Doing Business in Iran
Iran’s tumultuous political history has meant that despite the country’s wealth of resources, it has been relatively isolated from the global economy.
International business partnerships with Iran have been tentative at best and are generally limited to the energy sector. Unfortunately, negative images and stereotypes of Iranian society have clouded the great warmth and hospitality of the Iranian people.
While the country's business infrastructure and processes may not be on par with those of the Western world, the Iranian economy offers plenty of potential for discerning expat entrepreneurs.
Iran ranked 124 out of 190 economies analysed in The World Bank’s Ease of Doing Business Survey for 2018. While it scored fairly well in the areas of dealing with construction permits (25) and enforcing contracts (80), the country scored particularly badly in areas such as trading across borders (166), protecting minority investors (170) and paying taxes (150).
While this doesn’t present an enticing picture for potential investors, there are still a fair number of foreign businesspeople who are looking to establish operations in the country. Those wishing to do business in Iran will need to make an effort to gain some objective understanding of the people, culture, etiquette and approach to business. It’s only by operating with a degree of cultural sensitivity that international businesspeople will be able to enhance their business experiences in Iran.
Saturday to Thursday, 9am to 5pm.
Farsi, is the official language of Iran. English is spoken in most business circles and higher levels of government, but it's still best to arrange an interpreter.
Business dress should be smart and conservative. Suits are standard but wearing a tie is not necessary. Women should be particularly careful about covering up their arms, legs and hair in public.
Gifts are not necessary for business proceedings. If invited to a colleague's home, flowers or chocolates are a good option. Do not give gifts that contain alcohol or pork.
While the number of women in business in Iran is increasing steadily, the country still has a long way to go in terms of achieving equality. Women rarely occupy the most senior positions.
Business culture in Iran
Personal relationships and networking
Success in Iranian business circles is often defined by who you know rather than what you know. Taking the time to get to know one’s colleagues and business associates is vital to getting ahead in business.
Business in Iran is personal. Many businesses are family owned. Having a solid network of friends in Iran is important and one shouldn’t be afraid to ask for favours. However, expats should also be prepared to go the extra mile for colleagues in the future, as reciprocal support is an integral part of business in Iran.
Meeting and greeting
When meeting business associates, expats should greet them with a formal handshake. Men must wait for a woman to extend her hand before making any gesture. If she doesn’t extend her hand, a simple nod of the head and a smile will suffice.
It is best to keep things formal when doing business in Iran. Once a relationship has been established and counterparts begin to address expats using their first name, then it is acceptable to do likewise. Men are addressed with the prefix ‘agha’ followed by their surname. Women will be addressed using the title ‘khanoom’.
In Iran, the most common greeting is ‘salam’ when meeting someone. Upon leaving a meeting, Iranians will generally say ‘khoda hafez’ which translates as ‘may God preserve you’.
For new arrivals, business procedures in Iran may seem erratic. Those doing business in Iran should endeavour to make appointments four to six weeks in advance and be sure to confirm these by telephone and in writing. Prior to arriving at a meeting, it is a good idea to call the day before to ensure that it is still going ahead.
Punctuality is rare in Iran, but expats should still arrive on time to create a good impression.
Doing business with government officials will test one’s patience and expats should prepare to be kept waiting. Administration and bureaucracy in Iran are sometimes chaotic and this will often cause delays. When kept waiting, one should always be courteous and avoid showing outward signs of frustration.
At the beginning of a business meeting, small talk is exchanged and asking after a colleague’s health and family is expected. It’s best to wait for the Iranian business associate begin talking about business.
Expats should understand that getting to know Iranian colleagues on a personal level is critical and initial business meetings will focus solely on becoming familiar with one another rather than discussing business matters. Formal proceedings only begin once relations have been established.
Haggling is a common element of Iranian business culture, so expect long negotiations to take place. Decision making can be slow and it is likely that expats will have to meet with several different people before a final outcome can be reached. Iranians will gather a number of opinions from their associates before they trust new business partners.
Implementing decisions can be just as slow in Iran as it often requires manoeuvering through the slow-moving Iranian bureaucracy. Applying pressure in a non-confrontational manner may speed things up although the best method is often to ask a favour from an influential colleague wherever possible.
Setting up a business in Iran
There are several stages and bureaucratic hurdles that expats contend with when setting up a business in Iran. These include obtaining criminal record clearances, registering for VAT, officially registering the company’s name, paying stamp duty and enrolling employees in the social security programme.
Expats should also note that they should anticipate long waits for most of the necessary documentation. They should seek advice from Iranian business associates and fellow expats who have previously been through the process.