INSTITUTE OF MANAGEMENT

STUDIES
Global MARKETING
A PROJECT REPORT ON
EXPORT OF PICKLE IN UAE.

SUBMITTED TO:SUBMITTED BY:Dr. jayant sonwalkar

gautam

sohit
Mba

(ft) 4th sem

(marketing)

Table of content
1- AIM AND OBJECTIVES
2- INTRODUCTION
3- NEED TO GO GLOBAL
4- LEVEL OF PRODUCT
5- MARKETING MIX
6- MARKET SEGMENTATION
7- IMPORT DUTY AND TAXES
8- IMPORT COSTUM PROCEDURE
9- IMPORT REGULATION
10-SWOT ANALYSIS OF SME SEGMENT
11- TRADE BARRIERS
12-PESTLE ANALYSIS
13-EXPORT MARKETING CHANNELS
14-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 of- 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 worlds
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 30C, 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 - 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. Indias 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 15 TH 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

Mango

Pickled potatoes

Lemon
Mix vegetable

Pickled
mushrooms
Pickled okra

Cheese dips garnished with

zatar
Lemon marmalade

Soya
pickles
Bitter guard
pickles
Amla
pickles

Green chili

Pickled chickpeas

Red chili
Eggplant
Carrot
Onions
Garlic pickles

Pickled lentils

Strawberry Pickles

NON-VEG
PICKLES
Chicken pickles
Prawn pickles
Fish pickles
Lamb 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

Core
Actual
Augmen
ted

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

The Marketing mix and the 4 Ps 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 Ps and the 4 Cs: the Importers Perspective
An importer is most concerned about the 4Cs: Customer
solution, customer Cost, Convenience and Communication. The 4 Cs emphasize
customer needs and wants over just trying to sell products. Below is a comparison of
the 4 Ps and the 4 Cs from the importers perspective.

Product as Customer Solution

Price as Customer Cost

Place as Convenience

Promotion as Communication

The exporters goal is to sell a product; the importers 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 companys export success.
Stressing a products 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 products 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 manufacturers 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 products 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 products 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

Belchers Square Sausage: Scottish sausage

Fart: Polish candy bar

Bra: Swedish yogurt

Cream Collon: Japanese cookie

Packaging
A products design and container or wrapper is its packaging. Packaging is closely
connected with the design and style of the product. An importer understands the
packagings 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 products 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 companys 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 importers 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
importers 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 products 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 exporters ability to provide logistical solutions to help lower the landed
cost influences that companys 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 buyers 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 (nonvessel 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 buyers
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

childrens 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 companys 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 its 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 Cultures 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 companys
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 companys 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 products 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 companys
management.
So whats 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, youll speak with an industry expert wholl 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, inmarket 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-favourednation 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

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: Its 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 BARRIER
SUMMARY
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 UAEs 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
Committees 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 UAEs 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 its 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 UAEs 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

IMPORTER

EXPORTER (GRADING &

PACKAGING)

Global Marketing Channels and

Physical Distribution
Channel Objectives

Marketing channels exist to create utility for customers

Place utilityavailability of a product or service in a location that is

convenient to a potential
customer
Time utilityavailability of a product or service when desired by a
customer
Form utilityavailability of the product processed, prepared, in proper
condition and/or ready to use
Information utilityavailability 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
Distributorwholesale intermediary that typically carries product lines or
brands on a selective basis
Agentan 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.