The UAE uniform and branding market is in many ways very different from the European market. In Europe it is not normal to negotiate/haggle price point. At least to a much smaller degree than in UAE.
The whole structure of a meeting is also often different. In Europe a meeting is scheduled at a certain time and has a set duration. The meeting is often held in an office setting with all the stakeholders present. This is not always the case in UAE. It is common practice to have a meeting over coffee or lunch. This is a less formal environment than one would expect in Europe. It is a place where you evaluate each other, rather than discuss contractual points. Often the finer details are handled by mail after, so everything is in writing. Sometimes something as basic as WhatsApp is used for communications. This does however depend on just how well you are acquainted with the CEO or Stakeholder.
Now as a European coming to UAE who has only known the European market. I would most likely say it is highly unorganized and unprofessional. But once you have been in the market for some years you learn to love this approach. It focuses on building a friendly and respectful approach to each other first. It often makes the business dealings with each other easier as you get to know the person across the table. Another aspect of meetings in UAE and the GCC countries is that meetings are held whenever it fits in. This means that office hours is any time when you have time. It is quite common to have meetings outside of work hours or even weekends. So a key point to note is to be flexible because it simply gives you more business.
The branding and documentation on products in companies in UAE is not always up to par. So when your company’s branding material is top notch you are often perceived as super high quality and professional. This gives you an edge when coming into a meeting with a profile that stands out and seems well prepared. As a result this sometimes means that you will not be seen as the cheapest product. This can also be a downside if not dealing with people who are not concerned about quality. This completely depends on the product you are trying to sell.
So if selling normal buttons – then an over the top branded profile may not be optimal. However if you are selling something highly customized that stands out as different, it is a strong motivator to buy. So knowing your product and how to present it makes a lot of difference. Especially so in a market where people generally tend to skip expenses on branding and overall presentation.
The potential for growth in the market is fairly strong with the right marketing despite the introduction of taxes. It has spurred a lot of confusion, but also incited a need to structure business models accordingly. In the past it has often come down exclusively to price point, which is often not really a good indicator for a products quality. As the market grows and matures, JKFH expects an increased reliance on branding and increased quality awareness. This means that educating clients about the differences in quality and why it matters is off utmost importance. Once a new client has purchased and found it to live up to everything you say, then it is often that word of mouth helps pave the way for other new clients.
This may apply in most markets. But in the middle east it is important to have good contact. Contacts are often shared after past purchase experience and having a broad contact list can land you some amazing deals. Although websites are often not the primary information source, it is still of great value. To have your client logos a website is essential. Your client may know past clients. This can help bridge contacts and make future opportunities. However if you do a bad job on a project the word will spread. So the market will find out and will ultimately only reward you if you are very service orientated. So it pays to make the effort.
In the past 10 years companies have regularly asked for 90 days payment terms. Often with no more than 50% upfront payment and the remaining done in post-dated checks after delivery. This often leads to late payments which generally is bad for any company’s liquidity. When the margins are low to begin with it forces companies to spend money on up front costs. This could be on production costs which can halt production, if the liquidity is not what it should be. In the past, companies have even withheld the remaining 5-10% to assure satisfaction. This is beginning to change due to tax implementations.
In 2018 a 5% VAT taxation was introduced in UAE. Companies are now forced to pay with shorter deadlines is due to the quarterly VAT Payments. Say you invoice a client, then the payment should come rather quick. This is because you have to pay for tax within that quarter for the invoice. This is now becoming common knowledge for businesses. As a result businesses are beginning to understand that making an LPO without money for the upfront payment is hurtful. That harm comes back when the VAT has to be paid.
The VAT has brought a flurry of failing businesses which in many ways is both good and bad. It gets rid of bad market competitors. The upside to this is that companies are getting more used to fair business practices. They begin to understand that costs have to be covered. In JKFH we do not gamble with our liquidity. The cost of production must always be covered upfront prior to beginning any production. This has led us to a steady growth that reinforces our liquidity rather than draining it. It also prevents production halts for our clients.
Another upside to the new tax implementation is that now a tax number is always required for business dealings. Smaller businesses that earn less than 375k are not required to pay VAT. As a result they will not have a tax registration number. So if a company does not have it you can easily spot a smaller company. This helps you avoid risks.
The changes in the market will help companies make the switch towards online transfers. Currently most companies use post dated cheques. It will increase financial transfer speeds. Lastly it will help the market with transparency on payments. As the market shrinks the companies will become organized. They will also be forced to have the liquidity to pay their VAT. These companies will come out on top. Fewer competitors also means overall increase of quality in the market as companies fight to stay in the game.