go international 4 strategies for 4 marketsuae, bahrain, kuwait, oman, qatar and saudi arabia)....

1 © Rödl & Partner 17th April 2015

GO INTERNATIONAL

4 STRATEGIES FOR 4 MARKETS

Studio Rödl & Partner, Padova

Avv. Eugenio Bettella, Managing Partner

- EMIRATI ARABI UNITI -


Agenda

1

Foreign Investments in the UAE

Cosmetics and Dietary Supplements

2


Agenda

1



1.1. Market Overview

1.2. Market in the UAE: General Rules

2


1. Cosmetics and Dietary Supplements 1.1. Market Overview

The cosmetics and perfumes sector is one of the most competitive, dynamic

and innovative sectors in UAE.

Positive factors to be taken into account:

• increase in population;

• young “fashion conscious” population;

• growing income;

• strong social pressure to look good;

• harsh climatic conditions.

Around three quarters of the UAE population is represented by men:

products aimed solely at men show good potential.



Trade events

Beautyworld Middle East – Dubai –

26/28 May 2015.

Beyond Beauty Arabia – Abu

Dhabi (38/31 January 2015) &

Dubai (25/28 March 2015).

Beauty Secrets Exhibition – Abu

Dhabi (30 April / 3 May 2015).



Source: Comext Last updated on: 16 Mar 2015

Trade statistics: export from EU to United Arab Emirates

Product Code: 3304

Product description: Beauty or make-up preparations and preparations for the care of the skin

(other than medicaments), including sunscreen or suntan preparations; manicure or pedicure

preparations.

Export Value

from the EU

(1000 EURO)

Export Value

from the EU

(1000 EURO)

Export Qty

from the EU

(1000 kg)

Export Qty

from the EU

(1000 kg)

Year 2013 2014 2013 2014

United Arab

Emirates

260 764.533 282 931.920 20 337.000 20 758.000




Trade statistics: export from EU to the other GCC Countries

Product

Code: 3304

Export Value

from the EU

(1000 EURO)

Export Value

from the EU

(1000 EURO)

Export Qty

from the EU

(1000 kg)

Export Qty

from the EU

(1000 kg)

Year 2013 2014 2013 2014

Qatar 20 104.750 21 747.916 410.000 511.000

Saudi Arabia 121 312.965 144 598.334 6 964.000 7 970.000

Oman 5 863.979 6 158.827 183.000 230.000

Bahrain 5 581.723 5 751.641 126.000 163.000

Kuwait 36 396.164 36 829.097 1 169.000 1 247.000




Trade statistics: export value from Italy to the GCC Countries in 2014

Product

Code

3304

UAE

Qatar

Saudi

Arabia

Oman Bahrain Kuwait

Italy

Export

value

(1000 EUR)

27 648.257

896.908

14 346.822

149.475

252.466

3 723.623



* Most Favoured Nation Source: Comext : Last updated on: 16 Mar 2015

Trade statistics: tariffs due for the export to the United Arab Emirates

NB: the agreement establishing the Gulf Cooperation Council (GCC) Custom Union entered

into force in 2003. This agreement provides for a common external tariff of 5% for most

commodities and duty-free access for local goods traded between the members States

(UAE, Bahrain, Kuwait, Oman, Qatar and Saudi Arabia).

Goods which are cleared at a customs office of entry in one of the GCC member States

may be directed to any other member state without necessitating further customs

procedures at the border of the GCC state of destination with the exception of an

additional Statistical Declaration for Trade between GCC Countries.

Products MFN* Products MFN*

3304:10

Lip make-up preparations

5% 3304.30

Manicure / pedicure preparations

5%

3304.20

Eye make-up preparations

5% 3304.99.20

Suntan preparations

5%



masscosmetics

premiumcosmetics

fragrances

hair care

Source: Doing Business in the UAE - 2014 - by U.S. Commercial Service

Breakdown of cosmetic market

Mass cosmetics represents

the largest market

segment.

Within said segment, skin-

care products (e.g. anti-

aging, sun protection) are

experiencing a major

growth.


1. Cosmetics and Dietary Supplements 1.2. Market in the UAE: General Rules

• Any substance or mixture intended for use on external parts of the human body (e.g. epidermis, hair, nails, lips etc.) or on the teeth and the mucous membranes of the oral cavity with a view exclusively or mainly to cleaning them, perfuming them, changing their appearance, protecting them, keeping them in good condition or correcting body errors.

