INSTITUTE OF MANAGEMENT

STUDIES

Global MARKETING

A PROJECT REPORT ON

EXPORT OF PICKLE IN UAE.

SUBMITTED TO:- SUBMITTED BY:-

Dr. jayant sonwalkar sohit gautam

Mba (ft) 4th sem

(marketing)

Table of content1- AIM AND OBJECTIVES2- INTRODUCTION3- NEED TO GO GLOBAL4- LEVEL OF PRODUCT5- MARKETING MIX6- MARKET SEGMENTATION7- IMPORT DUTY AND TAXES8- IMPORT COSTUM PROCEDURE9- IMPORT REGULATION10-SWOT ANALYSIS OF SME SEGMENT11-TRADE BARRIERS12-PESTLE ANALYSIS13-EXPORT MARKETING CHANNELS14-GLOBAL MARKETING CHANNEL AND PHYSICAL DISTRIBUTION

AIMS AND OBJECTIVES

To prepare and standardize the recipe for apple pickle.

To study the physico-chemical characteristics of the final product.

To check the acceptability of the product.

INTRODUCTION

Fruits are among the perishable commodities, but are animportant source of nutrients in the human dietaries. Due to their highnutritive value they make significant nutritional contribution to humanwell being. Fruits in the daily diet have been strongly associated withreduced risk of some form of cancer, heart disease, stroke and otherchronic diseases.Fruits form an essential daily supplement since the early times,providing nutritionally valuable components. They are source of anumber of essential vitamins and minerals that cannot be found in theother foods or they may contain higher levels of these nutrients than other foods. The most significant contribution that fruits make to ourdiet is by adding vitamins to the diet, because they are a rich source ofβ- carotene, vitamin B3, vitamin B6 and vitamin E. Fruits have highwater content and also contains minerals like sodium, potassium, ironand other elements in small amounts. That is the reason why mostfruits can be eaten without any undesirable effect on health.Fruits contain organic acids in the form of acid salts of calcium,potassium and sodium. These acids are oxidized in the body and leave abasic residue in the blood. For this reason, fruits assist in maintainingthe acid-base balance of the blood. These acids include citric acid,found in citrus fruits, cherries and strawberries; malic acid found inapples, berries, cherries and some citrus fruits; oxalic acid in manyfruits. Like vegetables, fruits also contain dietary fiber, which our bodyneeds to cleanse and rid itself of refuse and toxins. The dietary fiber is also needed to keep bowel movements regular, lower cholesterol levels, prevents constipation, bowel cancer and other illness of the bowel and intestine such as diverticulosis.Apart from being rich in vitamins and minerals, fruits contain antioxidants that protect cells by neutralizing free radicals. Fruits also contain phytochemicals and unsaturated fatty acids. Fruits are not only a good food but also a good medicine. Since ages, scientists and horticulturists have been explaining the use of several fruits for the betterment of mankind. India is the third largest producer of fruits in the world with an annual production of 33 million tones, which is 8 per cent of world’s production. India produces almost all tropical and exotic fruits because of the varied climatic conditions. Most fruits are seasonal crops and perishable in nature. In a good season there may be a local glut, but because of insufficient transport facilities, lack of good roads and poor availability of packaging materials, the surplus cannot be taken quickly to the nearby markets in urban areas. Moreover the surplus cannot be stored for sale in the offseasons because of inadequate local cold storage facilities. This abundance of production is not fully utilized and about 20-30 per cent of the produce gets wasted. To avoid these surplus losses, fruits are processed in various products and are preserved. One such method for the preservation of fruits is the pickling, which is one of the ancient methods. Pickling is the lactic acid fermentation of fruits, which combines salting of fruits to selectively control the microorganisms and fermentation process to stabilize the treated fruit. Lactic acid fermentation is carried out by lactic acid forming bacteria, which are generally present in large numbers on the surface of fresh fruits. These bacteria can grow in acidic medium and in the presence of 8-10 per cent salt, whereas the majority of the undesirable microorganisms are inhibited in such conditions. Lactic acid bacteria are most active at 30°C, so this temperature should be maintained as far as possible in the early stages of the pickle making. Lactic acid fermentation has been associated with the therapeutic values besides the antimicrobial activity imparted to fermented fruits due to the production of various antimicrobial

compounds. During pickling process, the salt makes brine solution and the soluble materials like fermentable sugars and minerals diffuse out of the tissues of the fruits. The sugars serve as food for lactic acid bacteria which converts them into lactic acid and other acids. Apart from contributing certain desirable flavour characteristics to the fruits, pickling also prolongs the availability period of the produce by processing at a relatively low cost. Pickles are the products obtained as a result of the pickling process. Pickles are good appetizers and add to the palatability of a meal. Pickles are not the main meal itself but used with the main meal or some course to increase the pleasure of eating. They stimulate the flow of gastric juices and thus help in digestion. Pickles are prepared with salt, vinegar, oil or with a mixture of salt, vinegar, oil and spices. Pickles are commonly made in homes as well as commercially manufactured and exported. India has a large variety of pickles commonly known as ‘achar’ in Hindi. Mango pickle is very well known in Indian market and relished by all, but there are some fruits which are highly nutritious and yet there pickle is not available in the market, one such fruit is ‘Apple’. Apples are the pomaceous fruit of the apple tree (Malus domestic) in the family Rosaceae. Apples are low in calories; 100 g of fresh fruit slices provide only 50 calories. They contain no saturated fats or cholesterol; but are rich in dietary fiber which helps to prevent absorption of dietary LDL cholesterol in the gut. The dietary fibers also help to protect the mucous membrane of the colon from exposure to toxic substances by binding the cancer causing chemicals in the colon. Apple fruit contains good quantities of vitamin C and β- carotene. Vitamin C is a powerful natural antioxidant. Consumption of foods rich in vitamin C helps to develop body resistance against infectious agents and scavenge harmful, pro-inflammatory free radicals from the body. Apples are rich in antioxidant, phytonutrients, flavonoids and polyphenols. The important flavonoids in apples are quercetin, epicatechin, and procyanidin. The total measured antioxidant strength of 100 g apple fruit is 5900 TE. Apples are also good in tartaric acid that gives tart flavour. Apple fruit is a good source of B-complex vitamins such as riboflavin, thiamin and pyridoxine. Together these vitamins help as co-factors for enzymes in metabolism as well as in various synthetic functions inside the body. Apple also contains small amount of minerals like potassium, phosphorus and calcium. Potassium is an important component of cell and body fluids and helps in controlling heart rate and blood pressure; thus counters the bad influences of sodium. Apple occupies around 40 per cent of total area under fruit and accounts for 90 per cent of the total production of fruits in Jammu & Kashmir. The area under apple cultivation accounts for 87,000 hectares with an annual production of 9.29 lakh metric tons (2009-10). But due to unavailability of adequate packaging and processing facilities in the state, 30 per cent of the total fruit produced gets wasted. Also, inadequate marketing facility and lack of investment and integration in the marketing chain and value addition in the supply chain is negligible. This leads to a huge wastage of the crop in a good season. To avoid the losses due to wastage of apples, the apple fruit can be converted to a value added product by the pickling process. Apple pickle can be prepared by the use of various spices likefenugreek, cumin, turmeric, fennel, black pepper, rai powder, red chilli powder, salt and mustard oil. For preparation of apple pickle, the apple pieces are given a pre treatment prior to pickling to stop the browning process. Keeping in view the nutritive value and health benefits provided by apple fruits, pickle prepared from apples will have a good nutritional and medicinal value.

PROJECT REPORT ON GLOBAL MARKETING STRATEGY

PRODUCT: PICKLES

OVERVIEW OF PICKLE INDUSTRY IN INDIA:

Pickles & chutney is the traditional specialties product of India and has gained an important position in the Indian cuisine. They are eaten along with main course and provide tempting tastes. Pickles are prepared from Fruits and Vegetables and they supplement the food with vitamins and minerals. There are many types of pickles available in India like Chilly Pickles, Green Pickles, Lemon Chutney, Mango chutney, Gherkins, Mango Pickles, Onion Prpd/Prsvd and Tomato chutney etc. India’s Export of Pickles & chutney was Rs. 250.62 Crores in 2007-08. The major market for Indian Pickles & chutney are Russia, U.S.A, Belgium, Netherlands and France.

Our PICKLES WAS EARLIER KNOWN AS BOOM PICKLES.

BOOM PICKLES WAS INCORPORATED ON MAY 15TH 1989 & IN RECENT YEARS HAD ACHIEVED TREMENDOUS SUCCESS IN INDIA.BUT DUE TO IMMENSE COMPETITION THE COMPANY WAS NOT ABLE TO TAKE QUICK DECISIONS & DID NOT CHANGE ITS STRATEGIES IN THE COMPETITIVE AMRKET.EVENTUALLY THE GOODWILL OF THE COMPANY DIMINISHED & THE BOARD OF DIRECTORS RESIGNED.A NEW BOARD CONSISTING OF 4 BOARD MEMBERS FROM THE SAME INDUSTRY WERE APPOINTED.THE NEW BOARD SUGGESTED A CHANGE IN NAME WHICH WAS EVENTUALLY AGREED BY THE SHAREHOLDERS & THE COMPANY LAW APPROVED OF IT.THE DETERMINATION & HARD WORK PUT IN BY THE EMPLOYEES OF THE COMPANY PAID OFF & JASHN PICKLES NOW HAVE MANUFACTURING UNITS IN ALL THE ZONES VIZ NORTH, EAST, WEST, SOUTH.THE COMPANY RETAINED ITS BASE IN MUMBAI.

STRATEGIES ADOPTED IN INDIA

THE PRINT MEDIA & THE ‘IDIOT BOX’ HELPED US IN ACHIEVING THE REQUIRED ATTENTION LIKE THE NEWS OF OUR COMEBACK IN THE NEWSPAPER & TELEVISION CHANNELS. THE BILLBOARDS ON THE BEST BUSES IN MUBAI, POSTERS IN THE LOCAL TRAINS & ON THE OOH MEDIA SERVICE IN RAILWAYS HELPED US SET OUR IMAGE IN THE MINDS OF THE PEOPLE. A NEW STRATEGY WHICH IS CALLED THE PIQUE TECHNIQUE WHERE YOU KEEP ON REPEATING THE NAME IN FULL SPEED. THIS IRRITATES A NORMAL HUMAN BEING BUT AT THE END OF THE DAY THE NAME REGISTERS IN HIS MIND.

NEED TO GO GLOBAL

IS GLOBALIZATION REALLY NECESSARY?

YES, GLOBALIZATION IS NECESSARY FOR THE FOLLOWING REASONS:

1: PROFIT MAXIMIZATION: THE MAIN MOTO OF A BUSINESS IS TO ACHIEVE PROFITS. IF WE ENTER INTO A WIDER MARKET THE CHANCES OF PROFIT INCREASES & WHAT GREAT OPPORTUNITY TO ENTER THE FOREIGN MARKET AFTER THE SUCCESS OF YOUR PRODUCT IN INDIA.

2: STAGNANT OR SHRINKING DOMESTIC MARKETS: THE PICKLE INDUSTRY IN INDIA HAS GROWN VERY RAPIDLY IN RECENT TIMES. A LOT OF MANUFACTURERS HAVE COME INTO EXISTENCE WHICH HAS SHRINKED THE MARKET FOR PICKLES IN INDIA. ALTHOUGH COVERING ENTIRE INDIA IS NOT POSSIBLE AS THE SCOPE IS HUGE WE HAVE OPTED TO GO GLOBAL.

