Doing Business In: Iran

Doing Business With Iran

 

Persia

 

 

Iraq – Iran to India

Not descendants of Ishmael

Not Arabs • nephew of Abraham

In Persian, the word Iran means “Land of the Aryans”

 

 

After the Bible was completed, the Arab world fused into one vast empire.  The catalyst for this fusion was Muhammed (means “highly praised”) born in a tribe in Arabia in 571 at Mecca.

Age 25 married a wealthy widow, 15 years his senior, he had 12 wives, a number of children, but only one daughter survived.  He died unexpectedly on 8 June 632.

Muhammad was an unschooled man, but responsible for the Koran which one-seventh of mankind considers the embodiment of all science, wisdom, and theology.

Muhammad arrived to make Medina in Arabia his home on 24 September 622 when the famous Hegira took place and the official starting point of the Muslim Era.

Muslims are divided into:

  • 80%-85% Sunni, urban dwellers, in positions of leadership
  • 15%-20% Shiia, farmers and village dwellers, poorly educated

 

 

Iraq

 

Rocky plain in Northern Iraq burns an eternal fire ten yards wide, like a grass fire, always stays in one place, since the beginning of time. “Eternal Fire.”  Used to burn the bricks to build the tower of Babel.

Within 2 mile range 14 October 1927 first oil well called “Baba Gurbur”, the Eternal Fire.

Iraq cradle of civilization.  Garden of Eden, near the Tigris or Hidekel River.

Muslims are capitalists, but not Western in any sense of the word.

Babylonia capital Asshur in Assyria. Babylonians lived in Southern Iraq between the Tigris and Euphrates Rivers.

 

Doing Business with Iran

 Iran represents an appealing market, with 80 million people who enjoy Western brands such as Coca-Cola, drive European cars and stood in line to buy Apple iPhones when they were available through third parties. The country also represents a potential bonanza for energy companies, with the world’s largest natural-gas reserves and fourth-largest oil reserves.

Most nuclear-related economic and financial sanctions on Iran have been lifted, including a European oil and gas embargo and a ban on most energy-sector investments. The isolation of Iran’s banking sector and restrictions on its shipping and transport companies also are over.

Even with the lifting of sanctions related to Iran’s nuclear program, a ban on arms and ballistic-missile technology will stay in place, and the U.S. will keep trade curbs related to human rights and terrorism on broad sectors of the country’s economy. These include companies linked to Iran’s powerful Revolutionary Guard Corps, a hard-line paramilitary force with members who have wide and often opaque economic interests.

Iran is a notoriously difficult negotiator and, as all sides have noted, nothing is agreed until everything is agreed.  Have no reason to expect that the road to a binding agreement will be problem-free. For businesses interested in future commercial opportunities in Iran, the Iranian negotiating stance is important.

 

 Starting a Business

 

No. Procedure Time to Complete Associated Costs
1 Obtain a criminal record clearance 5 days on average IRR 50,000 per criminal record
2 Reserve a unique company name, Register at the Companies Registration Office and Pay the registration fees 3 days IRR 375,000 for registration and IRR 40,000 for name search and reservation.
3 Place a notice of the company formation in the Official Gazette and the selected newspaper of general circulation 1 day IRR140,000 for official Gazette; IRR 240,000 for general circulation newspaper
4 Notify the State Tax Affairs Organization of the commencement of business activities 1 day no charge
5 Register for VAT 2 days no charge
6 Retrieve the officially sealed books of account within 30 days of registration 1 day IRR 100,000
7 Pay the share certificate stamp duty within 60 days of company registration 1 day 0.2% of the par value of the subscribed share capital
8 Enroll workers in the social security program at the Iranian Labor Department and Obtain a workplace number 1 day no charge

 

 

 Business Culture and Etiquette

Meeting

When meeting someone in a business or official context always shake hands. As a male you should wait to see if women extend their hands, if they do not, then simply nod your head and smile.

The most common greeting in Iran is ‘salam’ which originates from the Islamic greeting ‘Asalamu alaykum’ (peace be upon you). One would also reply with ‘salam’.
When departing, Iranians will generally usually use, ‘khoda-hafez’ (may God preserve you).

When doing business in Iran, stick to formalities. Once a relationship has been established your Iranian counterpart will quickly start to address you with your first name. Men are addressed with ‘agha’ proceeded by the surname. So, Tom Jones will be ‘Agha-ye Jones’. With women you would use ‘khanoom’. So, Jane Jones will be ‘khanoom-e Jones’. Professionals with titles will be addressed similarly, for example, ‘Doctor-e Jones’.

 

Dress

When doing business in Iran you will notice that most Iranian officials and business people wear clothing comprising of trousers, shirt and jacket. Many officials will be seen with collarless shirts. Ties are very uncommon.

