Venturing Into The Middle East

Aalst Chocolate is a newly-established manufacturer of industrial chocolate. Since it produces a product not usually associated with Singapore or the region, we decided to tap into export markets to become competitive. So when we started to target the Middle East, we did studies on secondary data, examining import duties, market size, etc. We also participated in trade fairs in Dubai and elsewhere. Our conclusion was that the Middle East was a market to rival Asia, and that UAE was the obvious launch pad for us to start our export forays. It is an exciting market with a sizable population, high purchasing power, and a need to import. Ease of communication and a port without restrictions are also factors. And it is probably the most open of all the Middle Eastern countries.

Region dynamics
By definition, there are many countries in the Middle East market. Commonly, it refers to countries in the Gulf, Arabic Gulf or Persian Gulf—Iran, Iraq, Saudi Arabia, Yemen, Jordan, Syria and Lebanon. (It may also include Egypt, Libya, Morocco, Tunisia and Algeria). Although Israel is located in the Middle East geographically, is it usually excluded in this grouping. While the Middle East is a “Muslim” market as a whole, it is definitely not a homogenous one. The region is diverse in landscape, religion and ethnicity. Although there are marketing similarities, there are also marked differences amongst the countries, in terms of regulatory requirements, packaging needs, taste preferences, and buying power.

Strategy
We invested heavily in the participation of trade exhibition and shows. So the company slowly became known to be as a player in the market. Since there is no “one-size-fits-all” approach, neither is there a “one-taste-suits-all” stance. Initially, we took a lot of effort to modify our products to meet the taste buds of our consumers. Persistence, patience—and most of all—a strong tasting panel and detailed market research ensured that we had unique products with the correct taste profile and quality. Once we earned the acceptance of the buyers and final users, it was possible to introduce more products—even ones that are not traditional to the market.

Dubai is a Muslim country, and it is very open. Soon it will be a cosmopolitan city like Singapore. Although Aalst Chocolate factory is certified a halal factory, the halal certification was not the main selling factor. This is probably because most people in the foodservice/industrial sector are quite aware of the raw materials and ingredients used in the manufacturing of chocolates. However, it is important that food exporters pay particular attention to halal requirements, restriction of alcohol and food additives, and product-labeling needs.

Labeling
Aside from choosing sizes that are of acceptable sizes and configuration, labels must have a clear and accurate ingredient list. We had an interesting reminder of this when a client read one of our packages. Our product contains the ingredient “cocoa liquor” and we were tasked to clarify whether or not we have “alcohol” in our products. The answer is no. But this was a necessary description clarification, as cocoa mass (one of the main ingredients of chocolate) is sometimes commonly referred to as “cocoa liquor”.

Shelf-life is another critical labeling requirement. It must be mentioned on most if not all packaged food products exported into Middle East. (Even eggs have production and expiry dates stamped on the shells.) Take note that the GCC is currently harmonizing their food standards and regulation pertaining to shelf-life and labeling requirements.

Because of all these needs, it is very important to have somebody in your company who understands Arabic. Besides being able to cement contacts and negotiations, the person can also assist with labeling needs. These are usually required to be printed or embossed in both English and Arabic. (Any mistakes in the labeling or wrongful labeling can be very expensive. It can even result in the rejection of cargo, even if the contents are perfectly suitable.)

Partnerships
Then, after all the research and the preparation, the most important factor is the right importer for your products. While stringent selection procedures are quite standard (e.g. marketing and sales network, financial standing, etc.) another factor is personal chemistry—the ability to work together will ensure that the relationship will “click” and continue. Besides a mandatory agreement, the real essence of the relationship is the sharing of a common vision and strategy for the development and growth of the market.

Growth and struggles
Within 2 years, we have started exporting to UAE, Kuwait, Qatar, Bahrain and Saudi Arabia. Other Middle East markets in our sights are Iran, Egypt, Yemen, Jordan and Syria. While we have achieved initial success in UAE, the same cannot be said for the Lebanese market. Our research indicates that there should be good demand for our products; however, the deteriorating political situation has hampered our efforts. I am sure, not just for ourselves, but many importers/exporters are reexamining their priorities for this market. No matter how much one conduct research, one cannot anticipate political and country risk. But this uncertainty will only delay our plans. We still have the intention and belief to succeed in this market.

There have been hiccups in the development, economies and political stability of the Middle East region in the past. And at this juncture there are unresolved conflicts and likely unforeseeable political upheaval. But the Middle East is a region that one cannot ignore. Otherwise, one runs the risk missing of out on the ample opportunities for business.


How could the Singapore and Middle East governments help?

Singapore
• Compile more in depth information/survey of the relevant industries/products to convey to the Singapore exporters;
• Promote the AVA as a strong quality-control standard in the Middle East region.

Middle East governments
• Lift restrictions on imports;
• Reduce duties/minimum duties;
• Reduce bureaucratic red tape for importation;
• Offer more incentives;
• Decrease restrictions for overseas offices.


What should you do to enter a new market?

• Research it, makes yourself known, and be ready to adapt;
• Recruit expertise;
• Screen for the right importer/distributor (this includes checking credentials, scheduling meetings and field trips);
• Invest in marketing and brand building.