Why Expanding Your Business into the Middle East is a Wise Move

Part 1: What Does the Market Look Like?

With so many developing and emerging markets in the world providing a potential business boost, it’s no surprise more and more businesses are looking to take the plunge and make a move overseas. Businesses in the US are looking for ways to expand into places like Mexico and Europe. And businesses in Europe are looking for ways to expand into Asia and the Pacific. Even Africa is providing businesses with unique opportunities in some of its emerging markets. However, there is one region that is continuing to draw the attention of business leaders and investors from around the world as a prime opportunity for expansion.

In this 3-part blog series, we’re going to take a deep dive into why expanding your business into the Middle East is a wise move. We’ll begin by exploring the current makeup of the market. From there, we’ll make a compelling case as to why you might want to investigate your options in the Middle East.

Next, we’ll talk about the potentialities of expansion, including what the Middle East has to offer businesses and investors. Lastly, we’ll talk about some of the significant challenges that might come up as a result of your business expansion endeavours into this region. And while none of these challenges is particularly detrimental, they should provide you with some insight into the moves you need to make before implementing your expansion strategy to ensure that everything goes as planned.

With that said, let’s get into the first part of this 3-part series. So, what exactly does the market in the Middle East look like right now?

COVID-19 Has Left An Impact

There’s absolutely no doubt that the COVID-19 pandemic has taken its toll on the economy of the Middle East. Countries like the United Arab Emirates and Saudi Arabia have taken a substantial hit in their travel and tourism industries.

Thankfully, the UAE lifted most of its COVID-19 restrictions and its economy is very much making a recovery. However, it has a long hill to climb. From an investment standpoint, wouldn’t this be a red flag?

Traditionally, perhaps. However, the fact is that the Middle East’s economy isn’t the only economy in the world to have been struck by the pandemic. This means that there isn’t anything fundamentally wrong with the market in the Middle East. It’s going through a normal recovery process, albeit one that’s dictated by how the pandemic continues to unfold. The fact that the travel and tourist economies in a city like Dubai are coming back is a good sign because there wasn’t anything wrong with them to begin with. They’ve simply fallen victim, like the rest of the world, to the unpredictability of a global health crisis.

All in all, no country and no region has been left unscathed by the pandemic, so don’t let a slowdown scare you. There is still tremendous opportunity for business expansion into the Middle East, especially in a city like Dubai, Abu Dhabi, or even Riyadh.

There’s Already an International Presence in the Middle East

The Middle East already has a sizeable international presence. Although signs point to a dwindling oil industry soon in the Middle East, it’s currently rich and robust, as are the manufacturing and logistics industry.

Although the Middle East is known for oil, manufacturing, and logistics, it seems that there’s a shift taking place. According to Entrepreneur.com, “The Future Investment Initiative in October last year highlighted the growing importance of [technology] to the region, with the summit focusing on investment to drive growth opportunities, enable innovation, and champion disruption. It’s a shift that forward-thinking governments in the region are proactively fostering.”

This is something that we’ll dive into a bit deeper in the next article, but it’s interesting to see that the Middle East is beginning to shift its focus away from oil and onto more of an investor-friendly sector. Along with that, knowing that there is already an international presence within the region is a significant benefit because it provides you with local support right from the start. If you’re looking to get into the tech sector in the Middle East, you’ll need local partners to help you get your operation up and running.

In a city like Dubai, you can easily find an experienced and reputable PEO to help you plan your international expansion. The region is ready for international businesses to come in and make their marketplace more competitive.

Whether you’re an investor or a business leader, the Middle East offers a ton of opportunities when it comes to international business expansion.

With that in mind, we’re now going to talk about the potentialities that come along with expanding into the Middle East.

Part 2: The Potentialities of Expansion

One of the biggest questions that you need to answer as a business leader or as an investor when planning your business expansion: “Is this going to be beneficial for us?” If the answer is in the affirmative, then you know you’re doing something right, especially when you have the due diligence and market research to back it up. Businesses don’t choose to expand because they believe it’ll hurt them; they expand because they believe it’ll help them. There is always a potential for success in international business expansion. In this 3-part series, our goal is to ensure that you have the right idea behind developing your international business expansion plan as it relates to top the potentialities of expansion within the Middle East.

In our previous article, we spoke about how the Middle East economy has taken a hit due to the development and further spread of the COVID-19 pandemic. And in places like Dubai and Riyadh, their tourism and travel industries have been hit hard. However, market research is showing that there might be a new industry that the Middle East is looking to invest heavily in—and that’s precisely where your potentialities lie.

In part 2 of this 3-part series, we’re going to look into the potential opportunities and benefits that you could experience as part of your business expansion into the Middle East.