3: FOREIGN REVENUE: GLOBALIZATION IS NECESSARY TO EARN FOREIGN EXCHANGE CURRENCY FOR THE COUNTRY AS IT IS OUR DUTY TO EARN FOR OUR COUNTRY. THIS WILL HELP US TO ACHIEVE ECONOMIES OF SCALE.

4: REDUCE DEPENDENCY ON SINGLE MARKET : AS MENTIONED ABOVE, THE COMPETITORS ARE INCREASING DAY BY DAY IN INDIA. SO TO REDUCE THE DEPENDENCY ON A SINGLE MARKET WE PLAN TO GO GLOBAL IN SEARCH OF A MUCH BIGGER MARKET & LESS COMPETITION.

WHICH COUNTRY?

IT IS THE FIRST TIME FOR JASHN PICKLES TO GO OVERSEAS.

AFTER MARKET RESEARCH IN MANY DIFFERENT COUNTRIES WE ZEROED IN ON THE UNITED ARAB EMIRATES (UAE). The United Arab Emirates (UAE) is a situated in the southeast of the Arabian Peninsula in Southwest Asia on the Persian Gulf, bordering Oman and Saudi Arabia. The seven states, termed emirates, are Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah and Umm al-Quwain.The UAE, rich in oil and natural gas, has become highly prosperous after gaining foreign direct investment funding in the 1970s. The country has a relatively high Human Development Index for the Asian continent, ranking 31st

globally, and had a GDP purchasing power parity of $200.5 billion in 2009 according to the IMF.

THE POPULATION OF THE COUNTRY IS 4,621,399.THE CURRENCY IN UAE IS DIRHAMS (1 DIRHAM = 13 INR).

WE WILL BE TARGETING 3 OF THE 7 EMIRATES I.E. ABU DHABI,DUBAI & SHARJAH AS OUR FIRST TARGET AUDIENCE IS INDIANS & THESE THREE EMIRATES CONSTITUTE A HIGHER PERCENTAGE OF INDIANS.

WHY UAE?

Indians in the United Arab Emirates (UAE) constitute a large part of population of the country. Over a million Indian migrants are estimated to be living in the UAE (2000), who form over 40% of the total population of the UAE. A majority of Indians live in the three largest cities of the UAE — Dubai, Abu Dhabi and Sharjah. Indian contact with the emirates that now constitute the UAE dates back several centuries, as a result of trade and commerce between the emirates and India. More recently, the UAE has experienced a tremendous increase in the population of Indians who, having migrated to the country as a result of opportunities in petroleum, construction and other industries, far outnumber the population of local Emiratis. While most Indian migrants support the manufacturing and transport industries, a sizable minority of migrants are involved in professional services and entrepreneurship. Relations between India and the UAE have traditionally been friendly, though recent incidents relating to the treatment of the Indian migrant labor force by companies in the UAE have been the source of friction between the two nations.Also UAE is the hub for exports in the gulf so it will be easier for us in the future to export in gulf countries.

PRODUCTS IN UAE

TRADITIONAL EXOTIC RECIPIES JASHN SPECIALITIES DIET PICKLES

NON-VEG PICKLES

Mango Pickled potatoes Cheese dips garnished with zatar

Soya pickles

Chicken pickles

Lemon Pickled mushrooms

Lemon marmalade Bitter guard pickles

Prawn pickles

Mix vegetable Pickled okra Strawberry Pickles Amla pickles

Fish pickles

Green chili Pickled chickpeas Lamb pickles

Red chili Pickled lentils Eggplant Carrot Onions Garlic pickles

AN ARTICLE ON PICKLES

A report by Punjab Agricultural University (PAU) stated that during the year 2000-01, total production of pickles was 13645.16 metric tones and in 2002-03 the country earned Rs 154.16 lakh through exports. The exports could be doubled if provided efforts were made to organize the pickle industry. However, by using little care and simple technology, pickles can be prepared and preserved for a long period, the report suggested.

The finer aspects of pickle making can boosting export of this delicacy from India.

In order to overcome bitter taste of pickles the report pointed out that spices should not be cooked for a long time and a low concentration of vinegar should be used. Strict hygienic practice and iron utensils be never used.The scum formation in pickles occurs when mild yeast gains entry into the pickles. The problem can be overcome by adding acetic acid.Regarding cloudiness in pickles, the report said this can be seen in onion pickles or where whole fruits or vegetables are the material for pickle making. It can be checked by using small and thin textured material for pickle making especially onions.Blemishes in pickles can be seen in case of onion pickles and is due to some kind of fermentation. Such defect can be prevented by using fresh vinegar at the time of curing. Good quality oil and spices should be used for getting best flavor in pickles.

LEVELS OF A PRODUCT

The CORE product is NOT the tangible, physical product. That's because the core product is the BENEFIT of the product that makes it valuable to you. So with the car example, the benefit is convenience i.e. the ease at which you can go where you like, when you want to.

Another core benefit is speed since you can travel around relatively quickly. The ACTUAL product is the tangible, physical product. You can get some use out of it.Again with the car example, it is the vehicle that you test drive, buy and then collect.

The AUGMENTED product is the non-physical part of the product. It usually consists of lots of added value, for which you may or may not pay a premium. So when you buy a car, part of the augmented product would be the warranty, the customer service support offered by the car's manufacture, and any after-sales service.

The Marketing Mix

Core

Actual

Augmented

The Marketing mix and the 4 P’s are the controllable elements of business. In other words, a company has control over what product it makes, what price it sells the product for, how it wishes to place (distribute) the product and how it wishes to promote it.

A company may need to adjust its marketing mix for each individual market due to the uncontrollable elements. Uncontrollable elements include geography, infrastructure, culture, technology, politics, laws and competition.

The 4 P’s and the 4 C’s: the Importer’s Perspective

An importer is most concerned about the 4C’s: Customer solution, customer Cost, Convenience and Communication. The 4 C’s emphasize customer needs and wants over just trying to sell products. Below is a comparison of the 4 P’s and the 4 C’s from the importer’s perspective.

Product as “Customer Solution” Price as “Customer Cost” Place as “Convenience” Promotion as “Communication”

The exporter’s goal is to sell a product; the importer’s goal is to provide a solution for his/her customers. For either party to succeed, both must consider the total cost of shipping, insurance, customs clearance, duties, delivery fees and their own costs of business. Importers want the product to be handled, shipped and delivered to them asconveniently as possible. An importer also desires good communication in regards to product availability, transit times, problem-solving and marketing support.

Product Basics

Each product contains a set of attributes. Included in the attributes is customer service, which is used to support business relationships. Although the sale is about the product, purchase decisions are also based on your ability to add value to the transaction. Exporters who are reliable, supportive, helpful in financing promotional materials and activities and good communicators often add to the company’s export success.

Stressing a product’s comparative advantage is essential to make a sale. With so many products to choose from, you must convince a buyer why yours is the best. Is your product healthy, nutritious, organic, shelf-stable, ready-to-eat, high in protein, low in carbohydrates, or great for dipping in sauce? Emphasize features as selling points.

Next, consider if any changes should be made to the product before selling internationally. Are any label modifications required? Are the product packaging, size, color and name of the product appropriate? Considering these and other attributes are essential to positioning your product in a market.

Product analysis includes:

Quality Features Brand Name Packaging Labeling Product Assortment Product Length & Depth

Quality

Quality is the most important feature of a product, and is defined by the customer. Promoting and communicating product quality is imperative. An exporter often needs to educate the buyer and the market about a product’s inherent quality.

Features

Food features differ from other product categories. Ingredients make up a food and can be an area of competitive advantage. The way food is processed is also an important feature. A manufacturer’s care, creativity and technical skills can make up other important product features.

Brand Name

Successful branding of a product is a distinctive marketing skill. Branding includes creating, maintaining, protecting and enhancing the identity of a good to differentiate against the competition. A product’s brand is a combination of symbolic design, name, term or sign that gives the product a unique position within the market. The brand often influences customer perception and purchasing decisions.

A product’s name is also important. An exporter must consider whether the name makes sense, is offensive or means something entirely different when translated. American exporters are not the only people who face this challenge. Consider the following products that have had difficulty in the U.S. market:

Mental: French mints Plopp: Czech Republic candy bar Crapai: Turkish dill pickles Belcher’s Square Sausage: Scottish sausage Fart: Polish candy bar Bra: Swedish yogurt Cream Collon: Japanese cookie

Packaging

A product’s design and container or wrapper is its packaging. Packaging is closely connected with the design and style of the product. An importer understands the packaging’s importance, and might choose one product over another based upon it. A trade event in Singapore involved a tabletop display of over 60 U.S. food products and hosted buyers from a variety of chains and wholesalers within Southeast Asia. The primary research conducted at the event sent a clear message to these exporters. Although many products themselves were tasty, attractive and interesting, the packaging oftentimes left a lot to be desired. Most packages were considered to be designed poorly or could not withstand the long journey to Southeast Asia.

Packaging needs to be both attractive and durable. An exporter should also consider packing options, which better protect the product and the product’s packaging.

Labeling

Proper labeling is both a science and an art. Labels contain several key components. First, the design and artwork of the package is oftentimes part of the label. Label information should include: brand and product name, the origin and date of manufacture, a list of contents and ingredients, applicable nutritional and health claims, as well as proper use and shelf life.

Many countries have very specific labeling regulations, which are detailed in the USDA, Foreign Agricultural Service's FAIRS reports. The importer should provide a final consultation and label input, as he/she is the one who is subject to appropriate labeling and customs clearance.

Label modifications can be expensive. However, there are programs to help. The Branded Program supports the expense involved in labeling changes to comply with import regulations.

Private Labeling

Private label is a brand created by a store or re-seller of another company’s products. Private labeling in the international retail food industry has continued to grow in the past decade and shows particular success in certain categories and countries. Private label products have become competitive with brands, due to their lower cost and perhaps better shelf space allocation.

Many manufacturers have created their own private label for different market segments using essentially the same product as the branded options. Private labeling has grown into its own industry with its own trade events. Some trade shows are exclusively for private label products. In addition, Food Export-Midwest and Food Export-Northeast arrange Buyers Missions each year for private label products.

Product Assortment

Most small and medium-sized companies have some consistency in their assortment of products. This means that they do not stray very far away from their core competency, such as making sauces, condiments or salad dressings. These products are grouped closely together in the same subheading in the harmonized system.

This is a benefit, as many buyers are interested in working with a firm that specializes in certain types of products. Many buyers believe that a small company sacrifices quality if their product line is too large. It is good to have product mix consistency, which is to say, not too wide of an assortment of products to market.

Length & Depth

Product length and depth are important considerations in product assortment. Moderate length strengthens export opportunities, as it often refers to available product flavors. For example, having twelve flavors of margarita mixes allows a potential buyer to make choices on which products they are interested in distributing. In international trade, providing choices allows for customers to try new flavors or stay with the ones they are already familiar with.

The number of versions available for a product is referred to as product line depth. Product depth usually refers to the different sizes a product is available in. Many countries prefer small product sizes due to limited store shelf space and smaller storage spaces in customer homes. Appropriate portion sizes also differ among countries, especially when compared to the U.S. During a retail store tour in the U.S., an international buyer referred to a 32 oz. bottle of soda as “family size.”

