You are probably already familiar with the Arabic bazaar mentality or bargaining culture so you can assume that your Gulf Arab business partners will carry on intensive negotiations and haggle over prices.
The initial negotiations are generally very comprehensive and lay the foundations for long-term business connections. The personal relationship between business partners is most important. Without trust there is no deal. With trust, however, subsequent projects and collaborations don’t need to be negotiated anymore and things fall into place.
Pay attention to hierarchies
Good preparation for negotiations in the Gulf Arab areas is essential and will require not only sufficient room for negotiation but also gathering accurate information about your negotiating partners. Make sure you know who will be present, who has what powers of decision, and how in general the hierarchical levels function.
Observing the various hierarchical levels is vital when negotiating with Gulf Arab partners. In order to preserve mutual respect make sure the right people in the appropriate hierarchical positions are present. Therefore, it’s a good idea to mirror the hierarchical assembly at the negotiating table. If, for example, the Gulf Arab company owner is negotiating, the owner or the top manager should be represented on your side.
Ignoring the hierarchy can quickly lead to a premature end of the conversations. It is also essential that you negotiate only with persons who can make decisions.
Reaching the goal via detours
It cannot be overstated that negotiations with Gulf Arabs require a lot of patience. If you have not previously met they will want to get to know more about you as a person to strengthen the relationship. Answer their questions openly and willingly and do not forget to question them in turn to show your interest in the other side.
As a rule, never try to skip the small talk! Trying to get down to business too quickly can backfire. In the Gulf Arab world trust must always be set up first before they are ready to make deals with each other. Show that you are flexible; that will prove worthwhile every time.
The Arabic style of communication is indirect, and you may always have the feeling that you will never get to the main point. Collect individual bits of information and put the puzzle together bit by bit.
Do not mistake your Gulf Arab negotiating partners’ often flowery language for naivety or weakness. This is just a difference in communication. Gulf Arabs are mostly tough as nails in negotiations, even if the language used doesn’t seem to indicate this.
As mentioned at the beginning, Gulf Arabs will haggle over prices. Working out the price is part of a good negotiating strategy in the Gulf Arab world, which may include a lot of drama and theatrics.
It is best not to go into a conversation with realistic ideas about price; rather, pad your prices and plan for generous cuts. Do not believe that Gulf Arabs won’t demand any rebates, if prices have been calculated fairly. Gulf Arabs measure their negotiating success by how much they have reduced the original price. Starting with a lower price will not reduce haggling!
Above all, do not allow yourself to become unnerved by an emotional outburst from your Gulf Arab negotiating partners. Stay cool, and respond to the points being made. Play along with the game! Say, for example, that you would be only too pleased to fulfill all their wishes, but that unfortunately your hands are tied. Offer further services instead of further rebates.
Price is not always the most important factor in the Gulf Arab world if the quality of the products is high. A good price plus added value in another area – e.g., after-sales services, support, cash discounts, training of staff in another country – will in the end guarantee a win-win situation.
Always assume that your Gulf Arab negotiating partners have stamina and will not give in quickly. That includes follow-up negotiations even after a first agreement has been reached.
Perhaps you will be asked for a further price rebate at a dinner on the evening before your return flight. Do not panic, just extend your stay and go back to the negotiating table the next morning. Time pressure is a common negotiating tactic because they know you want to fly home as soon as possible with good results.
Don’t celebrate prematurely with your boss. There should not be talk of a successful deal until money has actually been paid into your firm’s account. Before that everything is possible, even after the signing of a contract.
Agreement or rejection?
It is quite possible to fly home after long negotiations feeling that at last everything is signed and sealed only to discover a few weeks later that the contract is actually not going to be signed. What happened?
To protect personal relationships, Gulf Arabs do not say no directly. It is considered impolite to give a negative answer. Instead, they make indirect statements that do not express a clear rejection. For business people from countries where a direct style of communication is used it is often difficult to recognize whether your Arabic conversation partners like something or not.
Read between the lines and pay attention to body language. If your Gulf Arab conversation partner does not react directly to your suggestion, does not answer or does so in a very general manner, if he changes the subject or offers an alternative, that is effectively a no. A yes or a vague statement like “I’ll see what I can do“ is nothing more than willingness, and not final agreement.
Waiting for a decision
If your Gulf Arab negotiating partners give a date for announcing their final decision, you can add a few weeks to that. Nearly all sections of a firm are involved in coming to a decision, so a lot of time can pass until everybody has given his consent and a contract can be signed. The trick is to stay relaxed!
On principle it is permissible, if the answer takes too long, to bring up the subject again. After all you want to know whether there is still interest in the matter. But whatever you do, do not come across as impatient. Pressure does not work on Gulf Arab business partners, so it is in your best interests to ask cautiously if more help or support is needed for the project.