EXPORTS FROM U.S. TO DUBAI.
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Overview of culture & economy to determine feasibility of foreign investment, focusing on exports of Glen Sporran whisky.... More...
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Overview of culture & economy to determine feasibility of foreign investment, focusing on exports of Glen Sporran whisky.
FEASIBILITY ANALYSIS OF EXPORTING GLEN SPORRAN INTO DUBAI 1. The Product Glen Sporran is a premium, single malt scotch whisky that can only be made within Scotland. Because of this, the liquor cannot be distilled in local joint ventures, and the product must be exported. 2. The Target Country Dubai. and the other nation/states of the United Arab Emirates, is centrally located close to the mouth of the Persian Gulf and is a portal center for oil producers like Iran, Iraq, and Saudi Arabia to the rest of
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Bestevidence from desk research suggests that the sale of bottled beverages ishighly restricted and licensed. Because of this, the liquor cannot be distilled inlocal joint ventures, and the product must be exported.2. Kind of like your average American theme park@(Zoroya, 1999, 4D). It alsoaddresses bankruptcy and insolvency. This means that historically, sea was the primary ,method of importand export. Its impact should not beunderestimated. " You who believe! Imports can be picked up from Port Jebel Ali, be shipped by truck tothe AVillage@ where it has free trade status and bypasses customs to beloaded onto jumbo jets within four hours.How does the British Exporter Ship to Dubai There are many options open to British companies seeking toestablish a business connection with the Emirate of Dubai. But the problem is trying to find thecomfort and well-rounded cultural experience. (1999, Feb. On average, UAE=s imports are in the $ US 2 billion to $ US 25billion range and its primary import partners are Japan (12%); UK (1 %);U.S. The Target Country Dubai. Trade practices in Dubai are in line with normal internationalstandards, and negotiations are conducted in many languages, however allofficial business correspondence must be in the English or Arabic.Payments are normally done by letter of credit. By way of example, the Code provides its own definition ofinternational trade terms such as 'CIF' and 'FOB'. As Chandler suggests, ATrade in Dubai has changed significantly fromthe time when wooden dhows delivered cargo from Iran, India, and Africa.The latest Paris fashions are often worn under the traditional abaya wornin public by Muslim women,and Mercedes and Rolls Royces crowd the streets once congested with camelcaravans@ (Chandler, 1996. Proper dress and proper decorum between the sexes are as important asobserving any civil laws. Dubai has developed an import/export model of trading with any nation,including MidEast neighbors that are not able to trade with other nations.AIran accounts for 2 percent to 3 percent of Dubai's business.Everything from cosmetics to electronic goods crisscross the Persian Gulf.Iran is a big neighbor, a big market, and the UAE is trying not to mix theissues of economics and politics, " (Peterson, 1997, 6).Conventional Patterns of Physical Distribution AThe road to Dubai has been paved with trade from centuries past topresent. (1997, April 23), Dubai puts politics aside, aims to be amideast 'Hong Kong', The Christian Science Monitor, 6 Zoroya, G. However, the actual per bottle sales growth is not the primary marketdeterminant when considering exporting to Dubai. During negotiations, it is permissible and helpful to makereligious gestures, which is considered a sincere form of flattery. Eschew such abomination, that you may prosper. Satan'splan is (but) to excite enmity and hatred between you, with intoxicants andgambling, and hinder you from the remembrance of God, and from prayer; willyou not then abstain?" (Koran, 5: 9 -91) AThey ask thee concerning wine and gambling. FEASIBILITY ANALYSIS OF EXPORTING GLEN SPORRAN INTO DUBAI1. Instead, because of the very aggressive port policies andthe number of duty free zones, this could be a valuable location for re-export. That book speaks out violently against alcohol as shown in these twoquotes. In addition, the tax-free climate, open- skies trading policy, stablecurrency, trade incentives and virtually no crime are enhancements tobusiness development. The main choices are a) to find a partner(some 3, agents arelocated in Dubai) or b) to establish a Dubai-based company, located in theJebel Ali Free Trade Zone. It canbe as simple as saying Inshallah , which means "God willing" and is used ascommonly as "okay" is here. At the heart of the city's success, then and now is Dubai Creek,the meandering natural harbor opening into the Arabian Gulf@ (Chandler,1996, 88). Now Dubai's rulers andeconomists are looking to carry that history forward and turn Dubai into anindispensable hub of Middle East business@ (Peterson, 1997, 6).Major Features of the Country Within the UAE (Al Imarata al Arabiyah al Muttahidah) areapproximately 3 million people, 82 percent of which live in urban areas.The ethnic groups are Arab, Iranian, Pakistani, Indian and the officialbusiness language is Arabic while the primary religion (96%) is Muslim. Just a few of the government incentivesavailable to companies located in the Jebel Ali Free Zone include:* 1 % Foreign Ownership - No local partners required.