Pricing Basics

Firms relatively new to exporting should aim to keep their pricing simple. What is commonly referred to as the cost-plus method of pricing may not be too different than how a company prices their products domestically. In fact, domestic pricing for many companies that have been in business some time include discounts, commissions, broker fees and other allowances that are more complicated than export pricing. Try to be as competitive as possible to gain market share, and remember that the importer has a variety of costs to deal with that you do not.

Experienced importers have a good idea about what the market price for a product should be and will let you know what is required to establish distribution. If they ask for pricing considerations from you, it often does not mean your price is too high, but that their cost is too high. If both you and the importer agree that the business has potential, there are ways to deal with the price escalation of export. If your pricing cannot match the importer’s needs or the market conditions, then continue trying other importers in other markets. Each transaction will provide a valuable lesson in export pricing.

Pricing Variables

Export Price Escalation Discounts Payment Period Payment Terms Use of the Pro forma Invoice

Export Price Escalation

Export pricing from your facility to the ultimate destination is usually segmented into three main parts:

Shipping within the United States to the port of export. This is commonly referred to as inland transportation or “pre main-carriage” transport. The further your facility is from the port of export, the more expensive shipping becomes.

Shipping from the port of export to the port of import. This is also referred to as “main carriage” and is usually listed as the origin and destination on the shipping documents. The main carriage is usually the longest leg of the journey, although there are exceptions.

Shipping from the port of import to the ultimate destination. This is referred to as “post main-carriage” and involves the expenses of getting a product from the port to the importer’s warehouse or end use location.

Every step requires organization, documentation and a logistical plan. Each function may vary between country of destination and type of buyer. As mentioned previously there are service providers that specialize in the process, such as international freight forwarders, consolidators, customs brokers and shipping companies.

Discounts

As price escalation between your warehouse and the ultimate destination can cost the importer more than the domestic buyer, the importer may request some form of discount off of your regular price. Many considerations go into discounting sales. However, the worth of the sale to the company in terms of volume, value, profit and long-term business should all be taken into consideration. Discount options could include:

Cash discount: Many businesses offer cash discounts to their customers in order to fuel demand of the products over a given period of time. Another type of discount could be offered for early payments, such as one percent per week prior to the invoice coming due.

Quantity discount: This is often used in the export business, and reduces price based on volume. For example, an exporter offers a product for $17.00 per carton of 12 boxes of product, under 100 boxes. The price could be reduced to $16.00 for amounts between 101-499 boxes; $15.00 for amounts between 500-999 and so on. It gives the importer an incentive to purchase more and increases sales for the seller.

Seasonal discount: Many foods and ingredients are produced in seasonal cycles. Sometimes, it makes sense to offer an off-season discount to the importer to make sure products move in the periods when consumption might be down.

An allowance might also be considered. An allowance may be promotional support for distributors or retailers who specially feature your products. The Branded Programprovides cost sharing in many types of promotional activities, and is of great benefit to many small businesses in developing export markets for their products.

Payment Period

Export payments may usually take longer than the domestic equivalent sale. As a result, prices should be designed to recover the cost of capital during a lengthy open account sale. For example, if it would cost a company $300.00 to finance an open account sale of 90 days, it is a good idea to include that cost in the pricing to absorb the loss. If the importer agrees to pay 50% of the invoice in advance, you could reduce the equivalent amount of the cost of financing.

Payment Terms

If open account sales are not an option for one or both parties, the use of a consignment controlled payment is an option. This payment method is also referred to as payment by documentary collection, or draft, either at sight or on a time basis. It restricts access of the commercial documents prepared for the shipment, which are required to take title of the goods at the destination. The documents are only released to the buyer when payment has been made (sight draft) or when an endorsement of the draft obligates them to make payment within a given time frame (time draft).

Letters of Credit (which also make use of a draft), documentary collections (payment by draft only) and cash against documents help protect both the seller and the buyer in the transaction as their banks become directly involved. When using these methods a variety of banking fees must be paid by both parties. Many exporters include those fees in their price to absorb the costs of financing the exports.

Use of the Pro forma Invoice

Most export prices are quoted via the use of a pro forma invoice, which is essentially a quotation to the buyer for a particular shipment. In actuality, it becomes the first draft of the commercial invoice, the key document in the export business. Many importers request pro forma invoices on a consistent basis, and most successful exporters have become skilled at issuing them.

The Pro forma invoice includes information about the product’s value, metric weight and dimensions, costs for inland transport, main carriage and insurance, if requested by the importer. International freight forwarders and other shipping companies can provide advice on export pricing and rates for these services. Some countries require the pro

forma invoice for the issuance of import permits and financing at the destination, which makes them formal and non-negotiable once accepted. For a sample pro forma invoice, click to view the document.

Export distribution can be broken into three steps. During the first step, products leave the factory or pick-up location and are taken to the port of export. Next, the shipment leaves the port of export and arrives at the port of import. Finally, the product moves from the port of import to the ultimate destination for storage, sale or use. More than one service provider is usually required to perform all of these functions, and because of the distance, paperwork and cost it is very important for all of these functions to work together in a seamless fashion, at least from the eye of the exporter and importer.

Placement Considerations

Distribution Channels Indirect vs. Direct Exporting – Who Owns the Goods? Exporting Logistics Intermodal Transportation Consolidations Exclusive Distribution Export Diversion

Distribution Channels

Channels of distribution vary greatly from one market to the next. For example, distribution channels in Japan are vastly different from those in Mexico or India. One of the major considerations of distribution concerns the length of the channel. The length of a channel refers to the number of intermediaries in the chain, all of whom are seeking a profit. The longer the channel, the more expensive the product is at the retail level. Thus, a shorter channel costs less and delivers the goods to market more quickly.

Indirect vs. Direct Exporting: Who Owns the Goods?

Many U.S. companies specialize in exporting products for others and do not produce any goods themselves. These companies may be called: Export Management Companies, Export Trading Companies, Export Merchants or Buying Offices from overseas firms. Regardless of the name, if you sell to another firm and they export your product, you are exporting indirectly, as you have given up title to the goods. Indirect exporting is a common way for small and medium-sized businesses to enter into foreign markets, as it requires little in the way of capital, time and staff compared to exporting directly. After some time and experience in the field of international trade, many companies begin to develop their own export business, often in other markets than the ones served by the exporting company.

In direct exporting, a company retains title to the goods until it is transferred to the buyer. Direct exporting involves setting up your own export operations and requires a long-term commitment, direct contact with buyers and increased cost and risk.

However, it gives a company greater control over their export marketing. In addition, it is often more profitable than indirect exporting as at least one level of distribution is eliminated and the final cost of goods is lowered.

Exporting Logistics

Logistics includes all of the activities in moving merchandise from the origin of manufacture to the point of use or consumption. Export logistics include getting the right amount of product to customers within the required time frame at a cost that leaves a margin of profit for both parties. Recent estimates indicate that logistics in trade account for 15% of the total volume, or $1.5 trillion annually. Therefore, controlling logistical costs should be a priority and can result in more profit for the exporter.

Physical distribution has evolved in recent years and has become a competitive advantage for U.S. Exporters. Many firms refer to their distribution systems as “marketing logistics” instead of just “shipping.”

Importers are more concerned about the landed cost of a product than of the individual product price. An exporter’s ability to provide logistical solutions to help lower the landed cost influences that company’s ability to be competitive.

While it is important to remain cost-competitive, choosing transportation on price alone is not advised. The cheapest method of transportation is usually not the best, and it is often risky to save a few cents by selecting an unknown logistics service provider or carrier. If goods are misrouted, lost or not properly serviced, future business could be lost. A savvy exporter will look for savings at each step beginning with the method of packing goods for shipment and ending at product delivery, without sacrificing the quality of shipment. When an exporter can add value to the transaction, he/she always should.

Intermodal Transportation

Many exports are shipped by intermodal transport, which is the use of two or more modes of transport between origin and destination. The further a product has to be shipped, the more likely it will require intermodal transportation. Many shipments are picked up by local trucking firm, transferred to another truck for the interstate haul, loaded onto a container at a port and then loaded onto a vessel for export. After arriving at the port of import, the shipment may then be offloaded onto a train, a truck or another vessel prior to its arrival at the ultimate destination.

When choosing a transportation mode for products, the buyer’s needs should be weighed. Transit time, level of service, availability of choices and cost are all considerations which factor into a decision. Air cargo can be expensive, but the goods arrive within days rather than weeks. Live, fresh, chilled or frozen products with high value often warrant the extra cost of transportation. However, if the value is lower and

there is not an urgent need for the product, then ocean freight would be a likely choice. In other markets, such as Canada and Mexico, truck or rail may be a suitable option.

Consolidations

Many food importers consolidate their shipments, which means that they request the exporter to deliver the shipment to the warehouse of a freight forwarder, NVOCC (non-vessel operating common carrier), or other consolidator. This company then builds a consolidation of multiple suppliers’ products into an air or ocean container and ships it to the port of import. By consolidating, the importer saves in freight charges, customs clearance fees and protects the integrity of shipments by having everything arrive in one lot rather than in partial shipments.

Even if the importer does not request consolidations, consider using a consolidator for your exports if they are less than a container load. In some cases, the buyer may not have enough orders to have their own consolidation and may ask you to include your shipment into a consolidation which arrives at port with multiple other importers’ products.

Exclusive Distribution It can work to the benefit of both the buyer and seller to enter into an exclusive distribution agreement. If an importer is truly excited about marketing a product in their country, they will often request the legal right to be the only one to do so. For an exporter, giving exclusive rights to the right partner can give his/her brand the best chance of gaining identity and market share.

Make sure the potential distributor has the proper network, sales support, promotional capabilities and customer base. If this cannot be determined, then a decision should not be made until sufficient information is gathered. Granting exclusive rights to an unqualified or unmotivated distributor can severely hinder your efforts in a market.

One key consideration regarding exclusivity is coverage. In some countries, most of the market may be within the coverage area of one distributor. In places like Canada, Mexico or Australia, there are multiple markets that are geographically spread apart and adequate coverage might not be possible with one partner. In these countries, you might choose more than one distributor and limit the exclusivity to a certain territory that can be properly managed by each one.

Export Diversion

Despite the channel, mode of distribution or type of distributor you work with, your exports could be compromised by diversion. Simply put, diversion occurs when your shipments do not reach the stated destination and are sent elsewhere without your knowledge. Diversion usually occurs when you have negotiated a special export price, based on the fact you are free from most domestic equivalent costs like commissions, broker fees and rebates. The goods are picked up from your facility on behalf of the

buyer, who then resells them to another U.S. customer and they are in turn sold below your domestic price.

Protect yourself with a written agreement forbidding the buyer from diverting product from the intended destination and placing destination control statements on your commercial documents, cartons, or other packaging. If goods leave the country and are returned and sold without your knowledge, or never leave the country at all, it becomes an illegal transaction based upon your written agreement and destination control statements. To further prevent diversion and other unethical practices, check a buyer’s credibility through bank and trade references before conducting business.

Example of a Destination Control Statement:

"These commodities were exported from the United States in accordance with the export administration regulations for the ultimate destination of the United Arab Emirates. Diversion contrary to U.S. law is prohibited."

PROMOTION

Promotions explain the merits of a product and its company and are oftentimes referred to as communications. Products that require significant promotion in the U.S. may find a similar need in international markets.

