Why is it profitable to open a business in Dubai in 2020?

Which country should I choose?

If you are the owner of a technology company, it makes sense to enter the market in a country with high technology penetration, then there will initially be demand for your solution.

It is not difficult to calculate such regions - these are the most developed countries, as well as states that have demonstrated good economic dynamics over the past few years.

Having compared the indicators of different countries, we chose between the USA, Singapore, Hong Kong, Europe and the UAE. The states have proven to be expensive to enter. Singapore, despite its favorable business climate, was not much cheaper. In fact, at that time we simply did not have the capital to open an office in one of these countries.

As for European countries, it is not for nothing that they are called the “Old World”: business there is very conservative, and the market is largely divided between players. You can easily enter it only with a completely innovative solution.

By process of elimination, we chose Dubai to start. And today, after a year of work, I can say for sure that those companies that do business related to regular payments and operate on a subscription model need to enter the UAE. Therefore, the UAE market is perfect for software and automation developers.

Tip 1. Prepare for bureaucratic hell

Opening an account and preparing other documents in Dubai takes much longer than in Russia. Paperwork will take up most of your time.

For example, the promise to “open a company in seven days” did not work in our case: contrary to the advertising statements of our partners, opening a legal entity in Dubai took four months. And this despite the fact that we opened the company according to a simplified scheme. It also took us four months to open a bank account.

The difficulty is that in the UAE you must first prove that you are a real entrepreneur who has a company in Russia.

This will require at least statements of accounts for the last year (both legal and individual), certificates of ownership, contracts with clients, and so on. All this evidence also takes a lot of time.

Is it difficult to open a business in Dubai, UAE?

From a technical point of view, opening a business in Dubai is relatively easy. Registration of a company occurs quite quickly. Licenses, if this does not apply to additionally regulated activities, can be obtained in the usual manner. There are plenty of premises for doing business - offices, warehouses, production facilities, etc. The cost of energy resources is low. The level of control on the part of the Emirates regulatory authorities when conducting business is at a very reasonable level - sufficient for the state to monitor compliance with the necessary standards, but not interfering with business.

In order to open a company in Dubai, UAE, you definitely need an understanding of what you will be doing. Some of our clients ask us – “What is the best business to open in Dubai?” Everyone must answer this question for themselves. There are many possible destinations in the Emirates - from restaurants and other service enterprises to large logistics complexes and various industries. At the same time, each direction has its own leaders, one of which you can become.

Tip 2. Feel free to offer your services. In the Arabic language

Interestingly, cold selling works well in the UAE. When offering an automation system, sometimes it is enough to enter a restaurant or office directly from the street.

You can even just see the opening soon sign on the building, go in and call the foreman: in Dubai no one will be surprised if you persistently demand the telephone number of the owner of the premises. One call and the meeting is scheduled.

A big plus is negotiations in Arabic. Learn the language yourself or hire people to negotiate, fortunately it’s not so difficult here. The competition among applicants is high, everyone wants to work. The local population does not know what a weekend is; they can work 24/7, without any “personal boundaries.”

Tip 3. Don’t transfer all your shots to the UAE

The average salary in the UAE is 10 thousand dirhams (approximately 180 thousand rubles). Another 3 thousand dirhams is a refundable deposit, which is reimbursed upon dismissal of an employee.

In addition, a person must have a visa, otherwise he will be deported from the country, and its cost may also fall on your shoulders. Hiring an employee here is an expensive proposition.

It is really important to take care of health insurance here. We buy it for 2 thousand dirhams, although you can find it cheaper. But in this case, it is better not to take the risk and contact a trusted insurer, since an employee may unexpectedly fall ill, and treatment in the UAE is of very high quality and expensive. And you, as an employer, could easily end up with a bill of Dh30,000 if the insurance company does not cover the costs.

Experience of compatriots: work and business in the UAE

However, this does not mean that a Russian has no chance of finding a job in a state company or business organization. Representative offices of almost all major international organizations operate in the UAE, and, accordingly, most of their managers and highly qualified employees are invited foreign specialists.

There are, however, several leading industries in which the need for both service personnel and top managers is constant. First of all, this is, of course, the oil and gas industry. Despite the fact that oil has fallen significantly in price over the past few years, this industry has been and remains perhaps the most highly profitable business, and companies operating in this sector are among the most attractive to many highly qualified specialists. A technician with three years of experience here will earn a minimum of 8,500 dirhams ($2,300).

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Photo: Rushana Ibraeva

Another driving force in the UAE, along with the oil industry, is the financial and banking sectors. Analysts, traders, investment specialists and representatives of many other related professions are always in demand here. The average salary is from 25 to 90 thousand dirhams ($6800-22500). It is worth noting that the banking sector is very well developed in the UAE and is represented by a number of international companies.

Another leading industry is real estate. As you know, the UAE is actually one large, ongoing construction project. Everything is constantly being built here - from cottages to hotels, shopping centers and giant stadiums. In such conditions, construction companies are constantly looking for new employees, and these are not only builders, but also highly qualified personnel - engineers, designers, and management personnel. Average salaries for qualified employees of companies working in the construction industry can range from 9,500 to 45,000 dirhams ($2,600 to $12,000).