As a male you would be expected to be smart and conservative. A suit is standard although wearing a tie is not necessary.

Whether doing business in Iran or visiting, women should wear very conservative clothing that covers arms, legs and hair. When in public women must cover their hair with a scarf. However, the last decade has seen incredible changes in what the authorities are willing to tolerate. Women can now be seen wearing make-up, jeans and scarves that barely cover the hair. However, as a foreigner it is best to err on the side of caution.

 

Business Meeting

If you plan on doing business in Iran appointments should be made in advance both via telephone and in writing. Prior to arriving in Iran telephone again just to confirm time and place.

Business hours are typically Saturday to Thursday 9 a.m. – 5 p.m. Lunch is usually an hour at around 1 p.m. Friday is a holiday. No business will take place so either try and avoid it or ensure you can use it to see some of Iran.

There are a few key times to avoid in Iran. No-Rooz is the major holiday for Iranians. Although its roots are in Zoroastrianism, this New Year celebration is an integral part of Iranian culture. All offices, businesses, shops, etc. will close for 2-3 weeks.

Other times to avoid doing business are Ramazan (the month of fasting), Eid-e Fetr (festival celebrating the end of Ramazan), Eid-e Ghurban (celebrating the end of the pilgrimage) and Ashura (the tenth day of Muharram).

Punctuality in Iran is rare. However, it will be expected of you. If you are doing business with government officials in Iran be prepared to be kept waiting. The administration and bureaucracy in Iran can be chaotic, meaning that officials may need to address an important issue before seeing you. Be patient and courteous. If you like tea, do not be afraid to ask for lots of it.

Although many Iranians in business and in the higher levels of government will have a good understanding of English, it is best to arrange for your own interpreter to accompany you.

At the beginning of any meeting engage in niceties and ask after people’s health, families, work, etc. Wait for your counterpart to initiate the change in conversation to business matters.

 

Negations

Before doing business in Iran appreciate that your success is defined by your aptitude to build effective personal relationships combined with a clearly outlined and well-presented proposal.

Business is personal in Iran. Many businesses are family owned and run. Even within government, officials usually work within networks of friends and associates. If you have influential friends in Iran, do not be afraid to call in favours. Just be prepared to re-pay them in the future. This is all part of doing business in Iran.

Building a relationship with your Iranian counterpart is critical. The first meeting should be solely focused on getting to know each other. Once a relationship has been established you can safely move on to business matters.

Iranians are astute business people. They enjoy haggling and getting concessions so be prepared for long negotiations.

Decision making can be slow. It is most likely that you will meet and negotiate with less senior members of a family or state department first. Once you are seen as trustworthy you will then move on to meet more senior members.

Implementing decisions are just as slow. Iran’s red tape and layered bureaucracy means a lot of waiting. Applying pressure in a non-confrontational way can help speed matters up although the most effective way to do so is to use people of influence to help you.

 

6 Myths

Myth #1: Sanctions are a complete stranglehold on Iran.

Sanctions have been effective at slowing down some projects. Tehran is full of buildings under construction that are currently stalled, topped by unused building cranes. Financial sanctions and closing the SWIFT system to Iran have also had a huge impact on oil, petrochemical and large-scale commerce, but this is a workaround country, barter transactions, OFAC licenses for a range of permitted products and services, and ‘flying money’, or suitcases full of cash that allow the Iranians to own 6.5 million iPhones and a host of Western products, imported through Dubai, Istanbul and elsewhere.

The country is full of sophisticated, world-class retail shops in high-end shopping malls. This is particularly true in Tehran, a cosmopolitan city full of world-class restaurants, broad boulevards, contemporary art museums and galleries.

There is a fully-stocked Mont Blanc store. There are large Apple Stores and Think Different billboards. There is even a company that provides national AppleCare-like service. The Iran Mall, under construction with $1 billion invested, will be the largest mall in the world. It has been internally funded and now needs an additional billion dollars to complete. Young people wear Western dress with American logos and are fans of, and experts on, American music and culture.

The Iranian Revolutionary Guard Corps (IRGC) owns and runs many of the major Iranian companies and has a huge vested interest in sanctions being removed and the country opening up, creating the much larger market opportunity.

 

Myth #2: Iranians do not have access to or knowledge about what is going on in the world.

Filters and censorship do exist but are largely ineffective. VPNs (virtual private networks) are widely used to bypass the government filtering and blocking of certain websites, such as Facebook and Twitter. Most Iranians are on social media, watching American movies and TV, including news, listening to American music and wearing American brands.

Facebook has 15 million users in Iran, a statistic cited by Iran’s vice minister of Information and Communication Technology (ICT) as a key competitive advantage. Massive open online courses (MOOCs) from American and international universities are also available.