* No Recruitment or Sponsorship Problems -- Manpower is availableeconomically, usually imported from the neighboring subcontinent of Indiaor the Philippines.* 1 % Repatriation of Capital and Profits -- No taxes are imposed.* No Currency Restrictions - Free flow of capital and profits.* No Corporate Taxes for 15 Years - Exempt for 15 years and renewable for afurther 15-year period.* No Personal Income Taxes - With the Free Zone area.Cultural Factors in Negotiation There are considerable differences between the UK business culture andthat of Dubai. The Avillage@ which is the center of all import/export activities hastwo main facilities: an import/export cargo terminal that contains an 8,5 square meter agents' free zone and a separate building adjacent theterminal for cargo agents. That market growth thatcould be notable is the Are-export market,@ which is predicted to besizable. Imports now receive a 4 % customs tax@ (Chandler, 1996, 9 ). The hub of the system is The Dubai International Airport that servessome 65 airlines with scheduled services to more than 1 destinations, ineffect, positioning Dubai as a redistribution center at the crossroads ofEurope, Asia, and Africa. It is safe to assume that among those tourists (an estimated 2 , annually and growing) there will be a market for Glen Sporran. Say: "In them is greatsin, and some profit, for men; but the sin is greater than the profit.They ask thee how much they are to spend; Say: "What is beyond your needs."Thus doth Allah Make clear to you His Signs: In order that ye may consider-drink not of the fruit of Satan@ (Koran, 2: 219) Therefore, drinking alcoholic beverages is considered a Asin@ in mostof the potential marketplace. We're looking for a reasonably upscalelevel of tourist -- educated, adventuresome, culturally hungry@ (Zoroya,1999, 4D). . However,since it is a high-end product, and affordable perhaps only to upscaletourists and Middle Easterners, it still bears investigating.References Chandler, P.M. (ADoing Business...@ 1999, Online). The economic modernization program implemented by Sheikh Rashid hasfurthered Dubai's history as "The City of Merchants, and secured itsposition as a meeting place where doing business is surprisingly easy.Dubai is a westernized, commercial hub supported by modern infrastructure:reliable communication and transportation networks@ (Chandler, 1996, 88). Dubai, on the other hand, has an aggressive, business-friendlygovernment that devloped a long-range plan for Dubai=s future. Also, thevisitors who come to Dubai=s sporting activities such as horse racing,championship golf, world-class competitions in tennis, powerboat racing,sailing and rugby, we are assuming, would enjoy the taste of the product. It is a given that Islam is the major religion inthe area, and it is also a given that the prime guide to Islam is theKoran. ADubai Arabs have been traders for centuries, remaining so despite theoil wealth that now dominates the regional economy. About the only thing that would make the venture appear less thanprofitable is the very fact of the product itself being alcohol. Its exports are in the same range with 38 percent going toother Mid East nations and 35 percent going to Japan. (1996, Feb. At the same time, new legislation established alegal framework for companies, setting rules, for instance, forrelationships between partners, especially between nationals andexpatriates. All of that has changed with the establishment of asophisticated air freight operational system. Low-level laborers are imported, and immigration istotally controlled by the government. Dubai is not a cultural capital, nor does it have a strong history.According to the Minister of Tourism, AThere are places that have moreculture than Dubai B Oman and Yemen. and the other nation/states of the United Arab Emirates, iscentrally located close to the mouth of the Persian Gulf and is a portalcenter for oil producers like Iran, Iraq, and Saudi Arabia to the rest ofthe world. Intoxicants and Gambling, all are an abomination ofSatan's handiwork. While the non-Muslim is not expected to kneelor face Mecca, he or she must not interrupt or display impatience when