V. MARKETING U.S. PRODUCTS & SERVICES Distribution and Sales Channels U.S. firms interested in selling their products and services in the Qatari market should adhere to provisions of Law No. 4 (1986), which deals with local agency arrangements, and Law no. 25 (1990), which deals with foreign equity participation. The two laws and related regulations highlight the necessity of having a local agent/representative as a sales channel for promoting products and services in the local market. Officially, such a requirement is not applicable to foreign suppliers of capital goods/services to the Qatari Armed forces and the police force. Many food importers are generally also wholesalers, distributors, and retailers. A handful of large local companies tend to dominate sales. In Qatar, consumer cooperative stores account for about 25 percent of total food retail sales. There is growing demand among processors/packers for bulk shipments of semi-processed food products for final processing and packaging, especially corn oil, tree nuts, dairy products, fruit juices, and snack foods. Imported U.S. beef products are mostly purchased by hotels, restaurants and catering companies. Use of Agents/ Distributors / Finding a partner The local agent/representative must be a Qatari national or a company with at least 51 percent Qatari ownership. All goods imported to Qatar for sale must be imported by a holder of an import license which is issued only to Qatari citizens by the Ministry of Finance, Economy and Commerce. Because it is a very difficult and time-consuming process to change a local agent/representative, selection of those agents should be given serious consideration. It should be done on the basis of personal visits to this market and by reviewing the nominated agent's potential. A well-selected agent in Qatar would have extensive contacts in both public and private sectors, enabling him to collect valuable information on upcoming Government tenders. A local agent should be able to introduce products and services of his foreign suppliers to key government officials. In Qatar, the Government is the largest end-user of a wide range of products and services. The Government's procurement process is based on standard tender procedures. A foreign supplier wishing to participate in government tenders should go through a local representative who can be easily called upon for any kind of contact with foreign suppliers. In many cases, bid and performance bonds are required to be presented by the foreign suppliers and guaranteed by local agents. It is common practice in Qatar and other Arabian Gulf countries to appoint an exclusive agent/representative as a sales channel. While applicable to selling products, this practice may involve some risk in the case of services. U.S. firms are advised to have local agents/representatives for their services on a project-to-project basis, since a local agent/representative may be very well-connected in some areas, but not in others. Although exclusive for a specific project, representation on a project-to-project basis provides legal space and grounds for foreign suppliers to change agents as deemed necessary. U.S. firms are strongly advised to avoid appointing one regional agent to cover all the Arabic Gulf countries. They should deal directly through a Qatari citizen or firm as agent. Establishing a regional agent was the more acceptable procedure prior to Qatar's independence from Britain in 1971. However, today Qataris view an exclusive agency as a matter of prestige. They like to meet key officers of the foreign firm, and they feel that the amount of interest displayed by the foreign firm in the form of frequent visits makes the difference between winning or losing a major contract. When finally approved by both parties, agency/representation agreements should be registered with the Commercial Registration Department of the Ministry of Finance, Economy and Commerce. The local agents usually follow up on the routine work required by the Ministry regulations. The Ministry also has responsibility for arbitrating between parties in disputes relating to an agency agreement.The local civil courts look into disputes which are beyond the Ministry to resolve. Franchising/Licensing This is another promising sales channel for U.S. goods and services in the Qatari market. Qatar has no special rules or regulations governing either licensing or franchising operations. Moreover, there are no restrictions on the payment of fees and royalties. However, U.S. firms interested in licensing/franchising their operations in Qatar should identify local agents. The restrictions and precautions which apply in the case of appointing local agents for products and services also apply here. The current five U.S. franchise operations in Qatar (mainly fast food services) are reported to be doing well in a market of no more than 400,000 inhabitants. Selling Factors & Techniques It is important to stress quality, since U.S. industrial and food products tend to be higher priced than similar products from other origins. Qatari consumers recognize the high quality of the U.S. products and are willing to pay a premium for such products. Steps to Establishing an Office The