The Ideal UAE Market Entry Strategy: Detailed Overview

Prabhat Nigam

13 Sep, 2022

There are a number of ways through which an international business can enter the UAE market. An ideal market entry strategy is the most important component while expanding in GCC countries^[1], especially the UAE market. An ideal market entry strategy demands having a sound understanding of the demographic structure, different administrative systems and logistical challenges to take your products to the UAE market. This article envisages about the meaning of market entry strategy, its major constituents and the types of business vehicles used to enter the UAE market.

What is a market entry strategy?   

A market entry strategy is a business plan containing a new market ecosystem’s distribution and delivery methods. It also includes designing, drafting and managing contracts regulating the export of goods and services in the desired external market. An ideal market strategy outlines all the important specifics of the business goals, an overview of the desired market, the goods and services to be sold there, projected sales and the ways of achieving them.

Constituents of a market entry strategy for the UAE market

To be successful in making inroads in the UAE market, a customised market entry strategy is a prerequisite for every business. Some of the important constituents of an ideal market entry strategy are as follows:  

1. A customised Business Plan 

Depending on the sector of the economy and the industry you want to enter, there is a requirement for a customised business plan which lays down the goals and projections of your business in the next five years. Suppose you want to enter the UAE market. In that case, your business plan should comprise the competitor’s analysis, proposed products and services, finance and marketing plan, cash flow and future sales projections for a minimum of 5 years. 

2. Market research   

Before deciding on the kind of products and services you want to offer to the UAE market, extensive market research is required because UAE is not a homogeneous society. It is a melting pot of a number of nationalities from across the world. Due to the proximity and cultural ties, South Asians comprise almost 60 per cent of the UAE’s population, whereas the UAE citizens comprise only 11 per cent of the UAE’s population. Therefore, it becomes necessary that your products should meet the requirements and are complementary to the habits of these cultures. Extensive market research in the UAE can help your business to:

• Understand the feasibility and viability of your business
• Gain an understanding of the rival products and services already existing in the market
• Develop an understanding of the demographics of the market
• Customise and redesign your product as per the needs of the market
• Acquire the available acquisition channels

3. Understanding the legal framework of the UAE 

Another crucial element of the market entry strategy for the UAE market is a good understanding of the applicable laws and regulations prevailing in the country to avoid landing on the wrong side of the law. The business should understand the laws applicable to foreign entities, tax norms, employment, etc.

4. Selection of the right business structure  

The most significant part of the market entry strategy is selecting the right business structure suitable to the needs and requirements of the business and the industry. To select an ideal business structure for your business in UAE, you can take the help of a team of incorporation experts in UAE, such as Enterslice. Following are the business vehicles through which market entry strategy can be built around:

a. Representative office

You can go for the option of opening a representative office in the UAE to carry forward your business activities. However, such offices are permitted to carry out limited commercial functions such as marketing, research, promotions, branding etc. They are not allowed to enter into commercial transactions or start selling their products in the UAE market. There is a mandatory requirement for the appointment of a local agent who should be a citizen of the UAE.    

b. Business/trade Licensing

Themost common way of entering the UAE market is by obtaining the required license to trade, which allows your international business to directly sell your products and services in the UAE market. However, this option may be a little expensive and a long-drawn process for small-sized businesses. 

c. Partnerships

Another way of entering the UAE market is by forging partnerships with a local entity that is well versed in the local demand of the consumers, the applicable laws, culture and demand of the product in the UAE market. However, certain risks can be related to leadership, share and profit division among the partners.

d. Business Franchise model

The international businesses are also extending their franchisees to the local entities in the UAE to gain global expansion. For this, a franchise agreement is entered into the UAE market. This model is prevalent mostly in the food industry.

e. Distribution model

To avoid the hassles of entering the market directly, the international businesses are choosing the other simpler option of associating with the local distributors and vendors established in the UAE. These include wholesalers, online suppliers, distributors, and retailers who take their products and services to the local level.

Conclusion 

A well-designed market entry strategy gives an overall direction to the company about the pathway to be followed for the export project in the new market. It has been observed across industries that the businesses that started exporting without having a well-designed plan have often shown poor results. This makes it necessary to have an ideal marketing strategy before you enter the UAE market. If you want a highly curated market entry strategy for the UAE market, then get on a call with international business experts at Enterslice.     

Read our Article: How Can I Start My Own Company in UAE?