Iran: opening up for business
Iran has abundant natural gas, oil and mineral resources and a large pool of trained and efficient manpower. The country is apt to technological progress and international development. With the international sanctions lifted, this economy with almost 80 million people is expected to boost and export opportunities for all kind of foreign companies will arise.
How to find your agent or distributor?
The majority of the action in Iran is in Tehran, the capital. This is the place to start with your exports and expand from there. It is possible to fully own a subsidiary in Iran, but it is advised to work with a local partner as the business environment can be very different from other countries in the region. A local intermediary can help you overcome cultural and language differences.
We have a clear and structured approach to find the best partner
We first want to know what kind of partner you are looking for. Based on your information, we make a long-list of 15-20 potential partners that fit your description. After your approval we find the right decision maker, approach him or her personally and share your business profile with them. This mostly leads to 3-5 companies who are suitable as your partner and interested in working with you. Once we have found these companies, we plan your meetings and accompany you during the first visits.
How open is Iran to international business?
A recent survey showed that Iranians consider the quality of product from western foreign countries as good. For the USA 87% agreed, for Germany 85% and for France 80%. Apart from better quality as main reason to buy (66%) also the latest design was an important factor (9%). Iranians are interested in buying foreign cars 949%), personal electronics (40%) or computers (38%).
Global companies that have been barred from doing business in Iran now are able to exploit a market hungry for everything from home appliances to automobiles to airplane parts.
Sanctions for Iran have been lifted, at least from the EU
The EU has replaced prohibitions on dealing with Iran in dual-use equipment, precious and other listed metals, diamonds, and graphite with a requirement for prior authorization. Prohibitions on transactions relating to Iranian oil & gas products and related services, provision of engineering and maintenance services to cargo aircraft , bunkering and supply services to Iranian vessels, and on certain software have been removed.
Several restrictions on financial services have also been removed, including a prohibition on trading in bonds with the government of Iran, a prohibition on providing insurance or re-insurance in Iran or to Iranian persons, and prohibitions on fund transfers to and from Iran.
Iran Post Sanction Economy
Since the law had been lifted to ban the nuclear program in the country and unfreeze Iran’s assets, the government had been looking forward to great improvement, opening the country up to international trade and bolstering direct foreign investment to stimulate the economy’s growth.
Global investment into Iran has been steadily increasing since 2013, a year in which the country attracted just three FDI projects. This increased to eight in 2014 and nine in 2015. Since the sanctions were lifted the financial services sector has directly attracted four investments from separate companies with capital expenditure of $60m.
The country has also attracted investments from the automotive sector, business services, consumer electronics and textiles, among others, it added. Iran believes that technology transfer should be a prerequisite for partnership. Technology transfer can be in the management and technical segments, but this approach leads to the country’s success in the long term.
Tips for entering the Iranian market
First get the basics right:
- A good understanding of the country’s history, culture and business landscape
- Make your main documents available in Persian as many older Iranians do not speak English
- Gaining a good understanding and the build-up of trust will not happen overnight, and certainly not through emails and conference calls
- Get an Iranian expert in your team
Start at the top. Aim for an entry point in the highest echelons of an organization. It may not be easy at first, but it will speed up the overall process. Beware for all kind of middlemen that want to take a stake out of your deal. It is better to work with a consultant who you just pay for his efforts.
Structure the business legally in a way that it falls under a Bilateral Investment Treaty (BIT) and/or another investment agreement. There are 52 BITs in force between Iran and other countries, such as Germany, France, Italy, Austria and Switzerland
Position for the long term and establish partnership with a local partner. Do not go along with the first partner that you meet or just because the partners speaks reasonably English. There are many more partners you can do business with, so first check their distribution network and reach in the country.