Middle East Commercial Negotiations
I recently spent two weeks in the Gulf states of Qatar and the United Arab Emirates, conducting a series of commercial negotiations. The experience has prompted me to think about how to explain the intricacies of doing business in the Middle East to those who have had little or no experience with the process, so without further ado, here are a few thoughts and examples on what I like to call Middle East Commercial Negotiations 101.
Understand the cultural overlay - remember that we have different values
I cannot overemphasise how important it is to remember that when working with Middle Eastern counterparts you are not dealing with Australians or other Westerners. This means that you are likely to have a very different set of values and priorities to the people sitting across the negotiating table from you. Let me illustrate this point with an example.
While in Dubai I ran a meeting on behalf of a client about a potential collaboration with a high-profile Emirati. The key sticking point in the negotiation was the different values that the parties attributed to a) time and b) status. My client wanted be compensated for her time and effort to develop a product for the Middle East market which, from a Western point of view seems entirely reasonable.
The other party did not see things this way at all. He argued that the value brought by the status of the potential Emirati partner was of equal or greater value than any time my client might spend working on the project. Essentially, he believed that we should be paying for the value brought by his name. This perspective is quite hard to accept in Western cultures, where a lower value is placed on status and hierarchy and our motto - to a greater or lesser degree – is “time is money”.
Nonetheless, in order to successfully close a deal in the Middle East, the ability to step out of your shoes and into those of the other side is essential. Failure to do so generally leads to a great deal of frustration and no deal.
Be flexible about timetables
As I have already mentioned, Australians and people from other Western cultures tend to be very conscious of time and its value. As a result, we are often quite attached to rigid scheduling and may become exasperated when things don’t happen at the expected time, or in the order which we expect.
This approach doesn’t work in Middle Eastern cultures which are far more flexible in their approach to time and scheduling. Being late for a meeting, changing times and dates, or even cancelling are not necessarily regarded as rude or problematic, and being flexible on timing usually works to your advantage. Let me give you a couple of examples.
I ended up attending my first meeting in Doha well ahead of my initial itinerary because of scheduling changes. A few days before my departure I received a phone call notifying me that a potential partner (let’s call them Qassim Co.) could only meet at a specific time and date, several days before the meeting originally scheduled. My client and I scrambled to get on flights from Sydney to make the date in time, and our flexibility paid off. We received plenty of interest and positive feedback as well as a clear indication that Qassim Co. needed the client’s services and wanted to work with her.
One of our later meetings in the United Arab Emirates had been scheduled weeks in advance and reconfirmed the day beforehand. To my surprise, on the appointed day our 12 noon meeting became an 8.30 pm dinner which went on until nearly midnight. All went well, but we did move as far as mapping out a way forward and agreed to meet the following day. That meeting did not eventuate and has now been moved back about a month.
As these examples show, you can’t assume or expect that things will happen on your schedule, and your negotiations and the overall deal may well take longer to happen than they would in Australia. The worst thing you can do is to let this different approach to time put you off your game or discourage you from continuing the negotiation process. Adopting a long-term view and being prepared to be patient will get you much further.
Be prepared to modify your original ideas
Australians tend to be quite structured and linear in our thinking, and we’re likely to arrive at any business negotiation with a clear idea of how we’d like to proceed and by when. We will have arrived at this point through a combination of information provided by the other side and our own commercial agenda. Be prepared to put these plans aside, or at least modify them significantly when you sit down to negotiate in the Middle East.
My experience is that the Middle Eastern mindset is fluid and creative, and that schemes which would be regarded as outlandish in a Western culture are more readily accepted. Generally speaking, I also find that people in the Arab world tend to consult less, possibly because in Arab culture decisions are usually made by a single person or a couple of key people at the top of a hierarchy. The combination of these factors means that you may arrive at a meeting to find that your counterpart has dreamt up a grand plan and signed off on it internally, without ever mentioning it to you beforeheand.
On at least three occasions during my recent visit, I was surprised to find that the other side had envisioned projects far beyond the scope of what we had originally discussed and in some cases was already moving forward to make them a reality. My counterparts were not being rude, they were just operating in the way that was usual for them.
The take-away here is that you should come prepared to listen to all proposals with an open mind. You don’t have to agree to every proposal or take crazy risks, but you should be ready to stretch your thinking. As anyone who has visited Dubai and seen Burj Khalifa, the Atlantis Hotel or SnowWorld will tell you, sometimes even the most daring dreams can become a reality.
Commercial terms often come later
This relates to my points above about the different approaches that Westerners and Arabs take to time and ideas. As structured Westerners with linear minds, we want to initiate a business proposal, hammer out the commercial terms, punch through to a deal and get on with it. Time is money! Businesspeople in the Arab world are much more likely to want to get to know you first, decide if they like you, think about the deal for a while and come to the commercial terms later.
Agreeing commercial terms can often take several meetings, which can be enormously frustrating for a party with limited time and resources to spend abroad. Nonetheless, this is a reality of how business works in the Middle East and you must be prepared to make multiple visits to the other side to close a deal. Your best bet in dealing with this challenge is to either a) spend several weeks in-country or b) if the project includes elements based in Australia, get the other side to come to you. Their willingness to do so may give you an insight into their level of commitment to the deal.
Don’t underestimate your interlocutor
In popular Western culture Arabs are often stereotyped as “bombers, belly dancers and billionaires”, or simply lacking in intelligence. These are quite simply just inaccurate stereotypes. As their success in business highlights, there are plenty of highly intelligent, highly educated, very savvy operators in the Arab World who have built fortunes through hard work and clever negotiation. Their ability to take a long-term view and to think creatively makes the Arabs brilliant negotiators - don’t underestimate their ability to cut a deal, and do think carefully about what terms and conditions you are willing to accept.
VIPs in the Gulf usually operate through staff
The great majority of VIPs in the Gulf States only appear at key moments of a commercial negotiation, leaving the legwork to staff. Although I had met and socialised with most of the VIP businesspeople with whom we were negotiating, in all but one case I dealt exclusively with their staff – none of whom were Gulf nationals – to hammer out commercial terms. Don’t be offended that the main guy or girl is not spending hours with your team working over fine detail – that’s just the way it is.
Follow-up – You need to drive the process
I sometimes hear Australian businesspeople trying to do deals in the Middle East say “we had a great visit, good meetings and then nothing happened”.
The motto of the story is that once your initial meeting is over you need to drive the follow-up process, particularly when dealing with wealthy Middle Eastern partners who need the deal less than you do. Don’t adopt a tit-for-tat approach to follow-up, if you need to call three, four or ten times to get a response, then go ahead and do it without waiting for a response each time.
Use email where necessary, but always follow-up by phone, or if you can, in person. The Middle Eastern cultures are big on face time and much less keen on written formalities and depending on the country it is not unusual for people to take a long time to respond to email, if at all.