Doing Business in Kuwait

Doing Business in Kuwait.
Muna Al Fuzai
Executive Director
American Business council, Kuwait.

 

Doing business in Kuwait while not as easy and efficient as it could be, is nonetheless possible and rewarding, provided the parties can create an effective and practical business plan. Needless to say, any enterprise must set forth clear objectives and possess an understanding of local customs, however enigmatic those customs may seem to appear and regardless how fundamentally different local Kuwaiti customs may be as compared to common practices in their home countries.

It is important to take into account two important dynamics of doing business in Kuwait. First, one must consider the existence of well established local "merchants" with a long history of participating in a wide range of business sectors. These business owners have a deep rooted understanding of how things get accomplished in Kuwait; they simply have the longevity of having been around for many generations. They are nimble and locally connected and can get things done in days or weeks where others might toll for months or years or possibly indefinitely.

Secondly, while Kuwait is no doubt a relatively small market, there is a code, parts of which are often unwritten, that make efforts either fail or succeed. Attempting to circumvent local rules or ignorance of such rules typically spells an end to a company's reputation and makes it unlikely any well respected local company will enter into business partnerships with such parties. New companies need to prepare well and study their objectives in the local market before establishing businesses and incurring the usual start up expenses such as renting offices and hiring staff et cetera. Retaining a local consultant is advisable to avoid unnecessary expenses and other costly mistakes. It is also important to bear in mind that the process of doing business varies depending on the size of the project or undertaking. Small businesses will not get the government or parliamentary oversight that large projects which affect national resources receive.

Another dynamic of doing business in Kuwait for foreign entities is the issue of the Sponsorship Program which requires that foreign entities appoint a local Kuwaiti sponsor/ partner. Clearly it is important to choose the right local partner whose corporate and business philosophy is aligned with yours and who you believe can add value and help you achieve your objectives. Not all sponsors are alike and some are better than others.

Governmental rules are a challenge when it comes to establishing a business in Kuwait as in other countries. Understanding local government regulations in Kuwait is essential. Finally, any new business should consider the Kuwaiti consumer and understand the Kuwaiti consumer is quality sensitive and has options of products as well as markets where they can make purchases.

Challenges encountered by businesses can be a burden to any new or well established business. It is particularly advisable for fledging companies to prepare a strategy and create clear objectives when it comes to doing business in Kuwait. In this manner, challenges can be converted into opportunities.