GO INTERNATIONAL 4 STRATEGIES FOR 4 MARKETS - EMIRATI ARABI UNITI Studio Rödl & Partner, Padova Avv. Eugenio Bettella, Managing Partner
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Agenda
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Cosmetics and Dietary Supplements
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Foreign Investments in the UAE
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Agenda
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Cosmetics and Dietary Supplements 1.1. Market Overview 1.2. Market in the UAE: General Rules
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Foreign Investments in the UAE
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1. Cosmetics and Dietary Supplements 1.1. Market Overview
The cosmetics and perfumes sector is one of the most competitive, dynamic and innovative sectors in UAE. Positive factors to be taken into account: • increase in population; • young “fashion conscious” population; • growing income; • strong social pressure to look good; • harsh climatic conditions. Around three quarters of the UAE population is represented by men: products aimed solely at men show good potential.
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1. Cosmetics and Dietary Supplements 1.1. Market Overview Trade events Beautyworld Middle East – Dubai – 26/28 May 2015.
Beyond Beauty Arabia – Abu Dhabi (38/31 January 2015) & Dubai (25/28 March 2015).
Beauty Secrets Exhibition – Abu Dhabi (30 April / 3 May 2015).
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1. Cosmetics and Dietary Supplements 1.1. Market Overview Trade statistics: export from EU to United Arab Emirates Product Code: 3304 Product description: Beauty or make-up preparations and preparations for the care of the skin (other than medicaments), including sunscreen or suntan preparations; manicure or pedicure preparations.
Year
United Arab Emirates
Export Value from the EU (1000 EURO)
Export Value from the EU (1000 EURO)
Export Qty from the EU (1000 kg)
Export Qty from the EU (1000 kg)
2013
2014
2013
2014
20 337.000
20 758.000
260 764.533
282 931.920
Source: Comext Last updated on: 16 Mar 2015
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1. Cosmetics and Dietary Supplements 1.1. Market Overview Trade statistics: export from EU to the other GCC Countries Product Code: 3304
Export Value from the EU (1000 EURO)
Export Value from the EU (1000 EURO)
Export Qty from the EU (1000 kg)
Export Qty from the EU (1000 kg)
Year
2013
2014
2013
2014
Qatar
20 104.750
21 747.916
410.000
511.000
121 312.965
144 598.334
6 964.000
7 970.000
Oman
5 863.979
6 158.827
183.000
230.000
Bahrain
5 581.723
5 751.641
126.000
163.000
Kuwait
36 396.164
36 829.097
1 169.000
1 247.000
Saudi Arabia
Source: Comext Last updated on: 16 Mar 2015
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1. Cosmetics and Dietary Supplements 1.1. Market Overview Trade statistics: export value from Italy to the GCC Countries in 2014
Product Code 3304
Italy Export value (1000 EUR)
UAE
27 648.257
Qatar
Saudi Arabia
896.908 14 346.822
Oman
149.475
Bahrain
252.466
Kuwait
3 723.623
Source: Comext Last updated on: 16 Mar 2015
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1. Cosmetics and Dietary Supplements 1.1. Market Overview Trade statistics: tariffs due for the export to the United Arab Emirates NB: the agreement establishing the Gulf Cooperation Council (GCC) Custom Union entered into force in 2003. This agreement provides for a common external tariff of 5% for most commodities and duty-free access for local goods traded between the members States (UAE, Bahrain, Kuwait, Oman, Qatar and Saudi Arabia). Goods which are cleared at a customs office of entry in one of the GCC member States may be directed to any other member state without necessitating further customs procedures at the border of the GCC state of destination with the exception of an additional Statistical Declaration for Trade between GCC Countries.
Products
MFN*
Products
MFN*
3304:10 Lip make-up preparations
5%
3304.30 Manicure / pedicure preparations
5%
3304.20 Eye make-up preparations
5%
3304.99.20 Suntan preparations
5%
* Most Favoured Nation © Rödl & Partner
Source: Comext : Last updated on: 16 Mar 2015 17th April 2015
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1. Cosmetics and Dietary Supplements 1.1. Market Overview Breakdown of cosmetic market
mass cosmetics premium cosmetics fragrances hair care
Mass cosmetics represents the largest market segment. Within said segment, skincare products (e.g. antiaging, sun protection) are experiencing a major growth.
Source: Doing Business in the UAE - 2014 - by U.S. Commercial Service
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1. Cosmetics and Dietary Supplements 1.2. Market in the UAE: General Rules
COSMETICS PERSONAL CARE
DIETARY SUPPLEMENTS MEDICATED COSMETICS © Rödl & Partner
• Any substance or mixture intended for use on external parts of the human body (e.g. epidermis, hair, nails, lips etc.) or on the teeth and the mucous membranes of the oral cavity with a view exclusively or mainly to cleaning them, perfuming them, changing their appearance, protecting them, keeping them in good condition or correcting body errors.
