Doing Business in Dubai
Hi again, Sunil here to discuss doing business in Dubai
It comes with its own nuances and complexities.
But if you are able to overcome those, then there is no sky to your progress.
You can keep flying as high as you want.
Keep in mind that I am writing from my own experiences. I have several friends whose families have been settled in Dubai for decades. They are all doing business in Dubai in one form or another. None of them work for wages. They are not employees.
Although still an employee (a high ranking one), he is also part owner of the business through owning shares.
Couple those facts with my research over the past few years and I can say Ive learned a thing or two about how it is doing business in Dubai.
Business in Dubai is good overall. There are many wealthy individuals and the upper middle class is growing rapidly because of the latest economic boom the City has been experiencing. More people are relocating to Dubai today for white-collar jobs than anywhere else.
All this activity proves fruitful to companies in Dubai. If you are interested in doing business in Dubai, the single most valuable piece of advice I can give you is to focus on building long term relationships with the local Nationals.
In the US, your relationship is only as good as the bottom line. When cash runs out or if you can no longer benefit from the other party involved, it is time to let them go right? As sad as this is, it is very true for the most part.
It is the complete opposite in Dubai. Doing business in Dubai boils down to doing business based on relationships. I mean true human relationships, not business relationships.
Unlike the US and many other places where it is all bottom line oriented, there is so much wealth in Dubai that the numbers are the least of the concern for many involved in business. Its truly all about relationships and rapport. If you understand that you will be very successful doing business in Dubai.
You have to be a National (citizen) if you want to do business in Dubai; and Dubai does not grant citizenships through naturalization. So it becomes important to establish a good relationship with a local Arab so that you can enter a business venture through partnership.
This is a very big decision because the local that you partner with becomes the owner of the business on paper. Practically however that person remains silent. So basically you work your a^*@#& off and yet on paper someone else owns your business.
It is very important to establish a good trusting and long lasting relationship. A business is a serious venture, especially if you will be heavily investing in it. That said, it is not easy to find trusting partners in Dubai that you can become comfortable with.
Even if you do find someone, you cant become comfortable with them overnight. Neither would they. But then again, what do they have to loose right? To do business in Dubai, you need a good reference or connection. You need someone to introduce you to a local that you can trust and are comfortable dealing with.
It is very difficult to find someone, let alone build a relationship, without being introduced to them by someone else. My friend Riad (Ray) has been trying to find someone for years now.
He has been back and forth to Dubai from the US at least 10 times in the last 24 months. That is a lot of 15 hour trips across the globe! He is about ready to quit and he tells me how difficult it is every time I speak to him.
My friends families on the other hand moved to Dubai back in the day when Dubai wasnt the Dubai we know of today. The rules were the same, but doing business in Dubai was much easier. Many times locals advertised themselves as available to do business with.
Those who moved there and have been settled and doing business are doing very well. Of course they pay their silent partners hundreds of thousands and even millions of dollars every year for simply using their name. The partners do absolutely nothing!
I still wont forget my trip to Dubai sometime in 2006 when I went for my friend Sunils wedding (yes his name is Sunil too). We were talking business and he told me that last year they paid their silent partners close to $2M USD! My jaw just about dropped.
See Sunils dad is involved in a few venture. They have a textile trading company, an electronics sourcing company and most recently he started a small real estate private equity type group. They are trying to liquidate and get into real estate solely given the massive boom Dubai is experiencing in property values.
Most of my friends who have been doing business in Dubai are very happy. I mean why not. Sure they pay up their wazooos, but they are also getting rich at the same time. Its a win-win situation for all.
On the other hand, my friend Hansie was cheated on a few occasions. His dad had to completely dilute a company because of disagreements with his local partner. Generally this is not a smart move. Not so much because its bad for business, but simply because you can get kicked out of the country immediately and no one would even know.
Yes, Dubai is known for deporting of the hip. One mistake and youre gone! That is why you cant have a citizenship to begin with! That is why the country/city is so safe. People are afraid of committing crimes and making mistakes. If they do, they might not see another day in Dubai. I will cover this more in other sections of this website.
But my point is that knowing who to trust and do business with is an individual decision. Things are risky overall but if you dont take risk you wont see any rewards. That goes for anything in life. Just make sure you are well informed and take calculated risks whenever you contemplate a tough decision; in this case doing business in Dubai.
Use the American Business Council in Dubai to guide you with your business ventures (thats if you are currently based in the US).
Their constitution stresses to development of commerce and investment between US and Dubai as well as the other Emirates. This is a FREE and volunteer composed resource so make sure you take advantage of it.
