BCFA’s International Project Manager Sue Graves, alongside Leila Al-Kazwini from the Department of International Trade, visited Iran during February on a mission to scope the Design and Interiors Market. A report was put together following the trip...
BACKGROUND
Population: 80 million
Area: 636,313 square miles
Major language: Farsi – Persian
Major religion: Islam
Currency:Rial
Persia, as Iran was known before 1935, was one of the greatest empires of the ancient world, and the country has long maintained a distinct cultural identity within the Islamic world by retaining its own language and adhering to the Shia interpretation of Islam.
Iran became an Islamic republic in 1979, when the monarchy was overthrown, and clerics assumed political control under the supreme leader Ayatollah Khomeini.
The Supreme Leader - the highest power in the land - appoints the heads of the judiciary, military and media. He also confirms the election of the president. Ayatollah Ali Khamenei was appointed for life in June 1989, succeeding Ayatollah Khomeini, the founder of the Islamic republic. He previously served two consecutive terms as president in the 1980s. Iran has been led by a highly conservative clerical elite since the revolution in 1979.
Hassan Rouhani won a resounding re-election victory in May 2017 as voters overwhelmingly backed his efforts to reach out to the world and rebuild the struggling economy. Rouhani, who is regarded as a moderate, reformist figure, spearheaded a 2015 nuclear deal with world powers.
On 16 January 2016, Iran received extensive economic and financial sanctions relief following confirmation from the International Atomic Energy Agency (IAEA) that Iran had met its obligations under the nuclear deal agreed on 14 July 2015, meaning the country is now able to trade more freely globally.
The UK government supports expanding a trade relationship with Iran and encourages UK businesses to take advantage of the commercial opportunities arising from the lifting of sanctions. The Department for International Trade (DIT) – based both in the UK and in the British Embassy in Tehran – is on hand to support trade and investment between the two countries.
Re-opening of the British Embassy in Tehran in 2015, the upgrade in diplomatic relations and the appointment of Nicholas Hopton as British Ambassador to Iran on 5 September 2016, marked an important step forward in diplomatic relations between the two countries.
There is a positive outlook for UK-Iran trade relations. Iran is the biggest new market to enter the global economy in over a decade, offering significant opportunities in most sectors, with potential to grow as the market in Iran expands.
Iran’s significant oil and gas reserves will be an important driver of economic growth. Other sectors in this diversified economy with the potential to contribute to the country’s Gross Domestic Product (GDP) growth and employment and where UK business has particular strengths, include: infrastructure, healthcare, retail, airports and aviation, mining and water.
The Iranian government is keen to attract foreign investment and technology transfer across all sectors.
Benefits of trading in Iran for UK businesses include: attractive projected growth prospects and the
Iranian government’s encouragement for foreign investment.
Strengths of the Iranian market include:
- a population of around 80 million (the second largest in the Middle East after Egypt)
- a young population (60% are estimated to be under 30 years old)
- a highly educated workforce
- plentiful natural resources and its strategic location.
EU trade with Iran in 2016 stands at around USD 8 billion and is expected to quadruple by 2018.
MEETING NOTES FROM A PROGRAMME OF VISITS ARRANGED BY THE BRITISH EMBASSY, TEHRAN
COMPANY - TARH VA AFARINESH, Architectural & Engineering Consultants
Shiva Babai, General Manager
Mohammad Nemati, President
Mansoor Rzmjoo, Senior Consultant & Facilitator
- Major construction & design company
- Designers of the new Accor IBIS/NOVOTEL – first of 45 new hotels planned over the next 10 years in Iran
- Tour of the newly finished hotel at - two brands joined together in two halves of the same building
- Public spaces very luxurious, with local accents. Luxurious separate spas for men and women with swimming pools. Bedrooms designed to Accor brand specifications
- General Manager & Designer Shiva Babaei won an SBID award for the hotel design. She conducts painstaking research to achieve the right feel for her designs
- Sourced much product from Turkey but not too happy with the quality. Also sourced interiors from Germany and France
- Keen to meet new suppliers but does not want to see salesman but representatives of serious companies with technical knowledge
- Visits Sleep in the UK, Index/Hotel Show in Dubai.