• Miscellaneous products which contain pharmaceutical ingredients and/or medical claim and cannot be classified as medicines, such as dietary supplements, medicated cosmetics, antiseptics and disinfectants, etc.
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1. Cosmetics and Dietary Supplements 1.2. Market in the UAE: General Rules
Cosmetics
Rules in respect of cosmetics are less pressing than in the pharmaceutical sector. However, cosmetic products shall respect a wide range of requisites and standards in order to be marketed in the UAE.
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Dietary Supplements Dietary supplements are included in the General Sale List (GSL – the list consisting of all registered pharmaceutical substances in the UAE) and subject to the same rules – Ministry of Health circular No. 20/2001.
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1. Cosmetics and Dietary Supplements 1.2. Market in the UAE: General Rules Cosmetics and Personal Care ECAS certificate (Emirates Conformity Assessment Scheme) by ESMA (Emirates Authority for Standardization & Metrology). Issuance of certificate of conformity assures (i) cosmetics and personal care products are compliant with the requirements of the approved standards and (ii) the production system is compliant with the requirements specified in the technical regulation by Emirates Authority for Standardization and Metrology. ESMA Locations:
Business Avenue Building Sheikh Rashid Road Dubai UAE
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15th Floor, Al-Khazna Tower, Al-Najda Street Abu Dhabi - UAE
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1. Cosmetics and Dietary Supplements 1.2. Market in the UAE: General Rules Cosmetics and Personal Care Procedure to obtain the certificate: • the applicant may submit the application through the ESMA website along with the relevant documents. • the average period for the completion of the procedure (starting from the filing of a complete application): 8 working days. • fees: Application 600 AED. Issuance of Certificate 500 AED. Safety and quality requirements, including: • compliance with requirements set forth by UAE.S. GSO 1943 (Cosmetic Products – Cosmetic Products Safety Requirements); • successful outcome of specific tests; • presence of a Cosmetic Product Safety Report; • products should not be mistakable for food products.
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1. Cosmetics and Dietary Supplements 1.2. Market in the UAE: General Rules Cosmetics and Personal Care Manufacturing requirements. • The manufacturer shall comply with the requirements of ISO 9001 and UAE.S GSO.ISO 22716 (Cosmetics - Guidelines on Good Manufacturing Practices). The latter provides guidance for Good Manufacturing Practices (GMP) for the cosmetics manufacturing industry and describes the basic principles of how to apply GMP in a facility that produces finished cosmetic products. Metrological requirements • The products shall comply with the metrological requirements of UAE.S GSO IOML R 87 (Quantity of Products in Packages). The latter provides legal metrology requirements for prepackaged products (also called prepackaged commodities or prepackaged goods) labeled in predetermined constant nominal quantities of weight, volume, linear measure, area, or count.
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1. Cosmetics and Dietary Supplements 1.2. Market in the UAE: General Rules Cosmetics and Personal Care Packaging/labeling requirements • The containers shall comply with the requirements of UAE.S GSO ISO 22715 (Cosmetics Packaging and Labeling). In case of glass containers, they shall also meet the requirements of UAS.S GSO 2093 (Glass Containers Used for Cosmetics).
GSO standards are international standards drafted by the GCC Standardization Organization. They may be downloaded in English from the e-store on the website of the GCC Standardization Organization or from the website of the Emirates Authority for Standardization & Metrology.
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1. Cosmetics and Dietary Supplements 1.2. Market in the UAE: General Rules Labeling of Cosmetics Expiry date. To be indicated as: • date of minimum durability • period after opening If necessary, this information shall be supplemented by an indication of the conditions of storage/use of the product in order to guarantee the stated durability. Ingredients. In particular, ingredients in the form of nano–materials must be highlighted.
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1. Cosmetics and Dietary Supplements 1.2. Market in the UAE: General Rules Labeling of Cosmetics Pictures and illustrations. It is inconsistent with precepts by the Islamic religion to depict animate life, because it is deemed to imitate the creative act of the God. Hence, it is advisable not to include pictures of persons and/or animals in the label/packaging (and, however, use only stick figures). Language. English and/or Arabic.
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1. Cosmetics and Dietary Supplements 1.2. Market in the UAE: General Rules Dietary Supplements and Medicated Cosmetics Marketing authorization for GSL products in the UAE can only be given to companies (manufacturers) who are registered with the UAE Ministry of Health. Hence, both the products and the manufacturer must be registered with the UAE MoH. GSL company registration. • The application forms are divided: Part I with regard to the Marketing Authorization Holder and Part II with regard to the manufacturer. • Each form entails the relevant documents required. • The Marketing Authorization Holder shall have available a medical store licensed by the Ministry of Health. • The Dubai Community Pharmacy Licensure & Pharmaceutical Practices Guide, issued by the Dubai Health Authority – Health Regulation Department (February 2013) focuses primarily on licensing and protocol of institutions and professionals.
