Ask the expert: Sir Charles Shaw gives his top tips on doing business in Oman
EXCLUSIVE:Sir Charles Shaw CEO of Bondoni, is an ‘in-country’ representation and market entry specialist in Oman. Sir Charles has first-hand experience setting up and leading businesses in Oman, UAE and Europe. Here he sets out some top tips for doing business in Oman.
The Sultanate of Oman offers great opportunities for international organisations to do business in a broad range of sectors.
Understanding Omani business culture is crucial in achieving initial negotiations and sustainable business growth.
Organisations have the option of doing business in Oman depending on the degree of risk, the control and commitment of resources they require and the return on investment they expect.
In Oman these range from a low, non-equity investment without having significant effects on the existing operations elsewhere through to fully committed equity based operations, either by setting up your business with a local Omani partner or by acquiring a full or part share in a local business.
Many international companies want to start doing business in Oman by initially “testing the water” They spend valuable time and money on flights: they fly in, have their meetings and fly out again. Without permanent local representation to follow up their efforts the probability of winning business is low due to being “out of sight out of mind”.
Many Omanis prefer to do business with international organisations but rightly in my opinion they want that business to show commitment to the Omani market by having some kind of local presence.
Local presence options
Low cost “In-Country” representation.
There are many companies and individuals who say they can provide market entry and local representative services .However, choosing the right partner is crucial to avoid expensive false starts. A few tips include:
–Select a professional representation partner that focuses on these services as their core business. Many local companies will offer a service but if it’s not core to their own business the relationship will soon end in disappointment.
–Objective setting – Select a representative who offers accountability by agreeing “SMART” objectives. These may vary from:
oExisting client follow up
oReputation management/brand establishment
–Professional fees v profit share agency agreements. Select a provider that offers a professional service based on fees instead of profit share. Companies that want a profit share agreement normally have relationships with dozens of other organisations so there is little chance of receiving their full attention in this uncertain stage.
–Knowledge and multi-dimensional networks. Select a partner that has multi-dimensional knowledge and a high level influential network. Many businesses will make “door opening” promises but quiz them on the quality of their contacts.
–Trust and confidentiality. Select a representative that respects the soft, qualitative priorities in business, especially when working in such a small “village” market environment.
–Availability – Quality representatives will only commit to a few clients so they can be available and responsive to their client’s requirements. It makes managing a business remotely so much easier knowing that there will always be an available dedicated Client Director on the ground.
Establishing a business with a local partner
Apart from US based businesses who take advantage of the Free Trade Agreement (FTA), international organisations generally need a local partner to set up a legal entity. Legally, the local partner has the right to own up to 30% of the shares. There are commercial alternatives but this is the start point.
There is always a toss-up between partnering with a local company that already offers similar services and setting up your own with a partner that will not interfere. There are clear benefits with both options but there are a few guidelines which may help you choose the best direction:
Control v profit share erosion .During the early and risky time of setting up a business it is compelling to set up with a company that already knows the market and has contacts. There are clear short term benefits to trade off control for instant access by surrendering a large chunk of precious equity and profit share but as the business becomes more established, questions (and often friction) arise as to whether it was a wise decision.
The alternative is to either choose a silent partner which means no interference with a low cost fee or an active local representation specialist that has the contacts and knowledge but has no conflicting distractions. The right company can process the set up quickly and efficiently.
Partner with a like-minded business. This is always a challenge. Initially the local business’s enthusiasm will provide support to help with the initial set up. But beware. Their business will normally take priority over the new “kid on the block”. There is a real danger of being treated as an “add –on” unless both parties have similar core values and a clear and long term strategy backed up by a robust business plan.
Understand the local culture and etiquette. Omanis are probably one off the friendliest people in the world. However they also have their own distinctive culture and business ways. Most business people wherever they are in the world recognise that joint ventures rarely succeed if they cannot get on with the JV partner. So choose wisely.
Conclusion. Whether business leaders are setting up in their own back yard or internationally in places like Oman it is always hugely challenging regardless of the success of the service or product. Each country has its own idiosyncrasies and Oman is no exception. The government continues to look at ways to improve incentives and cutting bureaucracy to encourage inward investment but in comparison to many Europeans, Far Eastern and even Middle Eastern countries it remains challenging unless they select a local “Business Guru” to help them navigate through the prevailing challenges.