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The iranian business environment and cultural etiquette

The Iranian business environment
Iran’s economy is dominated by the oil- and gas sector, agriculture and services sectors, and a noticeable state presence in manufacturing and financial services. Economic activity and government revenues to a large extent depend on oil revenues and therefore remain sensitive to the global oil prices.

Iranian authorities have adopted a comprehensive strategy encompassing market-based reforms. The new strategy envisages reforms of state-owned enterprises, the financial and banking sector, and the allocation and management of oil revenues. The strategy aim to shift Iran away from having an oil-dependent economy towards relying on manufacturing, high-tech solutions and bolster a knowledge based economy. This also entails a focus on strengthening innovation and competiveness among private Iranian companies.

Even though the security situation in Iran is stable, in comparison to many of its regional neighbours, the political situation is more volatile. The geopolitical situation of Iran has always caused a combination of political risks and business opportunities. Therefore, please contact the Embassy for any update prior to investment in Iran.

The Iranian business culture and etiquette
The Iranians are a proud people and very conscious about their country’s long history, cultural legacy and many traditions. Beside the country’s great Persian heritage, Iran has throughout its long history been influenced by multiple cultures and political movements.

Prior to the 1979 revolution, Iran had experienced great changes in terms of adopting western viewpoints on women and religion. However, the western values were perceived as a threat to Iran’s Islamic values and traditions by the religious establishment. As a result of the 1979 revolution, the new Islamic Republic of Iran attempted to shelter the country from western values and ideas. Nevertheless, western influence have continued to impact the Iranian business culture, since many key financial leaders and businesspersons have remained in touch with the international community. Iran also has a large diaspora in the US, Canada and Europe, which have remained in touch with family members in Iran and thereby maintained the cultural link between Iran and the West. The Iranian business culture is therefore a mix between traditional, Islamic inspired values and western norms and customs.

It is thus important to stress that there remains a great differences between the Iranian and Danish business culture and etiquette. Even though many Iranians are themselves critical towards the Iranian political system, it is considered impolite if a foreigner presents the same critique of Iran. Further, there is a strong perception in the Iranian public, also among Iranian businesspeople, that western countries have an unfair and unreasonable critical stance towards Iran.
Iranian business relations

In cases where it is necessary with business contact to an Iranian authority, it is common that the Iranian authority representative is not capable of taking a decision nor signing an agreement at the spot, but merely act as a representative for a complex bureaucracy with a blurred decision-making structure. Contracts and legal or financial documents are normally issued in Farsi with an English translation attached. Business meetings and discussions are increasingly conducted in English, but for some negotiations it is necessary to hire an interpreter.

When arranging meetings or hosting negotiations, delays are common. During negotiations it is not uncommon, that there are attempts of signing ‘oral agreements’, also after the contract has been signed. This factor needs to be taken into account, when negotiating a sales price for a service with an Iranian partner.

Iranian etiquette
A business relation with an Iranian partner is first and foremost based on trust between the partners. The trust is build up through frequent visits and gradual development of the business relation. On a formal level, the Danish partner might need to secure professional assistance to draw up agreements and contracts. In principle, financial or legal disagreements can be solved through a civil court. However, this is a time-consuming and expensive process with an often unpredictable end-result. The Iranian law is complicated and thus does not provide a foreign partner many opportunities to achieve its legal rights.

Iranian culture is characterized by politeness, which from the outside might seem superficial. The politeness is, however, imperative for creating a good dialogue and build trust between the partners and expressions in Farsi are very well received. Further, loud voice and high temper is looked down upon in Iran and should be avoided. As in other Muslim countries, there are certain restriction for dress code and social behaviour, which needs to be followed carefully. Dress code for male business persons are jacket and tie. Except face, hands and feed, women should cover up the whole body.