Supporting business and entrepreneurship in Qatar

I. Business legislation

Foreign business activities are mainly controlled by Emir of the country, the Ministry of finance and trade, and also Qatar Chamber of Commerce. By the Act is set to have for any business in the country a local agent.

II. The tax system

In an effort to get foreign capital, Qatar provides good conditions - cheap gas, electricity, duty-free imports of equipment, duty free exports, zero tax on profits of certain, pre-approved term (50-10 years), and there are no taxed salaries of foreigners. Besides the current expenditures in port-related transport, unloading and storage goods in warehouses, Qatar has no taxes (like VAT, road tax, excise duty). Qatar has no tax on labor (contributions to health and social security), but has the profit tax. If the income tax applies, it ranges from 10 to 35% depending on the industry.

III. Advantages and disadvantages of entrepreneurship in Qatar

Qatar is an Islamic-oriented country with a very small market (about 200 thousand of original inhabitants). The security situation in Qatar is on high level and crime reaches just a tiny percentage. Influential factor is difficult climate, since the peak of temperature in summer months reaches 45° C. Qatar is an open country with a self-professed straight legislative and trade and political conditions for all competitors.

IV. Terms and conditions for the awarding public contracts - Tenders

Public contracts are awarded by issued tenders. Tender process requires an experienced agent who knows the different rules throughout the process. Achieving a successful outcome in the tender process, especially in investment subjects, it is necessary to have long-established Representative posted by the company. Bids may be submitted in Arabic or in English. Due to stiff competition it is necessary to pay particular attention to the formal side. To obtain a strong bond here, it is important to have a long-term personal contact. Much of the matter is left to the trust between partners. Considerable weight to the agreement of terms of trade, have agreements concluded orally.

From Pull to Push

In the past, Company X has been entering distant markets mainly by answering to unsolicited orders. The project of Dubai’s subway system is a good example of this. The company has also been exporting its products to United Arab Emirates via a local agent so it has some experience of some markets in the Middle East.

Now, the plan is to change the strategy from pull to push. It is time be proactive and approach the promising market of Qatar. The previous and current operations in the Middle East are good references in this process. However, this is not an easy task to complete, as the push strategy requires significant amount of additional work compared to the reactive pull strategy, for example carrying out market research, networking and establishing distribution channels.

Currently, our team is making a strong effort in doing research on areas such as the waste bin market in Qatar and what special characteristics does the local B2B business culture have if any. As the result of these efforts, we should be able to understand the market situation in Qatar and find a suitable approach develop a coherent marketing strategy.

Potential Demand in Qatar

You can find below a list of some project in progress in Qatar (non-exhaustive list) :

• A project for 9 new stadiums for the Football World Cup 2022, that represent an investment of almost 230 millions euros for each stadium. Bouygues and Vinci are the two favorite companies for this contract.

• Project for the New Doha International Airport (NDIA): Bechtel (a German firm) realized the master plan and ADPI (Aéroports De Paris International) is participating (14%) in this project for some main buildings. The budget for this project is about 3.94 billions of investment for extension (deadline : 2015). More information concerning the different phases with this link: http://www.airport-technology.com/projects/doha/

• The Doha festival City: a 1.65 billion euros project in progress and that will be completed in 2014.

• New National Museum of Qatar (designed by the architect is Jean Novel) is in progress and should be completed in 2013. More information here: http://www.designboom.com/weblog/cat/9/view/9593/jean-nouvel-new-national-museum-qatar.html

• Project of 3.3 billions of dollars for a Space City.

• QP district project: huge complex realized by Bouygues in the new West Bay Business District (Doha). It represents an investment of 950 millions of euros and will be completed in 2013. More informations here: http://www.bouygues-construction.com/120i/group/major-projects-references/ongoing-projects.html

• Project for the Light Rail Transit system (LRT) in Lusail (15 km from Doha), realized by Vinci.

QATAR

Why Qatar? 
Fast-moving developing economy with positive future prospects, expansionary national policies, building a large capital equipment and investments such as infrastructure, stadiums, airports, shopping and business centers, helpful and liberal trade policy, the demand for quality European products and even more ...

