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Entering Middle Eastern Market: 2 Problems Should be Solved

Entering Middle Eastern Market: 2 Problems Should be Solved

The Middle East is often associated with free-spending oil princes as well as various magnates who are crazy about showing off their wealth. All in all, the Middle East leaves an impression on everyone that it has always been an affluent territory.

The rich Middle East is clearly the next target for cross-border e-commerce development, compared with difficult customs operations in South America, uncertain conditions in India and poor consumption ability in Africa.

Entering Middle Eastern Market: 2 Problems Should be Solved

As Amazon successfully purchased SOUQ, the largest e-commerce platform in the Middle East, at a price of $650 million last year, the Middle East has become an emerging market that Amazon, eBay and other cross-border e-commerce giants are frantically grabbing, and many sellers are subsequently jumping into this cross-border blue sea of the Middle East.

 

According to the data, the SOUQ platform sold more than twice as many products on white Friday in 2017 as before, and the sales volume of Globalegrow E-Commerce in Saudi Arabia surged by 1,229.3% on Black Friday.

And as a comprehensive B2B platform under Globalegrow E-Commerce, Chinabrands has millions of products available to all sellers who want to sell in the middle eastern market. According to the authoritative forecast, the total amount of B2C transactions in the Middle East will reach $58 billion in 2018.

What are the advantages it have, making it become one of the fastest growing e-commerce markets in the world? And what important preparations should we do before entering the middle eastern market?

 

Enormous population size and convenient network environment

 

With a total population of about 500 million and over 160 million people in its major e-commerce markets of GCC, Egypt and Lebanon, the Middle East is one of the youngest regions in the world with the highest Internet penetration rate.

With relatively high per capita GDP, it can support hundreds of millions of dollars of business. In an economy with more than 50 million broadband users, the Internet is growing fast. The number of broadband users in the Middle East have far exceeded that figure and is still growing fast.

Great market potentials and high consumption levels

 

The Middle East accounts for a third of the 15 countries whose per capita GDP ranks the highest around the world. Many countries in the Middle East maintain high consumption levels and have a large number of consumers with high purchasing power.

Many cross-border e-commerce products can reach 100% profits in the Middle East. Dubai, for example, is one of the global financial centers and serves as a bridge between eastern and western capital markets. So it is fair to call the middle eastern market “the richest cross-border blue sea”.

Being in the new stage makes it easy to seize the opportunities

 

The penetration rates of the Internet and smart phones in the Middle East are respectively more than 90% and 65%, but e-commerce as a whole accounts for only 0.4% of GDP. Compared with European and American e-commerce markets which are highly competitive and saturated, the middle eastern market is still in its infancy.

The layouts of the major e-commerce giants are still not improved, the pattern is not yet clear, room to growth is huge, and the opportunities are numerous, so that sellers can implement their layouts in advance to seize the opportunities.

 

Push from “The Belt and Road Initiative” policy and the government encourages market transformation

 

The Middle East, located at the junction of Asia, Africa and Europe, is one of the important regions involved in the One Belt And One Road initiative. With the rise of Chinese manufacturing, consumers in the Middle East are increasingly attracted to Chinese products, and a large number of Chinese sellers choose to enter the middle eastern market.

Meanwhile, many countries in the Middle East have also realized the importance of e-commerce and started to develop a sound e-commerce ecological environment, which facilitates the development of cross-border e-commerce.

 

The strong religious atmosphere provides advantages for cross-border e-commerce

 

In the Middle East, there is a strong religious atmosphere, and many countries have relatively conservative customs and less entertainment. Therefore, shopping has become a common pastime for people, and there are many restrictions on women. They cannot drive or go shopping frequently. Thus e-commerce has gradually become a popular shopping way for people.

 

 

However, it should be noted that Arab countries in the Middle East, because of their strong religious beliefs, are sensitive to alcohol products, sex toys and other items which mustn’t be sold.

 

Due to these advantages, the middle eastern market has become one of the most popular cross-border battlefields, attracting numerous cross-border giants and cross-border sellers to nab the market and seize the opportunities. However, cross-border e-commerce sellers who earn money in the Middle East can’t ignore the two major issues of international trademark and VAT number:

 

Trademark overview of the Middle East

 

As a cross-border seller, trademarks are certainly not unfamiliar. With the tightened trademark policies of major e-commerce platforms, trademarks have become a necessary cross-border tool for sellers. The layout of the middle eastern market cannot ignore the problem of trademarks, and only the trademark is a top priority.

