Dubai International Financial Center (DIFC) is the leading financial hub for the US $7.4 trillion Middle East, Africa, and South Asia region. Abu Dhabi is also tapping into emerging financial markets through its own stock exchange at Abu Dhabi Global Market, on Al Maryah Island. The UAE is now at the forefront of the multibillion dollar “global Islamic economy,” leading the way in the fields of modest fashion, halal media, and halal cosmetics and pharmaceuticals. Sharjah is the center of UAE’s limited manufacturing base, as well having a successful tourist trade, drawing visitors from across the Arab world to its museum of Islamic civilization and well-preserved heritage area. The other Emirates are also increasingly garnering a reputation for tourism.
The UAE has been taking strides to wean itself off dependence on oil money, and is currently managing because it has succeeded in attracting some of the brightest minds in business, from both East and West. However, in its anxiety to appear futuristic and buoyant, the UAE has a tendency to gloss over any bad news, and a closer inspection reveals small cracks in their economic model, which in the future could present serious problems for the economy. Revenue from property rentals across the UAE has been on a downward spiral in recent years, with average residential rents in Abu Dhabi dropping by 11 percent year on year from 2017–2018, and this trend shows no signs of abating. This reflects a slow exodus of foreign residents, not only because of job losses in the oil and gas sector, but also because significant cuts to expatriate salary packages have led many to return home. Government entities have cut back on their school allowances, for example, making it difficult for larger families to justify staying.
Dubai’s economy is heavily dependent on the fact that the city is hosting Expo 2020, and significant investments have been made in infrastructure to accommodate the millions of guests the government anticipates will visit. But a question mark hangs over the post-Expo economy. Dubai’s “if we build it, people will come” mentality has worked well for them so far, and the Emirate’s trailblazing architecture has certainly ensured that “brand Dubai” has made itself known to the world. But its massive investment into gigantic new theme parks has so far had limited success. The triple-theme park complex of Dubai Parks and Resorts, which promised to elevate Dubai to the status of the “Orlando of the Middle East,” has so far failed to become a top attraction.
Nevertheless the UAE is still keenly developing its leisure industry. Abu Dhabi’s Saadiyat Island, which means “Island of Happiness,” is their US $ 27bn cultural district. It currently boasts a campus of New York University and the Louvre Abu Dhabi, a cultural collaboration with France, with more cultural institutions in the pipeline.
But the danger is that the UAE’s own expatriate population will be priced out of being able to attend these prestigious new attractions.
The government has certainly succeeded in their efforts to make the UAE a peaceful, safe, and enjoyable place for people to live, and their hope is that expatriate residents will settle for a slimmed down pay package, because they prefer the quality of life in the UAE to that in their home country. And certainly, many will continue to stay in the UAE, because they appreciate the climate, the safety, and the values of the people, and because, in many cases, their own country is in turmoil.
The UAE business community has identified its sustainable competitive advantages as being ownership of capital (they are cash rich) and ability to manage large-scale enterprises. Their lives contrast with those of the majority of the population, whose most common interactions with business are via food stores, supermarkets, private schools, and clinics. The UAE is essentially a dual economy, in which two separate systems coexist with each other, with people being dependent on members of the other sector but rarely coming into personal contact with them. But there is also a definite entrepreneurial section of society too, which is committed to creating and developing new business structures. Having capital behind them does help, but personal attributes are also proving important.
By law, businesses in the UAE (aside from those set up in designated Freezones) are required to be owned or operated in partnership with an Emirati businessperson. How business is conducted depends to a large extent on the local executive’s international expertise, and whether they choose to be a silent or active business partner. Sometimes it is not easy to tell who the real boss is, as not all owners are interested in their businesses. But in some cases, they expect to be able to make all the important decisions and have appointed general managers so all relevant information can be brought to them for decisions to be made.
Many Emirati companies are run by family conglomerates with multiple business interests. While the company may initially have been set up some time ago by one man, whose name is still the public face of the company, it might be his son who is now managing it. Furthermore, because of the transient nature of expatriate society, there are times when continuity of a business project is impeded, because the most informed person has moved on.
If the people change, the business culture will also necessarily change. However, the physical spaces in which business deals take place tend to be similar to anywhere else in the world: large, spacious offices with excellent facilities.
Emiratis are as honest and hardworking as the people of any other country, but they are also subject to the same temptations. Deals involving large payments are not always made in a fully transparent way, so it is not surprising that sometimes people fail to adhere to the highest possible levels of behavior. However, since the country relies upon its reputation for honest dealing, serious efforts are spent to ensure that misappropriated funds are restored to their rightful owners. In Transparency International’s international ethics rankings 2016, which compares countries to find those that are the least corrupt, the UAE had climbed to 24th place, level pegging with the Bahamas and Chile and markedly better than its neighbors Qatar (31st) and Saudi Arabia (62nd.)