local agent requirement applies to all foreign firms interested in doing business in Qatar. This requirement applies to foreign firms wishing to establish a branch in Qatar for a mother company abroad, as well as those foreign firms entering into a joint venture on a basis of up to 49 percent foreign equity and no less than 51 percent local equity . The foreign firm, together with the local agent, should apply for official registration of the agency, the joint venture or the branch office, with the Commercial Registration Department of the Ministry of Finance, Economy and Commerce. Fees are minimal; original copies of the related agreements between the foreign firms and their local partners are required. This process may take up to two weeks, unlike the procedure for registration of trademarks, which may require several months to complete. Acquiring the business practice permit is more time consuming than registration of agency agreements. This permit is issued by the Ministry of Municipal Affairs and Agriculture. Copies of agency and commercial registration are required when applying for the business permit. Moreover, the Ministry often conducts a check on the location and residence permit of the foreign representative involved in the permit under consideration. Naturally, the local agent should be the local sponsor for the foreign representative' residence permit, which is issued by the Immigration/Passport Department of the Ministry of Interior. Advertising and Trade Promotion The business framework which U.S. firms are accustomed to has been developed to a good extent in Qatar. While trade statistical data is the responsibility of the Government- appointed Central Statistical Organization (CSO), several private advertising firms are now equipped to handle promotional activities. Most publications in Qatar, including three Arabic and one English dailies, as well as three weekly magazines, have a large readership. These include: "Al-Sharq" (P.O. Box 3488); "Al-Arab" and "Al-Orouba" (P.O. Box 633):"Gulf Times" and "Arrayah" (P.O. Box 533); and "Akhbar Al-Ousbou" (P.O. Box 4869). The State-owned radio, Qatar Broadcasting Corporation (QBS), established in 1968, broadcasts on medium-wave, short- wave and FM frequencies. Most broadcasts on the medium-wave are in Arabic. The FM stereo station which transmits for about 18 hours daily is mainly used for English programs. There are no private radio stations. Unlike the State-owned television, Qatar Television (QTV), QBS is yet to introduce advertisements in its programs. The TV station, comprising Arabic and English channels, broadcasts pre-recorded commercials. Further information on advertising in these two separate channels can be obtained from the Advertising Department, Qatar Television, P.O. Box 1944, Doha, State of Qatar. Selling to the Government In Qatar, the Government is the main end-user of a wide range of products and services. All Government procurement controls are let under provisions of bidding and tender regulations included in Law no. 8 of 1979. The Government's standard procurement tender process is divided into two sections. The Central Tender Committee (CTC) of the Ministry of Finance, Economy and Commerce handles procurement worth US$ 12,000 and above. Procurement below this amount is usually processed by in-house tender committees in each ministry. U.S. firms interested in selling products and services to the Government should go through local agents. Exemptions exist in case of selling capital goods and services to the Ministry of Defense. Under the direction of the Ministry of Finance, Economy and Commerce and the Office of the Heir Apparent, CTC handles the bidding process and awarding of contracts. The Ministry of Municipal Affairs and Agriculture, which replaced the former Ministry of Public Works, is the principal construction supervisor of the Qatari government. It supervises contracts for civil construction and highway projects. The Ministry of Energy and Industry and the Ministry of Electricity and Water supervise certain projects in their specialized fields. As a general rule, the Government of Qatar does not award turnkey contracts, preferring to award separate contracts to consultants. The role of the consultant (usually a foreign firm) includes, among other things, the task of short-listing firms to be invited to bid for projects. Contracts for small projects worth about US$ 80,000 or less are awarded only to local contractors or merchants who are officially registered with the Ministry of Finance, Economy and Commerce. CTC normally invites pre-qualification documents from short-listed foreign and/or local contractors or merchants for larger projects. The government announces invitations to pre-qualify in local and/or foreign papers and occasionally through Qatari embassies abroad. Law no. 8 for the year 1977 provides for classification of contractors by a committee operating under CTC. The classification process is based on the firm's financial strength, business reputation and experience. Although preference should go to lowest bids meeting all specifications, CTC has in practice waived this rule on various occasions without providing the reason. Bid and performance bonds