Professional Documents
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United Arab of Emirates contains seven states following both mixed legal system
of Islamic law and civil law: Abu Dhabi, Dubai, Sharjah, Ajman, Um-Alqawen,
Fujirah, Ras Alkhaema
The population is almost 10 million people with about 11% of local Emirate and
the rest are foreigners. For the alcohol sells its not allowed to sell to anyone
without having alcohol license and the license can be provided only to nonMuslim people. The license can be gain from the police department at the state
where the resident live, the license provided only for residents not for visitors.
After getting your license you can buy your alcohol from certain supplier similar
to Systembolaget in Sweden, the drinking age is +21. Other source for alcohol is
Ajman free zone area where you can buy as much alcohol you want for very good
prices. We should mention that UAE is tax-free country where almost everything
much cheaper than Europe. Another source of getting alcohol is the duty free in
UAE airports, which is allowed to buy up to 4 liters of alcohol.
However, alcohol sold without license to anyone at restaurants, bars and clubs
which are the main sources of alcohol in UAE. The country depend mainly about
business and tourism, that why huge number of hotels and tourist areas can be
founded in UAE.
From the above figure easily can be noted the high percentage of Muslims in UAE
which alcohol consumption is prohibited in Islam. However, that doesnt mean all
Muslims not drinking alcohol, in fact a lot of Muslims used to drink and smoke.
Also drinking is prohibited in some states as they follow the Islamic Sharea laws,
and we person arrested with accusation of alcohol can get 80-200 lashes. The
states following Sharea laws are Sharjah and Um Alqwen, which usually punished
the crime of alcohol accusation with lashes.
The main gate to UAE is the tourism growth as the country received more than
13 million tourists in 2014 and expected that number to increase to around 40
million tourists by 2024.
Leisure travel spending (inbound and domestic) generated 78.6% of direct Travel
& Tourism GDP in 2014 (SEK 182.1bn) compared with 21.4% for business travel
4- Diamond model (analyse the demand and supplier, rivals and resources) (To see it the
companies are strong because they are in their home nation)
In this part we will talk about diamond module applied into UAE market in
general and Dubai in special. To clarify the importance of diamond
analysis role in Dubai we quote Saeed Al Muntafiq, CEO of Tatweer said
We have made Porter`s theory a reality this shows the great importance
of diamond in the head of UAE leaders.
Before starting with the diamond analysis we should mentioned the mean
industry around the country. The country play major role in oil & gas
industry and the oil was the main base for the country creation and
development. Abu Dhabi alone contains 10% of the worlds oil reserves. In
each state a free zone area was established to bring more investment of
international companies into the market, of course with a lot of
governmental facilities and reasonable prices. Both Ras Al Khaymah and
Fujairah depends more on agriculture as they have better water resources
than other states. However, both of Ras Al Khaymah and Fujairah depend
also on tourism depending on fascinating nature. While the state of Dubai
known as commercial center connecting the east and west. It has also
been named the business capital of the Middle East and has become a
large tourism attraction.
The main source of income to UAE is the oil and gas industry, which
contributes to the Government revenues. The biggest producer is Abu
Dhabi, the capital of the country and the biggest state as well. The
discovery of oil transfer the country from being a desert to one of the
most booming country in the region
The United Arab Emirates is a constitutional federation of seven emirates;
Abu Dhabi, Dubai, Sharjah, Ajman, Umm al-Qaiwain, Ras al-Khaimah and
Fujairah. The federation was formally established on 2 December 1971.
The main successful industries in UAE:
-
between the companies never ends. That keeps the door open to new
things every day.
3- Tourism: The foreign investment opened wildly in UAE, secular policies
with regard to issues such as alcohol. The local government help and
support the economic growth in the country, the government owned giant
companies participating heavily in the market.
4- Logistic: the UAE government created valuable infrastructure in
logistic, in all three ways (Air, water, road) including the communication
and energy. The infrastructure support the development of logistic in UAE,
while the geographical location play high role in supporting the industry.
Related and supporting industries: as mentioned above, many
industries can be found in UAE such as trade, tourism, and real estate.
Therefore, it seems reasonable to establish a financial cluster to serve
these industries with sufficient capital. UAE land consist desert mostly, for
that reason its not suitable to create heavy industry. Opening more
industrial diversification would strengthen the financial clusters position
for UAE.
