I have been thinking what actually do foreign companies look for in a local Qatari partner. With so much interest from foreign companies who are looking for a sponsor, an agent or a partner, I decided to brainstorm what seems to be the key attributes and considerations when looking for a partner that adds value to your business. What determines the value of this local partner? I have to add that every business looking for partner should have an idea what you want from him, what value you think he can bring to the table i.e. opening doors to an important client or contact, getting advance market intelligence, facilitating your business development and navigating through local bureaucracy..the list goes on.
With my past experiences helping companies to look for a local partner since 2009, i think the 'magic formula' comes in the form of 5Cs or a checklist of 5 important attributes that determine the value of the partner.
1. Compatibility of Your Product or Service with that of the local partner
Do you prefer one already in the same kind of business or you prefer someone who is new? If this local partner already has a fire equipment distribution business and the necessary licences, do you want to work with him? If the local partner owns an IT consultancy business, do you think that this is best arrangement for you to also leverage on his business and his contacts? To help you, answer what value does his product and my product creates. If you think it is synergistic and creates a win-win value, he could well be the partner you are looking for.
2. Chemistry of the local partner and yourself
Why did you get married to your wife today? Can you explain the kind of chemistry you both have for each other before deciding to get married. Sometimes, people just click and they get married to each other as they shared certain common life values and hope for the future. I believe chemistry becomes even more important for the local partner and you because we are talking about cross-culture, difference in values, traditions and outlook (and hence the future directions of the partnership business). How do you evaluate your chemistry with a local partner. Is it just like 'love at the first sight'. In arab cultures (bedoudin culture), I sometimes observed that chemistry is 'present' when you are ushered into his big office and both of you discuss about anything under the sun except business. Perhaps, by the time you do get down to business, the chemistry is already 'there', that he liked you and wants to deal with you.
Chemistry might also takes time to build up between the two of you. Given Arabs' famed hospitality, they would also invite you for dinner just to get to know you better and to evaluate the chemistry between the two of you. If you are not sure whether to proceed with partnering him, delay signing up with him immediately. Ask to see what value or business he can give to you as goodwill to earn your trust. If he is sincere, likelihood he will do that. Chemistry actually helps in securing long term relationship and stability of your partnership, more than anything else.
3. Connections of the local partner
In Qatar's close-knit context, this is really how powerful this local partner's inner circle's network. A highly connected local partner is highly influential as he can really climb mountains to get that elusive contract foryou by leveraging on his close-knit network in his private 'Majlis' (which means "a place of sitting" in arabic). They get their regular dose of market-intelligence from their guests attending their Majlis and also used the Majlis to get business done among themselves. I attended a few sittings of Majlis and it is really a great way of knowing people and seeking their help to open doors for you.
High at the apex of power is the Al-Thani, elite Royalty family. Not just in politics, they are also a powerful force in business, with several of them who are business owners of large listed companies and private companies that are prevalent in all parts of the Qatari economy. Not all Al-Thani members are influential, you need to look at their family branch and understand their lineage and family dynamic relationship with the current ruler. I shan't not go into too much details.
After the Al-Thani, you have the powerful merchant families which are the captains of the industry and their influence and financial backing comes from the powerful members of Al-Thanis (who prefer to stay in the background and low-profiled). In return for their allegiance, the merchant families are given favours by certain powerful Al-Thani members. You need to be aware of the different tiers of merchant families you are seeking help, decide which are the ones that matter more to you. Why are connections important? Connections contribute to the probability of success. That is why some foreign companies pay through their nose to get the elite al-Thanis. If you are a small business, it might not make sense to go with the Al-Thani or top tier merchant families. And connections would play a lesser role.
4. Character of the local partner
How do you judge the character of your local partner. Try talking to his close friends, associates or even employees and existing customers to seek feedback what kind of a person he is. Usually, you might only meet your local partner only once or twice and in a very brief meeting that's about all the time you have with him. Instead you are asked to discuss the details of your partnership with his managers. So are you comfortable with that. This is the case if you are dealing with someone who is really from the elite group, as I mentioned above.
Do your due-diligence by checking with other foreign companies that he is a partner- you might get valuable information as to his character (honesty, helpful) and his integrity and how does he treats his existing partner. Ask yourself "Can I get help and time from this person when I subsequently meet with problems. Am I getting value from my partner? " Enough said.
5. Commission as charged by the local partner
Lastly, how valuable the partner is also determined by how much he charges you for being your partner. Makes sure you get what you pay for, by going through carefully the above four points I have mentioned. If you are paying him this much, you need to be sure that you should be getting good value for your business from him. For the case of a inactive partner (we called him a sleeping sponsor), market rate can be as low as QAR25,000 to QAR40,000 per annum on the low side. More commonly, I see people settle for around QAR100,000. On the high side, a sponsorship figure of about QAR500,000 per annum or 5% of revenue and higher is not uncommon. If you are dealing with the (top tier) elite families, it would also be in the millions of dollars based on a cut of your big contract that he has helped to secure.
In summary, the value of the local partner is a multiplication of all the 5 Cs I have just highlighted.
Value of the local partner = Compatibility X Chemistry X Connections X Character X Commissions
Good luck in finding your partner in Qatar. If you have other suggestions to add to the list, you are welcome to contribute.