Doing Business in the Middle East

Dr. Ahmet H. Kirca Michigan State University Department of Marketing and Supply Chain Management Eli Broad Graduate School of Management 7 th Biennial International Business Institute for Community College Faculty 29 May – 3 June 2007

Countries in the Middle East: - Turkey - Cyprus - Iran - Iraq - Kuwait - Syria - Lebanon - Israel - Jordan - Egypt - Saudi Arabia - Oman - Qatar - Yemen - UAE - Bahrain

The Middle East in the Twenty-First Century

Regional conflicts – Security issues Bilateral trade agreements with the US and EU (e.g., Saudi Arabia, Israel, Jordan) Restrictions and trade sanctions (e.g. Iran) Dependence on oil revenues and state-sponsored subsidiaries Large cultural/economic/political differences among countries in the Middle East. (e.g. Turkey, Israel, Saudi Arabia)

Potential Economic Opportunities

Policies intended to attract FDI and to diversify economically.

Privatization of traditionally state owned enterprises.

Progress on building institutional infrastructure (e.g., Israel, Turkey, Kuwait) Population growth.

Regional integration efforts. Reconstruction efforts in Iraq.

Key Points - I

Middle East is culturally, economically and politically diverse (Arabs, Kurds, Iranians, Turks).

Resource rich countries with stable governments with high rates of economic development (e.g. Saudi Arabia, Qatar, Kuwait). Countries with close trade relationship with the rest of the World (e.g., Turkey, United Arab Emirates).

Potentially lucrative market but typical developing country market environment.

Less fortunate countries of the Middle East (e.g., Syria, Iran, Iraq, Jordan).

Key Points - II

Region’s rich history, culture and religion, and their implications.

Critical role of government in the Middle East.

The role of skepticism in the Middle Eastern World. Islam is the glue of the Middle Eastern social fabric.

Collectivist, hierarchical and close knit societies.

The importance of shame / face / honor / consensus / respect for authority / seniority.

Some tips…

Who you know is key. Relationships and connections are vital. Get personal and understand face.

Invest time in building relationships. Get used to informal agreements. Appreciate the intertwining of religion and law.

Speak English when making deals. Speaking English is a status symbol.

Show compassion for a business in trouble. Entertainment and hospitality in business dealings.

Recommended Resources:

Legal Aspects of Doing Business in the Middle East 2006 By Christian Campbell – $ 86 Marketing in the Emerging Markets of Islamic Countries - By Marin Marinov - $ 80 The Globalization of Business and the Middle East: Opportunities and Constraints - By Masood Kavoossi $ 115 The Ottoman Centuries: The Rise and Fall of the Turkish Empire - By Lord Kinross - $ 14 IMF reports ( www.imf.org

) World Bank reports ( www.worldbank.org

) globalEDGE ( www.globaledge.msu.edu

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