1- Oil & Gas: the infrastructure in UAE from roads to ports and great
logistic industry support the oil & gas industry. While the support
industries are energy industry and oil products.
2- Real estate: oil price increment, development into service sectors
such as ports, tourism, logistics, financial services, health, manufacturing,
media all of that led to economically development in the country.
Nevertheless, the country stability, acceptance of western culture, tax
free, international investment, big salaries all of these points provide the
proper structure to the industry to grow.
3- Tourism: the main factors influence the industry is logistic, real estate,
retail and finance. In logistic the roads, ports and airports provide the
most important factors. Also real estate industry develops the tourism
industry, by building hotels and tourism entertainment areas.
4- Logistic: The main factors in this regard: highly developed finance,
insurance, construction, and tourism clusters, and rise in local capital
markets. These industries and organizations provide necessary services,
markets and information for improvement and strengthening of
competitiveness of the logistic cluster.
By the end we should mention the other two factors (chance and
government): In UAE market the electronic government make the business
easy to stablish and develop with shorten the way and make things more
clear. In the same time the government transparency is not very high
which make it risky to invest in the market is the investor have no clear
picture about the governmental economic situation and other related
issues. Other problematic issue is to get the license to import and
distributes the product in Muslim country, good connection with powerful
people can do the trick and make heavy entrance into the market.
While the chance is high to gain profit from such market, man can
consider the market still new and the chances is really high. Despite the
fact its Muslim country located next to Saudi Arabia, still the chances high
for the fact of high tourism movement into the country, and the tourist
from surrounding countries visited UAE to attend the fantastic activities in
United Arab of Emirates and good amount of them visit the night clubs
and bars as such places are prohibited in their home countries.
After all we discuss only four successful industries as we saw its the main
industries in the nation.
Entrance plan
Documentation is hard to lision, sell, distribution . there is only 2
companies and the third one still under process . COORS can make joint
venture with other supplier
They can make the way to other countries
They can make zero beer
They can contact one prince
Target is tourist areas
Target the whole sell points
Make zero beer factory in UAE / other beer to be bring from USA
When a visitor landed at Dubai airport he see different world, almost
everything look from future as the Emiratis make sure to use the most
updated technology and design in everything. The visitor feel very
comfortable as things moves very fast and smooth, also you can get the
feeling of living in the future but that feeling will vanishes as soon as you
hit the bureaucracy. Especially in our case, we are trying to sell prohibited
material and in process of getting the government approval to sell these
prohibited materials. Its also very important to find the right & easier
place to start your business. The next lines explain the UAE market and
types of companies with general information all over the country, it will
provide clear picture to the market and make it easier to understand.
Today, more than 90% of the urban population of Dubai and more than
75% of the urban population of Abu Dhabi are foreign nationals, the
majority of which are from South Asia. English is widely used for business
and is the lingua franca of the cities, but there is nevertheless a deep
awareness within Emirati society of the countrys heritage in the face of
rapid modernization.
This Market Entry addresses some critical considerations, issues and
questions confronting companies as they establish, operate and grow a
business in the Middle East from a base in the UAE.
The Gulf Cooperation Council (GCC)
The UAE is a founding member of the Gulf Cooperation Council, a political
and economic union of the Arab monarchies of the Arabian Peninsula,
namely Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.
FOREIGN INVESTMENT AND BUSINESS ESTABLISHMENT
The UAE does not have a foreign investment law, and the foreign
ownership restrictions are contained in the Commercial Companies Law
(Companies Law), which requires that UAE nationals or their wholly
owned companies hold a minimum of 51% of the shares of all companies
established in the UAE. In the past, foreign investors avoided the foreign
ownership restrictions on UAE companies by entering into side
agreements with UAE shareholders by which the UAE shareholder
granted the rights in their shares to the foreign investor. In 2004, the UAE
published the Commercial Concealment Law to prohibit and criminalize
these types of nominee shareholder arrangements, and the law is in force
as of 2010.
The Companies Law provides for the establishment of the following
business entities for foreign investors: joint stock companies (JSC), limited
liability companies (LLC), unincorporated joint ventures, and branch
offices of foreign companies. The Companies Law does not apply to
companies that are established in the free zones, which are explained
below.
Dubai has established more than thirty free zones. Other notable free
zones include Dubai Healthcare City (DHCC) and Dubai Silicon
Oasis.
In 2005, Dubai established the Dubai International Financial Centre
(DIFC) as a financial free zone.
