INTRODUCTION:
This document shows the cultural differences between
Australia and United Arab Emirates (UAE), which is a middle eastern country
with a promising market for all western business by the virtue of the level of
infrastructure the country possesses, the population being quite wealthy due to
the fact that they are expats from other countries and enjoy a lot of expat
perks as part of their packages and also no income tax is payable to the govt.
UAE has also setup Free Trade Zones which are very
attractive for foreign companies who wish to move locations or add another
location in a country which would be cheaper to run the business and low cost
labour.
In order to identify the cultural differences between Australia
and UAE, both countries have been put through the framework from chapter 3 of
the book “International business” Peter Dowling et all, 2009. The points
compared are Social structure and mobility, Religion, Language and Hofstede’s
cultural values dimensions. As every segment is described in the document,
potential risks, challenges and recommendations are discussed underneath.
EXECUTIVE SUMMARY
UAE as a country is inviting foreign investment with greatly
promising market and infrastructure. Dominated by Islam as a religion is is
quite obvious to expect the cultural differences between Australia and the UAE.
In order to look deep into this tempting market we put it thru the test of the
cultural difference frameworks mention in page 91 to 120 of the book
International Business, peter dowling et all, 2009. Most importantly the
Hofstede’s cultural values dimensions.
It is found that both countries are quite contrasting
cultures and makes it very important for the Aussie firms to take outmost care
when dealing in there. UAE has a very prominent social stratification and
Sheiks who are from the ruling family demand respect by the virtue of the wealth
they possess and the positions they hold in the country. Islam is the most
popular religion and causes a bit of work day difference added to the time
difference from the time zones.
A high context culture prevailing in UAE brings the unspoken
language in the limelight and western firms who come from a low context culture
need to be aware of this. A special job role in every company called “Mandoob” (http://www.bayt.com/en/job/?xid=1583618)
or the PRO helps bridge this gap.
Hofstede’s cultural value dimensions report for UAE suggests
very high power distance, high uncertainty avoidance and low individualism.
Hence companies need to take care on the fact the UAE is a collectivist culture
by the virtue of religion or place of origin of the workforce, and Managers and
Staff will never sit on the same table to bounce ideas as Aussie firms would be
used to.
COUNTRY PROFILE
The United Arab Emirates was formed in Dec 1971 as a
constitutional federation of seven emirates. Each component emirate has its own
govt institutions and the rulers of the emirates drew up a constitution for the
federal govt with allocated powers and responsibilities. Federal ministries
include examples like Health, Air traffic control, Defence etc.
The ruler of each emirate is a member of the Federal supreme
council and between them a president and vice president is elected for a period
of 5 years which is renewable. In Dec 1971 Sheik Zayed bin sultan al Nahyan was
elected as the first president of UAE and was subsequently re-elected until his
death in 2004.
UAE is
situated along the south eastern tip of Arabian peninsula and 80% of its land
is arid dessert. The temperatures in UAE vary between 24 deg and 5 deg in
winter and can get to more than 40 deg cent in summer months of June to
September. Due to this extremely hot temperatures most of the UAE works on a split
day working schedule. General business hours are 8 am to 1 pm then, there is a
break for about 3 hours when the employees take rest and typically sleep for a
few hours before commencing work again at 4 pm to finish at about 7 pm as
compared to a 9-5 schedule found is most organisations in Australia. Also due
to the same reason the typical annual holidays for the schools and working
staff is during the summers as compared to Christmas for Australia. (http://www.communicaid.com/access/pdf/library/culture/doing-business-in/Doing%20Business%20in%20the%20UAE.pdf
)
When comparing the weather with Australia it is important to
note that UAE has a very high humidity and Australians will find it very uneasy
when working in UAE. (http://www.everyculture.com/To-Z/United-Arab-Emirates.html#b)
UAE does have a wealth of oil situated beneath its soil
however the resources are very limited and this was realised by the govt quite
early, hence the govt is set to shift the revenue stream of the country towards
tourism and business. The country as of 2005 had an FDI of over 10 Billion USD
and a non oil sector contribution to nominal GDP of 64%. (http://www.emirates.org/about.html)
DETERMINANTS OF CULTURE
Religion: Islam is the principle religion followed in the
UAE. Although practice of other religious beliefs are allowed but being and Islamic
nation has a very strong affect on the business environment and the economy.
UAE has a 5
day working week but instead of a Saturday Sunday weekend they have a Friday
Saturday weekend and the first working day of week is on Sunday. A Friday
holiday resonates with the fact that Islam followers need to attend the prayer
every Friday afternoon. UAE also celebrates the holy month of Ramadan where
Muslims fast from dawn to dusk. In this month Muslims only work till midday and
then have the option of taking leave for the rest of the day. Those who choose
to leave after midday are still eligible for a full day wage and need to be
replaced by staff who potentially earn overtime wage. (http://www.communicaid.com/access/pdf/library/culture/doing-business-in/Doing%20Business%20in%20the%20UAE.pdf
)
Eid is an important holiday and the Eid holidays can extend
up to a week or 10 days, during this time the schools will remain closed and
also the govt offices will work minimum hours if at all.
Food and beverage business have to face a regular problem of
change of regulations and inspections with respect to service of alcohol and
pork both of which are not appreciated by Islam.
