Doing Business in Dubai

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A Manhattan dentist, a gallery owner, and designer Carolina Herrera, among others, weigh in on how it all works in the United Arab Emirates.

Relationships are everything in business, but they take on a new level of importance in Dubai. Just ask Dr. Michael Apa, a cosmetic dentist who developed a cult following among rich Middle Easterners starting in the early 2000s. Abu Dhabi’s royal family first heard of him after he was featured in an E! network special that aired in London. They began traveling to his New York clinic for custom veneers.

Business became more personal in 2008, when the royal family flew him to Dubai to tour high-end clinics where he could work as a visiting dentist. Soon after, Apa was flying there four times a year. Last year, he opened his own practice near the Jumeirah Beach Hotel, whose wavelike design is one of the most recognizable parts of Dubai’s glass-and-steel skyline. Apa’s office feels like a spa, with white walls and floors and subtle gold accents. Like Apa, the staff is beautiful and impeccably dressed—with perfect white smiles, of course. Apa says the clinic has been a success from the start, exceeding projected revenues threefold. “In our first year, we made about 80 percent of what we make in New York in only 71 working days,” he says. “It’s quite amazing.”

Apa now commutes twice a month. (He holds Emirates airline’s ultraexclusive Invitation Only status, which gets him escorted straight from his Manhattan apartment onto the plane.) He’s found that his Dubai clients, unlike those in New York, want to get to know him before sitting in his chair. “There were nights where a driver would pick me up at midnight, and I’d sit with the client until two or three in the morning having tea,” he says.

While more oil-dependent states in the region have seen their economies slump along with oil prices in the past two years, the United Arab Emirates has been diversifying its economy into areas like tourism, retail, and culture. Villiers Terblanche, managing partner of the Dubai office of Latham & Watkins, a multinational law firm, says he has seen a “significant” increase in Western companies trying to establish a presence in Dubai and the region in the past year. Whether they’re affected by the energy crisis or not, education, infrastructure, finance, affordable housing, technology, and healthcare are booming—with spending in healthcare expected to grow by 9 percent in the Middle East every year through 2019. Though many people in the region still travel abroad for treatment, Dubai and the rest of the UAE are building more hospitals and attracting foreign specialists, from Apa in Dubai to the Cleveland Clinic in Abu Dhabi.

Dubai is widely considered to be the safe bet for Western businesses looking for a foothold in an increasingly volatile Middle East. That doesn’t mean every foreign business fits in. “Everyone wants to open something in Dubai because they think it’s this magic land of gold bars and opportunity,” Apa says. “But you really have to understand the culture first.” One of the biggest adjustments, he says, has to do with the concept of time: “There is a saying, inshallah, which means ‘God willing.’ You can have an appointment for ‘11 o’clock inshallah,’ which means they can show up at 3. It’s not disrespectful; it’s just the culture.” Dubai is more flexible when it comes to appointments, payments, and schedules. Drivers will arrive in 20 minutes inshallah; shipments will come in tomorrow inshallah.

Westerners tend to expect yes-and-no answers but don’t often get them in Dubai, says Cynthia Dearin, a Sydney-based consultant who advises companies entering the Middle East and author of the business guide Camels, Sheikhs and Billionaires. Westerners “think the person on the other side of the table is deliberately evasive,” Dearin says. “Then the other person is offended because they think the [Westerner] is rude and pushy.” A 2012 Economist Intelligence Unit survey of 572 executives worldwide found that around half lost out on money and deals because of this disconnect.

Then there are Islamic cultural practices to navigate, such as Sharia law, the Islamic legal system based on the Koran. In the UAE, where Islam is the official religion but where there are also 75-plus nationalities and a winter festival complete with a Christmas tree and fake snow, Sharia applies mostly to civil and family disputes between Muslims, though non-Muslims are expected to respect Islamic norms (dress conservatively; drink only in hotels and clubs where it’s legal, never in public).