Promotion Variables

Advertising Sales promotion Public relations Personal selling Direct marketing Website for Export – “E-Marketing”

Together, these elements make up the promotional mix. In the export business, a company may find that one or more components of the promotional mix may vary in effectiveness based on the market, the buyer or the product being sold. When used at the same time, they are collectively known as “Integrated Marketing Communications", or IMC. It is helpful to take advantage of as many promotions as possible to grow a brand overseas. If a company does not have direct overseas communications, it should work with the importer to establish effective promotions.

Advertising

Advertising is known as any paid form of non-personal presentation and promotion of goods. While a small business exporter might not ever get involved in advertising internationally, the opportunity to do so is increasing with new media and lower costs in specific targeted markets.

If the proper opportunity to advertise does occur, it should be considered. In many cases advertising can be used to find potential distributors. Some targeted magazines are distributed overseas by federal government agencies for the purpose of bringing exported products to a market.

It is possible to maintain your domestic theme in international advertisements, and in some cases, preferred by the importer as well. It is imperative to have the message translated properly though, if the destination market does not use English, and in some cases even if it does use English. Interpretation of the message is most important, especially as most advertising has a humorous angle, and humor is often the most difficult aspect of language to interpret.

Examples of creative international advertising include:

A popcorn company targeted children by advertising their products alongside a new children’s movie. Placemats were made for restaurants that had fun and games for the children with popcorn and movie images.

A honey company hired a local in Greece to paint its car with the company’s logo and information. Their products were promoted all over town at a minimal cost.

One innovative company used product placement in key British soap operas to get their products into the living rooms of consumers. Their products could be seen in these fictitious supermarkets and convenience stores throughout prime time viewing hours.

Sales Promotions

Sales promotions are described as short-term incentives that encourage the purchase of a product within a given time frame. The use of coupons, cents-off, contests, premiums and other deals may be restricted in overseas markets, and are not nearly as common as they are in the United States. However, promotions can be a strategy used by your importer, who owns the goods and can decide how and when to promote a product.

Many promotions are designed to stimulate immediate sales. Some effective methods include: tastings, samplings and other similar events. Export assistance providers are often involved in overseas food promotional events, which may also qualify for Branded cost sharing.

Many international sales promotions can be found in grocery stores. In-store demonstrations with product giveaways and cooking demonstrations are popular along with end-of-aisle gondolas that highlight new products. Some companies even give away recipe cards as an incentive to buy the product if it’s an item consumers may not be familiar with.

Public Relations (PR)

Public Relations are based on obtaining favorable publicity and building up a good image as a “corporate citizen.” Public relations often make more of an impact than advertising. This is in part because they are true and believable. They are also an effective and economical way to create awareness about your products, your company and in some cases, yourself. Many small and medium-sized companies have effective public relations in place, even if that is not how they refer to them.

For example, many small farms, ranches, dairies and breweries have tours available for groups interested in learning about the operations. They also have shops on-site which sell their food products and other gift items such as hats, glasses, aprons and so on. Gift items often become a form of subtle advertisement. Many other firms donate proceeds to various charities, are involved in environmental issues, support local sports teams and provide food to the homeless and poor. These all make an impression on buyers as well as their customers. Displaying PR projects on a company website is a great way to develop a positive public image.

Personal Selling

Personal selling can pose a challenge with international customers. Cold calling distributor lists is less efficient than a properly set meeting such as a Buyers Mission, Trade Mission or meeting at a domestic or overseas trade show. However, it is important to note that many importers listed in the marketing reports outlined in Section 2 are aware they have been included in those reports and have requested to be included in order to be introduced to new suppliers. Food Export-Midwest and Food Export-Northeast also offer an online product catalog that has been customized to match buyer needs with registered companies’ products. Click here to learn more about the Online Product Catalog.

Personal selling is subject to “Culture’s Consequences.” In the U.S., we are used to being approached by strangers who would like to sell a product or service. But, in many countries this is not common or acceptable. Many cultures have distinctly different approaches to doing business, including both verbal and non-verbal communications, negotiations, thinking and decision-making processes. Before meeting with a potential buyer, learn about various business cultures of that country. Prepare yourself in advance by becoming familiar with their habits, as you can bet they are prepared to deal with U.S. businesses. And finally, try not to sell. Instead, focus on establishing a relationship and communicating why it makes sense for you to do business together.

Direct Marketing

Direct marketing involves carefully targeting existing or potential customers by a variety of media including telephone, fax, e-mail, the internet or direct mailing in order to cultivate or maintain business relationships. It is difficult in the export trade, as it is not directly aimed at consumers, but at businesses. Direct marketing is most effective if you

have actually met with or communicated with the targeted business before. It is also used to introduce yourself and your company or to create awareness about your products and international trade intentions.

Continued communications with those you have met at a buyers’ mission, trade show, through a trade lead or even via your website can demonstrate commitment and create a good impression. Information on new products and recipes, market developments, a booth or attendance at a trade event, or even moving to a new location could spark an interest in the buyer, and often might put your company in the right place at the right time.

Websites for Export – E-Marketing

Internet advancements have given small and medium-sized firms a boost and have allowed many to expand their business internationally. Many of the promotional concepts presented in this section can be achieved through a carefully designed website. E-Marketing can provide a low cost implementation of an export strategy.

It is highly recommended that your website includes an international section where potential importers can learn about your products and your company. Many food importers have indicated that they often try and locate new suppliers via the internet, but are puzzled at the lack of mention of trade opportunities, and refrain from contact in order to focus on firms who indicate direct experience or interest in exporting.

A clearly defined mention of “International Inquiries Welcome” along with a specially designated area to describe your exporting policies and procedures and a pricing list for export gives your company a competitive advantage. Companies can also incorporate their own trade lead form to collect buyer data and interests. Literally hundreds of food and agricultural product firms are establishing export business through their websites today; so if your company is not yet doing so, you should consider adding yours to that proactive group.

Market Segmentation, Targeting & Positioning

Once your top markets have been identified through market research, each market should be segmented, targeted and positioned properly for overall export success. This process helps a company to focus on those clients or market segments that offer the most potential, rather than using a de-segmented marketing approach.

Market segmentation, target marketing and market positioning are integral components to a successful marketing plan. Market segmentation involves separating markets into distinct groups with defined needs, wants and demands. Target marketing requires the firm to rank and select target segments based upon overall sales potential. Market positioning involves communicating a consistent message about your products in order to differentiate them from those of the competition.

Market Segmentation

In order to segment a market, it must be divided into separate groups which have distinct needs and characteristics. Each segment may hold potential for different products or require a separate marketing mix.

There are many ways to segment markets, especially in export marketing. Below are a few segments that will be discussed in more detail throughout the section:

Geographic Segmentation Demographic Segmentation Psychographic Segmentation Global Market Segmentation

Geographic Segmentation

Geographic segmentation divides markets into different groups based on regions, countries or even regions within countries. For example, the “North American” market could include the United States, Canada and Mexico. However, Mexico could also be segmented into the “Latin American” market.

Other geographic segments throughout the world might include:

Western Europe Central Europe Pacific Rim Asia Southeast Asia Middle East Caribbean

These regions are too large to be target markets, but they are regions where targets might be located. Within each segment there are differences in population density, climate and purchasing power which will help you to further refine your target.

Demographic Segmentation

Demography is the study of people, and is an important variable in market segmentation. If you have a good idea about whom your customers are in the domestic market, it makes sense to try and locate them in other areas of the world. The following is a list of some common demographic segments.

Age – Children, teenagers, young adults, adults, middle-aged, elderly Gender – Male or female Family Size – Ranging from single to 5+ Family life cycle – Young, single, married, kids, empty-nest or older Income – Under $10,000 to beyond $100,000

Education – Grade school, high school, college, graduates Nationality – Any individual within a country or different nationalities within countries

The variables depend on types of products you are marketing and your current customers. From this list you might target single women who are college graduates and in a profession that leaves them little time to prepare meals; or, you may choose to target high-income families with more than five kids. In both cases, you are not limited to any specific geographic segment, but to demographics. Because many demographic traits are universal, you can often target the same “types” of people with success no matter where they live.

Psychographic Segmentation

People in the same demographic may have different social classes, lifestyles and personalities. Psychographic segmentation divides markets by how individuals feel about themselves, their aspirations and goals in life. Marketing is often described as creating a “psychic bond” with customers and making them feel good about buying your products.

For example, many customers around the world are interested in U.S. products that represent the “American West” for its sense of freedom, adventure and open space. A company based in South Dakota has used this fact to gain a foothold in the Japanese market. The company exports gourmet mustard to customers in Japan who not only use the product, but collect the decorative jars as a prized possession of Americana. This might also be considered a form of “benefit” segmentation, where there is a distinct social advantage to using an imported product that is unique in content as well as packaging.

Another type of segmentation is by occasion, such as a particular holiday or event that might increase the use of a certain type of food. For example, exports of kosher food always increase in advance of the Jewish Holy Days.

Global Market Segmentation

Global consumers often have similar needs and purchasing behaviors despite their geographic location. Many consumer-oriented food exports are global in scope. Just as you might find some U.S. states to have strong sales; very similar markets can be found across the globe. Many customers have comparable tastes, regardless of language, culture, economics or politics. This is also referred to as “Intermarket Segmentation”.

Market Targeting

With proper segment profiles, a company may begin the process of evaluating each market and choosing one or several markets to enter into. Consumers in similar segments with common needs and characteristics can then been separated into the initial target markets.

In order to determine which target markets to begin with, a set of factors for evaluation should be set. These factors include market segment size and growth and overall attractiveness of the market. Each factor should be evaluated based on your company’s goals, capabilities and resources.

Market segment size & growth: The right size and market growth rate are unique to each exporter. The best market is not always the largest one.

Overall attractiveness: Market research should provide a good idea about how competitive a market is for products like yours or potential substitutes to yours, as well as price sensitivity for distributors and consumers.

Company goals, capabilities and resources: Consider your own goals and objectives against your company’s ability to provide marketing support.

Market Positioning

When introducing a product into a market, it is important to consistently relay its attributes to potential customers. Your message should provide a clear and distinct advantage of choosing your product over the competitions’.

“Positioning” the product is an important component of the promotional mix. Positioning begins with identifying where your products have a comparative advantage. In the business of food export, the comparative advantage sought is often on innovation, quality and value. A product’s position needs to have a relative advantage to be chosen over other products, and needs to be seen as distinct and superior. Products should produce profit for the importer while remaining affordable for the consumer.

The recipe for Market Positioning success includes: an appropriate business partner, export assistance agencies and support and long-term commitment from the company’s management.

So what’s the next step?

For more detailed exporting information relative to your specific business please register for our Food Export Helpline™ service. There are always specific issues and questions that are unique to your company, products, and export markets. With the Food Export Helpline™, you’ll speak with an industry expert who’ll put his more than 20 years of experience to work for you. There are no canned answers, only insightful, customized advice specifically for you.Click here for the Food Export Helpline.

Or, register for our Market Builder program. This service provides customized, in-market research to help you determine if a market is right for your product. Exporters can find new distributors or importers, receive valuable feedback about their product and gain industry insights on topics such as the distribution process and import regulations and restrictions for 18 international markets.

Import duty & taxes when importing into United Arab Emirates

Overview

Import duty and taxes are due when importing goods into UAE whether by a private individual or a commercial entity.

The valuation method is CIF (Cost, Insurance and Freight), which means that the import duty and taxes payable are

calculated on the complete shipping value, which includes the cost of the imported goods, the cost of freight, and the

cost of insurance.  No additional taxes or fees are levied on imports.