thehost does. AGeneral cargo is cleared in 45 minutes andperishable cargo in 2 minutes from the time a consignee arrives at theterminal. In summary, the main reasons for considering Dubai are these: * Gateway access to the region=s $1 billion import market * An import market that has grown by more than 2 percent in the last1 years * A diversified market * An open market with no trade barriers, low duties and harmonizedtariffs * An accessible market served by 17 shipping lines and 8 airlines(ADoing business...,@ 1999, Online).Culture Zoroya (1999) says of Dubai: AThis Rhode Island-size sheikdom on thePersian Gulf -- actually a city-state within the United Arab Emirates -- isa gilded corner of the Arab world that boasts Ali Baba exoticism in a safeand harmless setting. This document covers many legal issues. According to Zoroya, AAlcohol is served at restaurants and majorhotels (a beer runs $2 to $4)@, (1999, 4D), and alcohol is sold at the dutyfree customs shops at the airports. . Muslim is mentioned solely because there are strong Islamic censuresof alcoholic spirits, which has the effect of limiting consumption. 1), Dubai: an oasis of modern commerce,Transportation & Distribution, 88-94 Doing Business in Dubai, (1999) Online at www.businessandleisure.com/businessindubai.htm Peterson, S. Local legal advisersshould be consulted to review all commercial contracts to ensure they arein compliance with the Code.Implicit Barriers Although Dubai=s promotion materials do tout the openness of themarket and the lack of restrictions, the fact that most of its re-exportmarket is to the Middle East, the precise suitability of the product meritscultural consideration. On the other hand, if a physical presence is to be established themain options range from the establishment of a representative or branchoffice with 1 per cent foreign ownership, or a limited liability companywith a maximum of 49 per cent foreign equity under the UAE federal lawconcerning commercial companies, or the establishment of a professional orconsultancy business under a local licensing regulation issued by the DubaiGovernment. We don't want tobecome a backpacking destination. (9%). The Product Glen Sporran is a premium, single malt scotch whisky that can only bemade within Scotland. AIt contains provisions concerning retention of title clauses, timefor performance, limitation and exclusion of liability clauses. Part of that plan was to shift development dollars to the the servicesector, with the aim of making the emirate a successful tourism andshopping destination. AIn generalterms it covers all types of commercial contracts including distributionand agency agreements, terms and conditions of transportation and storageof goods, negotiable instruments and so on. On theother hand, the capitol, Abu Dhabi (approximately 4 , people and Dubai(approximately 6 , people) are not considered the primary target marketfor the product. 88).Major Market Opportunities The Aliberalized@ attitude of Dubai has created a good market forWestern products, as evidenced by the stores like Gucci, Armani, Chanel andTiffany=s, and the growth of luxury hotels and Gulf resorts. Deal making is influenced by the Commercial Transactions Code whichwas enacted in 1993. Islamic religious custom demands everything stopfive times a day for prayers. It is open to imports and the government has spent great amounts ofmoney maintaining its reputation as a trading center.Once its only competition in the Gulf for attracting and retaining businessand people was Bahrain, a nation that has lost much of its appeal becauseof political problems. Likewise,punctuality is critical for the visitor,although the host may not be on time. All visitors except Arab GulfCooperation Council (AGCC) nationals must have a visa sponsored by a localhotel or business. Most of the flights were cargo, creating the need for what is nowcalled the Dubai Cargo Village. It is safe to assume that not all of thepotential market eschews alcohol, but it is a vital point to consider.Overall Recommendation: Dubai is the acknowledged regional center for business and expatriateliving, and is unique in a region that is more familiar as a hardshipworld. . The business week runs from Saturday to Wednesday or Thursday, withThursday and/or Friday as the Muslim days of rest and worship. If a foreigncompany wishes to supply goods and services from abroad, withoutestablishing a physical presence in Dubai it can appoint a commercialagent. 19), Sheik to Chic Arabian-Western traditionsunite in Dubai, USA Today, 4D. Since Glen Sporran is a premium beverage and has a market price at thehigher end of the purchase spectrum, these two sources suggest a potentialmarket, the size and scope of which remains to be researched.
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