V. MARKETING U.S. PRODUCTS AND SERVICES DISTRIBUTION AND SALES CHANNELS Until recently, Syria's markets were relatively small by international standards and dominated by the public sector; consequently, sales and distribution channels were relatively simple. Agents/distributors representing international firms could easily service their clientele, whether in the public or private sectors, from their central offices. However, a rapidly growing population and a burgeoning private sector (stimulated by the government's economic reform program) are causing evolutionary developments in this field. While some companies continue to serve customers in the old ways, others have opened branch offices or contracted sub-agents in the growing markets of Aleppo, Hama, Homs, and the coastal cities of Latakia and Tartus. Also spurred by economic reform, entrepreneurs have started new transportation companies, increasing the speed, and decreasing the cost of delivery. USE OF AGENTS/DISTRIBUTORS; FINDING A PARTNER Syrian law does not require a foreign firm that wishes to do business here to have an agent or distributor. Syrian businesses often order directly from U.S. firms without seeking to establish an agent/distributor relationship. However, since many such deals occur only once, development of a long-term presence in the market usually requires an agent/distributor who can actively promote the product, follow leads, respond quickly to government tenders, and offer customer service. When a company has decided it wishes to sell in the Syrian market, whether on its own, or through an agent/distributor, the Embassy strongly recommends that it be contacted through the nearest district office of the Department of Commerce. The Embassy can provide the Syrian regulations for opening a branch office, the regulations for hiring an agent/distributor, and references for agents/distributors through the Dept. of Commerce's Agent/Distributor Service and World Trader Data Report Program. Under Syrian government regulations, public establishments and companies do not accept offers presented through non-registered agents. On the other hand, many Syrian businessmen often try to avoid having their agency agreements registered to evade income taxes. Therefore, Syrian agents often request that the agency agreements not be disclosed to the government. If at any stage during the execution period of the contract, the government discovers the existence of such an agreement, the agent's commission will be deducted from the contract value and be given to the agent at the unfavorable "official" exchange of 11.2 SP/USD. (Note: agencies are only recognized after a formal copy of the agency agreement, with a fixed commission clearly stated, is presented and registered at the Ministry of Economy.) FRANCHISING Franchising, especially the prospects for opening the first major American fast food restaurant, has captured the imagination of many Syrians. Many capable and well-capitalized Syrian businessmen have applied for major American fast food franchises, but have been refused. According to these businessmen, projected fast food income in Syria (at least in Damascus) compares favorably to expected earnings for newly opened restaurants in the U.S., however, the problems related to repatriation of earnings to the U.S. franchisers have blocked conclusion of any agreements. Local franchises have yet to evolve. DIRECT MARKETING At present, direct marketing does not exist in Syria. The Syrian government forbids the importation of many consumer items, for instance toys and finished clothing, which are marketed directly in other parts of the world. A local Syrian direct marketing company has not yet appeared. JOINT VENTURES/LICENSING Many Syrian businessmen, as well as the Syrian government, welcome the opportunity to establish a joint-venture with U.S. companies to execute a project, or participate in foreign government tenders. Several joint-ventures currently operate in Syria, the most successful of which have been the Al-Furat Petroleum Company (Syrian Petroleum Company, 50 percent, Deminex, 18.5 percent, Royal Dutch Shell, 31.5 percent) and the Dayr al-Zur Petroleum Company (Syrian Petroleum Company, 50 pecent, Elf Aquitaine, 50 percent). Please refer to Section VII, Investment Climate, for further information on forming a joint-venture in Syria. Currently, several major Syrian public and private sector manufacturers are trying to obtain licenses to produce pharmaceuticals, processed foods, especially fruit juices, glass, fertilizers, and pesticides. Most of the products desired to be manufactured under license cannot be imported, or face prohibitive duty rates (see Section VI), so opportunities for substantial profits exist. STEPS TO ESTABLISHING AN OFFICE To open up a branch office in Syria, an application, accompanied by the following documents, must be filed with the Ministry of Economy and Foreign Trade: 1. Document(s) of incorporation, registration of a sole proprietorship, or contract forming a partnership, from the company's country. 