COSMETICS

PERSONAL CARE

• Miscellaneous products which contain pharmaceutical ingredients and/or medical claim and cannot be classified as medicines, such as dietary supplements, medicated cosmetics, antiseptics and disinfectants, etc.

DIETARY SUPPLEMENTS

MEDICATED COSMETICS



Cosmetics Dietary Supplements

Rules in respect of cosmetics are

less pressing than in the

pharmaceutical sector. However,

cosmetic products shall respect a

wide range of requisites and

standards in order to be

marketed in the UAE.

Dietary supplements are included in the

General Sale List (GSL – the list

consisting of all registered

pharmaceutical substances in the UAE)

and subject to the same rules – Ministry

of Health circular No. 20/2001.



Cosmetics and Personal Care

ECAS certificate (Emirates Conformity Assessment Scheme) by ESMA (Emirates Authority for

Standardization & Metrology).

Issuance of certificate of conformity assures (i) cosmetics and personal care products are

compliant with the requirements of the approved standards and (ii) the production system is

compliant with the requirements specified in the technical regulation by Emirates Authority for

Standardization and Metrology.

ESMA Locations:

Business Avenue Building -

Sheikh Rashid Road

Dubai UAE

15th Floor, Al-Khazna

Tower, Al-Najda Street

Abu Dhabi - UAE




Procedure to obtain the certificate:

• the applicant may submit the application through the ESMA website along with the

relevant documents.

• the average period for the completion of the procedure (starting from the filing of a

complete application): 8 working days.

• fees: Application 600 AED. Issuance of Certificate 500 AED.

Safety and quality requirements, including:

• compliance with requirements set forth by UAE.S. GSO 1943 (Cosmetic Products –

Cosmetic Products Safety Requirements);

• successful outcome of specific tests;

• presence of a Cosmetic Product Safety Report;

• products should not be mistakable for food products.




Manufacturing requirements.

• The manufacturer shall comply with the requirements of ISO 9001 and UAE.S GSO.ISO

22716 (Cosmetics - Guidelines on Good Manufacturing Practices). The latter provides

guidance for Good Manufacturing Practices (GMP) for the cosmetics manufacturing

industry and describes the basic principles of how to apply GMP in a facility that produces

finished cosmetic products.

Metrological requirements

• The products shall comply with the metrological requirements of UAE.S GSO IOML R 87

(Quantity of Products in Packages). The latter provides legal metrology requirements for

prepackaged products (also called prepackaged commodities or prepackaged goods)

labeled in predetermined constant nominal quantities of weight, volume, linear measure,

area, or count.




Packaging/labeling requirements

• The containers shall comply with the requirements of UAE.S GSO ISO 22715 (Cosmetics -

Packaging and Labeling). In case of glass containers, they shall also meet the

requirements of UAS.S GSO 2093 (Glass Containers Used for Cosmetics).

GSO standards are international standards drafted by the GCC Standardization

Organization.

They may be downloaded in English from the e-store on the website of the GCC

Standardization Organization or from the website of the Emirates Authority for

Standardization & Metrology.



Labeling of Cosmetics

Expiry date. To be indicated as:

• date of minimum durability

• period after opening

If necessary, this information shall be supplemented by an indication of the

conditions of storage/use of the product in order to guarantee the stated durability.

Ingredients. In particular, ingredients in the form of nano–materials must be

highlighted.



Labeling of Cosmetics

Pictures and illustrations. It is inconsistent with precepts by the Islamic religion to

depict animate life, because it is deemed to imitate the creative act of the God.

Hence, it is advisable not to include pictures of persons and/or animals in the

label/packaging (and, however, use only stick figures).

Language. English and/or Arabic.



Dietary Supplements and Medicated Cosmetics

Marketing authorization for GSL products in the UAE can only be given to companies

(manufacturers) who are registered with the UAE Ministry of Health. Hence, both the

products and the manufacturer must be registered with the UAE MoH.

GSL company registration.

• The application forms are divided: Part I with regard to the Marketing Authorization Holder

and Part II with regard to the manufacturer.

• Each form entails the relevant documents required.

• The Marketing Authorization Holder shall have available a medical store licensed by the

Ministry of Health.

• The Dubai Community Pharmacy Licensure & Pharmaceutical Practices Guide, issued by

the Dubai Health Authority – Health Regulation Department (February 2013) focuses

primarily on licensing and protocol of institutions and professionals.