Duty Rates

Duty rates in UAE vary from 0% to 100%, with an average duty rate of 4.61%.  Some goods can be imported free of

duty (e.g. laptops and other electronic products).                     

Sales Tax

There is no sales tax applicable on imports in UAE.

Minimum thresholds

Imports with a CIF value up to AED1000 are exempt from duty.

Other taxes and custom fees

There are no other taxes or fees charged on imports in UAE.

Local Customs office and contacts

More information on import declaration procedures and import restrictions can be found at Dubai Customs.

IMPORT CUSTOMS PROCEDURES IN THE UNITED ARAB EMIRATES

:

- Delivery order from a shipping agent addressed to a licensed company by licensing

agencies in UAE;

- Original bill of lading (for seaports);

- Original invoice from the exporter addressed to a licensed importer in the country detailing total quantity, goods description and total value for each item (3 exemplaires); *- Copy of the trade license of buyer and seller;

- Certificate of origin approved by the chamber of commerce at the country of origin detailing the origin of goods; *

- Transport certificate; *

- The Customs entry declaration;

- A form or letter of exemption from customs duties in case the exemption requirements are fulfilled including Local Purchase Order (LPO);

- Detailed packing list as per weight, method of packing and HS code for each individual article contained in the shipment; *

- Import permit from the competent agencies in the event of importing restricted goods; *

- Health or Phytosanitary certificate or an export certificate for the processed products attested by the concerned national department office, confirming that the product is fit for human consumption

- A halal certificate for the meat ingredients; *

- A non-radiation certificate for some products (optional for European products); *

- Transport documents that are required for import clearance.

Documents with a * must be attested by the Embassy of United Arab Emirats and the Chamber of Commerce in the country of origin of products.

Specific Import Procedures

All imported meats - beef and poultry products, require a health certificate issued by the country of export and a "Halal" slaughter certificate issued by an approved Islamic center in that country.

Importing Samples

No specific rules.

 Customs Duties and Taxes on Imports

Customs threshold (from which tariffs are required)

Shipments valued under AED 500 enter free from duty and tax.

Average Customs Duty (Excluding Agricultural Products)

Since the adoption of a common tariff for the GCC countries, the customs duty is 5% of the CIF value of the product.

Products Having a Higher Customs Tariff

- 70% of the CIF value of the product for imports of alcohol-100% of the CIF value of the product for import of tobacco.

Preferential Rates

There is a common customs tariff for the UAE. Customs duties are 4% of the CIF value of the goods or service. In addition, the customs tariff includes a list of products or goods exempt from customs duties (mainly food and pharmaceutical products). Moreover, neither the goods entering Duty Free Storage Area (DFSA) at Port Rashid, nor the goods imported from the free zones are taxed. For further information, visit the website of Dubai Customs

Customs Classification

Since 2003 and the setting-up of the free trade area between the GCC countries, the system has been harmonized.Method of Calculation of DutiesCustoms duties are calculated from the CIF value of the product.

Method of Payment of Customs DutiesThe duties can be settled according to different forms. Once paid, the duties cannot be returned (except if there is an error of the UAE authorities). Import Taxes (Excluding Consumer Taxes)There are none.

United Arab Emirates Import Regulations

Introduction

Favourable terms of trade and a well-developed logistics network position the United Arab Emirates

(UAE) as a key hub to facilitate international trade. The UAE not only grants access to its domestic

market but also presents Canadian businesses with access to markets in the Middle East and North

Africa, South East Asia, Eastern Europe and increasingly Sub-Saharan Africa.

Following is an introduction to the fundamentals of the UAE's import regulations and customs duties

for Canadian exports destined for both the UAE and its re-export markets.

Overview

Canadian businesses engaging in international trade are not only encouraged to acquaint themselves

with the foreign market import regulations, but are also encouraged to develop an appreciation of

Canadian export regulations and procedures. The Canada Border Services Agency (CBSA) through

multiple acts, regulations and international agreements administers the flow of goods in to and out of

Canada.

In addition to administering Canada's borders, the CBSA offers industry multiple pre-approval

programmes that allow for smoother border clearance. The CBSA also provides importers and

exporters with clarity on the Customs Act enabling them to better meet reporting requirements.

CBSA also runs the Small and Medium-sized Enterprise Centre, a resource for small to medium

enterprises assisting them to better comply with CBSA requirements. Please follow the link for more

information on the CBSA and its services: www.cbsa.gc.ca/menu-eng.html

Exporters are also encouraged to familiarise themselves with Canada's tax conventions and treaties.

Canada and the UAE have signed a taxation convention which is still to be ratified: for full text of the

convention, please visit the Department of Finance website.

The UAE is a member of the Gulf Cooperation Council (GCC) and the GCC's Common Customs

Law sets the principle framework for the UAE's import regulations. The UAE is also a member of the

World Trade Organisation (WTO) and has signed multiple trade agreements, both bilateral and with

major trading blocks; these commitments as members as well as being party to trade agreements add

to the UAE's import regulations.

The UAE is a federal state comprising seven Emirates with each Emirate independently administering

its import regulations through a customs authority. In 2003, the Federal Customs Authority was

established, in part to harmonize and improve the UAE's customs procedures. Remarkable progress

has since been made and still continues. However, due to the ever evolving nature of the customs

procedures, we highly recommend contacting the relevant emirate customs authority or importer in

question for context and current information.

Exporting to the UAE: Customs Zones and Free Trade Zones

The UAE market may be classified as Customs Zones or Free Trade Zones with the distinguishing

factors outlined below:

Duty: In general, goods destined for the UAE's Customs Zones are subject to duty under the

GCC's Common Customs Law while goods destined for Free Trade Zones are exempt from duty.

The UAE operates at least thirty-six specialised Free Trade Zones. For a detailed list, please

visit www.uaefreezones.com. In addition to imports into Free Trade Zones being exempt from

duty, re-exports from UAE Free Trade Zones bound for third market destinations beyond the

GCC Customs Zones are also exempted from duty.

Market Access: Exporters with products destined directly for Customs Zones are generally

required to appoint a distributor with some local content, at least 51% local ownership.

Companies whose products enter the Customs Zone via the Free Trade Zone must appoint a

local distributor, a 100% local agent. The Trade Agencies Law sets the legal frame work for this

relationship. For more information on the Trade Agencies law, please see our guide to doing

business in the UAE Guide to Doing Business.

Equity ownership: Free Trade Zones allow foreign companies to own up 100% on equity of the

firm while Customs Zones generally allow foreign entities up to a maximum of 49% on equity.

It is essential for exporters to familiarise themselves with the import regulations for each zone and the

fundamentals of doing business in each of the markets. For more information on doing business in the

UAE, please consult our Doing Business in the Arab Emirates page.

Import tariffs, duties and regulation

As the GCC's Common Customs Law sets the framework for the UAE's Import Regulations, the

GCC's Common Customs Law single port of entry principle would apply. Applying the single port of

entry principle, the GCC member states are considered a single market. Imports into the UAE or any

other GCC state and destined for another GCC country are subject to customs duty only at the first

port of entry into the GCC market.

This clause in effect exempts and suspends the application of multiple customs duties and taxes when

imports are re-exported within the GCC market; please refer to the GCC Common Customs Law and

the UAE Federal Customs Authority for more information.

In general an external tariff of 5%, the GCC's Common External Tariff (CET), is levied ad volarem on

all imports to the GCC market. No tariff quotas, nuisance rates or additional duties and taxes on

imports are applied. This rate is levied on goods entering the GCC's customs zones including the

UAE's customs zones and excludes the free trade zones. The CET of 5% is also the most-favoured-

nation rate (MFN rate) and the UAE will grant, with some exception, MFN treatment to its trading

partners.

Abu Dhabi and Dubai are the principle ports of entry into the UAE; they both employ the Harmonised

Systems (HS) when classifying exports, and offer customs services electronically. Generally speaking, exporters would be required to provide the following documentation to clear customs .

Import Goods Declaration

Delivery Order

Original Bill of Landing

Original/authenticated invoice*

Certificate of Origin, original or authentic copy

Packaging list with HS code.

By law, all commercial or non-commercial enterprises, Customs Zone or Free Trade Zone entities

require a license issued by a duly authorized authority to do business in the UAE: only entities with

Trading Licenses may distribute products in the imports markets considered customs zones. Exporters

may appoint an exclusive agent licensed to operate within the specified custom zone market to

distribute their products.

Prohibited, Restricted and Exempted products

Imports are classified as Banned/Prohibited, Restricted and Exempted. The UAE, in accordance with

international conventions, environmental protection and health and safety considerations amongst

other aspects, does prohibit and restrict the importation of specified products. For a non-exhaustive list

of UAE prohibited/banned and restricted products please follow the links.

While the GCC's Common Customs Law sets the framework for the GCC's import regulations, each

member state administers its own list of prohibited, restricted and exempted products. Exporters

considering re-exporting within the other GCC market are advised to take note of the individual

member states lists as the lists are not harmonised but independently administered.

Prohibited and restricted products

The UAE's customs authorities rigorously enforce the regulations and will not permit prohibited

products to enter the country; exporters and visitors alike are encouraged to familiarize themselves

with the lists.

Provided prior approval has been sought and granted, restricted products may be imported into the

UAE. Authorization or approval is granted by a ministry or entity with oversight of the import:exporters

are urged to consult the relevant ministry or entity prior to exporting.

Ministries and agencies overseeing key sectors within the Canada – UAE bilateral trade relationship:

Abu Dhabi – Food Import: Abu Dhabi Food Control Authority

Dubai – Food Imports: Dubai Municipality

Medical Devices and Medicines Regulation: Ministry of Health

Telecommunications: Telecommunications and Regulations Authority

Exempted products - Duty and Tax Concessions

Under federal industry assistance legislation, industrial inputs considered necessary for industrial

production are exempted from duty. The list includes but is not limited to equipment, spare parts, raw

and semi-manufactured materials and packaging materials necessary for industrial production.

Under import for re-export, temporary admission or transit regimes, duty and tax concessions are

granted. In accordance with the ATA Carnet system, goods may be temporarily imported into the UAE

without duty being applied. Participants of trade shows and exhibitions may avail themselves of the

carnet; however, they must abide by the regulations. Please refer to the Dubai Chamber of Commerce

User Guide for more detail.

Rules of Origin

A Certificate of Origin is required for all exports to clear customs. Certificates of Origin must be

provided by the original exporter and recognised by a duly authorised representative in Canada. The

UAE applies preferential and non-preferential rules of origin with products originating from the Greater

Arab Free Trade Area, qualifying for preferential treatment.

In determining the origin of an import, the UAE generally uses value add content criterion. An import

would be said to originate from a particular country should it be wholly produced or contain at least

40% in value added transformation from that country.

Other non-tariff import regulations

The UAE currently does not apply subsidies or import quotas, however, it does run an offset program

specifically for defense and specialised manufacturing industries. An objective of the program is to

develop domestic production capacity; the offset program is administered by the Tawazun Economic

Council.

Please see the Government Procurement section for greater detail on the Offsets Program.

Government procurement

Government expenditure at both federal and emirate levels constitutes a significant portion of the

UAE's gross domestic. Exporters considering selling to the UAE's federal and local government

departments are encouraged to acquaint themselves with the Financial Procedures Guidelines and

Decision 20 of 2000. Each ministry and emirate independently administers its procurement process

applying the Financial Procedures Guidelines and Decision 20 of 2000.

