Tips for doing business in Iran

Tips for doing business in Iran

19 February 2016

Sadeq Hedayat / Commercial Advisor at the New Zealand Embassy / Middle East

New Zealand updated its regulations for doing business with Iran in February 2016, in line with United Nations Security Council changes to sanctions.  

These regulations mean New Zealand companies don’t have to register with the Ministry of Foreign Affairs and Trade before doing business with Iran. Here are a few things to keep in mind if you want to do business with Iran. 

1. Do your homework in advance 

Iran is an emerging market with many opportunities. However, even with the removal of some sanctions, it will remain a challenging and complex market in which to do business. An opaque and arbitrary regulatory environment, weak commercial law framework, and problems with corruption mean that New Zealand companies pursuing the market will need to do their homework in advance. 

2. Understand the market 

Doing business in Iran requires gaining some objective understanding of the people, culture, etiquette, local laws and customs and approach to business. By acquiring such cross cultural skills New Zealand companies can greatly enhance their business experiences and maximise the potential of their business venture in Iran. 

3. 'Partner well' and build strong local relationships 

Personal relationships are the foundation of business dealings in Iran. Before doing business in Iran appreciate this: foreign companies’ success is partially determined by building a strong personal and business relationship with capable local partners. 

4. Proceed with caution in the beginning 

Iranians are deliberate negotiators who can drive a hard bargain. They can be very demanding and may ask for all kinds of incentives such as exclusivity rights, even in the early stages of negotiations. 

As a best practice, New Zealand companies are advised to start slow in the market and gradually test both the market and their agent. Similarly, they are advised not to commit themselves to long-term involvement in the market, such as joint venture partnership or under license production, until trust has been established. 

5. Stay focused on what you do best 

With the lifting of sanctions, there is likely to be huge foreign interest in the re-emerging Iranian market. New Zealand companies will need to focus on their competitive advantage and be clear about what their value proposition is in the Iranian market and how they plan to carve out a successful niche. 

6. Seek legal advice on remaining sanctions and export controls 

The removal of New Zealand's existing UN sanctions regulations will not eliminate the need for New Zealand companies to exercise vigilance when engaging with potential Iranian clients or partners. New restrictions limit trade in some forms of technology in the nuclear, ballistic missiles, and conventional arms sectors – contact MFAT if you are proposing dealing in this area. 

Also, the sale of certain goods, such as dual use items, to Iran will continue to be subject to control and may not be exported unless an export license or permission has been obtained from the Secretary of Foreign Affairs and Trade. 

It is particularly important to seek legal advice on the potential impact of autonomous sanctions, including US sanctions, against Iran. 

7. Be aware that banking channels may not re-open overnight

The lifting of US financial / banking sanctions against non-US banks is expected to facilitate trade between New Zealand and Iran over time. New Zealand companies are advised to consult their banks prior to making any trade commitments with Iran.  As regulations continue to impose an asset freeze on designated individuals and entities, New Zealand companies should remain aware of who they are doing business with and ensure they are not designated by the UN Security Council. 

8. Be cognisant of how trade with Iran might affect your relationships with other export markets 

New Zealand companies with a commercial presence in other Gulf markets need to be cognisant of how seeking opportunities in the Iranian market may impact on their existing businesses / partners. 

In addition, recent changes to the US visa waiver programme will have implications for New Zealanders who have visited Iran since 2011 and their ability to retain visa waiver status into the US. 

New Zealand businesses seeking to do business with Iran (who also have a need to travel to the US) should keep abreast of changes in the US visa waiver programme. For more information about doing business with Iran, see the Ministry of Foreign Affairs and Trade’s website or call NZTE on 0800 555 888.