The latest dirty word in corporate America: ESG. Following years of simmering investor backlash, political pressure and legal threats over environmental, social and governance efforts, a number of business leaders are now making a conscious effort to avoid the once widely used acronym for such initiatives. (WSJ)  

New disruptions, geopolitics hang over 2024 supply chains. Companies that assembled new supply chain strategies in the wake of the Covid-19 pandemic are having to put those plans into practice far faster than they may have thought possible. (WSJ)

China sanctions five US arms manufacturers over Taiwan weapons sales. China has announced sanctions against five U.S. arms manufacturers over weapons sales to Taiwan. Beijing claims the self-ruled island as part of its territory and has not ruled out the use of force to achieve its goals, while the United States is required by law to provide Taiwan with the means to defend itself. (Al Jazeera)

Global economy set for weakest growth since pandemic, warns World Bank. It has forecast growth of just 2.4% in 2024 and stated higher interest rates were a major factor. Global trade and investment would continue to be stifled by conflicts in Ukraine and the Middle East, it said. Outside of the pandemic, growth of 2.4% would be the weakest since the 2009-09 financial crisis. (BBC)

The “riptide” economy, explained. By many measures, public companies came out of the pandemic financially stronger than they were going into it. But a big chunk of U.S. economic activity is generated by smaller, private companies that don't divulge their earnings to the public—and what's happening there is very different. (Axios)

One way to spot red flags in companies’ financials. Comparing search volume with reported revenue could help auditors and others identify companies that are likely to have future restatements, researchers find. (WSJ)

Why the cost of money is about to go up. It’s been headed down for decades, but the most important price in the global economy is changing direction. (Bloomberg)  

Red Sea crisis: Fuel trade robust but container shipping slumps. Escalating Houthi attacks on vessels in the Red Sea have prompted a slump in containerized trade passing through the region, yet commodity flows appear to be remaining steady, research suggests. (Global Trade Review)

Big U.S. bank profits fall on insurance fund charges, falling lending margins. Major U.S. bank fourth quarter profits fell on Friday as lenders put aside cash to replenish a government insurance fund dented by last year's bank failures, and as the rising cost of retaining deposits ate into margins. (Reuters)

Credit card delinquencies surpass pre-pandemic levels. More Americans are buckling under the weight of mounting credit card debt. All stages of credit card delinquency (30, 60 and 90 days past due) jumped higher during the third quarter of last year, surpassing pre-pandemic levels for the first time, according to a report released Thursday by the Federal Reserve Bank of Philadelphia. (CNN)  

US producer prices fall again, boosting bets on fed rate cuts. Prices paid to US producers extended their retreat in December, prompting traders to increase bets on how aggressively the Federal Reserve will cut interest rates this year. (Bloomberg)

Global trade to lag behind GDP growth for first time in decades: BCG. Worldwide trade is expected to grow more slowly than the global economy in the next decade, as the world moves away from the “trade-led globalism” of the past 20 years. Year-on-year growth in global goods trade is projected to be 2.8%, dropping behind an annual GDP growth rate of 3.1%, according to research from Boston Consulting Group (BCG). (Global Trade Review)

Trial lawyers are wrecking the bankruptcy system. Trial lawyers have found an opportunity to exploit the traditional bankruptcy claims process through the use of well-honed mass tort shakedown strategies. The scheme is simple but damaging. (WSJ)

Argentina inflation surges past 200% as economic crisis bites. Argentina's annual inflation rate sped past 211% in December, official data showed, hitting the highest level since the early 1990s as new libertarian President Javier Milei seeks to head off hyperinflation with tough austerity measures. (Reuters)

Mastering B2B Relationships in the UAE

Jamilex Gotay, editorial associate

The ability to form strong relationships is essential in the B2B credit world, as it facilitates business with customers and minimizes potential risk. But business relationships have many layers, all which credit professionals must master. In global trade, credit professionals should be knowledgeable about the cultural differences of their customers overseas to ensure a successful relationship. By doing your due diligence in learning about the region’s business style, culture and customs, you are one step closer to not only understanding them but becoming a long-time business partner.

Business in the United Arab Emirates (UAE) is multicultural. Most Emiratis are not from the Emirates, so you will likely be doing business with expatriates or Americans. However, whatever your counterpart's nationality, he or she may report to someone who is a native of the Emirates—the expatriate and native-born communities are intertwined in professional life.