Potential Risks and
Challenges:
Challenges which Aussie companies would face while working
with the UAE is first of all there are 2 days of the week clashing Friday and
Sunday where in either office is expecting the other to be working. Secondly some
Muslims need to pray 5 times a day usually 1 of this time is during business
hours for this a prayer room needs to provided and over that no meeting or
appointments can be scheduled with the people who need to go to pray. One of
the challenges is that we cannot get to know which of our staff will pray
during the afternoon as sometimes some people pray only during certain periods.
Muslims have 2 Eids every year, one of them come after the
holy month of Ramadan. It is challenge to have a correct balance between Muslim
and other religion staff due to the fact that during Ramadan the Muslims will
finish work at midday and then this period needs to be covered by the working
staff. This increases costs as the staff need to be paid overtime wages and the
Muslim staff need to be paid full wages for half day work. Eid is also the time
for gift and an expectation of bonuses is around this time.
LANGUAGE
Spoken: Arabic
is the national language and is widely spoken in UAE, however English is also
popularly spoken and understood in the country as a business language. Another
widely spoken language comes out of one of the states of India, Kerala. The
language is called Malayalam. There are a very heavy number of Kerala natives
along the UAE and extending to other gulf countries like Saudi Arabia, Bahrain,
Oman and Qatar etc. (http://www.ethnologue.com/show_country.asp?name=ae)
Potential Risks and
Challenges:
Even though UAE is a land of immigrants but Arabic as a
language is very popular even within the immigrants. All official documents are
in English and Arabic it is important to know that Arabic is written right to
left.
Unspoken: Very
prominent high context culture prevails in the UAE. Body language and local
slangs are very important to be taken into context while dealing at any level.
Men often greet with a hug and touch in this culture and these can often
communicate different information. Terminologies like Habibi “my friend” is very
widely used and the zest of the context needs to be considered. (www.bobriel.com/pdf%20files/cultural%20context%20-%20uae.pdf )
Potential Risks and
Challenges:
The unspoken language in UAE determines the need of a PRO in
every company. The public relation officer or the MANDOOB is person with connections and will deal majority of the
govt work. As UAE is a gift giving culture, foreign companies need to trust on
the mandoob to draw the line between gift and bribe as the consequences of
bribe can be very harsh.
Social Structure:
Social groups prevail very dominantly in UAE. They society
is grouped by religion the biggest being Islam. They can be grouped by country
of origin due to the fact that a big chunk of the population is expats and come
from different countries mainly India, Pakistan, Sri Lanka and Philippines and
groups are formed due to similar language and lifestyle.
Social Stratification:
The population of UAE can be divided in 2 major social
categories, locals or citizens, and expats or foreigners.
The locals are further divided in 4 social classes:
a. The Sheiks.
They are families who rule various emirates of UAE. These people hold the
powerful position in the govt and possess a lot of wealth and are treated with
a great amount of respect.
b. Merchant
Class. They form the business class of UAE and trade in international consumer
goods
c. Middle
Class: UAE has recently started to see an emergence of middle class who are
professionals who have benefited from the free education provided by the govt
and have qualified themselves into skilled professionals. They work in govt
departments like immigration, police army etc.
d. Low income
group: Represented by Bedouin nomads and former pearl divers and farmers.
Social Mobility in the above is quite difficult, moving into
the Sheiks class is impossible as it is by dynasty and birth. However with a
business perspective it is important that the business class and the middle
class be taken into careful consideration as the merchant class with where the
joint ventures will take place and the middle class are gatekeepers of any and
almost all govt offices.
Due to the fact that UAE locals only account to small
percentage of the population of UAE the major workforce is foreigner. In the
immigrants there is some more social stratification by the virtue of economic rewards.
Very highly paid top company executives, middle level skilled professional and
labour class. While doing business in UAE the top class professionals play an
important role, these are the people who have the signing powers for any
business venture. (http://www.everyculture.com/To-Z/United-Arab-Emirates.html#b)
Potential Risks and
Challenges:
Aussie companies are not used to social classes in a
business environment especially classes with less mobility between them. UAE on
the contrary has a very defined class structure which need to be dealt with
especially when dealing with the Sheiks and the business class. Almost every
foreign company need to have a partner local and under most circumstance it is
the top 2 classes. Very heavy sponsorship royalties are paid to these classes.
HOFSTEDE’S CULTURAL
VALUES DIMENSIONS
POWER DISTANCE: UAE is a country with a PDI of 80. A large
power distance is quite expected due to the fact that the different classes
prevail in the country. Also that they have a ruling class which is prevalent
by birth or dynasty clearly creates an environment of high power distance.
UNCERTAINITY AVOIDENCE: A UAI index of 68 complements the
PDI, hence managers and bosses are expected to pass quite clear instructions to
the subordinates and are also expected to stand responsible for the directions
given by them.
INDIVIDUALISM: An IDV ranking as low as 38 as compared to a
world average of 64 determines that UAE is a very collective society. This
resonates to the fact that UAE is a country of temporary migrants and social
groups prevail in the society. Loyalty is on a very high priority in a
collective society.
MASCULINITY INDEX: The MAS is at 52 which means that the
women have limited rights however a major reason of this could be the religious
belief and not culture.
Potential Risks and
Challenges:
Aussie businesses are used to a very low power distance,
essentially everyone does everything. However in a high power distance
environment you need to hire more staff as everyone does not do everything.
Also lot of ground level information has a potential of not coming to the
meetings as those people do not attend staff meetings or the managers are not
working at that level to be able to pickup that information. “This is not my
job” is a frequently used phrase and aussie manager will have to learn to tackle
this phrase.
REFERENCES:
International
Business, Dowling et all 2009Contributors
1. Param Ramanan
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