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TRADE IN MIDDLE EAST.
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Issues & problems for global traders (language, patents, finance, travel, violence).... More...
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Paper Abstract:
Issues & problems for global traders (language, patents, finance, travel, violence).

Paper Introduction:
Introduction Recent advances in technology and transportation make conducting business on a global level possible. Where once international markets were open only to companies with large capital resources, today's business environment makes even small and medium-sized companies able to participate in the international arena. Companies are now looking at the Middle East as a potential market, and some companies, including Fluor and Bechtel, have been successful in conducting business in this region. However, unique features of this region means companies considering doing business there need to be considered. This research examines some of the issues which affect global trade in general and some of the specific issues which are peculiar to the Middle East. Inte

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Somecompanies use "hedging" to avoid currency risk ("World Bank," 1996, p. 119). Israel has an outstandinginfrastructure which is friendly to Western companies seeking businessopportunities in the region. 62). Despite this setback, some countries in the region continue to try toimprove their financial infrastructure. TheMiddle East poses particular problems because the cultures are vastlydifferent from those of Western Europe. Travel Issues Travel in the Middle East carries with it particular problems forcompany personnel. Arab banks were leading participants in largeinternational syndicates, and Arab finance appeared, for a time, as thoughit could compete with Arab oil in terms of the influence it would have oninternational finance in general. Banker, p. 16). International Trade Issues Any company which conducts business on an international level takes ona higher level of risk than those which conduct business only domestically. Violence in thesecountries can be random and perpetrated by anonymous terrorists (ascommonly occurs in Israel), or it can be perpetrated by the government (asin Iraq) or even the result of military incursions. Different countries have different culturalexpectations when conducting business, and personnel from one company mustrely on translators or find other ways to overcome the language barrier.This issue can be particularly troublesome in the Middle East since none ofthe native languages (Hebrew, Arabic or Farsi) uses an alphabet whichpermits native English or Western European speakers to use a bilingualdictionary effectively (Cooperman & Makovsky, 1995, p. Mideast makes progress on patentenforcement. Issues Unique to the Middle East While language considerations are not unique to the Middle East, othertypes of issues are. The logistics of getting to and from the Middle East are good, inlarge part because of the interest in tourism which is generated by thereligious sites in Israel and Saudi Arabia. Journal of Commerce and Commercial, p. (1995, July). Cooperman, A., & Makovsky, D. (1995, January 23). Violence The level of violence in the Middle East is certainly an issue forcompanies considering expanding their operations there. 38. Women, in particular, may findthat they have a difficult time adapting to the Middle East, and somecompanies are reluctant to relocate women to countries such as SaudiArabia, where religious custom dictates strict segregation of the sexes andwhere women are not permitted to drive their own automobiles. This doesnot mean that women are prohibited from conducting business on theircompany's behalf, only that the company needs to be aware of the culturaldifficulties that women may face in the destination country (Kustanowitz,1995, p. These include patent protection (also a problem inother parts of the world), obtaining financing in Middle East markets,dealing with travel issues for company personnel, and facing sporadic andrandom violence in the target country. Beyond Israel's borders, however, only threeinstitutions (Arab Banking Corporation, Arab Bank and Libyan Arab ForeignBank) are considered truly international in scope and resources ("CapitalPipelines," 1995, p. A subset of the financial concernsis protecting company assets in such a highly charged political environmentwhere governments may seize or nationalize assets. The peace process thathas lumbered along in the Middle East is at a particularly vulnerablestage, and progress which had been made toward agreements in Israel haslargely been halted. World Bank looks for regional reform. While agents ordistributors might be used to sell items, a need may occasionally arise forcompany representatives to travel to the region. Financial Infrastructure During the 197 s and early 198 s, petrodollars (revenue from oil andoil products exported from the Middle East) moved Middle East banks intothe financial spotlight. Business Week, p. 62. Conclusion Despite the threat of violence and the primitive (by Westernstandards) infrastructures which exist in the region, the Middle Eastcontinues to represent an attractive market which Western companies arecertain to continue to explore. 4A). 38). Kustanowitz, S. Companies which do so must be aware of themany social, cultural, economic and political differences which existbetween Western nations and those in the Middle East, but may well be ableto reconcile these differences into a profitable and mutually beneficialrelationship. Companies are now looking at the Middle Eastas a potential market, and some companies, including Fluor and Bechtel,have been successful in conducting business in this region. IsraelBusiness Today, p. However, the oil price decline of 1986and a preoccupation since then with national financial problems hasprevented the region from achieving a place of prominence in internationalfinance ("Capital Pipelines," 1995, p. 16. In addition, companies take on currency risk, whichreflects the difference between the value of goods and services whenmeasured in one currency versus their value when measured in another. Also, most large cities in theregion have Western-style accommodations, and communications technology isalso present in most urban areas. (1996, August 8). Rossant, J., & Reed, S. Both domestic and foreign legal issues must be addressedwhen exporting, and the companies often must follow strict guidelines withregard to the type of products which may be exported and imported invarious countries. (1996, March 15). US News & World Report, p. Where once international markets wereopen only to companies with large capital resources, today's businessenvironment makes even small and medium-sized companies able to participatein the international arena. Additional violence in the form of bombings is likelyto occur in the region, and the U.S. Travel Weekly, p. 119. All roads may soon leadto the triangle. 4A. Protecting internationalcopyright is a problematic task, and U.S. Introduction Recent advances in technology and transportation make conductingbusiness on a global level possible. foreign officials are moving totake aggressive measures to improve the situation for American companies.Governments from Western European nations and local industries are alsoworking together to effectively eliminate intellectual property rightsinfringement in the Middle East, as well (Martin, 1996, p. Martin, J. This research examines some of the issueswhich affect global trade in general and some of the specific issues whichare peculiar to the Middle East. Patent Protection Patent protection is a significant issue in the Middle East (as it isin the Far East); recent studies show that 45 percent of all music sales inEgypt and Saudi Arabia, for example, are pirated. Transportation and logistical issues come into play in a way which they donot, typically, for domestic operations, and companies must also find waysto negotiate international law and the laws of the target countrysuccessfully. Many Middle Easternnations, including the United Arab Emirates, have taken steps to adopt morestringent ways of curbing such activities. (1995, November 13). Whenever company representatives travel to differentcountries, they must adapt to the culture and mores of that country. This permits company representatives tocommunicate with their home office by phones, faxes or data links.Additional logistical support is being implemented on a regular basis asnations are seeking to take full advantage of the revolution in informationprocessing and communications (Rossant & Reed, 1995, p. However,unique features of this region means companies considering doing businessthere need to be considered. Days Inns chief sees potentialin the Middle East. Islamic banking laws also differ from Western banking laws andregulations; these differences involve interest rates and fees charged forservices and accounts and may represent a significant change in thebusiness practices to which Western companies are accustomed, and may havea significant effect on the company's capital resources. New Middle East,old Middle East. (1995, November 13). References Capital pipelines. 67). 62). 67. 67). State Department regularly issuestravel advisories to Americans who might be contemplating travel to theregion (Cooperman & Makovsky, 1995, p. Aside from the legal environment in which companies must operate,international organizations also encounter significant challenges inculture and language.

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