Iran has a 98 percent literacy rate, English is widely taught in schools, and there is a high Ph.D. rate among CEOs.

 

Myth #3: Iranians are way behind technologically.

The Stuxnet virus, which damaged Iran’s nuclear centrifuges, created fear and triggered the government to put massive resources into software development.

Two-thirds of the population of the country is under 35, born after the revolution and hostage crisis. There are many private and public start-up accelerators, as in Silicon Valley.

 

 Myth #4: Women are an oppressed group and do not have a role in the economy.

Women are required to wear a headscarf, and in the past it had to cover all their hair, but now they are often brightly colored and pushed far back on the head, used more like a fashion accessory.

Woman creating Iran’s “Groupon,” who initially, being a young female, was not being taken seriously in business meetings. She went to her father, who was manager of a 500-person power utility and insisted he join the meetings. He would introduce her by saying, “We are doing some really interesting things on the Internet. She will tell you about them,” and turned the meeting over to her completely. With that older male presence, prospective clients listened and signed up. A year later, when she had grown the business to a substantial size, her father was no longer needed in the meetings for credibility.

At the Tehran Stock Exchange, most of the floor traders and many in management are women.

Sixty percent of university students are women.

 

 Myth #5: America is the dominant international player in Iran.

America is not the only game in town for Iran to do business with. There are 20,000 to 50,000 Chinese in Iran, many speaking Farsi, and they are now in Iran looking for deals and doing business.

Major French and German delegations with representatives of their top companies are currently actively pursuing post-sanction business opportunities. The U.S. could easily become the player that is isolated.

 

 Myth #6: Iran is a dangerous and difficult place to visit.

Traveling as a tourist or business visitor to Iran with a proper visa and following their rules is safe. Thousands of Western tourists visit Iran every year without incident.

Iran issues tourist visas to Americans and citizens of all other countries, other than Israel. While visiting, you are assigned a guide or minder, who both helps as any other guide would, and also enforces the regulations as to where you are allowed to go and what you are allowed to do.

Americans do not need any special permission from the U.S. government to travel to Iran. You cannot enter Iran on any passport with an Israeli stamp. The U.S. State Department issues American citizens a second passport for travels in the Middle East to any of the countries that also have that restriction.

Americans and U.K. citizens are always accompanied by a guide or minder, who enforces what is and is not allowed to visit and who is generally very accommodating. Despite restrictions, visitors still have access to much more than a tightly controlled itinerary.

 

 

About Persia Iran

Nearly half of Iran has an arid desert climate. It receives less than 4 inches of precipitation each year.

Only one river in Iran, the Karun, may be navigated by boat, and then only for short distances.

The Persian Gulf holds 60% of the world’s oil reserves. Iran alone has reserves of 125 billion barrels of oil, or 10% of the world’s total reserves. Iran pumps nearly 4 million barrels of oil each day.

Iran controls 50% of the Caspian Sea caviar market. The eggs of the Caspian beluga sturgeon can fetch up to $160 per ounce. The beluga sturgeon was swimming in lakes at the time of the dinosaurs, but the sturgeon, which can live to be 100 years old, are rapidly disappearing. Environmentalists argue that a full ban on caviar would help the ancient creature.

Iran is one of the world’s oldest continuous civilizations, with settlements dating back to 4000 B.C.

Approximately 70% of Iran’s population is under the age of 30.

Iran’s legal code is based on Shi’a Islamic law.

After 1979, Iran reverted from a legal system to Islamic law. Women under this law are not considered mentally or legally the equal of males. Additionally, children are perceived as the “substance of the male” and merely incubated by the female body. In the case of divorce, women lose all custody of children. Many young girls in Iran are married immediately after menarche.

Since ancient times, people in Iran have used a water supply system called a qanat or kanat. It collects underground water and moves it through tunnels to places where people need it.

Most homes in Iran do not have tables and chairs. Instead, people sit on cushions on the floor to eat their meals.

Iranians have woven beautiful rugs for over 2,500 years. When creating rugs, Iranian weavers often make a mistake intentionally. They want to show their belief that “only God is perfect”. After oil, Iran’s second largest export commodity is carpets.

The capital of Iran is Tehran, which means, “warm slope”. Nearly 12 million people live there.

The term “hijab” is Arabic for curtain or cover that women wear. Females over the age of nine must wear a hijab in public. Additionally, religious rules do not allow women to wear bathing suits when men are present.

The Persian cat is one of the world’s oldest breeds. They originated in the high plateaus of Iran where their long silky fur protected them from the cold. Italian traders brought the breed to Europe in the 17th century, where they became an exotic status symbol.