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1. Cosmetics and Dietary Supplements 1.2. Market in the UAE: General Rules Dietary Supplements And Medicated Cosmetics Registration of a GSL product requires a wide range of documents and information, including: • application (in English or Arabic); • certificate of Pharmaceutical Product as per the Word Health Organization scheme (or Free Sale Certificate); • 3 samples of the product in its final package; • certificate of analysis of the same batch of samples submitted for registration. • Halal certificate issued by recognizable organizations and authorities; • valid company registration certificate issued by the UAE Ministry of Health; • various undertakings and guarantees by the manufacturer (e.g. declaration that the product is devoid from hormones, heavy metals, antibiotics etc.).
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1. Cosmetics and Dietary Supplements 1.2. Market in the UAE: General Rules Market in the GCC GSO’s standards for cosmetics products apply also in other GCC Countries (e.g. Saudi Arabia and Qatar apply GSO standard 1943/2009 - Cosmetic Products – Cosmetic Products Safety Requirements).
GCC Countries are implementing a common market, which is until now only partially operative. GSO Board of Directors in its 10th meeting (Muscat, 24th May 2009) approved the Technical Regulation for GCC Conformity Marking. After full implementation of this system, a product authorized in one of the GCC Countries will be marketable in the other GCC Countries. Requirements for the marketing of products in other GCC States have to be verified on a case by case basis. © Rödl & Partner
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Agenda
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Cosmetics and Dietary Supplements
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Foreign Investments in the UAE 2.1. Indirect Investments 2.2. Direct Investments
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2. Foreign Investments in the UAE 2.1. Indirect Investments
Indirect investments does not constitute a stable presence in the market, e.g.:
supply agreements;
agency agreements/ distribution agreements;
franchising agreements
with local a local party.
NB: However, import activities as well as agency and/or distributorship activities (togheter regarded by UAE laws as “commercial agency”) are reserved to UAE subjects and/or companies. Agency agreements must be registered with the UAE Ministry of Economy. It is of the utmost importance to check whether the local party is fully entitled to market the relevant kind of products in the UAE, as it would be extremely difficult to effectively terminate an agency agreement, once this has been registered.
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2. Foreign Investments in the UAE 2.2. Direct Investments
Direct Investments constitute a stable presence in the market, e.g.:
representative office;
branch of a foreign company;
incorporation or acquisition of local companies;
free zone establishments or companies.
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2. Foreign Investments in the UAE 2.2. Direct Investments Representative Office Permitted activity
Only representation
Mandatory sponsor / local agent
Yes
Minimum share capital
No
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2. Foreign Investments in the UAE 2.2. Direct Investments Branch of a Foreign Company Permitted activity
It may carry out all activities included in the business purpose of the parent company and for which it has obtained the relevant license (with some exceptions, for instance distribution / commercial business).
Mandatory sponsor / local agent
Yes. It is necessary to hire a National Service Agent (UAE citizen) who will perform bureaucratic activities with the public authorities, usually in exchange for a fixed fee or an annual commission.
Minimum share capital
No.
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2. Foreign Investments in the UAE 2.2. Direct Investments Limited Liability Company Minimum share capital
No. If the foreign investor is a natural person, a certain capital is required in order to obtain an investor visa.
Minimum number of shareholders
2.
Necessary participation of a local partner
Yes, with a minimum participation of 51% of the share capital.
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2. Foreign Investments in the UAE 2.2. Direct Investments
Free Zones The government established some particular zone, where foreign investments are encouraged, for instance: • foreign wholly owned entities (no requirement of local partner); • a foreign investor may have the direct property of real estates; • benefit of tax exemptions / reductions; • support during visa procedures; • infrastructures (some free zones operate from airports or harbors); • ready to lease offices/warehouses/lodging. The incorporation of a free zone establishment (FZE – in case of a sole shareholder) or a free zone company (FZC – in case of two or more shareholders), is an efficient strategy for investors aiming to the market of one or more of the GCC Countries.
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2. Foreign Investments in the UAE 2.2. Direct Investments Dubai Multi Commodities Center (DMCC) DMCC is a free zone located in the heart of new Dubai in proximity to Jebel Ali Port, Al Maktoum International Airport and Dubai Logistics Corridor. Its focus is on companies in the commodities sector.
Rödl & Partner is to be appointed as DMCC’s “international service provider”. This bears the possibility of incorporating a FZE or a FZC in Dubai completely from Italy, without need of any notarization or attestation by the UAE Consulate. DMCC registers about 200 companies a month, 95% of which are new to Dubai. In December 2014 DMCC was home to over 9,700 companies. It is the fastest growing free zone. The member base includes large multinationals and major regional players, to SMEs and start-ups. © Rödl & Partner
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Contacts Eugenio Bettella Rödl & Partner Via F. Rismondo, 2/E 35131 Padova Tel. +39 049 8046911 Fax +39 049 8046920
[email protected]
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