2. Document outlining the company's internal regulations. 3. Financial statement that shows the company's capital, without the reserve. 4. Document showing the commercial registration of the company. 5. Declaration from the company that it is not shared or owned by any government or by joint-companies. (Requests to open up a branch office for a government company will be forwarded to the Prime Ministry for approval.) 6. Document announcing the company's management decision to open a branch office in Syria, along with a declaration that this branch will be directly affiliated with the company headquarters. 7. Power of attorney for the manager of the Syria branch, giving him all managerial, financial and technical authority in Syria. This manager can be of any nationality. 8. Company trade balance. All these documents must be certified by the following organizations: a. The Chamber of Commerce in the company's country of nationality. b. The Ministry of Foreign Affairs of the company's country of nationality. c. The Syrian Embassy in that country. d. The Syrian Ministry of Foreign Affairs. (All documents must be translated into Arabic by a sworn translator.) SELLING FACTORS/TECHNIQUES For marketing purposes, Syria can be divided into two zones, Damascus, and the north, centered in Aleppo. Approximately four million of Syria's 14 million people live in the vicinity of Damascus and the population is growing at a rate of eight percent per year. As the center of government, Damascus is the major contact point for selling to the public sector. In addition, a significant portion of private sector trading and industrial activity is located in the capital. Aleppo, Syria's second largest city, with a population of over 2 million people, is becoming Syria's main center for private sector industrial development, especially textiles, food processing, pharmaceuticals, glass, and metals production. According to Aleppo's Chamber of Industry, the city boasts over 27,000 industrial firms, over half of which are textile companies (two-thirds of Syria's textile industries are located in Aleppo). The northern secondary cities of Hama, Homs, Latakia, Tartus, and Dayr al-Zur also offer significant marketing opportunities. Syrian traders are experienced, sophisticated international businessmen, who traditionally have been able to cut advantageous deals. Government bureaucrats, who are somewhat less experienced internationally, may actually be tougher to negotiate with. Many businessmen are multilingual (Arabic/English/French), but even some of the more important businessmen and government ministers speak only Arabic. Negotiations for a sale, whether with a government agency or a private individual, will undoubtedly seem never ending as Syrians will haggle until the last possible second. Therefore, offering one's best price at the beginning may be ill advised. Government agencies follow a practice called "breaking the price." After financial tender envelopes are opened, bidders are invited to participate in a meeting attended by the purchasing agency and all tenderers at which each bidder is invited to revise his price downward. Such meetings can become an open auction, and the company with the lowest original bid sometimes does not win the contract. ADVERTISING AND TRADE PROMOTION With the expansion of product availability following the government's relaxation of import restrictions on many consumer goods, the Syrian retail market has become increasingly more competitive. Consequently, advertising, both on television and in newspapers, has become more widely used. Responding to this increase in demand, some private advertising/public relations firms have been opened. Employing desktop publishing techniques, they have raised the quality of advertising production standards considerably. Newspapers charge foreigners very steep rates, demanding USD 1470 for a 1/4-page newspaper ad, while the base rate for a 30 second TV spot for a foreigner is USD 750 to 1100. Below is a list of local newspapers that may be considered for advertising purposes: TISHRIN: Midan St., P.O. Box 5452, Damascus, Syria; fax: 963-11-223-1374, phone: 224-7359. AL-THAWRA: Kaffar-Souseh Square, P.O. Box 2448, Damascus, Syria; fax: 963-11-221-6851; phone: 222-2399. AL-BAATH: Mazzeh St., P.O. Box 2842, Damascus, Syria; fax: 963-11-662-2099; phone: 666-4601. GOLAN: (the daily bulletin of official tenders), P.O. Box 2842, Damascus, Syria; fax: 963-11-222-0754; phone: 222-5219. During the last year, local promoters have held a number of new trade shows, in both Damascus and Aleppo. Two of them focused on the computer and electronic equipment industries. Local representatives of U.S. computer firms participated successfully in both shows. Two additional fields for which Syrian promoters have held, or plan to hold, trade shows