Tuesday, June 01, 2010

10 tips for doing business in the Middle East countries

Proceeding from a history of thousands of years linking East and West, today’s Middle East is in transition, adapting to shifts in global commercial power.

Executives in the region often see emerging markets as their natural homes. Cities such as Dubai, Jeddah or Beirut often feel as much affinity with global trading hubs as they do with their own hinterlands.

Arab culture is such a strong force that “modernisation” is a poor description of the current trend. Middle Eastern executives are adapting, not adopting, blending ancient traditions and perspectives with those they find useful to navigate a globalized world.

The Arab outlook on the world is fundamentally different from that of other cultures. Although many Middle Eastern managers have been educated in the West and have worked for multinational companies, they do not necessarily optimise economic returns, because they are embedded in a social matrix of expectations and obligations.
1. There is no such thing as “The Arab world.” This region is in many ways more diverse than Europe; cultural, ethnic and national differences are important. Lumping together the Sahel, the Levant, and the Gulf would be a mistake. The Arabic language has spawned many local dialects and concomitantly, local perspectives. Everyone from the Middle East must be viewed as belonging to a region but marked by a strong local culture.

2. Family obligations and expectations are exceptionally important. To understand a person, you must understand something about his or her family. You must also grasp that bringing honor to the family is a vital motivation, as is avoiding anything that might dishonor a family. Learn who is older and younger; who is perceived as being favored by the patriarch.

3. Social relations are hierarchical. There is no substitute for dealing with the apex of any organisation. Organisations are seldom run by consensus; the person at the top wields enormous influence, though there is often a powerful person who is just as influential because he is the trusted advisor of his chief. Arabs are expected to know their place in any hierarchy and behave accordingly. As a result, doing solid business in the region requires a relationship at the top of an organisation.

4. Arab organisations are often bureaucratic, but in distinctive and non-Western ways. The essence of Western bureaucracy is following rules and procedures impersonally. In contrast, Arab bureaucracy is entirely personal. It can take a long time for a decision to wend its way through many layers of approval, but this is because approvals are necessary to preserve the status of officials. organisations are riddled with reports because it is unacceptable for a manager to appear uninformed when questioned by someone above him.

5. The pursuit of honour and the avoidance of shame are primary motivations. From a young age, an Arab learns that life is a struggle for prestige and social standing. Consequently, getting ahead and gaining social approval is extremely important. One must always be careful to avoid wordings or actions that can unintentionally signal a lack of respect or failure to acknowledge the status of a person from the Middle East. Direct criticism is very unusual in this culture except from people of unquestioned superior status.

6. Timing is everything in the Middle East. Quite commonly, negotiations can drag for months, apparently going nowhere. Suddenly, a breakthrough occurs and there is pressure for immediate action under impossible deadlines. Decisions are made when the timing is right for them, which means that a person of sufficient authority has decided an initiative needs to move forward impatient people fare poorly in the Middle East and headquarters shouldn’t make linear projections based on past progress — if things have gone nowhere for the past three months, that doesn’t mean the next three will be the same. Prior to an agreement, anticipate whatever will be needed to implement it very swiftly once a breakthrough occurs. Get pre-approval and align necessary resources in advance so you can respond quickly when given the opportunity for an agreement.

7. Middle Easterners want the best. Localisation is important as long as international quality standards are sustained. Many local executives complain that when foreigners offer them services, they simplify or strip down what would be offered in the West instead of customising to local needs. Many managers complain that when Westerners offer courses in the region, the material is “simplified”, which is insulting as well as unacceptable.

8. Everything is negotiable and language is a flexible tool. Few cultures have a longer history of trading, and as a result, Arabs see someone who takes advantage of commercial opportunities as clever, not devious. Middle Easterners see themselves as using language to get things done and to enhance their prestige by succeeding, where failing would bring shame. Contracts can be signed in a hurry under very friendly circumstances, but they must be rigorously framed because loopholes could be exploited.

9. Look for subtle power shifts. Because shame and honour are such important considerations, it is uncommon for people to be fired or demoted in local organisations for low performance (except for acts of disloyalty). Such an obvious and blunt rebuke would be unbearably painful; therefore, when people are judged incompetent or inadequate for a job, they usually are subtly shifted to the sidelines. Only through constant discussion can one understand what the major issues in an organisation are and who is included in them, to gauge who is being relegated to the background.

10. Emphasise oral communication. A central institution in Arab culture is the “majlis,” a consultative council. Arabs typically learn through interaction, by exchanging ideas, observations, and arguments. Because the characteristic mode of absorbing new information is verbal, many Arab executives are impatient with long readings or long presentations. They want to probe, argue, debate, and then decide. Spoken presentations designed for interaction work much better than formal arguments. Structure what you have to say as a conversation and be prepared to listen more than you talk.

Philip Anderson is the INSEAD Alumni Fund Chaired Professor of Entrepreneurship, Associate Academic Director, INSEAD Middle East Campus, Abu Dhabi.