Emirati laws that prevent freedom of association for trades unionists, and the lack of collective bargaining rights are considered by many to be unethical. During the country’s last economic downturn, expatriate entrepreneurs who got into debt were summarily jailed for bankruptcy when checks bounced. In response to what many considered a disproportionately harsh practice, new bankruptcy laws were drafted in 2016 to remove the criminal offense of bankruptcy by default.
Companies in the UAE are nowadays expected to demonstrate their ethical commitment in terms of their impact on their stakeholders, society, and the environment. UAE firms are only beginning to come to grips with their environmental impact, and corporate social responsibility (CSR) is still a new phenomenon, but one that is quickly catching on. You can see CSR most evidently in action during Ramadan, when many businesses, particularly in Dubai, organize donations of food or toiletries for those in the labor camps, or some other charity initiative.
It is advisable to have business cards ready to hand out when meeting new people, as they are still commonly used in the UAE. Remember to offer one with the right hand.
Handshakes are a common form of greeting in business, but in the UAE, the handshake is generally softer than in the West. Men should not shake hands with Emirati women unless the woman initiates it. And for Western women meeting Emirati men for the first time, it is advisable to try to judge how traditional you deem the man to be before offering your hand. If he is likely to have been educated in the West, he is unlikely to be embarrassed by a businesswoman offering him her hand. A few words of greeting in Arabic are also likely to be appreciated.
Expect to be offered coffee at the start of any meeting, and accept at least one cup; taking more than one sip is not necessary as cups are small. When refusing another cup, gently waggle the cup between thumb and forefinger to indicate you have had enough. Wait calmly for the meeting to turn to the issues you’re interested in discussing, but be ready to address them when the opportunity comes.
At conferences and large meetings, it is common for a sheikh or someone of high standing to introduce the proceedings. It is very important to sit politely and quietly while they speak, with your phone on silent, as a mark of respect. Status is essential to pay heed to in business, so permit the senior person in any situation to take the leading role.
Many businesspeople maintain one or more technical advisors, who should be accorded respect. Advisors may come and go during meetings and this, like the answering of cell phones during an address, should not be construed as a lack of respect, but simply the way of doing things. Further, the moment at which a decision is actually made may not be entirely obvious. On some occasions, a consensus will emerge from discussions, at other times, eye contact between the decision-makers is sufficient to determine success or failure.
To conservative Emiratis, it is considered inappropriate to portray people in any way, and, in some cases, animals or anthropomorphic versions of inanimate objects can also cause offense. Indeed, any graphic or suggestion of Emirati men and women appearing together in the same physical space should be eliminated when presenting to a conservative Emirati audience.
The way in which negotiations take place varies considerably, but in all cases, demonstrating loyalty and respect is critical. Traditional forms of negotiation depend upon finding common ties and affiliations as a means of assessing trustworthiness, after which the business details can be dealt with. Expect, therefore, for Emirati business partners to spend some time working out who is related to whom and what other connections exist. UAE business executives with international experience will get down to business more promptly, and follow a more Western negotiation style.
Many Emiratis are used to people coming to them with various business propositions, and therefore have no qualms in rejecting deals that do not appeal to them, or proposals that are not structured in ways they find attractive. They drive a hard bargain, and negotiations can become quite tough. A direct negative response can cause offense, so “no” should be framed in a polite manner. Agreements should only be considered final once all parties have parted ways.
Oral communication still carries more weight than the written word in the UAE. In traditional Emirati culture, a contract would not be necessary, since it is the underlying relationship between the people involved that provides the guarantee of compliance. Indeed, there may be occasions at which this old-fashioned approach to business may be carried out between people who trust each other sufficiently. However, the need for transparency has persuaded most UAE businesspeople of the value of adhering to contracts.
Contracts are created in line with standard international best practice, and once signed, all parties are expected to adhere to them according to UAE law. Documentation may be in Arabic, even when business partners speak good English, particularly in dealings with the government. In this case, establish a working relationship with a translation agency.
Emiratis prefer to conduct business face to face. Indeed, it can seem that holding a meeting is an end in its own right and need not have any particular purpose other than getting people together. Initial introductory meetings, which are inevitably social in nature, must be held at the start of any new business venture so that people can get to know each other. In the past, this process could continue for some hours before any hint of business could be brought into play. These days, this process is speeded up, as there are now so many more business opportunities. Even so, the niceties of hospitality are still likely to be scrupulously observed.
Historically, when a person wished to meet an important figure, they would go to the appropriate tent and wait. The amount of time that would pass before the petitioner was admitted to see that person depended on the relative status of those involved. It would not be practical to operate such a system in the modern world, but some aspects of this practice do still linger. For example, there is the belief that everyone will get access to the leader if they are sufficiently persistent, and there is an obligation on the shoulders of leaders to be available to employees. One reason why Sheikh Zayed was so revered as a leader was that it was said his door was always open to his people. Foreign-born businesspeople should consider the implications of this, perhaps permitting access to all those who may wish to consult them on specific occasions.
