The Middle East is often viewed with some trepidation by the Australian business community, with the language and distinct cultural differences often creating uncertainty among Australian exporters.
However, the region is growing and offers huge potential for Australian exporters, particularly as we look to expand and diversify our export markets away from Asia.
Like any other export market, understanding where demand exists, learning about any potential risks and taking the appropriate steps to success, can ensure more Australian SME exporters, including manufacturers, are able to take advantage of the growth opportunities in this exciting region.
Strategic export destination
The Middle East is strategically located between Europe and Asia, meaning historically it has been well placed to act as a trading hub for Australian companies operating there. This has meant that Australia has developed strong relationships with a number of markets in the Middle East.
The United Arab Emirates and Saudi Arabia are our strongest export partners in the region, and were ranked 11th and 18th respectively as the most important export markets for Australian businesses in the recent Australian International Business Survey 2015.
Strong industry demand
Australia’s key export industries, including mining, agriculture and services, all have strong markets in the Middle East, providing a number of exciting opportunities for Australian SME exporters.
The mining sector in the Middle East is growing, as many of the Gulf countries look to diversify their economies away from oil. Investment is also being made in other sectors, such as mining and infrastructure. This will create opportunities for Australian mining equipment, technology and services companies, and companies involved in the infrastructure supply chain.
There is also a strong and growing market for Australian agricultural exports to the Middle East. For example, Australian lamb exports to the Middle East increased by 7 per cent in 2014 and beef exports to the region were worth AU$390 million, according to figures from Meat and Livestock Australia. Other strong export opportunities exist for grains, such as barley and wheat, and canola.
Education is a key services export market for the region, with a number of Australian institutions already having a presence in the Middle East. This is likely to grow as the region looks to up-skill and diversify its labour force away from oil. Tourism is also growing, with the number of flights between the UAE and Australia, for example, having increased rapidly in recent years to support this growth.
Overcome export challenges
The Middle East has some distinct differences to doing business compared to Australia.
Understanding how these differences could impact your business and where any risks may lie is crucial before entering any markets in the region.
It is important to be aware of cross-cultural differences when doing business in the Middle East to avoid making a mistake that could damage a potential partnership.
For example, the culture of the Middle East tends to be much more flexible and relaxed when it comes to time and schedules than Western culture, so be aware that meetings and negotiations may not progress as quickly as in Australia.
Australian businesses also need to be aware of their legal standing when operating in the region.
Research, plan, prepare
There are a range of steps that Australian SMEs looking to export to the Middle East can take to help make their transition as easy as possible.
One of the most important tips for any SME exporter is to do their research. Any cultural barriers can be overcome by conducting careful and comprehensive research prior to entering the market.
Exporters should read widely, talk to peers who have already entered the Middle East and engage professional advisers that have experience of operating in the region.
When planning market entry, it’s important to get all paperwork in order.
The Australia Arab Chamber of Commerce and Industry (AACCI) is the peak national association for trade and investment between Australia and the Arab League countries.
AACCI certifies all export documentation for Australian exporters, which is a prerequisite for exporting to the Middle East. It also holds networking events and organises trade missions for Australian SMEs who wish to learn more about the region before making a decision to export.
A strong personal relationship is key to doing business successfully in the Middle East. This requires committing significant time and resources to investing in building relationships before entering the market.
This will likely involve conducting a number of visits to get to know potential customers, partners and suppliers before entering into a formal relationship.
For Australian SMEs that choose to service their Middle East market remotely, it is also important to have a good relationship with distributors.
Australia is well-placed to meet growing demand in the Middle East in a range of industries.
However, being aware of the potential difficulties and risks around entering the Middle East will help ensure Australian SME exporters are well-positioned to leverage the export opportunities available in this region.