In Dubai, Sharia law can trickle into business—defaulting on debt is a criminal offense, for example—but not to the extent it does in other Middle East countries. To be licensed, Apa has to offer separate male and female waiting rooms for more conservative Muslims, but most clients want an American experience. Club music plays from speakers (as it does in his NYC office, on East 76th Street opposite the Carlyle), people are buzzing between rooms, and the staff is mostly expat. Prices are the same as in New York, though Apa says they’re up to four times more than what other Dubai dentists charge.

The concept of wasta, an Arabic term that loosely translates as “who you know,” is crucial in Dubai’s economy. Leila Heller, an Iranian-born, New York–based gallerist, spent more than ten years developing relationships throughout the region before opening her Dubai contemporary-art gallery in November with her son Alexander. They attended the Abu Dhabi Art and Art Dubai fairs every year and met with potential buyers to form a client base. “We traveled throughout the year as per their invitations for weddings and iftars,” she says. “The Middle East is a society which integrates the social and professional in many ways.”

But a relationship-based culture can easily spiral into nepotism and corruption. Political elites blur lines with state-owned businesses, and there have been major cases of alleged bribery by foreign businessmen in Dubai. The government has responded in the past few years with stricter laws and punishments. “It’s a highly regulated economy, so if they find that you’re corrupt, they’ll cancel your visa, try you, and kick you out,” Dearin says.

Foreign companies opening businesses in Dubai typically operate either in free zones, whereby the outside businesses retain 100 percent of their ownership but can conduct business only in specific areas, or as limited liability companies, whereby 51 percent of the business must be owned by an Emirati national. (Some say it is potentially easier for LLCs to secure a government contract and get visas.) With Emiratis making up only about 5 percent of the workforce, it’s a cushy gig: Sponsors can be as involved as they like and still get paid.

Payments can be notoriously slow—inshallah—in Dubai. Construction is so hamstrung by red tape that foreign companies often hire on-the-ground liaisons to go to government offices and get money in people’s hands. But relationships, again, make all the difference. Being able to call and make personal appeals can mean fast payment, Dearin says.

The allure of setting up shop in Dubai is not just money (after all, American expats are taxed on worldwide income), but also a glamorous lifestyle of beachgoing, shopping, and top restaurants. Heller says she appreciates the cleanliness, safety (“You can leave your purse all day and no one would touch it!”), and community. “Everything is appreciated and you’re welcomed all the time,” she says. “I feel like a million dollars out there.”

Apa, for his part, says his only frustration working in the emirate is that he can’t spend enough time enjoying the city. “I stay at a hotel on the beach, get up in the morning, work out, swim in the ocean, and then I shower and go to the office,” he says. “But it’s wonderful. And it’s interesting to be shaping the community that Dubai is becoming.”

Dr. Michael Apa is at 30 E. 76th St., Ste. 5B, New York; 212-794-9600, and 63 Al Thanya St., Villa B, Dubai; 971-4/709-1000.

Local Lessons

From three Western entrepreneurs with Middle Eastern outposts

Dr. Michael Apa, Cosmetic dentist
Location in United Arab Emirates (Dubai)

“In Dubai, when you go out to dinner, you’re paying the same thing you’re paying in New York. They’ve got all the Ferraris and the Bugattis. It’s also not uncommon for people to pay in cash or have their driver come and bring a boatload of cash. But it’s only in healthcare that they question the price. You really have to change the mentality and the value for patients here. So our design was about having that ‘wow’ factor. You don’t feel like you’re in a dental office.”

Carolina Herrera, Fashion designer
Locations in Azerbaijan, Bahrain, Egypt, Kazakhstan, Kuwait, Lebanon, Qatar, Saudi Arabia, Turkey, United Arab Emirates (Dubai)

“Middle Eastern people like perfection. The women love glamour and luxury. When I’m going to open a boutique there, we have to make sure the location is right. You have to [consider] malls, because they love malls.”

Wolfgang Puck, Chef, Cut
Locations in Bahrain, United Arab Emirates (Dubai)

“Most of our customers in Dubai have experienced our restaurant somewhere in the world. People know what to expect. The only difference in taste is a lot of Middle Easterners prefer their meat more well done than we do in the West. For this reason, Kobe has become one of our most popular meats at Cut.”