 

The trademark legal system of Middle East countries not only shares in common but also has respective characteristics. Below I have compiled the basic items of several popular trademark registration countries in the Middle East for your reference:

 

Registered trademark: UAE

The principle of table and category:

 

One table and one category (alcohol products under Nice Classification of the 9th edition, the 33rd and the 32nd categories cannot be registered)

 

Necessary materials for registration:

 

Trademark pattern, specific goods or services, the applicant’s English and Chinese nominal address, and notarization of the original power of attorney. The original documents can be submitted to the authorities within 60 days after the application is made.

 

Length of acceptance:

 

about a week

 

Length of registration:

 

about 12 to 16 months normally

 

Review procedures:

 

application→review→newspaper announcement (1 month or so)→trademark announcement (1 month)→approval of registration

 

Time limit of Announcement:

 

Two announcements, one month at a time

 

 

(Note: In the case of the UAE trademark approval registration, if you do not pay the announcement fee, it will be invalid.)

 

Time limit of registration:

 

10 years from the date of application

 

Registered trademark: Egypt

 

The principle of table and category:

 

One table and multiple categories (45 categories in total)

 

Necessary materials for registration:

 

Trademark pattern, specific goods (Nice Classification), the applicant’s English and Chinese nominal address, authentication of power of attorney, and copy of business license

 

Length of acceptance:

 

3 to 4 weeks

 

Length of registration:

 

24 to 36 months normally

 

Review procedures:

 

application→acceptance→review→announcement (objection)→approval→certificate issuance

 

Time limit of Announcement:

 

2 months

 

Time limit of registration:

 

10 years from the date of application

 

Registered trademark: Iran

The principle of table and category:

 

One table and one category (alcohol products under Nice Classification of the 9th edition, the 33rd and the 32nd categories cannot be registered)

 

Necessary materials for registration:

 

Trademark pattern, specific goods or services, the applicant’s English and Chinese nominal address, notarization of the original power of attorney, and notarization of the original business license. The original documents can be submitted to the authorities within 60 days after the application is made.

 

Length of acceptance:

 

about 2 weeks

 

Length of registration:

 

about 1 year normally

 

Review procedures:

 

application→acceptance→review→announcement (objection)→approval→certificate issuance

 

Time limit of Announcement:

 

1 months

 

Time limit of registration:

 

10 years from the date of application

 

Registered trademark: Saudi Arabia

 

The principle of table and category:

One table and one category (under Nice Classification of the 9th edition, alcohol products of the 33rd and the 32nd categories, pork products of the 29th category, as well as Christmas trees and the related goods of the 28th category cannot be registered)

Necessary materials for registration:

Trademark pattern, specific goods or services, the applicant’s English and Chinese nominal address, and notarization of the original power of attorney. The original documents can be submitted to the authorities within 30 days after the application is made.

Length of acceptance:

 

about 2 weeks

 

Length of registration:

 

about 12 to 16 months normally

 

Review procedures:

application→acceptance→review→announcement (objection)→approval→certificate issuance

Time limit of Announcement:

4 months

Time limit of registration:

9 years and 8 months from the date of application (10 years for Islam)

VAT overview in the Middle East

 

Recently, the problem of VAT number frequently broke out on major cross-border e-commerce platforms, causing heavy losses to sellers in many European sites. The VAT number remains a thorny issue in the face of the emerging middle eastern market. I would like to remind all sellers that if they don’t pay attention, it is easy to repeat the mistakes of the European station.

According to the agreement of the VAT framework agreement implemented by GCC, the UAE and Saudi Arabia will collect the VAT from January 1st , 2018. As the trend towards tax compliance intensifies, it is highly likely to spread throughout the Middle East.

What are the taxable commodities?

Goods sold or imported within the UAE and taxable services are subject to VAT, except exemption. Therefore, according to the regulations, goods sold on e-commerce are subject to VAT.

How long will it take to register VAT number in the Middle East?

Currently, the time of registration of VAT number in the UAE and Saudi Arabia is 2 to 3 weeks after the submission of all information.

 

Therefore, when the sellers enter the Middle East, they must register the VAT number of the relevant countries and pay reasonable taxes, so as to avoid the violation detected by the local tax bureau in operation. Otherwise, they will end up with a series of fatal risks, such as warehouses getting locked up, accounts being banned, fines, etc.

Understanding the above content, we all know that the Middle East as an emerging cross-border market, has many favorable factors such as large market capacity, strong purchasing power, low entry threshold and so on.

But opportunities are always accompanied by risks, the international trademark and VAT id number are two most important risks before entering the middle eastern market. Only when the sellers register international trademark and VAT number in advance can they seize opportunities to really enjoy the benefits brought by the middle eastern market.

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