Global meets local: regional branches

Ben East
Ben East
Local knowledge is invaluable to businesses opening regional branches, Vision finds out why

It is said that the Inuit have dozens of words to describe snow and an equally great number of words describe ‘sand’ in Arabic. The point is that one’s reality can differ greatly from another’s.

The same applies to the corporate world. A successful business model in a country may turn into a disaster in a different part of the world. Global businesses must carefully take into account local subtleties when establishing local branches in the Middle East, which an increasingly higher number are doing, to tap into the region’s growth prospects.

“Global companies are increasingly looking eastward in pursuit of corporate success. Economic growth for the GCC is expected to rise to 4.1 per cent in 2014 compared to an anticipated global growth of 3.6 per cent. This is not just a percentage; behind this growth are a host of business leaders that are driving not only their organisations but also economies at the national, regional and global levels towards prosperity. Family businesses, government and entrepreneurial enterprises stand as the three main pillars of the region’s economic success, but so too do global organisations, led here on Middle Eastern soil by a pool of international talent,” said Hannah Stewart, executive editor at Forbes Middle East.

Under the theme “Global Meets Local” the magazine’s Middle East team has recently recognised the achievements of the Top 100 Executive Management heading corporate powerhouses in the MENA region. Held in Dubai, the event was attended by the top executives of some of the world’s largest businesses (IBM, Intel, Volkswagen, Boeing, McDonalds, HP, Toyota etc.).

Many individuals in Forbes’ list are running the regional branches of big businesses. This is no easy task: when entering new regions, companies may face significant differences in business practices. Timelines, processes, regulations, hierarchical structures and cultural sensitivities may differ greatly from home. Accepting gifts or hospitality, for instance, may be perceived to be bribery in some Western countries. However, it is common practice in the Middle East for business partners to show their gratitude this way. Professional and personal life is not as separate in the Middle East as it is in the West.

Furthermore, Islam permeates every aspect of Muslims’ lives in the region. Therefore global businesses’ local branches must give their employees the opportunity to pray in the office for instance, and remember that Fridays are days off as male employees need to attend congregational prayers at the mosque. Trying to do business during the month of Ramadan could also prove difficult.

In a globalised world, large corporations have to expand abroad to diversify, spread their operating risk and tap into new market segments. The businesses that get it right in the Middle East and set up successful branches will reap the commensurate financial rewards.