are hotel/tourism equipment and construction equipment. The Syrian government also hosts its annual International Fair in August and its International Book Fair in September. A list of Syrian Trade events and Trade Show Promoters can be found in Appendix E. The Embassy actively promotes participation in U.S. Trade Shows to Syrian businessmen and hopes to coordinate future U.S. trade promotion events relating to the best prospects list in Section II. PRODUCT PRICING Syrian consumers are heavily price conscious and have been known to purchase mediocre quality goods, simply because they carried the best price. Hence, American firms considering entering the Syrian market are well advised to consider every component in the pricing process very carefully. One factor which Syrian importers interested in buying American products often complain about is the high cost of transporting products from the U.S. to Syria relative to the cost of transportation from Europe. SALES SERVICE/CUSTOMER SUPPORT In a country in which technical skills are scarce, companies offering responsive, reliable, and competent customer service should establish strong reputations leading to increased future sales. This, of course, reinforces the earlier arguments for hiring an agent/distributor. Training the agent's customer support staff in the U.S. will also provide greater product credibility in the market. SELLING TO THE GOVERNMENT Government organizations procure through the complex tendering procedures outlined in Decrees Number 195 of 1974 and Number 349 of 1980. The buyer must solicit bids by announcing for his requirements through the "Daily Bulletin of Official Tenders." However, the announcement of tenders with deadlines of less than 45 days is not uncommon and is read by many U.S. companies as a signal that the contest is already "fixed." Many public sector companies continue to favor barter arrangements not attractive to American suppliers. The Syrian public sector has also been known to engage in other unfair and questionable practices. Offers, accompanied by a bid bond of 5 percent of the offer value, may be submitted either directly by the foreign company, or through the company's duly-registered Syrian agent. Before an L/C is opened, the supplier must submit a 10 percent performance bond. The Commercial Bank of Syria requires that all bonds be issued according to the "Syrian official text." Since 1987, most government tenders have included a clause allowing the bidder to cancel his offer at six month intervals if a letter of credit is not issued, provided a written notice is provided in a timely manner. Furthermore, the same regulations allow proportional payment of performance bonds. Nevertheless, companies still experience difficulties in obtaining the prompt and complete return of their performance bonds. Despite these difficulties, several U.S. companies have been able to compete successfully in public tenders and conclude large contracts. They attribute their successes to tenacity and patience in dealing with government officials, a clear understanding of the nature of the regulations and evaluation process, and most importantly, a capable "agent" or "middle man." PROTECTING YOUR PRODUCT FROM IPR INFRINGEMENT Syria's legal system recognizes and facilitates the transfer of property rights, including intellectual property rights. Syria is a member of the Paris Union for the International Protection of Industrial Property. Prior registration of intellectual property is required to bring infringement suits. With the growth of the private sector since 1991, infringement problems may begin to grow. Local courts would likely give plaintiffs fair hearings, but any financial awards would be in Syrian pounds, an as yet unconvertible currency. Requests for payment in foreign exchange would probably be delayed indefinitely. Still, the Syrian government takes its responsibilities in this field seriously, and in early 1993, raided shops selling computer programs, confiscating all illegally reproduced software. NEED FOR A LOCAL ATTORNEY Because Syrian law and the Arabic language in which it is practiced are vastly foreign to U.S. business, hiring a local attorney is a sensible, and often necessary, action. Specialties: While an attempt has been made to indicate the listed attorney's specialization, most Syrian attorneys accept all types of cases. Collection Agencies: No such firms operate in Syria; although most attorneys will handle collection cases. The American Embassy assumes no responsibility for the professional ability or integrity of the persons or firms whose names appear in the following list. Nevertheless, care and selectivity have been exercised in its preparation. Names are arranged alphabetically, and the order in which they appear has no other significance. List of Attorneys in Syria (As of March 31, 1994) Damascus Mohammad Abdin: Port-Said Street, Awkaf bldg., No. 6, Tel: 2214798 (office), 