Exporting to new markets offers clear opportunities to grow your business. There’s the potential to raise the visibility and value of your brand and, crucially, to increase market share, customer base and profit. All at a time when the economy at home is dealing with the uncertainty of Brexit. Indeed the falling value of sterling makes export even more attractive.
The Middle East is an attractive target. The region is home to a growing and affluent population, where the value of “British” continues to command a premium. Average GDP growth is expected at 3.7% and there will likely be 6.5m more people in the region by 2021, with a growing number of large supermarkets to match.
However, the region does have its specific challenges. Legal changes can be introduced with little warning such as the 5% VAT that came in to force in UAE in January 2018. Cost can also be a challenge; UAE and Saudi Arabia represent about 60% of Gulf consumers but the cost of registering trade marks there can be hefty. These and other challenges must be balanced against the commercial benefits of entering the region.
Before you start to export, you will need to research and plan carefully so you’re aware of the biggest risks and can maximise the opportunities.
Here are our six top tips.
1. Check you’re safe to use your mark
Before commencing use, conduct searches to see if anyone else has earlier trade mark rights that you could be infringing and that could be used to oppose your trade mark application. Note that even if you have been using your mark for some time in the Middle East, typically registration is king so even if someone registered their mark later, it can still pose an infringement threat to you. In a worst case scenario, you could be prevented from using your mark, forced to rebrand, and waste considerable time, money and resources.
A search will identify threats early on and avoid costly infringement and opposition proceedings.
2. Recognise the cultural differences
The specific cultural differences of the region affect how and when you can respond to queries raised by the trade mark offices.
In particular be aware of “hidden” extra costs when documents need to be notarised and legalised, which adds hundreds of pounds to the registration process.
When a query is raised against a trade mark application, don’t expect to be able to respond on the day and still to have your response accepted. The rule of thumb is to reply at least 1 month ahead of the actual deadline. Note that Friday and Saturday are the weekend so deadlines can fall on a Sunday.
There is also the challenge of registering trade marks for pork and alcohol products. For pork you can often rely on the class heading of class 29 which includes meat generally, but more creative solutions are required for alcohol. You can use the term “grape juice” as a replacement for wine, while “beer” is allowed in Saudi Arabia because it is a term that appears in the standard summary of goods in class 32.
Another option is to obtain protection for “soft drinks” and make sure that there is at least some use for those goods to safeguard your registration. If a third party uses a similar mark for alcohol, then it may be possible to take action as soft drinks are typically considered similar.
Consumers may come up with their own localised version of the mark so take control by choosing your own local character translation or transliteration.
3. Register your trade marks
This will help you retain control and ownership of your brand particularly as unregistered or “use-based” rights are not usually recognised. A third party registering a conflicting mark even after your use began can pose a serious infringement risk threatening your export market. Your distributors in the Middle East may also ask to see your trade mark registration certificate before entering an agreement to minimise their risk.
Lastly, educate consumers (and competitors!) that your brands are protected. Note that ® should be used only where you have a registration in place; if in doubt use ™.
4. Make sure your packaging meets both consumer perception and regulatory requirements – without giving away your crown jewels
Consider how you present information to consumers. There is an increasing interest in what goes in to food and drink and this is reflected in the push towards “clean labels”, which aim to replace “chemical sounding” terms with more natural-sounding alternatives. For example, “rosemary extract” sounds much more palatable than butylated hydroxyanisole!
However, regulation in certain jurisdictions may force you to include certain information on your labels. If that would make it easy for a competitor to reproduce an innovation you’ve made in your recipe then consider seeking patent protection before disclosing the ingredients list for a new product outside of your business.
One way to address regulatory requirement is relabeling. While European consumers tend to be suspicious when they see a label stuck over existing packaging, this approach is often received more positively elsewhere.
The approach of regulatory authorities in the Middle East can also be unpredictable. Product registration can be strict even for a simple multi-vitamin product, which can be treated like a pharmaceutical. For example consider whether your probiotic yoghurt with added vitamin D would actually be regarded as a pharmaceutical.
When it comes to packaging, the key is to be flexible.
5. Make sure your business partners sign robust contracts
This applies to manufacturers, licensees, distributors and anyone else you’re working with. Make sure contracts include clauses that acknowledge you as the owner of the IP rights and prevent the other party applying to register your marks or anything similar as a trade mark, domain name, or anything else. Also make sure there is a clear written agreement setting out the scope of each distributor’s operation by specific territory, as well as what happens to any excess stock at the end of the agreement. Hopefully you will never need to rely on these agreements but relationships do break down and being smart at the outset will help to protect you.
6. Keep an eye on the competition
Get your local partners, distributors etc. to keep an eye out for any counterfeit or copycat products and let you know as soon as they see a problem. Make use of the more formal monitoring procedures, for example trade mark watching services, which flag any similar marks that are filed, which can often be a precursor to conflicting products actually going on sale. You can also record your registered trade marks and designs with Customs authorities.
Local enforcement bodies are also effective. In UAE there is the Dubai Department of Economic Development, akin to Trading Standards in the UK. They will take swift action if you can demonstrate infringement and have a registration certificate. Get to know these entities and their officers.
Having good people on the ground will help you to both manage risk and save you money in the long run.