Anticipate also that other people may come in and out of the meeting room on unrelated business. Don’t address newly arriving people without being invited to do so by others, and avoid showing impatience. On the other hand, do set meeting objectives and focus on these as much as possible, no matter how sidetracked the discussion might become.
The UAE government has made considerable efforts to make it as easy as possible for people to deal with the state, largely by providing e-Government links and portals. However, accessing services and information in English in rural areas can still be problematic.
A number of business procedures tend to be organized quite differently in the UAE, and this can lead to disappointment. Government tenders, once a would-be contractor has passed the quality thresholds, are usually fiercely negotiated in terms of price. But it’s not unusual for tender specifications then to be changed, and companies asked to re-present their bids accordingly.
Customer service at government service desks has improved over the years and generally, Emirati staff are professional and polite. However, the bureaucracy can be opaque and require more paperwork than seems necessary. Often, names, addresses, and other information have to be translated from English to Arabic or visa versa in order to process a form, and in doing so, it is easy for words to be misspelt or misconstrued.
In recent years, the UAE government has devoted significant effort toward finding employment for its young women. Emirati women are now choosing to move into careers after completing their degrees, rather than rushing into marriage and children. Yet the fear that a daughter might become unmarriageable if she is too ambitious can still trouble even the most liberal of fathers. A 2015 GCC-wide study of women by the Pearl Initiative (a Gulf business-led organization promoting a corporate culture of accountability and transparency) found that although three quarters felt their families were supportive of their education and career, they were still hampered by traditional role models. Practical issues abound, but workplace environments are adapting so women need not be subject to close contact with male co-workers or customers. Separate rooms are provided for women to eat, drink, pray, and even nurse their babies. The government has stepped in to create jobs suitable for more conservative Emirati women, most commonly in the Department of Health or Education. Women need to work in a position in which they can remain living in their own home, since it still remains a taboo for women to live alone. Emirati women therefore often find it difficult to work unsociable hours, or undertake business trips that require overnighting away from home.
Organizations willing to take the necessary steps to accommodate local women often find their efforts are rewarded, as Emirati women are proving themselves to be ambitious, hard working, and enthusiastic, and as such are valuable assets to any company.
The business role of Muslim women from other countries working within the UAE differs little from that of men, although physical contact should still be avoided. Male visitors should develop the habit of being cautiously gentlemanly in crowds to avoid accidentally bumping into Muslim ladies. In shared elevators, he is advised to keep his eyes respectfully averted.
Western women in management positions should accustom themselves to the occasional unintended snub from male colleagues. Much of the business world is dominated by the rather macho oil exploration industry and by the preponderance of male migrant workers, who mostly hail from countries where women are still expected to stay at home. These employees may be less sympathetic to the concept of high-ranking career women. She may find that while male colleagues converse with jokey banter, they find it disconcerting if she tries to do the same. In the case of a young female college teacher conversing with her male students, it is best to earn respect by keeping the tone of conversation formal, and remembering that her students will be quite unused to chatting to unrelated members of the opposite sex.
Although expatriate workers are valued for their expertise, the government is keen to replace them with UAE nationals whenever it is possible to do so, under a process known as emiratization. There are worthy reasons for this: expatriates come and go, and some industries, such as the new nuclear energy sector, require employees dedicated to a long-term strategy. But the downside of emiratization is that it creates a culture of entitlement in which Emiratis expect to be given the top jobs, which they might not be qualified for.
When Emiratization is enforced, it can cause some resentment among foreign workers, who are expected to do the bulk of the work while their higher paid Emirati colleagues take more of a back-seat role. But this is not always the case. In some roles, such as the police force, for on top of their working duties, many Emirati employees have to take English classes in the evenings too. However, Emiratis are more inclined to seek employment with the government, who offer higher pay and better holiday allowances than private sector companies. When Emiratis do get involved in the private sector, it is usually as business partners rather than employees.
The UAE government maintains a light hand on the economy, and it is usually not difficult for foreign investors to establish their businesses. Those who prefer to have a 100 percent ownership of their business, rather than working with an Emirati business partner, can opt for a license and office in one of forty-five designated free zones in the UAE, designed to encourage foreign investment with easier start-up processes and labor and immigration procedures. Each free zone has its own authority and rules. Dubai’s twenty zones include Dubai Healthcare City (for medical start-ups), Dubai Studio City (a filmmaking hub), Dubai Internet City (for tech companies) and Dubai Media City (where CNN and other big news organizations have their Middle Eastern base.) It is hoped that by inviting foreign innovators into the UAE through these hubs it will stimulate a knowledge-based economy, which Dubai hopes will shape its future.