The Middle East, specially the Arabian Gulf, has experienced a notable upsurge in foreign direct investment. Find out about the risks that businesses might encounter.
Pioneering scientific studies on risks associated with foreign direct investments in the MENA region offer fresh insights, trying to bridge the research gap in empirical knowledge about the danger perceptions and administration methods of Western multinational corporations active widely in the region. For instance, a study involving several major international companies within the GCC countries unveiled some fascinating data. It contended that the risks related to foreign investments are a lot more complex than just political or exchange rate risks. Cultural risks are regarded as more essential than governmental, economic, or economic risks according to survey data . Furthermore, the research discovered that while aspects of Arab culture strongly influence the business environment, many foreign firms find it difficult to adjust to regional customs and routines. This difficulty in adapting is really a danger dimension that needs further investigation and a change in how multinational corporations operate in the region.
Although governmental uncertainty appears to dominate media coverage on the Middle East, in recent times, the region—and specially the Arabian Gulf—has seen a stable boost in foreign direct investment (FDI). The Middle East and Arab Gulf markets are becoming more and more attractive for FDI. However, the prevailing research how multinational corporations perceive area specific dangers is scarce and frequently lacks insights, a well known fact solicitors and risk experts like Louise Flanagan in Ras Al Khaimah would likely be aware of. Studies on dangers related to FDI in the region tend to overstate and mostly pay attention to political risks, such as government uncertainty or policy modifications that could affect investments. But lately research has started to illuminate a crucial yet often overlooked factor, namely the effects of social facets in the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies reveal that numerous businesses and their management teams considerably undervalue the impact of cultural differences, due primarily to deficiencies in understanding of these social factors.
Working on adjusting to regional culture is necessary not adequate for successful integration. Integration is a loosely defined concept involving numerous things, such as for instance appreciating local values, understanding decision-making styles beyond a restricted transactional business perspective, and looking into societal norms that influence company practices. In GCC countries, successful business relationships are far more than just transactional interactions. What affects employee motivation and job satisfaction vary significantly across cultures. Hence, to genuinely integrate your business in the Middle East a few things are essential. Firstly, a corporate mind-set shift in risk management beyond monetary risk management tools, as specialists and attorneys such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah may likely recommend. Next, strategies which can be efficiently implemented on the ground to convert the new mindset into practice.