In Abu Dhabi the key free zones are twofour54, a media free
zone, Masdar City for clean energy businesses, and Khalifa Industrial
Zone Abu Dhabi (KIZAD) as a unique industrial cluster integrated with
the new Khalifa Port, which opened in December 2012. In May 2013, Abu
Dhabi announced plans to establish Global Marketplace Abu Dhabi
(GMAD) as a financial free zone in Abu Dhabi.
Other Emirates have established free zones around seaports, airports, and
other industrial and technology sectors.
TAXATION
Each Emirate of the UAE has promulgated its own laws regarding taxation
of income. However, currently, no corporate taxes are collected except
from companies licensed in the banking industry and carrying out oil
exploration and production in the Emirates.
There is currently no individual income tax in the UAE.
Based on the information mentioned above, the best thing is to start
company branch on free zone area located in Dubai. It will easier to
receive goods and resend them to customers, and the location in half way
to everywhere also will shortcut the distances. Also our branch office will
make contact with distributer to deliver or products, forward integration
will reduce the cost and guaranty the high sell of our products. For that we
shall mention the bellow information.
CONTRACTING WITH AGENTS AND DISTRIBUTORS
It is common to sell products and services through agents or distributors.
This is the case not just for foreign companies but also for companies
established in the free zones that are not permitted to carry out
commercial activity.
Distributors and agents that are registered as commercial agents of a
foreign principal are granted substantial rights, such as automatic rights
of exclusivity, automatic renewal of fixed-term agreements and protection
from termination.
As such, all distributor agreements, dealer agreements, agency
agreements, franchise agreements and similar agreements must be
drafted with extreme caution. Companies selling their products and
services in the Middle East need to know local law protections held by
local distributors, the agent registration system and registration
mechanics, and plan ahead about what to do if the relationship is not
successful.
For the above a solid contract with distributer will shortcut the process of
sales put the sales and delivery part on other company will reduce the
cost and the managerial interferes.
DOING BUSINESS IN ISRAEL
The Arab League issued a boycott of Israel soon after its establishment in
1945, which calls for a three-prong approach:
But following the Oslo I Accords in 1994, the GCC announced it would only
enforce the primary boycott. Today, it is common for multinationals do
business in both Israel and the Arab world, and Arab League coordination
on the boycott has effectively ended.
Even so, multinationals should be aware that it remains a criminal offense
to import Israeli products in the UAE and most other member states of the
Arab League, and the primary boycott is still actively enforced in most
station to get one or they are not allowed to get one as mentioned earlier. For
that reason the buyer get any cold beer offered by the bar, and in party nothing
interesting more than strong stuff make you drank and funny.
However, zero alcohol beer can straggle little more than regular beer, for the
reason of varieties of brand names well known by customers. Such product
normally offered in normal supermarkets beside two to three brand names. The
innovation in finding new flavour zero alcohol beer can guaranty the sales in
such market, of course with fine beer taste like COORS.
Potential entrance:
COORS can enter the promising market of UAE after setting solid foundation by
getting the licenses to import and re-sale, and find the proper distributer agent
to deliver the product to the end customer. The market could be risky to enter if
we look at the country as Muslim country and put the xenophobia in front of our
plan, but we must understand the need is such market and the target customer.
Also we should contact the two major licensed companies in UAE, MMI &A+E
both currently operating in the market. The third company still under contraction
CDI, could be the next potential for COORS as distributer for the product. By
working with the major distributers in the country COORS can guaranty the
entrance and increase the sales. However, it could limit the number of sales as
the distributers are limited, which mean they already have the market share with
existing suppliers. However, the famous brand name for COORS can do the sales,
as the product well known globally for the fine taste and good quality, especially
as the main target customers is the tourist which are familiar with the brand
name of COORS.
The market could be risky to enter if we look at the country as Muslim country
and put the xenophobia in front of our plan, but we must understand the need is
such market and the target customer.
Also COORS should contact the two major licensed companies in UAE, MMI &A+E
both currently operating in the market. The third company still under contraction
CDI, could be the next potential for COORS as distributer for the product
On other side, the market entrance could be done easily without advertising, as
the product well known to the tourists who represent high part of COORS
customers. Working along with existing distributers, to sell and distribute the
product. COORS branch can operate from free zone area located in Dubai, the
location will be perfect in middle way to other states. Sales can be carried on to
other nearby countries, or move to Qatar as the football world cup will take place
over there in few years.