The industrialized countries in the Arab world – countries like Saudi Arabia and the United Arab Emirates – have registered significant economic growth in recent years. Countries from Europe are constantly finding new sales markets there. Negotiations with potential customers and future business partners from these countries are thus extremely important. In order for you to be as competently prepared for these cross-cultural situations as possible, we’d like to provide you with some information about conducting negotiations in the Arab world in today’s blog post.
Arab negotiation culture is, historically speaking, strongly influenced by trade and mobility. Animated commerce existed in souks, where salesmen offered their wares from all over the world, as early as the first few centuries of the common era. Traveling merchants also joined together in caravans, and these caravans provided solidarity and mutual protection. The merchants had maxims that could not be broken, as this was the only way to ensure safe travels. A negotiation culture emerged that was focused on an interpersonal level. Salesmen would first have to convince others of their character before they could sell their advertised wares.
Haggling and bargaining are still a big part of the Arab business culture. Negotiations with Arabs can seem tedious to Westerners, as they can take up a lot of time and don’t always proceed linearly. Offers can even be pushed to the sidelines and left there for several months before being pursued again. Long breaks in negotiations should consequently not be misunderstood as a discontinuation of business.
Arabs also tend to show a lot of gestures and emotions when they negotiate. For Westerners, it can look like the pinnacle of theatrical performance when they fall from a cordial, friendly mood into a discontent, irritated mood. Don’t let it get upset you. These histrionics serve only to clarify standpoints and to work toward a bilaterally satisfactory win-win situation.
Patience, flexibility and perseverance
Keep in mind that collaborations with Arab companies can often take up a lot of time. You should bring to them as much patience, flexibility and perseverance as possible. Closing contracts can sometimes take up to as long as two years or more. Here we’d like to give you some specific tips regarding your behavior.
- First, establish a relationship with your counterpart before concluding your business. Try to keep in mind that negotiations can serve as the foundations of long partnerships. To that end, emphasize your personal relationships and mutual interests.
- Your negotiation partner should always be on the same hierarchical level as you. Often several Arab representatives will take part in a single negotiation. It can thus have a positive impact if you also bring several employees, at least in the beginning. This will help your Arab counterpart perceive you as a stronger and more competent partner.
- Position yourself at the start of negotiations in such a way that you can be flexible and make adjustments with regard to both prices and contents. Set your starting price to be higher than what you want your final price to be. Starting prices are considered negotiable, so they should be about 10-50 percent higher than your desired final prices. This varies according to product, situation and competitive pressure.
- If critical points crop up, they should not be addressed in official negotiations. It’s recommended to ask your counterpart – preferably in a personal, informal discussion on the side – when might be a convenient time to clarify these issues, and always indicate your willingness to work together toward the objective.
More information on other interesting topics and target countries can be found on Eidam & Partner’s website.