Exporters should also note that only GCC nationals or UAE registered companies with at most 49%

foreign equity (i.e. at least 51% in equity held by a UAE national – person or legal entity) may

participate in the government procurement process. Exceptions to this rule will be applied in instances

where the number of potential suppliers is severely limited. In such instances, a foreign supplier will be

invited to establish a local presence and employ a local agent who will then sell to the UAE

government.

UAE Government tendering options:

General/Open Tender: Bids advertised publicly

Limited Tender: Bids requested from a list of pre-approved suppliers

Practical Participation: A committee requests tenders from selected contractors without applying

the tendering process

Direct Order: Sole sourcing, limited to extenuating circumstances

Defense and aerospace spending constitutes a significant portion of the federal . The Ministry of

Defense is the central body administering the UAE's defense purchases. Government purchases over

USD10 million are subject to the UAE's Offsets program.

Packaging and Labeling Requirements

The Gulf Standards Organization (GSO); aligned with international norms for standards and other

technical requirements, sets the framework for the UAE's packaging and labeling requirements. GSO's

technical requirements for food exports stipulate that all UAE food imports provide information in

Arabic either as part of the packaging or as an affixed label, detailing the:

products and brand name

lot identification

production and expiry dates

country of origin

manufacturers name

net content weight in metric units

list of ingredients and additives in descending order of proportion

While no other technical requirements are in place to regulate the UAE's packaging industry, exporters

are encouraged to consider cultural norms and values when designing and developing product

packaging. A best practice would include consulting local contacts for context and current information

when developing labels and packages.

Exchange rate and Foreign Currency Controls

Apart from a fixed exchange rate between the USD and the AED, the UAE has not implemented any

foreign exchange controls. The AED dirham is pegged to the US dollar at USD1.00 ≈ AED3.68 and

floats against other major currencies.

Tariffs and Market Access Information

Foreign Affairs and International Trade Canada, through the Multilateral Market Access Division

(TMA), offers market access information on  tariffs, taxes, rules of origin and some entry procedures to

Canadian exporters. Additional information can be obtained by contacting TMA directly by email

at consultations@international.gc.ca.

Useful Links

ATA Carnet

The Canadian Chamber of Commerce

Federation of United Arab Emirates Chambers of Commerce & Industry

Customs Authorities

Federal Customs Authority

Government of Abu Dhabi

Government of Abu Dhabi

Abu Dhabi General Directorate of Customs

Dubai Customs

Sharjah Customs

Government Regulatory Entities

Abu Dhabi Food control Authority

Dubai Municipality                   

Telecommunications and Regulations Authority

UAE Ministry of Health

I

SWOT Analysis of SME segment of UAE

For any nation a vibrant SME  (small and medium enterprise) segment does not only play an important role in providing vibrancy to the national economy but also  a very important role in providing employment and unwinding entrepreneurial spirit of the population. In the following blog author will be doing a SWOT analysis of the SME sector at UAE.

SME primarily means small and medium enterprises. Different nations have different definitions for the SME segment. According to the definition by European Union companies with up to; 250 employees come under medium enterprise, 50 employees come under small enterprise and 10 come under micro enterprises. Another global definition has been defined by Standard Charted bank that places any organization with a turnover of US $ 1 Million to US $ 25 Million under the SME segment.

SME segment has the following advantage:-

• It’s an important constituent of economy and a major source of employment for many of the emerging economies across the world. In many of the economies around 90% of the non oil GDP comes from the SME segment. SMEs constitute 50% of the global GDP and employs 85% of the world population. (Dun and Bradstreet, 2008)

• Helps in realizing entrepreneurial zeal and creativity of individuals.

• Helps in diversification of the economy.

• Due to ease of entry and exit into the SME segment, it helps  building more elastic and competitive economies.

Along with the usual benefits, SMEs do have their own disadvantages that are as follows:

• These are usually small companies lacking management capacities.

• They find it tough to afford various support services such as, financial services, HR services, IT support etc, which hampers their productivity.

• SMEs have been hit hard by the global economic crisis on two fronts, due to credit crunch as well as customers owing money to them finding it tough to pay back. This had resulted in closing down of many of the SMEs across the globe.

Government across the entire MENA (Middle East and North Africa) and GCC (gulf cooperative council) are emphasizing strongly on the SME segments. UAE one of the important constituent of the GCC has got a very strong SME segment with more than 70% of the non oil GDP coming from the SME segment (Chris Bruin, 2010). The major Emirates of UAE , both Dubai as well as Abu Dhabi have got ambitious socio economic development plans in the form of Dubai 2015 and Abu Dhabi 2030 with a strong focus on SME segment.

The following table shows some important facts and figures regarding the SME segment in UAE

 SWOT Analysis of SME sector in UAE

Strengths:

• Strong economy: as a nation UAE is a rich country with huge oil, trade and tourism revenue. This helps in providing the required institutional support for the emerging SMEs in the Emirates.

• Rise of oil prices: the rise of oil prices have resulted in stronger economy for UAE, eventually resulting into stronger confidence among the business fraternity and higher disposable income for consumption. This will surely have positive impact on the SME segment. (Emirates 24/7, 2011)

• Efficient government: The govt. authorities at UAE are known for their efficiency and speed of execution. As a part of their plans for Emiratization and economic diversification, they are keeping the SME segment high up on their agenda. Both at Abu Dhabi and Dubai associations, intended for encouraging and supporting SME segments, had been formed.

• Intra Regional trade: SMEs are expected to be benefitted by the rise in trade across the MENA region. (Emirates 24/7, 2011)

• Strategic position: UAE is placed strategically between the cross roads of West and East and North and South. This strategic position helps it to attract and retain businesses and human resource talent from all across the globe.

• There had been rapid growth in lending activities for the SME sector in the recent years, from 2003 to 2008 there had been an increase of 200% in lending activities for individuals for business purpose. Along with domestic banks many of the MNC banks like Standard Charted and HSBC have their dedicated business units at UAE, catering specifically to the SME segment. Some of the banks active in SME lending in the given geography are- HSBC, Mashreq, RAK, Union national bank, ADCB, Citi bank etc (Dun & Bradstreet, 2008)

• SMEs can also draw strength from the Inherent strength of Dubai and Abu Dhabi as trading hubs and regional financial centers.

Weakness

• In spite of a booming SME segment, they keep facing various challenges in the form of high start up cost and difficult access to capital. In spite of growth in credit for SMEs, most of the individual businesses still complain about lack of capital. According to a research conducted by Dun & Bradstreet loan rejection  has been estimated to be in the range of 50 to 70%.

• Other challenges include high registration fee, high rental charges, information asymmetry etc. (Dun and Bradstreet, 2009)

• SMEs are vulnerable to low financial buffer, low margins and high operating cost.

• In UAE though some 90 percentage of the firms come under the SME segment where as SME also contribute one third of the GDP, the figure is still low in comparison to other developed and emerging economies where the contribution of the SME segment is around 60 percentage.

Opportunities

• SMEs will get a great boost by the abolishment of the minimum capital requirement of US $ 40, 000 (150,000 DH) for setting up of a limited liability company in UAE. (Dun & Bradstreet, 2009)

• Some of the SMEs are quite competent. Around 58% of them are expected to be operating internationally by 2013. (Emirates 24/7, 2011)

• SMEs at UAE are also expected to be benefited by the increase in international activities by the SMEs worldwide. It is expected that by 2013, number of SMEs worldwide, conducting international activities will increase from 29 % to 40 %. (Emirates 24/7, 2011)

• As a part of their economic growth plans, the Emirates of UAE are planning to diversify into various alternate industries other than the usual ones like petroleum, tourism trading etc such as petrochemicals, education, media, metal works, aerospace, telecommunications etc. Such industries will require a cluster of SMEs working around them and providing various types of support and enabling functions. This will surely boost the SME segment at UAE.

• The Emirates in UAE are coming up with new platforms to encourage and support SMEs.Mohammed Bin Rashid establishment for young business leader had been established in 2002, which specializes in providing financial assistance, training and inspiration to UAE nationals in starting their own business. Another such initiative is “SME 100” that awards top 100 SMEs in Dubai. The Khalifa fund provides funds and training for startups at Abu Dhabi. Such strong initiatives taken by the government will definitely help the SME segment in the long run.

Threats

• As a region Middle East is susceptible to political unrest and turmoil. Though UAE has one of the most popular, efficient and transparent govt. in practice and there is no threat of any impending political unrest in the gulf state, but since the MENA region as a whole is prone to political upheavals, it can affect the intra regional trade, considered very important for the SME segment.

• Compared to other emerging and developed economies, SMEs at UAE are still not matured enough.

• Growing globalization will pose new competitive challenge to the SMEs at UAE.

• SMEs at UAE will also be prone to threat from the bigger industries of UAE. The SMEs will find it hard to match them in terms of management and technical skills, quality and cost effectiveness which their bigger counterparts can produce on account of their scale.

As any other business entity, the SME segment at UAE has its own pros and cons. Some of the them are  structural while some are  conditional. Beyond the given pros and cons, one thing that can not be denied is that, SMEs definitely had a great role to play in the nearby future of the UAE and the govt. authorities in association with private sector  will not prefer keeping any stone unturned in further boosting and encouraging the sector.

TRADE BARRIERSUMMARY 1. The UAE's trade regime is open, with low tariffs and few non-tariff barriers to trade. The UAE's openness was instrumental to achieving the solid growth registered prior to the global crisis and has facilitated the diversification of economic activity. The investment regime remains considerably more restrictive than the trade regime, as foreign participation in any domestic company or activity is limited to 49% of the capital; however, 100% foreign ownership is allowed in any of the UAE's free zones.

2. The global financial crisis brought an end to a period of rapid growth. The economy contracted in 2009, and grew by just 1.4% (total real GDP) in 2010. In the aftermath of the crisis, GDP growth was affected by lower oil prices, turmoil in the financial markets, particularly in Dubai's financial sector, and a price correction in the Dubai property market. As a response to the crisis, the authorities supported banks by providing liquidity and deposit guarantees, and through recapitalization.

(1) ECONOMIC ENVIRONMENT

3. The UAE's economic performance was very strong over the period 2005-08, achieving an annual average growth rate of 5.5%. Growth was based to a large extent on a successful strategy of diversification, into services, real estate, and manufacturing. Non-hydrocarbon GDP growth was particularly high and made possible by a policy to promote investment. The global financial crisis combined with lower oil prices and the price correction in the Dubai real estate market brought an end to this period of high growth, and the economy of the UAE contracted by 1.6% in 2009. The crisis led to an increase in debt, particularly of Dubai's government-related enterprises (GREs).

4. Reacting to the crisis, the Federal Government applied strong countercyclical monetary and fiscal policies and adopted rescue packages for GREs, including an important debt restructuring. The UAE economy started to emerge from the crisis in 2010, with real GDP growing by 1.4%. The global crisis had the effect of cooling off the economy, stopping the acceleration in price increases observed in the 2005-08 period. However, as growth resumes, inflation is forecast to accelerate somewhat, although to below the pre-crisis levels.

