Page 169 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

A Piece of the Action: Strategies for Entering the GCC Market 153

expertise, reputation and track record for transparency and fair
dealings, and a solid management team able to execute and oversee
the venture’s anticipated projects. As mentioned previously,
conflicts of interest can be a serious issue, and policies aimed at
avoiding or managing them need to be agreed upon from the
very start. One of the worst impediments to a JV to endure is the
partner’s commitments (contractual or otherwise) to other parties
that could detract from coleading the JV adequately.
Beyond these basic elements, there are more intangible ones, such
as corporate cultural fit. Will your international staff “gel” with your
prospective partners? Will board members focus on the key issues, or
will they be distracted by side issues of lesser consequence? Will man-
agers from both sides be able to address the tough issues head-on? Is
there any chance that either party will feel exploited, or that they are
receiving the worse end of the bargain? If so, these issues need to be
addressed forthrightly before entering into a JV.
The good news is that the more savvy local firms, such as the
UAE’s Al-Futtaim Group and Saudi Arabia’s ALJ Group, have a great
deal of expertise in dealing with multinationals. They understand
multinationals’ concerns, meet or exceed their quality standards, and
are often good cultural fits. Global firms need not worry that there are
no value-adding potential partners in the GCC; there certainly are
many there that can add value. The challenge is finding one that “fits”
from the perspective of capabilities, lack of conflicts of interest,
commitment, and cultural compatibility.

Supportive Regulatory Environment
As is the case when entering any new market, multinationals need
to feel comfortable that the regulatory environment is favorable.
The most basic issues concerning this, such as those involving the
rule of law and property rights, are not problems in the GCC coun-
tries. On the contrary, all of the GCC states included in the World
Bank’s most recent “Ease of Doing Business” rankings—Saudi
Arabia, Kuwait, Oman, and the UAE—were ranked significantly
higher than both China and India. China (excluding Hong Kong
and Taiwan) ranks 93rd from the top; India ranks 134th. The four
GCC states included range from 38th to 77th in terms of the ease of
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doing business. While not spectacular, these rankings are certainly
respectable relative to other emerging markets.