Tourism remains the most important component of the Emirate economy. It is in this industry that the majority of Russians and immigrants from the CIS who come here work. Moreover, they can work both as waiters and managers of travel companies. The salary, of course, varies greatly depending on the position held. For example, a waiter can earn on average 1,300 dirhams ($350), an administrator – 1,800 ($500), and a manager – about 5,000 thousand dirhams ($1,300).

There is also the opportunity to open your own business in the emirates. Moreover, the country's government highly encourages foreign businesses to open in the UAE. Legislation in this sense here, as experts admit, is even better than in European countries.

There are more than twenty “free trade” zones in the UAE, where you can open companies without the participation of citizens of the country in the authorized capital. If a company opens outside such zones, then they must at least be formally registered in the name of a UAE citizen. There are also some nuances here - in some places to make friends, and in others - as they say, “unfasten”.

I myself have been running a business here for more than 10 years, in three directions - real estate sales, a travel agency and a restaurant of Russian-Tatar cuisine - all three directions are focused mainly on Russian-speaking people.

Photo: From the personal archive of Ismagil Shangareev

As for taxes, in the emirates there are not many fees that entrepreneurs in Russia have to pay, for example, tax on personal income, real estate or profit.

It is especially worth noting that the UAE is a country in which the Muslim legal system operates, and morals are stricter than in Russia. Here they carefully monitor compliance with their legislation, and offenses are severely punished.

You found a job, what next?

If you find a job in the emirates, the employing company will most likely take care of the necessary paperwork. You will only need a legalized education document, that is, certified by the consulate.

In addition, before moving, it is advisable to legalize other personal documents, such as a marriage certificate and, for example, birth certificates of children.

As for the driver’s license, if you receive a resident visa, you will have to obtain it again in the emirates.

Housing, transportation, food and other “little things in life”

Housing, if you move to work in the emirates, will become almost the main expense item. Its cost, depending on the emirate, differs dramatically. For example, in Dubai it will cost from one and a half to fifteen thousand dirhams, that is, from 400 to 14,000 dollars.

You will have to pay a minimum amount for living in so-called sharing apartments - apartments that are rented by sharing. Several people live in such apartments at the same time. They are popular among residents of countries such as Pakistan, India, Bangladesh, who come to the emirates as unskilled workers.

Utilities here are very expensive by Russian standards; the amounts in bills in some cases can reach 5 thousand dirhams, that is, about $1,300 per month. However, these figures in relation to the average income of labor migrants, especially highly qualified ones, are not so critical.

The cost of travel here varies quite significantly. For a trip on the metro, depending on the duration, you will have to spend from 2.5 to 7 dihrams (0.68 - 1.91 dollars).

Photo: Rushana Ibraeva

The expenses of motorists in the emirates are much higher. A liter of gasoline here costs an average of 1.5 dirhams, that is, about 40 cents. Considering traffic jams and the inevitable constant use of air conditioning, a lot will be spent. The presence of toll roads, as well as very large fines for violating traffic rules, can be added to the costs of motorists.

Food prices are not very different from Russian prices, especially if you purchase in small stores and do not “abuse” exotic fruits imported from abroad and other gastronomic delights.

Climate

The climate in the country can hardly be called comfortable. If in winter the temperature here is quite “bearable” (about 20-25 degrees during the day and 15-20 degrees at night), then in summer it can reach +40°C and higher, and you won’t be able to “take a break” from the heat even at night. Natural phenomena such as sandstorms, which can significantly aggravate health problems, are also common.

Medical service

The level of healthcare in the UAE is very high. There are more than enough medical centers and pharmacies, not only public but also private, here. They are equipped with the latest technology, and they employ highly qualified specialists, most of whom received medical education abroad.

Free medical care in the emirates is provided only for citizens of the country. For visitors it will cost a pretty penny. Health insurance will solve this problem.

If you live in the emirates in connection with employment, the employer will issue it. The document is issued once a year and guarantees free service in a specific clinic. If you are not satisfied with it, you can change it.

The cost of insurance depends on the number of cases it covers. Full insurance, which will cover any expenses for any medical services, will cost at least 10 thousand dirhams ($2,700). A typical consultation costs about 40–50 dirhams; a doctor's home visit will cost at least 70 dirhams (up to $20). For the simplest operation you will have to pay at least 10 thousand dirhams.

Education

There are many public and private kindergartens, schools and universities in the United Arab Emirates. It is impossible for visitors to get a job in state educational institutions, and therefore they will have to pay for education, and in popular educational institutions the cost of education is very high and can reach tens of thousands of dollars a year.

The best schools in the UAE are those with British or American educational programs. Tuition in them is more expensive than, for example, in Indian schools, and ranges from 80 to 150 thousand dirhams (from 21 to 41 thousand dollars) per year.