MEETING WITH IRANO-BRITISH CHAMBER OF COMMERCE (TOURISM GROUP)
Met Dr. Amini, Vice President & Secretary General
- Have a huge number of members as chambers in each of the Iranian “provinces/towns”
- The Chamber acts as a conduit to the main government
- The Private sector has more value now
- Heathcare/hospitals are the most important sector
- They are currently revising the rules and regulations for foreign investment to make it more attractive.
- They have been working on a new website which has good information on it
- They are a licensed contact by the Ministry for construction.
English website at www.bicc.org.uk – website in Farsi at www.ibchamber.org
At the Chamber also met member:
Mohammed Nikbin, CEO of Artabin
- 26 year old prestigious company of architects & designers undertaking projects from shopping centres, office buildings, passenger terminals etc.
- Wife is a director of Iranian films, so company also does film work.
MEETING WITH TEHRAN CHAMBER OF COMMERCE - Industries, Mines & Agriculture
Mohammad Reza Bakhtiairi, Ex. Ambassador to S. Korea & Belgium, Deputy for International Affairs Ferial Mostofi, Member of the Assembly
- TCC are the most influential non-government association
- They specialise also in Tourism on three levels: Heritage, Health, Religious
- They are currently concentrating on the upgrade of existing hotels – mainly independently owned.
- Hotels are very overcrowded and they need more 3 & 4 star hotels which meet international standards
- Tourism is of great importance, it has come up from 2.5m to a current figure of 7.5 million
- Health Tourism is a growing market at they have the best doctors and costs are low
- They specialise in receiving delegations, matchmaking process, and can organize b 2 b meetings
- They have received delegations from S Asia, Spain, Denmark, Austria, Italy, Germany, France & The Netherlands (but not US or Israel)
- The Chamber can assist companies to set up.
VISIT TO SANA SHOPPING CENTRE
SANA CEO Abbas Hemad
Brand Manager, Superdry – Benyamin Ziaee Fard
- Smallish mall – 4 stories of retail outlets, coffee shops and a food court
- Only UK brand present was Super Dry which entered the market 2 years ago and now has several outlets with more on the way
- Doing well, particularly majoring on gym/sports wear
- Fit out of Superdry shops – first one was brought in from the UK, but now reproduced locally to reduce costs
- Mall had been sourced with product from Europe & Japan, nothing British
- The marketing manager was keen on looking at making future malls “experience destinations” to get visitors to stay longer
- Sana Mall was the first to have a food court in Iran
- Might be looking at building another mall in the future.
MEETING WITH BAM GROUP
CEO & Member of the Board, Dr. S Tabesh, NIKAN Hospital
CEO Mehdi Kavoosi, CEO BAM Group
- Biggest building, design & fit out group in Iran
- Amazing presentation of current projects
- Building 650 bed Araz Hotel on the Caspian Sea (will be the biggest in Iran)
- All construction, design & fit out organized internally.
- Happy to sponsor series companies who want to invest.
- Currently looking to fit out new hospital, tender with Germany at present, happy to include UK if willing to bid
- Building five new hospitals at present
- Would look at new suppliers if willing and able to do business in Iran – no timewasters wanted
- Particularly keen on sustainability, zero energy and solar power.
FOURTH MEETING OF THE BRITISH BUSINESS GROUP AT THE BRITISH EMBASSY, TEHRAN
- Meeting of Embassy officials, The Ambassador, and CEO’s of Iranian Businesses, plus UK businesses involved with doing business in Tehran, i.e. Honeywell
- Discussion on the of difficulties and challenges of UK companies doing business in Iran
- Particularly the problems involving payments and channels that could be utilized
- Ambassador assured everyone that the UK Government was keen to work towards a better situation despite the unwillingness of some JCPOA* members.
*Joint Comprehensive Plan of Action: the agreement reached by the P5+1 (China, France, Germany, Russia, the United Kingdom, and the United States), the European Union (EU), and Iran to ensure that Iran’s nuclear program will be exclusively peaceful.
