IRAN Market – Can be your Golden dream for business or easily could be your Worst Nightmare!
Iran is the second largest economy in the Middle East and North Africa (MENA) region after Saudi Arabia according to World bank which makes Iran second high value market in the region with 78M population is larger than any other country in the region except for Egypt. 71 percent are living in urban areas, and Tehran and its satellite towns are home to almost 18 million inhabitants.Most of the population is young, with 60 percent aged under 30. Iran has the biggest group of Internet users in the Middle East & education is an important value in Iran, as seen by a big jump in the number of people pursuing higher studies at university or in religious institutions. also men and women are split almost equally 50-50 in this category, underlining the growing number of educated Iranian women.
During the past few years, there has been a growing trend on luxury good consumption among Iranian consumers & the results of recent market study indicate that all three factors, consumer perceived value, sensitivity to social norms and need for uniqueness, influence consumer intention to buy luxury goods. In addition, consumer knowledge is a mediator factor between need for uniqueness and purchase intention as such you can see 60K monthly sales for IPhones, first market for Porsche in the region and high ASP.
Also There is absolutely no strong -wise Local brands!
It looks promising hence Iran becomes MENA`s El Dorado so every one is interested and wants to play and have pieces of this delicious pie!
So as a company what do you think? Easy money? lets go and take it?
As an expert in Iran market for several years working for Multinational companies & local distributors, I am telling you don`t be fooled as this can be El Dorado mirage.
Beware that this Golden dream can be your Worst Nightmare as well.
To establish healthy fruitful Biz & benefit from it in Iran you have to be prepared and wear your toughest armor. Believe me I don’t want to be negative . All I am trying to say is that it is not as easy as it looks.
Iran entry for your Biz can end up to be your Golden Goose in the region if only you play your cards really smart & be PREPARED.
Always keep in mind that IRAN is really unique market which you can never see such a market in the region. of course everyone is saying their country is different and there is always Pros & Cons for each market but I am telling you Iran is really UNIQUE and Different, nothing like you have ever experienced before unless you worked here and I give you some insights why it is so unique:
- Currency Fluctuation – Expect huge and unexpected Fluctuation. Keep in mind it can be up to 6% which can easily destroy your estimated margin especially for products which are selling in volume and small margin.
USD Exchange Fluctuation over a Week
- Exchange rate : There are two rates, Central Bank & Open Market which is 29900 Vs. 35750 and keep in mind that not every one has an access to Central bank rate. Imagine your competition has an access to Central bank rate and you get your dollars from open market! You will be facing 17% price different.
- Interest rate : Again there are two rates and again it is Central bank rate and open market which is 24% Vs. 36% per year.
- Inflation rate : Iran has one of the highest inflation rate in the world.
- Rules, Tariffs & regulation can be changed with out prior notice and even over the night! for example custom duty & cost of importation for Mobile changed from 7% to 65% and again to 35% and 22%. don’t get me started with regulation and required license!
- VAT is applicable for whatever your are importing via official channel and custom but sometimes you can not add it to your landed cost as there might be some competitors that pulled some strings and dodged that VAT!
- Smugglers and unofficial routes: Some times you can see over 80% smuggled stock in certain products which will be huge issue due to high custom duty & Tariffs. It makes Iran the Heaven on earth for smugglers and please don’t expect government support at all!
- Iranian Consumer behavior : There is no room for making any mistakes. if you make mistake you might kill your brand and the recovery is almost impossible. for Example ZTE, Alcatel, Panasonic, Sony Mobile & LG Mobile Failure & also on the other hand, Samsung & Huawei huge success. These are examples for Consumer Electronic segment. There are other examples for BAT,ATI,JTI, Nestle, Danone, Bel group for FMGC & Tobacco or for Telecom side there are MTN, Talia & Rightel stories. I can go on and on to name the brands. Always remember : IF YOU FAIL, THERE IS A SMALL CHANCE OF RECOVERY. I will share the stories & get into details later.
- Highly competitive vast market with different cultures & consumption behaviors : Just have a look at below map which is showing Iran ethno religious distribution. There are Arabs,Turks,Kurds &… and of course you know every one has their own different culture & traditions.
Now what do you think? Scary right? is not it?
So you may think that`s it, it does not worth it, there are too much risks.
But if you ask me what is your advise? is it worth to invest?
My answer is :
100% positive!!! it is second high value market in MENA! Are you kidding me? of course you must plan for IRAN market entry and trust me it gonna worth every penny you spend.
You might say this guy is crazy,all he has been saying was negative & was complaining about IRAN market but make no mistake my friends. if you play your cards right, if you plan properly, if you adopt your self to the Iran`s T&Cs you will hit the Jackpot and IRAN can be your GOLDEN GOOSE!
Iman Soltani