The UAE is one of the largest trade and logistics hubs in the world. Commodity flows between Asia, Europe and Africa pass through the Emirates, and local companies actively offer intermediary services: from complex logistics to re-export. This dynamic makes the market attractive, but at the same time increases the risks when choosing partners.
To reduce the likelihood of financial, reputational and legal consequences, it is important to carefully check the companies and understand the specifics of doing business in the region.
Business specifics of trade and logistics activities in the UAE
Business in the UAE is a combination of great opportunities and high risks. Companies can be very effective, but due to the peculiarities of licensing, the model of work and the non-transparency of the ownership structure, there is a need for more thorough verification.
1. Licensing and regulation
To conduct trade and logistics activities, companies need to obtain special licenses. The main types are:
- Commercial (Trade) License - for trading and intermediary operations
- Logistics License - for the provision of warehousing, transport and distribution services
- permits of state authorities - for the transportation of goods (Federal Transport Authority), as well as for customs clearance (customs authorities).
Each license has a validity period and must be renewed regularly. Late renewal or a limited set of licenses are often an indicator of risk.
2. Variety of business models
The trade and logistics sector in the UAE is represented by different types of intermediaries:
- Fully-functional hubs. Large companies with their own warehouses in key zones (Jebel Ali, Dubai Airport) providing a range of services - import, storage, distribution and re-export
- Industry intermediaries. Specialize in certain categories of goods (electronics, textiles, food), have expertise in specific regulatory requirements and sustainable sales channels in certain regions (Africa, South Asia, CIS);
- "Virtual" companies. Minimal infrastructure, work through subcontractors and partner warehouses, emphasis on trade finance and document management. Often it is these structures that carry increased risks of non-transparency.
- Re-export specialists. Focused on transit trade, knowledge of customs regimes and preferential agreements. They have low added value, but fast turnover of goods.
Main risks and ways to minimize them
Working with trade and logistics companies in the UAE is fraught with a number of specific risks.
1. No real storage capacity
Many companies claim to have a logistics infrastructure, but actually use someone else’s warehouses or work through virtual offices.
Risk assessment: verification of lease agreements, on-site inspection, request for supporting documents.
2. Risks of working with sanctioned goods
Large commodity flows pass through the UAE, including products subject to sanctions. Working with such intermediaries can lead to secondary sanctions.
Risk assessment: verification of goods by codes and names using the Sanctions compliance in Globas.
3. Difficulties with prepayment return
There are frequent situations when, after making an advance payment, the company disappears or delays delivery.
Risk assessment: use bank guarantees, step-by-step payments.
4. Non-transparency of supply chains
Some intermediaries act only as a "gasket," actually transferring transportation to third-party companies. This increases the likelihood of breakdowns, mistakes and claims.
Risk assessment: analyze the supply chain, clarify the final executors, fix the obligation to disclose subcontractors in the contract.
5. Reputational and legal risks
The company may be listed in sanctions lists or other negative registries (for example, related to terrorism), which is fraught with criminal and administrative consequences.
Risk assessment: use the tools of the Sanctions Compliance in Globas to screen through the international lists of sanctions and restrictions, and identify links following the 50% Rule.
Screening methods for trade and logistics companies from the UAE
Checking counterparties in the UAE requires an integrated approach. A simple check on registration data is insufficient here, since many intermediaries can only exist "on paper" or work through subcontractors.
Key methods that help reduce risks:
1. Working with state and zonal registries
In the UAE, there is no single centralized register of companies. Registration is carried out both at the level of federal bodies and at the level of free economic zones (Free Zones). The following is important for verification:
- to request information from the specific area where the counterparty is registered (for example, JAFZA, DMCC, DIFC, etc.)
- to make sure that the license is really active and allows to conduct the declared type of activity;
- to check for license expiration and renewals.
2. Verify licenses and permissions
The intermediary must have licenses for:
- trading activities (Commercial/Trade License)
- logistics service (Logistics License)
- transportation of goods (permission of the Federal Transport Authority)
- customs clearance services.
It is important to request copies of these documents and verify their authenticity through official portals or directly with licensing authorities.
3. Infrastructure verification
One of the weak points of the market is companies that claim to have warehouses and logistics capacities, but actually use third-party resources. Therefore, it is necessary:
- to request lease or ownership of warehouses and offices;
- to check addresses and existing infrastructure (virtual offices are red flags);
- if possible, to arrange an inspection or independent visit.
4. Analysis of customs and trade history
Companies engaged in re-export should have work experience with customs. Requesting information about the turnover history and supporting documents helps to understand the real volume of transactions. Lack of history could be a sign of a shell company.
5. Verification of financial stability and reputation
It is recommended to analyze:
- financial statements (if available)
- information on litigation and arbitration
- reviews and mentions in specialized publications, media, industry associations.
6. Comprehensive check with Globas
Information Agency Credinform and Information and Analytical System Globas will help solve the problems of due diligence when checking international business partners, including those from the UAE. Credinform is a leading provider of economic information on companies from around the world.
In Globas, online reports can be requested for more than 580 million companies from Europe, America, Africa and the Asia-Pacific region. Basic information about companies worldwide is provided.
For a more detailed check, you can place an order for fresh investigations, which are prepared by Credinform experts. Offline reports contain key data, including registration data (date of registration, registration number, status), contact details, management, shareholders, types of activities, authorized capital, financial statements if available, banks, etc.
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