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Doing business in Iran

Iran’s tumultuous political history has meant that despite the country’s wealth of resources, it has been somewhat isolated from the global economy.

 

International business partnerships with Iran have at best been tentative and are generally limited to the energy sector. Unfortunately, negative images and stereotypes of Iranian society have clouded the great warmth and hospitality of the people that make doing business in Iran is rather, fascinating experience.

 

While the country's business infrastructure and processes may not be on par with those of the Western world, the Iranian economy offers plenty of potential for budding expat entrepreneurs.

 

Iran ranked 118 out of 189 economies analysed in The World Bank’s Ease of Doing Business Survey for 2016. While it scored fairly well in the areas of dealing with construction permits (69) and enforcing contracts (62), the country scored particularly badly in areas such as trading across borders (167), protecting minority investors (150) and paying taxes (123).

 

While this doesn’t exactly present an enticing picture for potential investors, there are still a fair number of foreign business people who are looking to establish operations in the country. Those wishing to do business in Iran will need to make an effort to gain some objective understanding of the people, culture, etiquette and approach to business. It’s only by operating with a degree of cultural sensitivity that international business people will be able to enhance their business experiences in Iran.

 

Fast facts

Business hours

Saturday to Thursday, 9am to 5pm.

 

Business language

Persian, or Farsi, is the official language of Iran. English is spoken in most business circles and higher levels of government, but it is still best to arrange an interpreter.

 

Dress

Business dress should be smart and conservative. Suits are standard but wearing a tie is not necessary. Women should be particularly careful about covering up their arms, legs and hair in public.

 

Gifts

Gifts are not necessary business proceedings. If invited to a colleague's home, flowers or chocolates are a good option. Do not give gifts that contain alcohol or pork.

 

Gender equality

While the number of women in business in Iran is increasing steadily, the country still has a long way to go in terms of achieving equality. women rarely occupy the most senior positions. The attitude towards expat women in business in Iran will be quite conservative.

 

Business culture in Iran

Personal relationships and networking

Success in Iranian business circles is often defined by who you know rather than what you know. Taking the time to get to know one’s colleagues and business associates is vital to getting ahead in business.

 

Business in Iran is personal. Many businesses are family owned. Having a solid network of friends in Iran is important and one shouldn’t be afraid to ask for favors. However, expats should also be prepared to go the extra mile for that colleague in the future. This is all part of business in Iran.

 

Meeting and greeting

When meeting business associates, expats should greet them with a formal handshake. Men must wait for a woman to extend her hand before making any gesture. If she doesn’t extend her hand, a simple nod of the head and a smile will suffice.

 

It is best to keep things formal when doing business in Iran. Once a relationship has been established and counterparts begin to address expats using their first name, then it is okay to do likewise. Men are addressed with the prefix ‘aga' followed by the surname. Women will be addressed using the title ‘khanoom’.

 

In Iran, the most common greeting is ‘salam’ when meeting someone. Upon leaving a meeting, Iranians will generally say ‘khoda hafez’ which translates as ‘may God preserve you’.

 

Business etiquette

For new arrivals, business procedures in Iran may seem erratic. Those doing business in Iran should endeavour to make appointments four to six weeks in advance and be sure to confirm these by telephone and in writing. Prior to arriving at a meeting, it is a good idea to call the day before to ensure it is still going ahead.

 

Punctuality is rare in Iran, but expats should still arrive on time to create a good impression.

 

Doing business with government officials will test one’s patience and expats should prepare to be kept waiting. Administration and bureaucracy in Iran is sometimes chaotic and this will often cause delays. Even when one is kept waiting, they should always be courteous towards their Iranian counterparts and avoid showing outward signs of frustration.

 

At the beginning of a business meeting, be ready to engage in some small talk and ask after a colleague’s health and family. It’s best to wait for the Iranian business associate to initiate the change in conversation to business matters.

 

Business negotiations

Expats should understand that getting to know Iranian colleagues on a personal level is critical and initial business meetings will focus solely on becoming familiar with one another rather than discussing business matters. Only once these relationships have been established can formal proceedings begin.

 

Iranians are astute in business. They enjoy haggling and getting concessions, so expect long negotiations to take place.

Decision making can be slow and it is likely that expats will have to meet with several different people before a final outcome can be reached. Iranians want to be sure they can trust foreigners and therefore they’ll want to gather a number of opinions before proceeding.

 

Implementing decisions can be just as slow in Iran. There is plenty of red tape to get through and manoeuvring through Iranian bureaucracy isn’t easy. Applying pressure in a non-confrontational manner may speed things up although the best method is often to call in a favour from an influential colleague wherever possible.

 

Setting up a business in Iran

There are several stages and bureaucratic hurdles that expats will have to contend with when setting up a business in Iran. These include obtaining criminal record clearances, registering for VAT, officially registering the company’s name, paying stamp duty and enrolling employees in the social security programme.

 

Expats should also note that they should anticipate long waits for most of the necessary documentation. They should seek advice from us before taking any steps.

 

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