I. Basic economic information
Qatar has one of the youngest and most dynamic emerging economies in the world with the real 16% GDP growth for 2011. The current Emir Sheikh Hamad bin Khalifa al-Thani began large development projects to transform Qatar into a modern Islamic state. The most prominent progress is being made ​​by economic reforms. Qatar is a country with open economy competition and with good conditions for domestic business and foreign capital. It is estimated that in 2012, real GDP growth will be stabilized at 4-5%. In recent years, considerable resources were invested mainly in developing infrastructure and tourism. Qatar wants to place greater emphasis on the private sector. There is a national plan of development of the country for the years 2010 to 2032, which deals with the overall appearance of the country. Favorable price development on the oil markets and high capital expenditures on development have created the preconditions for constant high growth in the next years.


Essential economic dimension of Qatar will be organizing the Football World Cup in 2022. Qatar intends to invest 100 billion USD to various infrastructure projects such as the construction of the national railway system, airport expansion, bridging the gulf in the capital city, repair and build roads, build air-conditioned football stadiums, hotels and a bridge between Qatar and Bahrain. 


Total GDP at PPP (2010): $ 121.4 billion USD
GDP per capita (IMF): 179 000 USD (first place in the world)
Public debt of the country (2010): 16%
Inflation (2011-November): 2.5%


(* Source: Qatar National Bank)


II. Investments
To attract foreign capital, Qatar provides attractive conditions for foreign investment. This is especially the cheap price of gas, electricity, rent land, duty-free import of any equipment, zero tax on profits and salaries, stable exchange rate, and a liberal immigration policy and quality of infrastructure.


III. Marketing strategy and business practices

Any foreign company wishing to expand their business to Qatar has to implement it through a local agent, so the choice of an appropriate and responsible agent is key to developing business. The Qatar market is very demanding, because there, the great competition is created by the world's leading manufacturers. Qatar consumer is very choosy and demanding for quality products and services. Qatar, with this economic background and progressive development strategy, is a big attraction for foreign investment companies and the possibility of sales of various goods.

Discussion points from meetings 23-25.1.12

Our meeting on Monday spawned many questions, some of which are listed below. During today's meeting, Qatar came up as an option for target country.

The litter bins emphasize design and high quality. They are manufactured in Finland, which leads to a generally higher price. However, the target customers of Company X demand design and high quality. As such, it is fair to assume that price is not the first factor customers consider. We do not yet have any information on competitors or their pricing.

Due to the durability of the litter bins, there is no need for active servicing of the bins after installation (except emptying the bins). However, other related services might be considered, offered by Company X or through a partnership.

Some questions that came up on Monday:

• Considering that Company X's operations abroad are still quite limited, should the company
• Continue to target the current segments (B2B, public organizations, municipalities)?
• Target new/additional segments?
• Competition
• Who are they?
• Who are their customers?
• Where do they manufacture their products and what is the approximate cost to their customers?
• Do they offer related services?
• Should a partnership be formed with an actor in the target country? For what purpose?
• Custom design products for large customers with specific needs?

The characteristics of the product range (quality, design, price) together with target customers' demands (quality, design, large quantity bought) means a potential customer is 'worth fighting for', i.e. Company X should be prepared to adapt to each customer.

Background of the real life group project

Inspired by the last case study (Danish waste bins) of the course book, our group of 7 people decided to choose Company X and its design waste bins (later called litter bins) manufactured in Finland for the project. Decision was made on 16th of January. The target of the project is to form  a marketing plan for market entry of a litter bin products into the foreign market/markets in the context of company’s strategy in foreign markets.

Products is the market leader in Finland and exports products to some 30 countries. Export business has been done last twenty years. The litter bin products are suitable for any place where people spend time for work, business or leisure. Litter bins are used by people but are purchased by companies/public organizations, thus these are considered as B2B products in this project.

Growing awareness of environmental issues and growing interest in recycling offers good prospects for the Company X. Finnish design is growing its status in the world and Helsinki being design capital of the world 2012 offers good platform to improve exports of Finnish design waste bins.

Next stage of the project will take place on Monday 23rd of Jan. On Monday the products and the currect strategy will be investigated more deeply and public data from internet and other databases will be used. Next most important decisions for the group are to choose the target country where Finnish litter bins are not existing yet, discuss about target segment and provide info about markets with a focus of litter bins.

List of members of this team:

Atte
Anastasia Trofimova
Dominika Bardiovska
John Ahtokari
Sabina Akter
Timo Tiainen
Yohann Couttet

Go Team!

Alright, hopefully it works! Atte could you please start this blog by making a post with company X description, its presence in different markets and about the product of interest. I think it would be best if you provided that material, since first you have the access and second you are the best judge of what can be published here and what can't :)