5. Departing from a situation of traditional surplus, as a result of the crisis and of the expansionary fiscal policy adopted, the Federal Government ran fiscal deficits in 2009 and 2010. The authorities have been taking steps to reduce this deficit by containing the growth of spending, and reducing producer subsidies and transfers. However, stronger efforts might be needed to achieve fiscal consolidation. 6. Exports of goods increased rapidly throughout 2006-08, but declined by some 17% in 2009, reflecting lower oil prices and the global economic crisis. Imports followed a similar pattern, but both exports and imports started to recover in 2010 as growth picked up. The UAE runs a structural trade balance surplus, which peaked at US$62.9 billion in 2008, declined in 2009 as a consequence of a considerable drop in oil exports and despite a reduction in imports, and increased again in 2010 and 2011, mainly due to higher non-hydrocarbon exports and re-exports. The surplus in the current account balance reached 3.8% of GDP in 2010.

(2) TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES 7. The UAE has a liberal trade regime, although a number of limitations and conditions are set on foreign investment. Improved market access for its products through multilateral trade liberalization and bilateral and regional trade agreements is a main trade policy objective. Policy formulation and implementation in the UAE takes place both at the federal and the emirate level; the emirates have a relatively high degree of independence,

8. The UAE has been an active player in the Doha Development Agenda, presenting proposals to eliminate tariffs and non-tariff barriers (NTBs) on raw materials and submitting an initial offer in trade in services. The UAE has not been involved in any dispute settlement case during the period under review.

9. The UAE attaches great importance to regional trade agreements as a valuable complement to, though not a substitute for, a rule-based and non-discriminatory multilateral trade system. The UAE is a founding member of the Gulf Cooperation Council (GCC). During the period under review, the UAE has advanced in the process of regional integration, through its participation in the GCC. However, the full consolidation of the GCC's customs union was still pending in mid-2011, and was

expected for the end of the year. Free-trade agreements between the GCC and EFTA, and the GCC and Singapore have been signed, but in late 2011, were still awaiting implementation. The UAE is also a member of the Pan Arab Free Trade Agreement (PAFTA)

TRADE POLICIES AND PRACTICES BY MEASURE

10. Since its previous Review in 2006, the United Arab Emirates has streamlined procedures to process documents and reduced the time required to clear Customs, mainly by introducing totally electronic clearance procedures and a risk assessment system. Nevertheless, the UAE still requires that imports be processed by a designated trade agent, and nationality restrictions are applied in this respect. A trade agent requires a trading licence, granted only to UAE nationals and to companies that are at least 51% owned by UAE nationals.

11. The UAE has applied the Gulf Cooperation Council's (GCC) Common External Tariff since 2003. The tariff structure comprises four ad valorem tariff rates: zero, 5%, which is the general tariff rate, and 50% and 100%, applied on alcohol and tobacco, respectively. Some 97% of all tariff lines are ad valorem; duties are levied on the c.i.f. value of imports. Alternate or specific duties apply to 0.3% of all tariff lines. Since the last Review of the UAE, the average tariff rate has fallen slightly, from 5.1%, to 4.9%. The UAE has bound all tariff lines. Bound rates are in general considerably higher than applied rates, ranging from zero to 200%, giving scope for reductiion. The UAE does not apply other duties and charges on imports.

12. Import prohibitions are in place on some 30 HS tariff lines, and another 244 lines at the HS 8-digit level are considered restricted goods. Restrictions and prohibitions are mostly applied on safety, religious or moral grounds. No import licensing regime is in place, and the transaction value of goods is generally used for valuation purposes.

13. The Emirates Standardization and Metrology Authority (ESMA) develops and adopts standards, which are prepared by its technical committees at the request of the Government, industry, or consumers. In general, standards are developed according to existing international and regional standards. Drafts are circulated to the relevant bodies for comments. There is no central body in charge of preparing technical regulations in the UAE. These may be developed by the ESMA, initially in the form of a standard and then made mandatory, or may be devised directly by a Ministry; all technical regulations are approved by Cabinet decision for legal implementation. The ESMA monitors the application of standards and technical regulations. During the period under review, the UAE made over 90 notifications to the TBT Committee.

14. The UAE has an extensive body of national legislation to regulate SPS measures; most of the laws are based on GCC standards. SPS measures are enforced at the federal and the emirate level. All plants and plant products entering the UAE are subject to quarantine, and require a phytosanitary certificate. Similarly all animals and animal products are subject to quarantine and require a sanitary certificate. All shipments of food are inspected to ensure compliance with labelling and shelf-life regulations.

15. The UAE does not apply export taxes, charges, and levies, other than a tax on steel scrap exports. Exports of dual-use goods require a licence. The UAE applies a number of programmes to

promote exports, including a Free Trade Zones (FTZ) programme. Foreign ownership in firms established in FTZs may be up to 100% and investors are exempt from paying personal income taxes and corporate taxes for 15 years, renewable for an additional 15 years. Additionally, goods may be imported into a FTZ duty free. Companies located in the FTZs are exempted from agency/distributorship, sponsorship, and national ownership requirements. FTZs produce both goods \and provide services.

16. There is no competition policy legislation in the UAE, but a draft competition law, including restrictive agreements, abuse of a dominant position, and mergers and acquisitions, is under consideration by the Ministerial Cabinet. The economy would benefit from the adoption of a competition law given the relative concentration of producers/suppliers in some sectors. 17. The UAE is not a party or an observer to the WTO Plurilateral Agreement on Government Procurement. Government procurement continues to give preference to local companies and suppliers, as foreign participation is limited by nationality requirements. However, there is a strong reliance on foreign companies, particularly for major projects for which local expertise is not always available. An offset programme is in place for defence contracts. Given the federal nature of the \UAE, the majority of procurement (by value) is at the emirate level.

(4) TRADE POLICIES BY SECTOR 18. The oil sector and connected industries continue to play a major role in the UAE economy. However, attempts are under way to diversify the economy, particularly into services and manufacturing. The petroleum sector accounted for 29% of GDP, 69% of government income, and 85% of export revenues in 2009. The UAE's estimates of proven crude oil reserves are 97.8 billion barrels, equivalent to almost 8.5% of the world's reserves, while production reached 2.32 million barrels/per day in 2010. Some 95% of all petroleum production is in the emirate of Abu Dhabi.

19. In accordance with the Constitution, management of natural resources in the UAE is vested in each individual emirate and not with the Federal Government. Foreign equity in projects is determined by the competent authorities of the local government of the emirate where the natural resource is located.

20. Agriculture represents a small share of the UAE's economy, accounting for just 1% of GDP. Total cultivated land has decreased in recent years, and the UAE remains a major net food importer. Foreigners, other than GCC nationals, are not allowed to own agricultural land in the UAE, but may own up to a 49% stake in agri-business companies. Fishing is restricted to UAE and GCC nationals. Notifications to the WTO on agriculture remained pending in December 2011.

21. In its quest to diversify the economy away from oil, during the period under review, the UAE has continued to develop its manufacturing sector. However, some of the main manufacturing industries, such as petrochemicals, remain linked to the oil industry. Nevertheless, there have been important developments in aluminium production and pharmaceutical products. Most manufactured imports face a 5% tariff. However, all materials that are used in the production of a licensed industrial project enter the UAE duty free.

22. The services sector is growing rapidly, particularly in air and maritime transport, telecommunications, and tourism. However, developments in the sector would benefit in general from some flexibility of the foreign investment ownership limitations currently in place.

23. In financial services, the emirate of Dubai was particularly affected by the global financial and economic crisis. There was a sharp contraction in equity markets in 2008 and 2009; market capitalization, and the general share price index continued falling in 2010. The authorites responded to the crisis by stepping up regulation, including raising minimum capital adequacy ratios for banks, which were raised from 10% to 12% in 2010, and by pumping liquidity into the system and recapitalizing banks. Other measures adopted to counter the financial crisis included a moratorium on new licences for commercial banks and placing a limit on the number of branches permitted to licensed foreign banks.

TRADE SUMMARY The United Arab Emirates (UAE) is a federation of seven emirates (Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al-Qaiwain, Fujairah, and Ras Al-Khaimah). The U.S. goods trade surplus with United Arab Emirates was $13.5 billion in 2011, an increase of $2.9 billion from 2010. U.S. goods exports in 2011 were $15.9 billion, up 36.2 percent from the previous year. Corresponding U.S. imports from United Arab Emirates were $2.4 billion, up 113.0 percent. United Arab Emirates is currently the 19th largest export market for U.S. goods. The stock of U.S. foreign direct investment (FDI) in United Arab Emirates was $4.3 billion in 2010 (latest data available), up from $4.2 billion in 2009. U.S. FDI in the United Arab Emirates is led by the wholesale trade and manufacturing sectors. IMPORT POLICIES Tariffs As a member of the Gulf Cooperation Council (GCC), the UAE applies the GCC common external tariff \of five percent for most products, with a limited number of exceptions. Currently, the UAE‟s exceptions to the 5 percent tariff are a 50 percent tariff on alcohol, a 100 percent tariff on tobacco, and duty exemptions for 53 food and agricultural items. According to the WTO, the UAE‟s simple average applied \tariff is 6.6 percent for agricultural goods and 4.7 percent for non-agricultural goods. Import Licensing Only firms with an appropriate trade license can engage in importation, and only UAE registered companies, which must have at least 51 percent ownership by a UAE national, can obtain such a license. This licensing provision does not apply to goods imported into free zones. Some goods for personal consumption do not require import licenses.

Documentation Requirements Since 1998, the UAE has required that documentation for all imported products be authenticated by the UAE Embassy in the exporting country. There is an established fee schedule for this authentication. For

U.S. exports, if validation is not obtained in the United States, customs authorities will apply the fee schedule when the goods arrive in the UAE. GOVERNMENT PROCUREMENT The UAE grants a 10 percent price preference for local firms in government procurement. The UAE requires companies to register with the government before they can participate in government procurement, but to be eligible for registration, a company must have at least 51 percent UAE ownership. This requirement does not apply to major projects or defense contracts where there is no local company able to provide the goods or services required. The UAE‟s offset program requires defense contractors which are awarded contracts valued at more than $10 million to establish commercially viable joint ventures with local business partners that would be projected to yield profits equivalent to 60 percent of the contract value within a specified period (usually 7 years). To date, more than 40 such joint venture projects have been launched. There are also reports, as well as anecdotal evidence, indicating that defense contractors can sometimes satisfy their offset obligations through an up-front, lump-sum payment directly to the UAE Offsets Group. The UAE is not a signatory to the WTO Agreement on Government Procurement. INTELLECTUAL PROPERTY RIGHTS PROTECTION The UAE has made the protection of intellectual property a priority in recent years. In June 2011, the UAE established an independent office for intellectual property rights (IPR) at the Ministry of Economy and for the first time appointed an assistant undersecretary position for IPR. According to 2011 industry estimates, the rate of software piracy in the UAE is the lowest in the Middle East, and, after South Africa, the second lowest in the Middle East and Africa. While the UAE is recognized as the regional leader in fighting computer software piracy, other industry stakeholders believe the UAE could be doing more. For example, the recording industry has complained about the UAE‟s failure to establish a royalty collecting mechanism for the use of recorded music, which means that rights holders are not being remunerated for certain uses of such works. In addition, compliance representatives of U.S. rights holders have voiced growing concerns regarding the lack of transparency and information exchange when UAE customs officials conduct raids and seizures.

The six Member States of the GCC are working to harmonize their IP regimes. In connection with that effort, the GCC recently approved a common trademark law. Each Member State is expected to adopt that law. The United States has established a dialogue with GCC technical experts to discuss this law and other Customs Union efforts regarding IPR.