are required in the form of unconditional guarantees with a local bank. The standard bid bond is 5 percent and performance bond is 10 percent of the contract. However, the above rate can be larger for certain projects. Foreign firms are not required to have a local agent for the bid process. However, by the time a contract is ready to be signed, participating foreign firms should have already honored the local agent requirement. U.S. firms are advised that a well connected local agent can be an asset, even during the bidding process. The State Purchase Office (SPO), a division of CTC, handles all local purchase orders (LPO's) for equipment and supplies required by various Government ministries. SPO handles bids worth hundreds of millions of dollars every year. The period for preparation of quotations is usually 30 days and very often less than three weeks after the announcement of tenders. Under these circumstances, an already established local agency arrangement is crucial for successful bidding. Also known as SPO, the Special Projects Office located at the Office of the Head of State handles private construction projects related to the residences of the Head of State and immediate members of his family. The Special Projects Office, which is controlled entirely by the Office of the Head of State, employs its own engineering consultants, who invite pre- qualification documents from local and foreign firms for each project, and prepare a shortlist of contractors. The Special Projects Office also acts as the engineering supervisor for these specific projects. Government contracts normally include arbitration clauses. Unless stated otherwise in the contract, the standard clauses stipulate that disputes emanating from government contracts will be subject to arbitration in Qatar. U.S. firms are advised to reserve the right to resort to appeal local arbitration decisions abroad whenever possible. Foreign and local contractors are usually paid 20 percent of the contract awarded to them against unconditional bank guarantees. Further payments are made according to the progress of the project. Foreign and local contractors have had mixed experience with delayed payments without interest. Arabic is the official language in Qatar though English is widely used. Bids should be in Arabic unless specifically indicated in the tender document that English is required. Specifications have been generally made to conform with British/European standards. This situation is gradually changing as more Qatari students go the United States for higher education and come back to replace retiring British advisors in the areas of power generation/water desalination, public works, municipal planning and physical development plan preparation. Protecting your product from IPR Infringement Apart from the GATT, Qatar is not a member of any international convention in which the United States participates on the subject of patents, trademarks or copyright protection. Qatar's Law No. 3 for the year 1978, known as "The Law of Trademarks and Commercial Indications" provides provisions for trademark registration and penalties for infringement. In practice, protection is afforded by advertising a cautionary notice in Qatar's daily newspapers. There are no patent laws in effect in Qatar. As is the case with trademarks, protection is afforded by advertising a cautionary notice in local dailies. Moreover, Qatar has yet to promulgate laws for protection of copyrights, trade secrets and semiconductor chip layout design. Need for a Local Attorney A list of local attorneys is provided below: Abdullah Essa Al-Ensari Law Office: Abdullah Essa Al-Ansari, (Qatari), P.O. Box 23399 Tel: 351-418/351-419/351-420 Fax: 351-421 Lawyers and legal consultants Languages: English and Arabic Akhal Mueen Aref Law Office: Akhal Mueen Aref, (Lebanese), P.O. Box 5922, Jaidah Tower,8th Flr Tel: 424-856/421-620/(R)427-882 Fax: 434-336 Specializes in commercial law and civil law Languages: English, Arabic, French Kabbani Law Office: Nizar Kabbani, (Lebanese), P.O. Box 8717, Embassy Street, Al-Obaidly Tower, 4th Floor Tel: 431-015 Fax: 432-060 Specializes in commercial and civil law Languages: English, Arabic and French Behzad Y. Behzad Law Office Behzad Y. Behzad, (Qatari), P.O. Box 869 Tel: 352-333,4,5,6,7/433-119/433-224 Fax: 352-888 Specializes in civil, maritime, insurance, trademark, construction and contract laws. Majdalany & Partners Law Office: Gebran Majdalany,(Lebanese), P.O. Box 4004 Tel: 428-899 Fax: 417-814 Specializes in business law (commercial, banking, company law), civil law including building law, real estate, shipping,insurance Languages: English, Arabic and French Rashid Jassim Al-Boinin Law Office: Anthony Rutland, Consultant, P.O. Box 9393 Tel: 441-651/2 Fax: 414-127 Attorneys and legal consultants Languages: English and Arabic Rouhani and Partners Law Office: Riad Rouhani, (Qatari), P.O. Box 8747 Tel: 425-815 Fax: 441-428 Specializes in criminal, labor and civil law Languages: English, Arabic and French Sayel Daher Law Office: Sayel Mohammed Daher, (Jordanian), P.O. Box 5684 Tel: 415-080/1 Fax: 443-930 General practice. Associated with Walker Martineau, Lawyers, London, UK Languages: English and Arabic