The Interpreneur survey: Understanding mid-market business trends in the UAE

The UAE’s inclusion in BRICS in 2024 is expected to enhance trade and investment while its record FDI inflow of over $22 billion in 2022 highlights its status as a premier investment hub in the MENA region.

To understand how this landscape is affecting mid-market businesses, we recently surveyed 1,400 C-suite business leaders in 14 countries, in private sector companies earning up to £300m a year that have expanded internationally. We call these CEOs ‘interpreneurs’.

We have analysed the UAE-based data to understand better what drives Middle Eastern business owners when expanding abroad.

Global business trends: Do UAE business leaders believe more business will expand overseas in the next 12 months?

Overseas business expansion is widely expected to increase

At 93%, the UAE is one of the most optimistic countries in the world that global expansion is on the rise.

The UAE Interpreneur report is precise and will be valuable for any investor. In the UAE, all foreign Governments are actively partnering with the UAE government to attract and bring in foreign direct investments as Government support is key in expanding operations. Every Diplomatic Mission in UAE has set up their separate Trade Offices to attract UAE interpreneurs. And the investor numbers increasing regularly. New areas and sectors for investments are discussed and planned. The main challenges for UAE Interpreneurs for international expansion are market volatility, right business partner and talent. Most of the Governments have formed special Teams to handle international investors and that Team relates with the Trade Offices in UAE. This helps the Interpreneurs expansion plans go seamless. A trusted and knowledgeable advisor is what all interpreneurs look for to take them through the process.   

Sudhir Kumar
Senior Partner & Head-Corporate Communications
Kreston Menon

Which markets do UAE businesses prefer to expand into?

Western Europe number one choice for UAE interpreneurs when expanding businesses globally or Western Europe is UAE’s number one choice for global expansion

62% of UAE respondents call Western Europe their number one location for business expansion, and they are not alone. Globally, 52% of respondents agreed that Western Europe was in their sights for expansion.

Closer to home, the Middle East is on the radar with a score of 54%. However, UAE companies aren’t afraid of truly going global, and strong trading relations with North America are reflected in the fact that 44% are considering expanding there.

What makes a country more attractive to UAE businesses looking to expand globally?

Government support is the primary attractor for UAE business leaders

UAE respondents were the only country to value government support the most attractive when considering expansion into a country. Cultural and language similarities to existing operations were valued as the least important.

The emphasis on future economic growth as a key trait for international expansion among UAE respondents highlights the region’s forward-thinking mindset. Additionally, the high value placed on local talent availability and openness to skilled immigration (45%) indicates a strategic focus on harnessing human capital to drive innovation and competitiveness.

What motivates UAE interpreneurs to expand internationally?

Half of UAE businesses are driven to expand internationally by market growth opportunities. Meanwhile, 43% aim to outpace rivals by securing new market footholds, and 38% are motivated by access to cutting-edge digital technologies and innovation.

What are the biggest international expansion challenges in 2024 according to UAE interpreneurs?

Managing economic volatility proves challenging to UAE CEOs looking to expand internationally

46% of UAE businesses see managing economic volatility, such as currency fluctuations and inflation, as their biggest challenge in international expansion.

43% also majorly concern themselves with adapting logistics and supply chain issues, while 39% struggle with finding reliable local partners. Additionally, 38% of respondents find navigating global tax regulations a significant hurdle, highlighting the complex landscape UAE businesses must navigate to succeed globally.

Risk: What do UAE CEOs think are the biggest risks to global business expansion in 2024?

How much of a risk do the following pose to your business’s international expansion or planned international expansion?

Market volatility key risk for UAE businesses

Nearly half (44%) of UAE businesses view financial market and foreign exchange volatility as a major threat to their international growth, with 11% identifying it as highly disruptive and 33% considering it a significant risk. However, 30% see little to no risk from this volatility.

42% of respondents see economic slowdowns or recessions as disruptive or significant risks. This mirrors the concern for escalating geopolitical tensions and instability, which another 42% also regard as a threat. This heightened apprehension may stem from recent global events and uncertainties, prompting businesses to reassess their risk exposure and adopt robust strategies for resilience and adaptation.

Private Equity vs Venture Capital: Which is the preferred international expansion funding source for UAE businesses?

Private investors offering UAE businesses key to global expansion

Like the fast-growing economies we analysed, private investors offer young and burgeoning businesses a flexible pathway to rapid expansion.

Understanding global tax: Is the C-suite ready for a global tax threshold?

UAE businesses confident in global taxation understanding

In the UAE, diverse perspectives emerge regarding multinational businesses’ grasp of global international tax rules. Notably, 43% express strong confidence, indicating a deep understanding of these regulations. Additionally, 49% feel confident handling common tax scenarios but may seek external help for complex situations. Only 8% feel less confident and rely heavily on external advisors. This breakdown highlights the varied approaches taken by UAE businesses in navigating global tax obligations.

The growing importance of ESG for UAE investors and interpreneurs

UAE business leaders place ESG as a priority

Nearly all (97%) consider ESG factors when expanding into new territories. Of these, 41% prioritise ESG, 35% value it without prioritising, and 20% would consider it if it doesn’t conflict with other priorities. Only 3% disregard ESG. These findings highlight a widespread recognition of ESG’s significance in corporate decision-making, reflecting a nuanced approach to integrating these principles into business strategies.

The benefits of AI in international business operations

UAE business leaders confident about the use of AI in global operations

94% of respondents from the UAE expressed readiness to harness AI’s benefits in global business within the next two years. Notably, 60% strongly endorse this view, while 34% moderately agree. Remarkably, only 1% disagree.

This high level of agreement underscores widespread confidence in AI’s potential across diverse backgrounds. Similar sentiments are echoed in the US and Nigeria. These findings highlight a global readiness to embrace AI as a transformative force in business operations.