When in Iran, do as the Iranians do

US lawyer provides tips for doing business in Iran

Lawyer Andrew White

By Kang Hyun-kyung

Punctuality is a virtue among many Western businesspeople, but hurrying someone up is not necessarily culturally acceptable in Iran. To be successful in the emerging market, lawyer Andrew White says Korean businesspeople must be patient and spend a great deal of time and effort to share who they are with their potential Iranian partners in order to build trust.

According to him, many Western businesspeople are direct and focused, whereas their Iranian counterparts prefer having informal discussions before going into business discussions because they want to learn more about the people they are dealing with.

“In Iran as well as in the rest of the Middle East, relationships are incredibly important,” White, a senior foreign counsel at Seoul-based law firm Yulchon, said during an April 8 interview with The Korea Times at his office. “And you work through those relationships .... Do not try to contact the person (you’d like to talk to) directly. You’ll fail.”

In case you don’t know how to contact the person you’d like to talk to, White says find the people who know him or her. “You talk to somebody who knows somebody else who again knows somebody else who can put you in touch with the person you want to talk to,” he said.

In addition, according to him, nepotism is a part of the trust-based business practices in Iran and other parts of the Middle East.

White has been handling business matters in the Middle East since the mid-1980s when he was practicing with a Washington D.C.-based law firm, then called Patton Boggs. The firm was the first American law firm to open an office in Abu Dhabi in the late 1980s. White’s clients included the royal families of the United Arab Emirates and Saudi Arabia, for whom he and his colleagues handled sovereign wealth funds, asset management and investments in the United States. His work included buying properties for his clients, such as office buildings in New York, ski resorts in Colorado and a shopping center in North Carolina.

In the 1980s, many American lawyers were working mainly with European clients, and few had clients from the Middle East. White said working with his Middle Eastern clients was a learning experience because it showed him the Middle Eastern way of doing business, which is quite different from that in the West.

Before joining Yulchon, he was a law professor in Singapore and the founding director of the International Islamic Law & Finance Center at Singapore Management University, specializing in Islamic law and financial structures and cross-border investment in Asia and the Middle East.

White said the Middle Eastern way of doing business is, to some extent, similar to the Korean way in that informal meetings play an important part in closing deals.

“Middle Easterners want to do business with people they feel comfortable with,” he said. “In order to be comfortable with someone, you have to spend some time with them. You have to spend time knowing a little bit about them, their families and their interests. Casual discussion is important before doing business in Iran as well as in (the rest of) the Middle East.”

His advice came amid the increase in interest among many Korean companies in doing business in the post-sanction Iran.

Korean companies first entered the Iranian market in the 1970s at the start of the construction boom, when the region was awash with liquidity from petro dollars. Following the Iran-Iraq War, Korean firms joined the post-war reconstruction in Iran, building roads, dams and other infrastructure in the 1980s.

The Korea-Iran trade had been decreasing since 2010 when Korea joined the United States-led sanctions against the Middle Eastern country because of its nuclear program.

But hope for a second construction boom in Iran is growing, following the lifting of the nuclear-related sanctions in January in return for the Middle Eastern country’s agreement last year to restrict its nuclear activities.

But even before the sanctions were actually lifted, Iran had already become a land of opportunity, drawing a flurry of economic delegations from Europe and Asia. Germany, for example, had been sending several delegations, including automakers, to discuss post-sanction cooperation with Iran since July last year, immediately after the nuclear deal was signed between Iran and the six world powers involved. The German automakers reportedly discussed with their Iranian counterparts ways to build local factories.

The rising Iranian market has also thrilled Korean companies, both those with prior experience in Iran and those without, especially amid the tough economy at home.

According to the Korea Trade-Investment Promotion Agency in 2015, 68 Korean companies have inquired with the government’s trade arm about doing business in the Iranian market. Nearly 70 percent of them have no prior business experience in Iran.

Some experts say Korean companies’ relatively short history of doing business in Iran is a hurdle to expansion in or entry to the market because of their limited knowledge of and experience in the country, compared to European companies.

However, White is optimistic about the future of Korean companies in Iran, saying Iranians think highly of Korean companies owing to their past successful projects there and their similarly trust-based way of doing business, which White believes would make it easier for Korean businesses to expand or start in Iran.

“(To be successful in the Iranian market) you have to convince them to trust you and convince them that you are somebody they want to do business with,” he said. “If they like you, trust you and want to do business with you, the next thing that you have to do is (to make sure) that your product is the product that they want. Usually, if you convince them to trust you, they’ll like you and it will be much easier to sell your product. They are less worried about the product and more worried about the person.”

He said Korean businesspeople need to bear in mind that some elements that are culturally acceptable in the West are not considered so in the Persian state.

“For Middle Eastern businesspeople, family is number one. The most important thing in their life is family,” he said. “However, you don’t ask questions about their wives and daughters because they usually don’t discuss women. In the Middle Eastern culture, women are to be protected, and they are protected even from discussions. The concept is that their privacy is protected and safeguarded.”

In addition, ranks and titles are widely used when referring to people, he said. “In public, one uses rank and title and family name. Most Middle Easterners don’t use first names. Iran is more formal,” he said.