3335285 (home). Citizen of the SAR. Born in Damascus 1925. Graduate of Damascus Law School in 1950. Practicing since 1950. Specializes in criminal, civil, banking and commercial cases, and international arbitration. Former Minister of Social Affairs and Labor. Legal counselor for the Commercial Bank of Syria since 1985. Languages: Arabic, French, and English. Mazhar Anbari: Sanjakdar Street, tel: 2217017. Citizen of the SAR. Born in Damascus 1923. Graduate of Damascus Law School 1948; practicing since 1948. Specializes in criminal and civil cases, insurance, and international arbitration. Former Minister of Justice. Former Vice-Speaker of the Parliament. Former President of the Syrian Bar Association. Languages: Arabic, English, and French. Farid Arslanian: Balkis Street, telephone: 2218321 and 3331676. Citizen of the SAR. Born in Turkey in 1915. Graduate of Damascus Law School. Specializes in criminal, civil, and insurance cases. Secretary General of the Committee of Damascus Bar Association. Controller, 1960-1971. Elected Deputy in the Syrian Parliament. Legal consultant since 1964 for the United Nations Relief and Works Agency in the SAR. Languages: Arabic, French, English, Armenian, and Turkish. Jacques Hakim: Victoria Bridge, Mardam bldg., P.O. Box 5788. Telex 412033 Sy (drobco); tel: 2223577 (office), 710554 (home). Citizen of the SAR. Born in Damascus in 1931. Doctor of Law (France), graduate in economics (Economics Institute, Univ. of Colorado). Professor, Head of the Commercial Law Department, Damascus University. Practicing since 1952. Specializes in commercial, and finance cases along with international arbitration. Languages: Arabic, English, and French. Hazem Jazzar: Salhieh Street, Cinema Amir's Bldg., Tel: 421069 (home), 2225286 (office). Citizen of the SAR. Born in Damascus in 1948. Graduate of Damascus Law School 1971. Has practiced since 1971. Specializes in commercial and criminal cases. Languages: Arabic and English. Zouheir Al-Midany: Abou-Roumaneh street, tel: 2213100 (office), 3332075, 3330650 (home). Citizen of the SAR. Born in Damascus in 1923. Graduate of Damascus Law School 1947. Has practiced law since 1947. Specializes in civil, commercial, and criminal cases. Former head of the Syrian Bar Association and former Vice-President of the International Bar Union. Languages: Arabic and French. Souheil Sarkis: 7 Fountain Square, Adel Sharaf bldg., Floor no. 2. Tel: 428240-419999, telex 412464. Citizen of SAR. Born in Damascus in 1934. Graduate of Damascus Law School 1960. Has practiced law since 1961. Specializes in civil and commercial cases. Languages: Arabic, English, and French. Sami Wardeh: Marjeh Square, Kabbani bldg., P.O. Box 10355, tel: 2211767 (office), 714892 (home). Born in Damascus in 1942. Graduate of Damascus Law School 1965. Has practiced law since 1965. Specializes in commercial and real estate cases. Languages: Arabic, French and English. Aleppo Miss Ghada Bismarji: Kostaki Homsi Street, Azizieh, telephone 219428. Citizen of the SAR, graduate of Damascus Law School 1962. Has practiced law since 1962. Sworn translator English-Arabic, and vice-versa. Handles all types of cases. Languages: English, Arabic, French, and some Armenian. Ihsan Kayali: Baron Street, tel: office 215811 and home 219403. Citizen of the SAR. Born in Aleppo in 1925. Graduate of Damascus Law School in 1949. Handles all cases with specialization in commercial and insurance cases. Languages: Arabic, English, and French. Simon Bashkhamji: P.O.Box 67, Azizieh, tel: office 247074 and home 217624. Citizen of the SAR. Graduate of the University of Aleppo 1969. General practice. Languages: Arabic, French, and some English. Homs Mouhammad Mounir Amoudi: P.O. Box 362, tel: 223115 (office), 222683 (home). Citizen of SAR. Born in 1928. Graduate of Damascus Law School 1949. Has practiced since 1949. Specializes in criminal, civil, banking, and insurance cases. Languages: Arabic, French, and English. Antoun Trabulsi: tel: 224406 (office), 225286, 224655 (home). Citizen of the SAR. Born in 1919. Graduate of Damascus Law School 1940. Has practiced since 1940. Lawyer of the Municipality of Homs. Head of Homs Bar Association. General practice. Languages: Arabic and French. Hama Fathallah Alloush: Al-Alamien Street, tel: 223206 (office). Citizen of the SAR. Born in Hama in 1932. Graduate of Damascus Law School in 1955, practicing since 1955. Specializes in civil, banking, and criminal cases. Languages: Arabic and French. Khaled Al-Keylani: Kowatly Street, tel: 222536 and 221299. Citizen of the SAR. Born in Hama in 1929. Graduate of Damascus Law School in 1954. No specialization, handles all cases. Languages: Arabic, French, and some English. Latakia Hassan Makhlouf: P.O. Box 1025, tel: 338055 (office), 226089 (home). Citizen of the SAR. Born in 1930. Graduate of Damascus Law School 1960. Has practiced since 1960. No specialization, handles all cases. Languages: Arabic, French, and English.