Train Yourself Locally
One way to win the respect and trust of the locals is to blend with them. This goes for anything right? Think about it. If you come across someone that shares the same culture and language as you, wouldnt you feel closer to them off the bat?
This is human nature. It is particularly helpful when you are overseas away from your country. Meeting someone who shares the same background as you is comforting and encouraging.
Learn the basic customs, rules and regulations of Dubai. More on this in other sections of this website. Also, learn the basic Hi and Hello type words in Arabic. This is not hard.
Grab a self teaching program and just do it. Kish can partly understand Arabic and can speak a lot of it too! Just a little bit will help tremendously with your business in Dubai!
Laws, Regulations and Taxes
Once you get started conducting your business in Dubai, all else falls into place nicely. Laws, regulations and taxes are not of concern. Everything is very relaxed and as long as you are going about your business legally and cleanly, there is nothing to worry about.
Dubai does not tax your personal income so that is a big plus for a lot of business men and entrepreneurs. Many companies are also taking advantage of the tax haven by establishing locations in Dubai City.
The Jebel Ali Free Zone Dubai
The Jebel Ali Free Zone Port of Dubai is located 35 kilometers from The City. The port was established around 1970 and a small area was developed around the port to house all the construction workers that worked on the port.
Jebel Ali is the biggest port in the Middle East and the largest mad-made harbor. The sight is absolutely amazing. This port is extremely busy as billions and trillions of dollars in international trade are transacted here every year.
The area has improved dramatically over the years. As Dubai is progressing, Dubai City is expanding outward and overlapping into nearby territories like Jebel Ali. When I was in Dubai in 2007 I stayed in a corporate apartment in the Jebel Ali area.
Everyone told me how nothing used to be there and roads used to be narrow and made of dirt. I just couldnt believe it. When I was there it looked like Pasadena, California. They even built a brand new Ibn Batuta Mall in the area which is supposed to be one of the biggest and best malls in the Middle East.
So what do you do with all that extra cash from doing business in Dubai? Whether you do business or work, you will likely save more money at the end of the year. Here in the US, .40c of every $1 I make goes to my long lost Uncle Sam.
That is A LOT OF MONEY!!!! You can save your money (savings account), invest it in a CD (certificate of deposit) or buy Gold which is increasing beyond belief. Did you know that Gold is more valuable than Diamonds today? Amazing isnt it?
Dubai has some of the best 24K Gold in the world. A lot of Dubais Gold is supplied directly from India (once known as the Golden Hen). I have not seen Gold as pure as the one I see in Dubai.
You can also look into Dubai Properties. Real estate in Dubai is booming and property values have experienced unprecedented growth since 2005. Rents are up 30% in a two year period and there is no sign of slowing down. Real estate is probably the best Dubai investment (in my humble opinion though I think that a bubble does exist!).
In fact the rent to mortgage spread in Dubai is about 7% on average. This means you can get a loan and pay 3% interest rate and rent your investment property out for 10% cash flow after paying your mortgage.
10% minus 3% is 7% pure profit in your pocket. And the best thing is that your tenant pays your property off. This is free equity! Appreciation on your property is icing on cake.
All in all you just made bank! Hey doing business in Dubai also entails smart real estate investing. For many this IS a full time venture.
Check out this excellent Dubai investment company resource. This company has the most comprehensive market and industry information covering the entire Middle Eastern region including Dubai.
In countries that tax your earnings, you need to make your money work even harder. Suppose inflation in your country is 3% and your tax rate is 25%. That means if you have $100 invested and you earn 5% on it, you are really taking home a .75% return.
Stay with me. 5% return on $100 is $5 right? A 25% tax on $5 is $1.25 right? Subtract that from $5 and you are left with $3.75. A 3% inflation on $100 is $3 right? Subtract $3 from $3.75 and you are left with only a .75 cent gain. Do you see why you need to make your money work hard for you and grow?]
Dubai Stock Market
The Dubai Stock Exchange, or the Financial Market was founded in March 2000. It has been well received and investors are slowly developing confidence in it overtime. As of 2007 there were close to 60 companies listed.
Most of the companies are local UAE based companies and others from the Middle Eastern Region (also called MENA). Investments are open to foreigners and are often good avenues to diversify your portfolio as well.
More and more companies are joining the Dubai Stock Exchange and the list of participating industries is also growing.
Banks in Dubai
Banking in Dubai is pretty straightforward like in the USA. There are financial institutions established left and right. You can find a bank pretty much anywhere.
Banks in Dubai offer pretty much the same financial products and solutions that you will find in the US. After all, the entire world has modeled their economy after the US to some extent.
Pretty soon the whole world will look the same as one. True Globalization!
Dubai Book Review section.
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