With its highly diversified and fast-growing economy, the United Arab Emirates is a brilliant destination for various traders worldwide to do import and export trade business. The country’s strategic location and modern infrastructure make it an ideal hub for distributing commodities worldwide. If you are interested in starting an import-export business in the UAE, continue reading this brief guide to know more about the high-demand commodities and the challenges you may face in finding a local distributor. We will also give you some tips to accelerate the engine of your business for the distribution of commodities.
A Major Hub for Import/Export Distribution of Commodities
The UAE has established itself as the most significant crossroads for trade between Europe and East Asia. Because of its geographical location, the UAE continues to serve its imports, exports, and re-exports business on a considerable scale. The UAE’s import and export businesses have reaped significant benefits, and the Dubai government has even established eServices to help companies to run more efficiently and effectively. Registering for imports and exports in Dubai has been much easier since it was made available online.
Dubai Customs’ online declaration and clearance system are known as Mirsal 2. The Mirsal web portal has user guides for registering and getting started in the Dubai import-export business. The registration process can be completed online, but the documentation must be delivered to the Customs Officer in person. The Customs Office conducts a rigorous examination to determine whether imported and exported products fall into the restricted category. Businesses must obtain an import-export license to acquire the rights to engage in import/export distribution of commodities. Companies that import or export restricted items must obtain special authorization from the Customs Office, which can be done online.
An Overview of UAE’s Main Import Export Distribution of Commodities
On land, the United Arab Emirates borders Oman, Saudi Arabia, and Iran; on the sea, Qatar. The United Arab Emirates economy ranked 33 globally in terms of GDP (current U.S. dollars), 24 globally in terms of total exports, 22 globally in terms of total imports, 28 globally in terms of GDP per capita (current U.S. dollars), and 51 globally in terms of economic complexity in 2020. (ECI).
UAE’s Imported Commodities
Gold ($38.4B), broadcasting equipment ($20.4B), refined petroleum ($9.15B), diamonds ($8.11B), and automobiles ($6.63B) are the top five imported commodities into the United Arab Emirates, with the majority coming from China ($41B), India ($18.1B), the United States ($14B), Saudi Arabia ($9.21B), and Germany ($7.81B).
UAE’s Exported Commodities
The top five exported commodities from the United Arab Emirates are crude oil ($42B), gold ($28.8B), refined petroleum ($21.5B), broadcasting equipment ($14B), and diamonds ($7.69B), with the majority going to India ($22.1B), Saudi Arabia ($18B), Japan ($15.2B), and Iraq ($13.1B).
It’s worth noting that the United Arab Emirates was the world’s largest importer of tugboats ($1.05B) and tobacco processing equipment ($119M) in 2020.
Distribution of Commodities in UAE
In the UAE, there are numerous selling choices for the distribution of commodities. The most typical sales strategy is the employment of a distributor or local commercial agent for the entire nation or in individual emirates. Commercial agents are in charge of selling products for the designated territory for operational reasons (many businesses appoint agents based in emirates), including identifying trade and service channels, product registration, supply, inventory replenishment, merchandising, in-store promotions, etc.
To maintain control over product registration and select agents for the distribution of commodities, some overseas businesses decide to establish an office in either free zones or on the mainland.
Distribution of Commodities: Wholesale and Retail Trade
Over 10% of the GDP of the UAE is reportedly contributed by wholesale and retail trade. Supermarkets in the UAE account for the most outstanding market share of sales in the retail trade sector. Carrefour, EMKE (Lulu) Group, Nesto Group, Spinneys, and local cooperative stores, such as Abu Dhabi Cooperative Stores, Sharjah Cooperative, Union Cooperative, etc., are significant groups in the category.
Al Maya Supermarkets, Centrepoint Stores, Choithram Supermarkets, K.M. Trading, Safeer, and West Zone Supermarkets are additional, somewhat smaller grocery chains and group stores.
Wholesale sales, mall store sales, C-class supermarket, grocery sales, and boutique stores come after retail sales in the UAE.
But the pattern has quickly shifted owing to the COVID-19 pandemic over the past few years. The UAE customer is relying more and more on telemarketing and online sales. By reacting to internet orders, supermarkets and grocery stores use more resources to meet customer expectations.
One of the region’s most developed e-commerce markets is the UAE. Due to the recent sharp increase in demand in this market, it is anticipated that all of the nation’s leading retailers will need to increase their capacity for online sales to stay competitive.
Challenges and Tips for the Distribution of Commodities in the UAE
The UAE provides international businesses with various choices for marketing and distributing goods and services. Doing business in the UAE comes with several difficulties and recommendations, such as:
- Locate a reliable business partner with the required connections, contacts, and in-depth understanding of the targeted and potential markets.
- Have expert legal counsel and know the UAE’s rules and regulations.
- It would be wise for foreign businesses to engage directly with local sponsors because expatriate executives may decide to leave at any time.
- Ensure Arabic translations are accurate (because this supersedes the English version in case of disputes).
- Draft and sign a contract that safeguards and advances mutual interests. The UAE Commercial Agency Law gives local partners solid protection for the distribution of commodities. Determining whether the distribution of commodities exclusivity is required is crucial to pinpointing certain geographic areas.
- Establish a system for ensuring that agreements are correctly followed to enforce contractual compliance.
- Consider the termination of the contract and dispute resolution. The UAE Commercial Agency Law regulates agency dispute procedures and renders judgments in circumstances of contract termination. The process could be challenging.
Using an Agent for the Distribution of Commodities in the UAE
Many businesses engage local agents or distributors (companies, groups, or individuals) with the capacity and resources to market and distribute their products in the UAE rather than having an office or a subsidiary. Due to this, global businesses can benefit from local knowledge and cut some of the costs related to having a physical presence in the UAE. When selecting an agent or distributor, due diligence is essential.
Because local agents are favored by laws and the legal system, hiring knowledgeable legal counsel is strongly advised. Additionally, agency arrangements can be highly challenging to terminate.
The Final Word
The UAE is a significant player in the global market for the import and export distribution of commodities. The ports in the UAE are some of the busiest in the world, handling a massive volume of trade. Besides, the UAE’s diversified economy and robust financial sector provide stability and certainty that traders and investors need to conduct business in the UAE confidently.
Are you looking for ways to do trade business in the UAE? Our expert team of consultants at DFreight will help you go through all the logistics and shipping processes in the most efficient way possible. Just get in touch to get a clue.
What are the UAE’s main imports?
Gold, broadcasting equipment, refined petroleum, diamonds, and automobiles are the top five imported commodities into the United Arab Emirates.
What are the UAE’s main exports?
The top five exported commodities from the UAE are crude oil, gold, refined petroleum, broadcasting equipment, and diamonds.
What Countries export commodities into the UAE?
China, India, the United States, Saudi Arabia, and Germany are the top five countries that export to the UAE.
What countries import commodities from the UAE?
India, Saudi Arabia, Japan, and Iraq are the top four importers of commodities from the UAE.
What is the biggest challenge for the distribution of commodities in the UAE?
Locating a reliable business partner with the required connections, contacts, and in-depth understanding of the targeted and potential markets is the most critical challenge you may face while doing trade business in the UAE.