- Take one step at a time
In order to match corporate strengths and market opportunities, foreign companies need to identify their key target sectors, conduct thorough research on what is happening in those sectors and ensure full justification for entering those markets. Once business justification has been established, the most appropriate market entry strategy must be selected. This could either be direct or indirect. Given that Iran has just started emerging from international isolation, the latter option seems to be favored as a first step in order to minimize risks. Local partner selection is also a key exercise that will have to be diligently undertaken in indirect entries.
It is worth mentioning that Iran has significantly reduced foreign investment risks through the introduction of the Foreign Investment Promotion and Protection Act (FIPPA), which allows the repatriation of foreign capital and corporate profits as well as providing protection against any loss as a result of direct action by the government that may lead to disruption in the business activities of the foreign entity. Iran has also taken serious steps in encouraging foreign presence through allowing 100% foreign ownerships of companies and offering competitive corporation tax rates.
Act early & show commitment
In the past few months, Iran and Iranian managers have seen many foreign businessmen coming into the country either on their own or as part of delegations. The trips on their own are considered insufficient and superficial. Iran is keen on concluding business negotiations and witnessing actual investment and physical presence as soon as possible. Experience shows that those foreign entities that entered the Iranian market during relatively risky and unstable periods, have benefitted from their first mover advantage. In contrast, those business partners that left the Iranian market as a result of the imposition of sanctions now find themselves in unfavorable situations in their attempt to re-enter the Iranian market. Without visible action and commitment, no foreign entity is likely to be taken seriously.
- Get the right advisors
In devising strategies and implementation plans for Iran, it is highly recommended to make use of reputable local consultants who can bring significant value to the table though their local knowledge and deliver huge time and cost savings through lessons learnt from past relevant experiences.