SERVICES BARRIERS Insurance Foreign insurance companies may operate only as branches in the UAE. An insurance company established in the UAE must be a public joint stock company. At least 75 percent of the capital in such companies must be owned by UAE nationals, while the remaining 25 percent may be owned by a foreigner. Since 2008, new insurance licenses have been issued only to UAE and GCC firms. In the Emirate of Abu Dhabi, the offering of insurance coverage for construction projects and companies under the Abu Dhabi National Oil Company (ADNOC) is restricted to Abu Dhabi-based insurance companies.

Banking The UAE Central Bank does not grant new licenses to foreign banks. In 2008, the Central Bank allowed several foreign banks already operating in the UAE to set up new branches. According to Central Bank statistics, there were no new foreign banks in 2009, 2010 and 2011, but one branch was opened in 2010. The number of electronic banking service units for foreign banks operating in the UAE was 47 in 2011, down from 50 units in 2010. In 2011, local banks opened 13 new branches. Foreign banks are taxed at 20 percent of their profits. Agent and Distributor Rules It remains difficult, if not impossible, to sell products in UAE markets without a local agent. Only UAE nationals or companies wholly owned by UAE nationals can register with the Ministry of Economy as commercial agents. The provisions relating to commercial agencies are collectively set out in Federal Law No. 18 of 1981 on the Organization of Commercial Agencies as amended by Federal Law No. 14 of 1988 (the Agency Law) and applies to all registered commercial agents. Federal Law No. 18 of 1993 (Commercial Procedure) and Federal Law No. 5 of 1985 (Civil Code) govern unregistered commercial agencies. On March 22, 2010, the UAE issued Federal Law No. 2 of 2010 amending certain provisions of the Commercial Agency Law. The amendments prevent the termination, or non-renewal, of a commercial agency unless the principal has a material reason to justify the termination or non-renewal. Further, a principal may not re-register the commercial agency in the name of another agent even if the previous agency was for a fixed term unless: (i) it is amicably terminated by the principal and the agent; (ii) termination or non-renewal is for justifiable reasons that are satisfactory to the Commercial Agencies Committee; or (iii) a final judicial judgment is issued ordering the cancellation of the agency. The 2010 Amendments also reinstate the specialized Commercial Agencies Committee, which had been revoked in 2006. The Commercial Agencies Committee has original jurisdiction over disputes involving registered commercial agents. Any commercial dispute should be referred first to the Commercial Agencies Committee. In April 2011, the UAE Cabinet issued Resolution No. 3 of 2011, Concerning the Commercial Agency Committee, which further outlines the responsibilities of the Committee. These include receiving applications for settling agency disputes and managing the process of cancelling registered agencies. The Committee is permitted to abstain from settling a dispute referred to it and can advise the parties to refer the matter to litigation. A party may challenge the determination of the

Committee by bringing a matter to the UAE courts within 30 days of the date of receiving notice of the Committee‟s resolution. The Committee is permitted to seek the assistance of any expert or “appropriate person” for performing its duties. It also has the right to demand the submission of further information and documentation involved in the dispute.

Telecommunications UAE currently has two telecommunications companies which are largely government-owned: Emirates Telecommunications Corporation (Etisalat), the former telecommunications monopoly, and Emirates Integrated Technology Company (which operates under the trade name Du). The UAE has committed to remove the duopoly by December 31, 2015, after which time it will consider issuing further licenses. One U.S. trade association representing Voice over Internet Protocol (VoIP) providers has complained that the UAE is limiting their ability to provide these services by licensing only two companies; other companies using this technology are subject to having their services blocked. In January 2011, the UAE Telecommunications Regulatory Authority (TRA) announced that it will no longer enforce the ban on Skype in a sign that the UAE could be shifting its stance on Internet telephone services. Software applications using VoIP technology are illegal in the UAE unless they are sanctioned by a licensed operator. TRA has delegated the decision to allow the use of Skype to the country‟s two operators, Etisalat and Du. In January 2011, the TRA issued a new regulation concerning mobile telecommunications apparatus. The regulation grants the TRA the authority to issue regulations with respect to importing, manufacturing, using, and managing telecommunications apparatus, and the TRA has the exclusive competence in issuing all authorizations and approval in relation to telecommunications apparatus comprised in, or intended for, use in connection with a telecommunications network. Moreover, the regulation prohibits anyone from selling or offering for sale any telecommunications apparatus which has not been approved by the TRA. Transportation Federal Act No. 9 on Land Transport and Public Roads was decreed on July 13, 2011 and is scheduled to take effect in 2012. The law authorizes the National Transport Authority (NTA) to oversee licensing of all commercial transport vehicles, including those used by couriers. Discussions are ongoing to clarify the scope and implementation of the law. The NTA has asserted that the aim of the law is not to place an undue burden on the courier industry, but to regulate and standardize the land transportation regime across the UAE to improve security and safety. INVESTMENT BARRIERS Except for companies located in one of the UAE‟s free trade zones, at least 51 percent of a company established in the UAE must be owned by a UAE national. A company engaged in importing and distributing a product must be either a 100 percent UAE-owned agency/distributorship or a 51 percent UAE-owned limited liability company. While the UAE government is reportedly considering liberalizing specific sectors where there is a need for foreign expertise or where local investments are insufficient to sustain 100 percent local ownership, the government has yet to enact measures to achieve this end.

Resolution of investment disputes continues to be a problem in the UAE. Foreign investors have expressed concern that pursuing international arbitration in such disputes may jeopardize their business activities in the UAE. Foreign investors also report a reluctance to take disputes to the domestic court system, due to a perceived lack of impartiality. A number of American firms have expressed increased frustration with lengthy delays and burdensome procedures in receiving payment for projects undertaken in the UAE, particularly for work done on behalf of certain public-sector entities. Another area that is drawing concern from U.S. firms involves requests by some UAE procuring entities to include language in contracts that would place American firms in violation of laws related to commercial boycotts of Israel. Companies have reported losing business because procuring entities would not strike such language from proposed contracts.

PESTLE Analysis

• Political– Each Emirate has its own governmental institution.– The ruling family of each Emirate is a member of the Supreme Council,

which is responsible for policy-making and electing the president and vice president for five-year terms.

• Economic– Wealth is based on oil and gas exports (Abu Dhabi)– The government increased spending for infrastructure and job creation,

and there is a greater opportunity for private sector investment.– Lately there has been a surge in real estate and shares prices and

consumer inflation is elevated.• Social

– Islam plays a large role in business– Women are seen as equals and are protected by rights and privileges laid

down by Islam• Technological

– Telephones (land line and cell), radio broadcast stations, television, internet

• Legal– Court proceedings in the UAE are time-consuming.– There are no juries; only a single judge or a three-judge panel (depending

on the case) hears cases.– All evidence submitted to the court must be in Arabic.

• Environmental– Arid/tropical, sandy desert, and coastal areas.

Political structure, infrastructure, economy, currency, and hot sectors

• The UAE is a Federation comprised of seven separate emirates.• Each emirate retains a high amount of political and economic independence

within the federal system. • Each emirate has control over its own natural resources and regulates its

commercial activity.• The central government makes laws dealing only with defense, foreign policy,

communications, and immigration. Between the seven emirates they serve as members of the Supreme Council of the Union (SCU) and elect a President from among themselves.

• The UAE’s currency is the dirham. • The principal growth sectors are energy production and manufacturing.

Political structure, infrastructure, economy, currency, hot sectors continued

• Recently, the Emirate of Dubai has started to look for other sources of revenue. High-class tourism and international finance are the new sectors starting to be developed. Also, the Dubai International Financial Centre was announced, which offers 100% foreign ownership, no tax, freehold land and office space and a tailor-made financial regulatory system with laws taken from best practice in other leading financial centers like New York, London, and Singapore.

• Many of the worlds leading companies have now set up in Dubai. Dubai is known for it’s 2 palm islands, the World islands, Dubai Marina, Jumeirah Lake Towers, and other developments that offer villas, high rise apartments, and office space.

ECONOMY

• United Arab Emirates is now the second-richest country in the Muslim world. This is because the UAE claims the world's third largest proven oil deposits.

• The GDP per capita fell by 42% in the 1980s, but successful diversification helped to provide a positive growth of 48% in the 1990s.

• Immigrants make up a large percentage of the UAE’s workforce.

• The UAE government wants to preserve its traditional forms of art and culture. However, change is also apparent.

BUSINESS-

• The United States Department of State has noted widespread instances of blue collar labor abuse throughout the United Arab Emirates businesses.

• It is a common practice for managers and employers in the UAE to hold employees' passports for the duration of their employment contract.

The UAE government has been criticized by many human rights agencies. One of them, the Human Rights Watch, has criticized the government for not acting when discrimination against Asian workers in the emirate is present.

Entering the Market

• A local sponsor or service agent• Trade license• Register with the local Chamber of Commerce and Industry, the Economic

Development Department, and with the Minister of Finance• Annual renewal of the trade license• Company can function only within the emirate where the license was granted• Separate license must be obtained to open a branch in other emirates• Free Trade Zones

– 100% foreign ownership is allowed with no recruitment or sponsorship

problems – Corporate tax and customs duty exemption on imported raw materials and

equipment– No levy on exports and imports– The Free Zone Authority gives a questionnaire to assess the company's

requirements and whether it can be met. Once the company submits the questionnaire, it will be given a license application, a list of invoices required for planning, consumer request for electricity and Form B for environmental concerns (if applicable)

Organize a transportation of goods to and from the United Arab Emirates

Main Useful Means of Transport

Maritime transport remains the principal means to goods transport. There are 15 ports in Emirates which experience an average traffic of 3 billion containers in a year. The port Jebel El Ali is one of the largest artificial ports in the world.The air or surface transport freight remains less important than the maritime transport. According to them, rail transport is non-existant.

1- By sea

2- Bye air

3- Bye road

Export Marketing Channel

PRODUCER GAP CONSULTANT EXPORTER (GRADING & PACKAGING)

IMPORTER

Global Marketing Channels and Physical Distribution

Channel Objectives

• Marketing channels exist to create utility for customers

• Place utility—availability of a product or service in a location that is convenient to a potential

customer

• Time utility—availability of a product or service when desired by a customer

• Form utility—availability of the product processed, prepared, in proper condition and/or ready to use

• Information utility—availability of answers to questions and general communication about

useful product features and benefits.

Distribution Channels Terminology and Structure

• Distribution is the physical flow of goods through channels

• Channels are made up of a coordinated group of individuals or firms that perform functions that add utility to a product or service

• Distributor—wholesale intermediary that typically carries product lines or brands on a selective basis

• Agent—an intermediary who negotiates transactions between two or more parties but does not take title to

the goods being purchased or sold

CONCLUSION

NOW WE CAN EASILY EXPORT OUR PICKLE PRODUCT IN THE MARKET OF UAE. BY FOLLOW THESE ALL CUSTOMS, RULE & REGULATIONS. DISTRIBUTION CHANNEL AND PROMOTIONAL ACTIVITIES PLAY MAIN ROLE IN SUCCESS OF OUR PRODUCT IN FOREIGN COUNTRIES. WE KNOW VERY WELL THAT ECONOMICAL CONDITION OF UAE IS VERY HIGH AND BECAUSE OF IT WE CAN GET HIGHER PROFIT BY EXPORT OUR PRODUCT IN UAE.