The vast majority of schools issue an international certificate, which will allow your child to enter any university in the world. There are enough higher educational institutions that accept both citizens of the country and visitors, and in the emirates themselves. The most popular are Zayed University, Higher Colleges of Technology, American University in Dubai, etc.

Tip 4. Test employees for as long as possible

Given such a high level of salaries, it is better to play it safe and set a probationary period of six months (this is the maximum by law). If you decide to fire an employee after the end of the probationary period, he will need to be paid a month's salary. If dismissal occurs during the probationary period, no compensation is paid.

We had an illustrative case: out of ignorance, we fixed the duration of the probationary period at two months. For one employee we were unsure about, the probationary period had to be extended. As a result, we fired him after 2.5 months. The former employee complained to the appropriate authorities, and we were informed that the probationary period is fixed in the contract, and no other agreements on extension are grounds for refusal to pay compensation. Therefore, our company was obliged to pay the dismissed person a month’s salary.

Tip 5. Invest in online marketing and major events

Promotion and marketing in the UAE follows a special pattern: for example, advertising on Facebook is in great demand here, and specifically in Arabic. Tables comparing your product with competitors’ products work well, as do infographics directly in advertising or on your website.

For example, we launch contextual advertising in search engines for “Service technical support”, from where the visitor goes to a site with infographics where we compare ourselves with competitors (it is not necessary to mention specific company names). And then we give him the opportunity to get acquainted with the demo version of the product.

Participation in specialized exhibitions gives a good effect. Owners and top management of companies come to major industry events. If you work in the HoReCa segment, then at events such as Gulfood and SIAL, it is much easier to reach the decision-maker and talk to him “face to face.” Dubai loves this format of communication very much.

Is it true that in order to open a business in Dubai, you need a local partner from the UAE?

No, that's not true. If a company is registered in a free economic zone, then a local partner is not needed, and the company can be 100% owned by a foreign citizen. If a company’s activities in the Emirates require registration of a local company, then even such companies do not always require a local partner. For companies falling under the professional activity category, a local partner is not required. And in cases where the presence of a local partner becomes absolutely necessary, there is a proven way to ensure the safety of the real business owner, and the local citizen acts only within the necessary formal requirements of the Emirates.

National characteristics

Firstly, everything in the UAE is much more expensive than in Russia. For example, we spent 4 million rubles on opening an office, although in Russia similar processes would have cost 100-150 thousand.

Secondly, it is important to communicate with the client in their native language. And I don't just mean Arabic. The national color in the UAE is very colorful. If you know English, you shouldn’t expect that anyone will be happy about such “international” communication.

When you go to meet a Hindu, you should definitely take someone who speaks Hindi with you. Most often, such meetings are very fun: we usually start negotiations in English, then our fellow countrymen switch to their native language, until I understand almost nothing. At the end of the negotiations, the participants sum up and clap hands.

Thirdly, if you want to communicate via Skype, it is better to pay attention to the European market. In the UAE, people love live communication and negotiate only in person - no messengers. Even with top managers of large companies you can easily schedule a meeting.

Moreover, customers freely transfer large amounts of cash in any direction. If the client doesn’t like something, he can demand a refund, and this is completely normal in local realities; all regulatory authorities will support him.

Fourthly, the key to success in negotiations in Dubai is small talk. Locals like to first discuss general topics: family or the EXPO 2020 exhibition, which is highly anticipated here. Only after this do they move on to business matters. The same rules apply to correspondence on WhatsApp and other instant messengers.

Before discussing something important, you need to find out from your interlocutor how he is doing, ask about his family, children, whether he likes the weather. And if they bring you food during negotiations, this is a sign that you need to stop discussing business issues while you have a snack.

Finally, local business is not aimed at saving, as in Russia, but at finding the most advanced solutions. In Dubai, you'll have a better chance of hooking local audiences with innovative technology and showing how it can benefit their business.

Company registration procedure

Any company registered within the UAE undergoes trade licensing. The procedure depends on the Emirate in which the enterprise is opened.

All types of economic activities are divided into 3 licensed groups:

• commercial enterprises (can carry out any type of trade);
• professional firms (for example, craft organizations);
• industrial companies (enterprises operating in the field of production and industry).

To complete the registration procedure in the UAE, you need to complete the following steps:

• reserve a business name and submit an application to the DED (Department of Economic Development);
• have the constituent documents certified by a notary;
• submit documents to DED, obtain a business license and registration certificate (registration with DCCI - Dubai Chamber of Commerce and Industry);
• submit an application for registration to the Ministry of Labor;
• register UAE resident workers with the Social Security and Pension Authority.

What documents are required

In order to register an enterprise in the UAE (that is, obtain a business license and registration certificate), you need to submit the originals of the following documentation to the DED and the Trade Registration Department (this can be done via the Internet):

• a statement signed by the head of the enterprise and his representative;
• articles of association (original and copy);
• business name approval letter issued by DED;
• original company registration document, also issued by DED;
• copies of participants' passports.

In the UAE, a company can be registered without having a legal address. In most FEZs there are companies with so-called virtual offices.