The Medes were of Aryan origin and the first people to unify Iran by the 6th century B.C. One of the tribes, the Magi, were powerful Zoroastrian priests. The most famous Magi are the Three Wise Men of the Christian Nativity story who brought gifts to the newborn Christ. The 13th century Italian explorer Marco Polo claimed to have visited the graves of the Three Wise Men in what is now Iran’s capital Tehran.

Iran has experienced one of the highest urban growth rates in the world, jumping from 27% to 60% between 1950 and 2002. By 2030, 80% of the population will be urban.

Iran is one of the primary trans-shipment routes for Southwest Asian heroin to Europe. Over 3,600 Iranians have been killed in the past 25 years fighting heroin smugglers.

Iran has been dubbed “the nose job capital of the world”, as the Western nose has become the desired nose shape of young Iranian women.

Iran is one of the world’s largest producers of caviar, pistachios, and saffron.

Famous biblical figures purported to be buried in Iran include Esther, Daniel, Cyrus the Great, Darius the Great, and St. Thaddaeus.

Iran has over one million foreign refugees, more than any other country on earth. Most of the refugees are from Afghanistan or are Iraqi Kurds. Consequently, Iran has acquired a large workforce willing to do manual labor for the lowest wages.

In 2007, Iran produced the world’s largest handmade carpet for a mosque in the United Arab Emirates. It was the size of a soccer field.

Polo was played in Iran as early as the 6th century B.C., mainly as training for the cavalry.

Iran is the 18th largest country in the world, with a total of 1,648,195 sq. km. It is slightly smaller than Alaska.

Poetry holds a special place in Iranian culture. All Iranians can recite lines from famous Persian poems, such as the most famous poem in Iran called Shahnameh or The Epic of Kings.

The Shah-En-Shah monument was erected in 1971 to celebrate the 2,500th anniversary of the Persian Empire. The name has since been changed to the Azadi Monument, which means “freedom” in the Farsi language.

Iran’s constitution dictates that women are mothers and homemakers. If they want to work outside of the home, they need permission from the male head of the household.

The government also segregates schools by gender, and at the university level, there are some subjects women are not allowed to study. On city buses, men and women sit apart, and a woman may not appear in public with a man unless it is her husband or family member. However, unlike women in Saudi Arabia, Iranian women can drive and vote.

The first day of spring in Iran is a festive day. Women prepare huge feasts and mothers eat hard-boiled eggs, one for each of their children. According to Persian ritual, the table is set with seven items, each beginning with the letter “s” in Farsi: such as apples (sib), green grass (sabze), vinegar (serkey), berries (senjed), ground wheat (samanoo), a gold coin (sekke), and garlic (sir).

Women in Iran follow a strict dress code called the hijab. The punishment for not following the hijab is a lashing, although it is not always enforced consistently.

Polygamy is legal in Iran, and men can marry up to four wives. Once married, a girl can no longer go to high school. The marriage age of girls is currently 13, up from 9 years old after the Revolution. Boys may marry at 15, the legal age Iranians can vote.

Persian culture is famous for beautiful poetry, luxurious rugs, and lush gardens. In fact, the English word “paradise” comes from a Persian word meaning “enclosed garden”.

The most popular sport in Iran is soccer. The national team has won the Asian Cup three times and played in three World Cup Final competitions.

Persians make up the most of Iran (61%), followed by Azeri (16%), Kurd (10%), Lur (6%), Baloch (2%), Arab (2%), Turkmen and Turkic tribes (2%), and other (1%).

Islam is the dominant religion in Iran at 98%: Shia 89% and Sunni 9%. Other religions, such as Zoroastrianism, Judaism, Christianity, and the Baha’i faith make up the remaining 2%.

The Iranian population in 2012 was 78,868,711, making it the 18th most populated country in the world.

In Iran, yogurt is referred to as “Persian Milk”, and many Iranians consider yogurt a miracle food. It is used to treat ulcers, relieve sunburn, and even prolong life. Some people use yogurt as a facemask.

 

History

 

2000 B.C. Central Asians migrate to Iran
530-330 B.C. Cyrus the Great founds the Persian Empire
330 B.C. Alexander the Great conquers Persia
323 B.C. Alexander dies; one of his generals forms the Seleucid Dynasty
250 B.C. Parthian invaders establish the Parthian (or Arsacid) Empire
A.D. 224 The Sassanids found the Second Persian Empire
A.D. 637 Arabs conquer Persia; Islam becomes the state religion
1051-1220 Reign of the Seljuks
1258 Mongol invaders establish the Il-Khanid Dynasty
1335 The Mongol dynasty collapses; a succession of minor dynasties follows
1501-1722 The Safavids rule the Third Persian Empire
1796-1925 Reign of the Qajars

 

 

 

Published by The Academy of Market Intelligence
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