Dietary Supplements And Medicated Cosmetics

Registration of a GSL product requires a wide range of documents and information,

including:

• application (in English or Arabic);

• certificate of Pharmaceutical Product as per the Word Health Organization scheme (or

Free Sale Certificate);

• 3 samples of the product in its final package;

• certificate of analysis of the same batch of samples submitted for registration.

• Halal certificate issued by recognizable organizations and authorities;

• valid company registration certificate issued by the UAE Ministry of Health;

• various undertakings and guarantees by the manufacturer (e.g. declaration that the

product is devoid from hormones, heavy metals, antibiotics etc.).



Market in the GCC

GSO’s standards for cosmetics products apply also in other GCC Countries (e.g. Saudi Arabia

and Qatar apply GSO standard 1943/2009 - Cosmetic Products – Cosmetic Products Safety

Requirements).

GCC Countries are implementing a common market, which is until now only partially

operative.

GSO Board of Directors in its 10th meeting (Muscat, 24th May 2009)

approved the Technical Regulation for GCC Conformity Marking.

After full implementation of this system, a product authorized in one of

the GCC Countries will be marketable in the other GCC Countries.

Requirements for the marketing of products in other GCC States have to be verified on a

case by case basis.


Agenda

1


2.1. Indirect Investments

2.2. Direct Investments


2


2. Foreign Investments in the UAE 2.1. Indirect Investments

Indirect investments does not constitute a stable presence in the market, e.g.:

supply agreements;

agency agreements/ distribution agreements;

franchising agreements

with local a local party.

NB: However, import activities as well as agency and/or distributorship activities (togheter

regarded by UAE laws as “commercial agency”) are reserved to UAE subjects and/or

companies. Agency agreements must be registered with the UAE Ministry of Economy.

It is of the utmost importance to check whether the local party is fully entitled to market

the relevant kind of products in the UAE, as it would be extremely difficult to effectively

terminate an agency agreement, once this has been registered.


2. Foreign Investments in the UAE 2.2. Direct Investments

Direct Investments constitute a stable presence in the market, e.g.:

representative office;

branch of a foreign company;

incorporation or acquisition of local companies;

free zone establishments or companies.



Representative Office

Permitted activity

Only representation

Mandatory sponsor / local agent Yes

Minimum share capital No



Permitted activity

It may carry out all activities included in the

business purpose of the parent company

and for which it has obtained the relevant

license (with some exceptions, for instance

distribution / commercial business).

Mandatory sponsor / local agent Yes.

It is necessary to hire a National Service

Agent (UAE citizen) who will perform

bureaucratic activities with the public

authorities, usually in exchange for a fixed

fee or an annual commission.

Minimum share capital No.

Branch of a Foreign Company



Minimum share capital

No.

If the foreign investor is a natural person, a

certain capital is required in order to obtain

an investor visa.

Minimum number of shareholders 2.

Necessary participation of a local partner Yes, with a minimum participation of 51% of

the share capital.

Limited Liability Company



Free Zones

The government established some particular zone, where foreign investments are

encouraged, for instance:

• foreign wholly owned entities (no requirement of local partner);

• a foreign investor may have the direct property of real estates;

• benefit of tax exemptions / reductions;

• support during visa procedures;

• infrastructures (some free zones operate from airports or harbors);

• ready to lease offices/warehouses/lodging.

The incorporation of a free zone establishment (FZE – in case of a sole shareholder) or a free

zone company (FZC – in case of two or more shareholders), is an efficient strategy for

investors aiming to the market of one or more of the GCC Countries.



Dubai Multi Commodities Center (DMCC)

DMCC is a free zone located in the heart of new Dubai in proximity to Jebel Ali Port, Al Maktoum International Airport and Dubai Logistics Corridor. Its focus is on companies in the commodities sector.

Rödl & Partner is to be appointed as DMCC’s “international service provider”. This bears the possibility of incorporating a FZE or a FZC in Dubai completely from Italy, without need of any notarization or attestation by the UAE Consulate.

DMCC registers about 200 companies a month, 95% of which are new to Dubai. In December 2014 DMCC was home to over 9,700 companies. It is the fastest growing free zone.

The member base includes large multinationals and major regional players, to SMEs and start-ups.


Contacts

Eugenio Bettella

Rödl & Partner

Via F. Rismondo, 2/E

35131 Padova

Tel. +39 049 8046911

Fax +39 049 8046920

[email protected]

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