Bringing together many industry leaders at a specially convened roundtable last month helped to identify several exciting opportunities that currently exist to forge greater trade partnerships between the UAE and the UK. It also highlighted that collaboration and securing robust partnerships is critical to long-term success.
Understanding the trends and underlying dynamics is fundamental, as investors and businesses look to navigate the landscape in both markets.
Diversification
Economic diversification is moving at pace in the UAE. That includes, in particular, moving away from a dependency on fossil fuels into a broad range of other sectors including fintech, renewables and life sciences. Non-oil trade in the UAE hit a new record high in 2023, surpassing US$950bn. It’s an indication of the scale of impact diversification is having in boosting economic growth.
Linked to this is the ongoing expansion of free zones across the UAE, where expats and overseas investors can have full ownership of companies. There are now almost 50 free zones across the UAE, with a remit to attract and facilitate inbound trade in specific sectors.
In addition, the UAE has a strong talent pool. The country offers favourable incentives to attract people with specialist skills and expertise to live and work in the UAE, conscious that they need to attract the best people to support its diversification ambitions.
Outward investment
As well as attracting investment, the UAE is also a major outward investor in markets around the world – including the UK, where UAE investors have allocated major capital into, for instance, digital infrastructure and renewable energy.
Within the context of the UK, investment and business expansion emanating from the UAE is evident across the board and across multiple sectors. It’s an ambitious, extensive and clearly diversified approach to outbound investment from the UAE.
Springboard
As well as establishing itself as the ‘end point’ in attracting business, the UAE is also successfully positioning itself as a major springboard to support global business expansion and growth plans. Being positioned conveniently between Asian and European time zones, UAE is backed up by a highly proactive trade policy, aimed at nurturing partnerships in key global markets and reducing barriers to trade.
The ongoing UK-GCC Free Trade Agreement is a case in point. It is hoped that this agreement will be concluded over the next year, offering conducive prospects for bilateral trade between the Gulf Cooperation Council (GCC) and the UK. It’s also the case that the UAE is interested in securing its own trade agreement with the UK, possibly in specific sectors.
SMEs
Small and medium enterprises (SMEs) are the backbone of the UK economy, accounting for some three-fifths of employment and around half of turnover in the UK private sector. There’s a real opportunity there, for those SMEs to look beyond their existing borders and seek growth opportunities in overseas markets, like the UAE.
With the UK's growth forecast set to improve, British SMEs are positioned to drive exports to the UAE, benefiting from increased capital allowances and incentives to enhance domestic productivity before branching into the UAE market.
In fact, the UAE is, after Europe, the most popular market to invest into, with popular sectors including food, drink, consumer and retail, as well as professional services and life sciences. Those enterprises tend to do well, with British expertise, skills and services often being highly regarded in the UAE market.
Support and partnerships
Despite these opportunities, success is not guaranteed. When it comes to expanding into the UAE and further afield, getting high quality guidance is critical.
The UAE is a highly saturated, competitive market and there can be considerable market entry and ongoing operational costs. That can often be a shock to some brands. It’s important that businesses looking at the UAE come to market with a well thought out business strategy.
In instances where firms are using the UAE as a springboard for international growth, building those partnerships and strong networks is vital and can take some time, but the ultimate long-term goal is worth that effort.
Likewise, for businesses in the UAE looking at the UK market, some uncertainty has surfaced as a result of a change in government and in the run up to the UK budget. Getting the right advice and responding rationally – rather than adopting a knee-jerk approach – is important, because there’s no doubt that the UK offers a highly complementary opportunity for UAE businesses looking to grow internationally.
Looking forward
This is a pivotal moment in terms of the evolution of the trade relationship between the UK and the UAE. The UK has sent out an ‘open for business’ message to overseas investors, while UAE businesses are keen to explore global opportunities. There are clear synergies.
But success is not a given. Establishing good partnerships can open the door to exciting collaboration, greater resilience and opportunities for innovation, enabling businesses on both sides to thrive.
To learn more about the business opportunities in the UAE, contact our UAE Managing Director, Chrissi Zamora.
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