirates: Abu Dhabi, Dubai, Sharjah, Ajman, Umm al-Qaiwain, Ras al-Khaimah and Fujairah. Each emirate has its own executive and legislative power controlled by a ruling family. Political parties do not exist so government posts are attributed according to tribal connection and economic power.
The UAE has experienced incredible growth since its independence from the United Kingdom in 1971, largely due to its abundant natural resources (oil, gas), attractive foreign policy and its willingness to support innovation plans. The UAE has the second largest economy in the Arab world after Saudi Arabia and it has one of the highest standards of living in the world.
The 2009 global financial crisis caused a decline in the property sector. In response to this the ruling families began to focus on innovative sustainability plans, which is perhaps not what you’d expect from the oil rich UAE. Planned for 2020, the “eco-city” of Masdar, in Abu Dhabi, will be the world’s first zero-carbon city. Further revival to the UAE economy comes from success in the financial sector. Abu Dhabi, the richest emirate, has a new financial centre for global banks. In Dubai, the largest city in the UAE, growth is demonstrated in the financial sector contributing to around 12 percent of overall GDP.
Additionally the UAE wants to further develop tourism and international trade. The aim is to become a key player in the global fashion industry. Dubai is already an important destination for international retailers and The Dubai Design District (D3) is being built to compete with the U.S., Japan and Europe. It will be home to design studios, boutique hotels, luxury apartments and a shopping mall. With over 200 nationalities in Dubai and over 50 percent of the total Emirati population of Asian origin, international investment is a logical move. To cap this investment peak, Dubai will be the host city in 2020 for the World Expo, a six-month long event entitled “Connecting Minds, Creating the Future”. About 17.5 million visitors are expected from outside the Emirates, so international trade and tourism seems to be safely on track.
The UAE is said to be one of the most liberal countries in the Gulf, with other cultures and beliefs generally tolerated. Alcohol is permitted but there are rules. Women enjoy more freedom in professional and social settings. Despite its Western feel, however, the UAE remains a country faithful and respectful to Islamic tradition. Five daily prayers are respected and foreign business people are recommended to publicly observe the dawn-to-dusk fast during Ramadan as a gesture of consideration. Sensitivity to dress codes is also important. The British government’s travel advisory for citizens travelling to the UAE specifies that: “clothes should cover the tops of the arms and legs”. Traditional Muslim dress like “kandoora” (men), or an “abaya” (women) are not obligatory. Taking on board these points demonstrates appropriate cultural intelligence (CQ), that is the ability to relate and work effectively in other cultures. On top of beliefs and sensitivities, the UAE traditionally follows a caste system reinforcing inequality of power. Despite such apparent inequalities, there is a close long-term commitment to the group (family, extended family, or extended relationships). From a Western business viewpoint this could be interpreted as nepotism. However, from an Emirati viewpoint, commitment to the group is a demonstration of loyalty and brings security (common rules, regulations, and controls).
UAE leaders are committed to attracting FDI to the country to become an economic hub similar to Hong Kong, London or New York. Although a certain degree of “corruption” is often said to be part of business transactions in the UAE, the government is aware of the importance of transparency and accountability in international business development. However, issues of transparency and accountability are not holding back foreign investment today. According to the World Economic Forum Global Competitiveness Report 2012–2013, it is more a question of access to financing, a lack of skilled labour force and restrictive labour regulations. In response, the government has set up the Department for Foreign Investment at the Ministry of Economy providing investors with information about regulation and investment opportunities.
Despite official business support from the government, personal relationships are still key to doing business today. A level of respect must be reached in the UAE before any negotiation can take place and it is favorable to maintain the same negotiator or team throughout business transactions. At the outset of any business encounter, at the airport or in the lobby, the standard greeting “as-salam alaikum” (peace be upon you), should be declared before putting one step forward. It is customary to wait for a reply, usually “wa alaikum as-salam” (and upon you be peace). Mastering a few basic phrases and words, no matter how they are pronounced, is appreciated. When entering a carpeted area room, shoes must be removed to preserve the carpet’s cleanliness, necessary for prayer time. The first gesture should be to shake hands with the most senior ranking person, avoiding the left hand, before moving around the room in a counter-clockwise direction. Once seated, the soles of feet are not to be directed at anyone, an offensive gesture which is interpreted (politely) as “go away.” Strong eye contact communicates a business person’s sincerity and honour. This can be somewhat uncomfortable for more “reserved” cultures where weaker eye contact on the contrary shows respect (many Asian countries).
In such a relationship-oriented culture, small talk is to be accepted. This can lead into more personal conversation, but generally speaking the mention of wives and children is an invasion of privacy. Small talk can also lead to controversial topics. It can come as a surprise to hear business counterparts being highly expressive, even openly aggressive. Yet, speaking in this way shows sincerity and denotes engagement.
The overall pace of life is much slower than in the Western world so it is not surprising to learn that business deals reflect this same pattern. Showing signs of impatience is considered bad manners. With a “polychromic” or more flexible attitude to time in the UAE, meetings may not start on time so organizing several in one day could be risky. It is recommended to set up meetings at an up-market local hotel where refreshments are served. Interruptions are also less frequent. UAE businesses typically operate Saturday to Wednesday, from 7 a.m. or 8 a.m. to 1 p.m., closing then until late afternoon. Friday is the day of rest.
Cross-cultural references apart, more than 80 percent of the population of the region is non-Emirati. So there is a strong possibility that business deals are conducted with an expatriate. The new financial centre (financial free zone), Abu Dhabi Global Market (ADGM), has appointed a Swiss and British national as its executive adviser and programme leader. Yet, the free zone’s Chairman is an Emirati official. The UAE is like an iceberg. What is visible is obvious, even tangible, but what lies beneath is certainly more complex.68
Case Discussion Questions:
What are the origins of the United Arab Emirate’s dynamic economy today?
Clinching a deal with a UAE company is not just about signing a contract. What would you indicate as the key stages in the meeting?
Which cultural blunders would you advise a Western business representative not to make?
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