7 things to consider
in doing business in Arabia

get help

discover a better business

Flavio, Sheikh, Dr Richard, Mr Ramzi

Little nightly thoughts
by Business Exploration

Dear Fellow Innovator,

You reached Flavio's blog on Business Exploration.

When Italian SMBs want to export goods and Services in GCC or using Dubai as an hub to serve Africa, India and South East Asia, they may need to take into consideration a few cultural differences.

I had the chance to be introduced in the Arabian business environment by my friend Imad El Kanj. It has been a unique opportunity to focus some of the key points that can help Italians make business in this great nation and its adjacent companions.

I call Imad the Phoenician Merchant. Staying at his side while he spins among different meetings, conferences, economic institutions, exploring and discovering a network of relations and opportunities, is simply amazing.

And it helps a lot to understand the underlying assumptions of making business there.

First: is not about “how” - is about “who”

The fundamental question we as western people do to our self whenever we want to accomplish something, is totally different from what and Arab does.

We think “how”: how we can make it , how we an get the resources, etc.

The Arab thinks “who”: who can provide it, who can refer about it.

This makes a big difference when sitting together around a table to discuss a partnership or a deal. I had a really hard time in nailing down my arguments, catch the attention on the details of a business proposal, while my Arabic friends where jumping from idea to idea, from opportunity to opportunity, in a never ending quest of the next “possibility”.

On the other hand I shall admit that their way to overcome distances, obstacles and risks is well above my poor imagination.

“Connecting” is their job. “Giving a direction”, probably is ours.

Second: Arabs do love Italians, both love Family.

Arabs literally love Italians. It easy to spot it: just drop few words about fashion, cars, luxury, lifestyle and you immediately feel their smile upon you.

In a world where men wear white and women wear black, is no wonder that the colorful Italian style has a strong appeal.

But there is something more profound that make Arab and Italian culture closer:

It is Family. Both Italian and Arab culture put an incredible importance on family, family relations, long term thinking and risk avoidance.

Family is the common trait where a mutual understanding and commitment can be built upon. If both of us understand that making business is not about betting money on a venture, but betting the family’s destiny on a project, the arguments instantaneously align

Third: We must better explain what are we good at: Special Services.

While in Riyadh with Imad, we attended the Saudi-Italian Economic Forum at the Council of Saudi Chambers. And there I understood in full the difficulty to explain Italy’s capabilities to Arab Investors.

The Chief of ICE ( Italian Foreign Commerce institute) Mr Paolo Monti desperately admitted that as Italy’s CMO he totally failed in marketing Italy abroad.

Italian Consul General Simone Petroni during his welcoming speach in Jeddah

To me was no wonder. To use a classic marketing approach to market “The Italian Offer” is simply a non-sense.

Italy’s offer is not about equipment or solutions. It's about service. What we are very good at (what our SME companies and “districts” industrial infrastructure are good at…) is making unique services for that 20% of the market that may need tailor made - smart, affordable, solutions… with a beauty.

Marketing best-practices have been designed to deliver sales of products, equipments, solutions to that 80% of the market that can be efficiently targeted with one-fit all, state of the art, un-customable products.

The Ford model “T” - just to be clear.

A nice piece of equipment, but not something that you want to use for a special appointment.

What the Forum made clear to me, is that if an Italian company wants to make business abroad, and in Arabia in particular, shall bear clear in mind that it is delivering Services. Tailored, special, nice, and beautiful services.

Even when they sell the next transformer or generator.

If we start our marketing from this point, we immediately see that classic marketing techniques can not be used to gain new customers.

Is not with advertising that your barber makes new customers, but you went there to his scissors, because a friend told you about how great are his manners and skills.

Fourth: Arabs do not understand our English.

I would have never realized this, unless Imad had not told me. Arabs do not understand Italians when they speak english. Is not a matter of pronounce. Is not a matter of how well you are versed and educated in the Shakespeare language. Is that the sound of our voice do not pass the ear-drum of arabs. They get as low as 10 % of what you say, and they are immediately reverting to an Arabic translator to get your point.

The main reason is probably lying in the Italian tendency to make long periods. They don’t. Make it long and they will loose you. Arabs are used to think to the next wave of opportunities, while they talk about the present one. They are literally a step ahead of you. So do not give them the time to get bored or distracted, or you will loose them

The fact is: when the ICE’s boss Mr Monti talked about how great is the potential of the Italian SME system. Most of the arabic investors simply did not get able to grasp the point.

The lesson learned is: get a professional mediator in dealing with arabs. You will save your time and money.

Fifth: Do not look just at the money, Arabs can offer Costumers too.

The last point I noted in my black book, was about the possible partnership structure among Italian and Arabs Companies.

This deal is not easy. Most of the key arabic business men are used to large infrastructure projects and deals that badly match with the size of the SME Italian Company. Nevertheless there are those special 20% spots where we as Italian can provide real value.

But we need to find the right partner. One that can be of comparable size, or with a comparable size of business in his portfolio. The best combination will come when the Arab investor add to the venture not only a financial support, but also a solid customers base.

Having someone that can open his network, tap into existing distribution systems, bring his experience on the market costs will speed up any venture.

Italians, from their side, can well offer know-how, technology and management. People that start looking for a business, with the “how…?” question. Who stick in a direction, and has a feel for delivery time.

Sixth: Speed is of essence.

When I said that Arabs do not listen Italians, is not only about communication. Is about time. Arabs are fast decision makers. They bet always on a portfolio of opportunities, so hedging risks. They have strong difficulties in understanding our lengthy decision process, our fear in moving forward fast.

Is part of our culture: we bet our life—and that of our family - on each business venture. So we always want to be covered by paperwork, laws framework, and risk hedging.

But when dealing with arabs we have to accelerate our decision pace. They are always looking to a portfolio of other opportunities, and we must learn to do it in a hurry, if we want to be chosen.

A way to mark this point with arabs is to bring “decision process costs” into the decision process. Arabs tend to overlook the costs of it, probably because they value time much less. Spending their time on multiple opportunities without closing than a few of them, seems to not hurt them. But probably is simply because they do not have fully digested the equation that says: “Time is Money”.

If you bargain with an Arab, bring the cost of bargaining into the equation. Make him feel the value of time. You will quite probably get a better attention.

Seventh: Opening the doors of Arabia requires investments.

If you are serious about getting to grasp your share of the Arabic Market, better you start thinking to a budget for understanding the Arabic world, finding your way into it, and being introduced by someone that can translate the key assumption supporting it.

During the ICE Forum, Imad made an short speech about how he and his generation of Arab-Italians are the bridge among the two nations. Young guys who studied in Italy at our Universities, that have been raised by an Arabic Parent in an Italian city. These are the ones that can easily make the value of the two cultures converge.

Curious enough , after the forum, he has been immediately approached by several Arab business men…

I hope these 7 points may help you find new routes to market.

Arabia is growing 5% per year, and has a desperate need of good business partners to put its very young population at work. Something like 60% of the population is less than 35 years old. The opportunities are there.

If you have any comment and suggestion, just ping me: +39 02 8719 8498

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