A New Industry Is on The Horizon

According to this article from Entrepreneur.com, “The Future Investment Initiative in October last year highlighted the growing importance of [technology] to the region, with the summit focusing on investment to drive growth opportunities, enable innovation, and champion disruption. It’s a shift that forward-thinking governments in the region are proactively fostering.”
And although this new development is still in its infancy, the fact that it’s happening means that only good things are coming in the Middle East. Countries like Saudi Arabia, Egypt, Jordan, and the UAE have made tremendous strides within the last year or so to not only build up their technological capabilities, but to build their technology infrastructure in terms of marketing it as a viable market for international investors and international businesses.

The governments of these countries have even gone so far as to develop “clear foreign ownership laws, robust regulation, increased access to funding, and a world-class education system in line with the skills required in a fast-changing world.” In other words, the Middle East has committed to the technology sector, and it isn’t going back on it.

Foreign Ownership Laws

Traditionally, foreign ownership laws within the Middle East haven’t exactly been investor friendly. They’ve been quite strict, essentially leaving interested businesses and investors out of the equation entirely. However, there has been a concerted effort more recently to loosen up the rules and allow international businesses and investors to tap into these new markets.

According to the same article, “The UAE has recently announced plans to lift its 49% ownership restriction for foreign owners in certain industries, allowing foreign investors to own 100% of companies. This is also matched by Saudi Arabia, where restrictions are being lifted in many industries, and the Vision 2030 agenda is proactively opening up the economy to foreign investment.”

As you can see, there’s never been a better time to invest in the Middle East and to implement your international expansion strategy. There are plenty of opportunities here, and it might be in the best interest of your business to see if there is something here for you. It’s always best to strike while the iron is hot—and the potentialities in the Middle East are glowingly brightly right now.

No Expansion Comes Without Challenges

We’ve spoken at length so far about the current makeup of the Middle Eastern markets. From there, we used this article to talk about the tremendous potential that lies ahead in terms of the emerging technology market and more relaxed restrictions, as it relates to foreign ownership within several of the most prosperous Middle Eastern countries. And while that’s all well and good, it’s important to remember that no expansion comes without challenges.

In our final part of this 3-part series, we’re going to walk you through some of the potential challenges, roadblocks, and obstacles that you might face when expanding into the Middle East. And while none of these challenges is large enough to derail your plans, it’s essential to be at least aware of them, so that you know what to expect and can proactively plan to combat them.

Part 3: The Challenges of Expansion

No expansion comes without challenges. In this final instalment, we’re going to fill you in on some of the main concerns that we believe a forward-thinking business leader or investor would want to keep in mind when planning their international expansion. While none of these challenges are game changers, they should still be considered nonetheless, and any due diligence research into your potential expansion project should undoubtedly have these considerations in mind.

With that said, let’s get into some of these potential challenges. We’d also like to place a small disclaimer here—the Middle East is a massive region, and these challenges are mostly general and could certainly be much more complicated or arbitrary depending on your desired location of expansion.

That’ll be up to you and your due diligence process to determine how relevant these challenges are for your ambitions.

Language Barriers

The Middle East is a diverse region, with many different countries, languages, and dialects. This means that language barriers will be a real challenge that any business interested in expanding into the region will have to consider. Most countries use their own languages, and there isn’t necessarily a universal business language applicable to the region, as could be said for Europe and English.

This means that planning your expansion needs to be done extra carefully. You’ll want to be sure that you’re able to connect with a local partner in the region you wish to expand into first, in order to help you gain a better footing of the language, the culture, the traditions, the norms, etc. All this comes into play later in your expansion process, but if you don’t understand the language, you’ll have no way of getting your foot in the door.

The Culture Gap

We mentioned it briefly in the previous section, but the Middle East does have a culture gap because each country within the region is different. And not only that, but Middle Eastern culture is also tremendously different from Western culture.

One of the ways you can go about navigating the culture gap is to hire local talent. Bizjournals.com says, “Your best employees will be able to operate locally and understand Western business practices.” And that’s a great point. Now, how and where do you find local talent?

How to Navigate the Challenges

You could connect with a regional recruiter, a local HR outsourcing company, or a Global PEO. Partnering with a Global PEO for your international expansion into the Middle East might be the answer to all your questions. Not only will it allow you to break through the language barriers because Global PEOs are trained and designed to work with international businesses, but it’ll also help you navigate the culture gap that exists between Middle Eastern and Western culture.

Global PEOs specialize in access to a massive talent pool of local talent and local experts. This not only provides you with a quick and immediate setup in terms of your human capital overseas, but it also ensures that you have an organization already aware of the rights of your workers. Save time navigating the employee culture needs of your Middle Eastern workforce by partnering with an organization that can hire your workers for you on your behalf and keep them employed on their payroll, to ensure that you’re not liable for anything other than the success of your international business.

You Can Overcome These Challenges

Expanding into the Middle East shouldn’t be considered in terms of the potential challenges that may lie ahead; it should be considered in terms of the potential benefits.

The Middle East is waiting for passionate business leaders and innovative investors to come and take advantage of the opportunities its emerging technology market has in store.

Now that you’ve finished this 3-part series, you should see just how apparent these opportunities are. It’s up to you to take advantage!