MEETING WITH CULTURAL HERITAGE & TOURISM ORGANISATION
Mr Wali Taymouri, Director General, Monitoring & Evaluation of Tourism Services
Leila Ajdari, Director General of Tourism Marketing & Promotion/Presidential Office
- Tourism is important as a means to promote peace between nations and cultures
- There has been a long history of relations between the UK and Iran
- There is a big need for refurbishment in the Tourism Sector
- Hotels 30/40 years old need to be refurbished/reconstructed
- Plus new construction needed. (i.e. Accor intentions)
- New standards will be launched in March which must be followed
- Have partnered with the French to implement this
- Particular emphasis on sustainability/zero energy hotels and disabled access
- New training, branding, brochures required
- Another field changing “historical” houses into lodgings
- The new rules must transform properties but keep the heritage
- Private sector will have the contracts so they are the partners to work with
- The new standards will be published in Farsi. Working with a French organization to draw up regulations
- Working for short, medium and long term co – operation.
WOMEN IN BUSINESS MEETING – UK TEHRAN EMBASSY
- Afternoon hosted at the Embassy for 50 Iranian business women.
- Met the UNESC0 representative in Tehran who is working with the government to protect, promote and conserve the over 18 UNESCO historic sites in Iran. A major tourist attraction going forward.
- Iran has a powerful and talented generation of business women who are respected and run businesses in a male dominated society.
CONCLUSIONS
- Iran is the biggest new market to enter the global economy in over a decade, offering significant opportunities in the design and construction sectors, with potential to grow as the market in Iran expands.
- The UK government supports expanding a trade relationship with Iran and encourages UK businesses to take advantage of the commercial opportunities arising from the lifting of sanctions. The Department for International Trade (DIT) – based both in the UK and in the British Embassy in Tehran – is on hand to support trade and investment between the two countries.
- Iran is embarking on an ambitious drive to increase tourism by a new branding and offer focused on promoting the many UNESCO World heritage sites around the country. To facilitate this goal, they need to improve the offer to overseas tourists by refurbishing and building many new hotels to Western standards.
- Healthcare tourism, already a growing sector, is to be encouraged by ambitious plans to build many more hospitals to improve this offer.
- Iran is particularly keen on sustainability/zero energy hotels and provision of disabled access.
- Iranian companies respect the British and are keen to do business with them. However, they are only keen to meet companies who are serious about the market and have the business acumen to work through the current restrictions.
ADDENDUM
LOCAL OBSERVATIONS / TIPS
- Time Zone GMT plus 3.5 hours (GMT + 4.5 hours during BST)
- You cannot use credit cards in Iran, so take US dollars in cash, which can be changed into the local currency Rials. Hotels will take bill payment directly in US dollars.
- Imam Khomeini International Airport is about 1 hour out of the main city of Tehran. Modern well-appointed airport.
- Do not take photographs unless you are in a “safe” place and ask permission. None outside.
- Taxis are not metered and require bartering for fare.
- House prices very high in Tehran. Many people live outside the city and commute in.
- Very good metro / bus system (we noted new extremely high spec shelters were on view throughout the city)
- Very bad pollution in the city caused as is surrounded by mountains.
- Most families can have up to 6 cars.
- Enormous number of scooters/motorbikes.
- Atmosphere also very dry as little rain.
- Shops mainly in the bazaar format with small artisan shops. A couple of small malls have just been completed, with a large IRAN Mall coming on line at the end of the year.
- Very safe to walk around the city, people very hospitable and polite although older generation speak virtually no English. The younger generation is taught it in schools.
- Many meetings will be conducted through an interpreter, so you need to have carefully thought out your questions / pitch, before attending. Visual images are very important.
- Take double the amount of business cards you would usually take as you will use them up very quickly.
BCFA Iran Workshop- SAVE THE DATE
The BCFA is organizing a seminar in Clerkenwell, London on Tuesday 10th July to discuss potential opportunities in Iran and a future trade mission for market ready companies to Tehran in January 2019. If you are interested in attending the workshop, more information will be coming soon.
For more information on the Iranian Market, contact sue@thebcfa.com