Doing business in the Arab world

Learn about the main characteristics of Arab countries from an intercultural negotiation point of view.
Doing business in the Arab world

In general, doing business with a foreign and different culture can sometimes be very difficult. However, knowing how to behave in the face of social and commercial issues of potential partners or clients can help and increase business opportunities. Continuous trading with Arab countries, as in any other part of the world, requires knowing the different styles, approaches, customs and religion. Felix Santos, the foreign trade specialist gives us the business keys.

Important cultural aspects

Sense of unity

The Arab countries count with around 300 million consumers. Although there are differences in concepts and customs, there is a strong feeling of Arab unity. For example, religion, language, geography have been the unifying forces among the Arab peoples throughout their long history.

History

It is important to highlight that the history of the Arab world is essentially the history of Islam.

Firstly, after the death of the Prophet Muhammad, in AD 8000, the Arabs conquered a vast territory ranging from Spain to Afghanistan.

Secondly, during Muhammad’s time, the Arabian peninsula was inhabited by nomadic Bedouins dedicated to herding and banditry, and by Arabs who lived off-trade in the cities. As for religion, there was an ancient tradition of belief in a supreme divinity.

The third stage highlights a rapid spread of the Islamic religion, which took place during the 7th and 8th centuries through conversion and military conquest.
In the early 8th century, Islam dominated a wide area that stretched from the peripheral regions of China and India in the east to North Africa and almost the entire Iberian Peninsula in the west. Islam became the third great monotheistic religion, after the emergence of Judaism and Christianity.

In addition, at the beginning of the 10th century, the presence of Turkic peoples, coming from Central Asia, increased notably. Most importantly, they adopt the faith, laws and culture of the local Muslims and soon rule most of their territories. In the thirteenth century, the Ottoman Empire arises.

Lastly, In the 19th century, the European powers began to divide the Ottoman Empire. At the end of the 1st world war, the empire loses the Asian provinces. Moreover, in 1922 the Ottoman dynasty was abolished. Finally, Between the 40s and 70s, the twentieth century decolonized the Arab countries. Oil as a differentiating economic force.

Islam and The Sharia

Generally, Islamic law could be described as religious obligations of the Koran. For instance, it regulates not only religious obligations, but also family law, criminal law, administrative law, and the law of war.

The Five Pillars of Islam

In short, prescribed ritual obligations, the performance of which is the central pillar of their faith for Muslims:

  1. Profess the faith (shahada)
  2. Perform the five daily prayers (salat)
  3. Fasting during the month of Ramadan (sawm)
  4. Pay the tax for almsgiving (zakat)
  5. Make, at least once in your life, the pilgrimage to Mecca (hach)

Muslim and the Arabic language

Generally speaking, Muslim understands religion as an integral part of his daily life without making a distinction between the sacred and the secular, morality, laws, and politics.

The Arabic language is the most important unifying force. On the one hand, there are many dialects and accents but the written language and its classical roots impose their supremacy from one end of the Arab world to another. On the other hand, classical Arabic is common to all countries and is used in business, politics, journalism, etc.

Islamic calendar

It has 12 lunar months and the leap years 355 days. The rest are common years of 354 days.

Doing business in the Arab world: Trade relations between Spain and the Maghreb

Firstly, and most importantly, doing business in Arab countries varies from country to country. For example, in Algeria, investing in traditionally mining and energy sectors are the best option. Indeed, agriculture and agri-food, pharmaceutical industry or hotel management among others. Libya is a country which stands out for oil refining and processing (renewable energy, telecommunications or equipment and machinery for the hydrocarbon sector). Mauritania imports around 70% of the food needs. Moreover, in the case of Morocco, the business relations with this country are very diverse. On the one hand, the automotive industry, construction, machinery and equipment for textile manufacturing. On the other hand, the energy and agriculture sector are also very important. Finally, the business relations in Tunisia are as diverse as in Morocco. However, this country stands out for leather and footwear.

Doing business in the Arab world

Particularities of the Maghreb market

Algeria

Firstly, competitions and public tenders. Secondly, the low implementation of large distribution. Thirdly, difficulties for franchises. Moreover, the importance of informal markets, and finally, the relevance of wholesalers-distributors.

Libya

In general, it is important to say that this market has an old logistics and distribution system. Moreover, their non-existence of shopping centres, hypermarkets or supermarkets together with the absence of franchises and the figure of the importer/wholesaler is decisive when doing business in this country.

Mauritania

In general, there is no great distribution and logistics chain in oligopoly.


Morocco

Above all, this country has a busy business sector. In other words, the coexistence of modern and traditional distribution, and growth of franchises.

Tunisia


Similarly to Morocco, there is a coexistence of modern and traditional distribution. However, the franchise system is more restrictive. Lastly, there are deficiencies in the logistics chain, counterfeits, street vending, and informal trade.

Business: Key aspects

  • For example, the intellectual and professional capacity of Arab entrepreneurs should not be underestimated.
  • In work meetings, you should not enter the matter directly. A few minutes should be spent on family and social issues.
  • Another example would be kissed on the cheeks, as a greeting formula, means that there is an already consolidated friendship, the same as holding hands (between men)
  • Do not sit with your legs crossed showing the soles of your shoes towards the interlocutor
  • Respect the fasts in the month of Ramadan
  • In Arab culture, older people are highly revered
  • Thank the host’s generous hospitality
  • Above all, do not drink alcohol or eat pork in front of Muslims or in public
  • Always use the right hand
  • The titles are important, it is convenient to use them
  • Never ask about the wife or daughters, always ask about the family

Stay tuned on our blog to learn more about the international business world!

Marina Díaz

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