The opportunities for SME exporters in the Middle East

By Andrew Watson

The Middle East can be viewed with some trepidation by the Australian business community, with the language and distinct culture of the region often creating uncertainty among Australian exporters.

However, the region is growing and offers huge potential for exporters as Australia looks to expand and diversify its export markets away from Asia.

Read more: Seven essential tips for doing business in the Middle East

Like any other export market, learning the potential risks and how to manage them is crucial, as it can ensure more exporters are able to take advantage of the growth opportunities in this exciting region.

Understand the region

The Middle East is a geographic region that comprises Bahrain, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Palestinian Territories, Qatar, Saudi Arabia, Syria, United Arab Emirates and Yemen.

Strategically located between Europe and Asia, the region is well-placed to act as a trading hub for Australian companies operating there.

Australia has a strong relationship with a number of markets in the Middle East, with the United Arab Emirates and Saudi Arabia being its strongest export partners in the region.

Economic growth in countries within the region has been mixed in recent years but continued population growth will present some strong export opportunities for Australian SMEs.

A number of countries in the region have experienced civil and political unrest in recent years, so it is important that any exporter considering entering a country affected by turmoil conducts extensive research to understand the political environment before entering the market.

Assess the opportunities

The Middle East holds a number of exciting opportunities for SMEs in Australia’s key export industries, including mining services, agriculture and education services.

The mining sector in the Middle East is growing. As many of the Gulf countries are looking to diversify their economies away from oil, investment is being made in other sectors, such as mining and infrastructure. This will create opportunities for mining equipment, technology and services businesses and companies involved in the infrastructure supply chain.

There is also a strong and growing market for Australian agricultural exports to the Middle East. In particular, Australian lamb and beef exports to the Middle East have increased significantly in recent years. Other export opportunities exist for grains, such as barley and wheat, and canola.

Education is a key services export market for Australia in the Middle East. A number of Australian institutions have a presence in the Middle East and this is likely to grow as the region looks to up-skill and diversify its labour force away from oil.

Manage the risks

For those unfamiliar with the Middle East market, it can seem daunting. There are a number of differences to doing business in Australia and understanding how these differences could impact your business, and where any risks may lie, is crucial before entering any markets in the region.

It is crucial to be aware of cross-cultural differences when doing business in the Middle East to avoid making a mistake that could damage a potential partnership. For example, the culture of the Middle East tends to be much more flexible and relaxed when it comes to time and schedules than Western cultures. Pushing for a meeting at a specific time may not be well received and negotiations are often likely to take a lot longer than we are used to in Western business cultures.

Local law in the region may also differ to the legal framework in which Australian businesses are used to operating. A significant proportion of laws in the region are based on Islamic principles. Local laws can have an impact on how businesses need to operate, so it is crucial for any SME operating in the Middle East to be fully aware of the legal environment in each market.

Like any new market, exporting to the Middle East involves a new set of financial considerations for SME exporters. Understanding the financial implications of selling your product or service into the Middle East is important to avoid being caught out with an unexpected cost. For example, product listing fees apply in many markets in the region. For SMEs exporting to the Middle East, financial support is available from a number of sources and your banker can advise you on where to start for export finance.

The next step on your export journey

For Australian exporters seeking out new international markets for their business, the Middle East holds significant opportunities in a range of industries, including mining services, agriculture and education.

The key to success in the region is to understand and carefully manage the risks prior to entering any market within the region, which will give SME exporters the confidence to capitalise on the many export opportunities available.

Andrew Watson is executive director of export finance at Export Finance and Insurance Corporation.