Understanding and respecting the cultural nuances, business styles and religious sensitivities of the UAE is crucial for successful B2B relationships in this region, with emphasis on personal connections, mutual trust and flexibility during negotiations.

If you are dealing with a local company, it will most likely be family-owned and strictly hierarchical, with decisions being made at the top by senior family members.

• If you're dealing with a subsidiary of an international corporation, key staff members are likely to be expatriates and influenced by the business style of the parent company.
• Therefore, it is highly recommended that you research beforehand the company you wish to do business with to know what to expect.

Always show respect to religious sensitivities as the UAE are heavily influenced by Islam and not doing so can cause irreparable damage to business relationships. For example, it is custom for Muslims to pray five times a day, so a meeting can and will be interrupted for prayer if the meeting coincides with a designated prayer time.

Relationship Building

In the Emirates, business revolves around family, trust and personal relationships, so it is crucial that the foreign businessperson establishes a relationship that is more than just business. You need to establish connections based on mutual friendship and trust.

The relationship-building process will begin at the initial meeting, which will mostly be spent in conversation with them getting to know you. Anyone could be a favored relative of someone at the top.

Flattery is an expected part of the UAE business culture. Make sure to compliment your counterparts, their organization and the Muslim world in general.

Top Export Partners

The UAE’s main export partners include Japan, with 15% of sales, India, with 13%, Iran, with 11% and Thailand, Singapore and South Korea, each with 5%. The nation is an important center for re-exports to India, Iran and Iraq.

Major Export Products and Services

The UAE’s main exported commodities are natural gas, dried fish, re-exports, dates and crude oil, which comprises 45% of exports. Crude oil exports flow mostly to Japan, Chinese Taipei and other East-Asian countries.

Top Import Partners

The UAE’s principal import partners are India, with 17% of purchases, China, with 14%, the U.S., with 10%, Germany, with 5% and Japan, with 4%. Imports purchased from members of the Greater Arab Free Trade Area enter the country duty-free, except for tobacco and alcohol.

Major Import Products and Services

The UAE’s principal import commodities are food, machinery and transport equipment, and chemicals. Large raw material imports, such as tobacco leaves, are processed in the free trade zones and re-exported after processing.

Negotiation

Businesspeople in the UAE tend to be shrewd bargainers. Initial offers or prices are most likely exaggerated and should be seen as a starting point from which concessions can be made. Similarly, you should start negotiations prepared to compromise or back down. Doing so is a sign of respect for your counterparts. The best outcome is one in which everyone feels they have gained.

In the end, your relationship with your Emirati counterparts is of greater importance than any contract you sign with them. The daily majlis (seated receptions) that the local rulers hold are good opportunities to network and connect with prominent locals.

Emirati business meetings are quite informal. Appointments, schedules and agendas are rarely adhered to in a strict manner and impromptu visits are common. Don’t be surprised to be asked to drop in for a social call whenever you are in the area, and your UAE counterparts may well turn up at your office unannounced.

Business Etiquette

When exchanging greetings in the UAE, it is appropriate when men greet other men to shake hands. Be aware that handshakes can be prolonged, and etiquette dictates that you wait for the other person to withdraw his hand first.

• If a man is greeting a woman, he should wait for her to extend her hand first; if she does not, a polite bow or nod of the head will suffice. For foreign businesswomen, it is also advisable to wait for a man to extend his hand first before shaking hands.

• Foreign businessmen should not be taken aback if their male Emirati counterparts holds their hands while walking to a meeting, as holding hands among men is common, and does not have the same connotation as it does in Western countries.

• But whatever your gender or the gender of the person holding or shaking your hand, make sure to only use your right hand for greetings, as they will, because in the Emirates the left hand is considered unclean.

• If your counterpart is a non-Muslim foreign national, etiquette will differ, so it is best to follow your counterpart's lead in the greeting process.

• Men are to maintain direct eye contact with other men as it shows openness and trustworthiness. However, men should maintain minimum eye contact with women.

Although Western attire is popular in the United Arab Emirates, many people wear traditional clothing, in business situations and otherwise. Foreign businessmen should stick to the classic Western business ensemble: dark-colored (gray, black or blue) business suit, white shirt, unpretentious tie and dress shoes. Businesswomen should wear finely tailored, dark-colored business suits.

Consider joining FCIB to have unlimited members only access to the World Trade Ref, which also features information on travel security and restrictions in place for the specific country.

Week in Review Editorial Team:

Annacaroline Caruso, editor in chief

Jamilex Gotay, editorial associate

Kendall Payton, editorial associate