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Kuwait Routes to Market

So you've decided to expand your business in Kuwait and researched your market. Now it's time to decide how you will register and enter the business. What is the best, most viable option for your company, your products, and yourself? Which is the path of least resistance?

Here are your typical options when expanding a business into Kuwait:

Foreign Direct Investment Company

Subject to approval by an investment committee, this form of company exists to encourage foreign investment in specific industries. The business can be 100% UK owned and can enjoy benefits such as no taxation for 10 years, exemption from some import duties and government allocation of land or real estate.

Limited Liability Company (WLL)

Limiting any investors liability to the extent of their investment, a WLL is relatively simple to incorporate and takes around three months to form. Any business must be at least 51% owned by a Kuwaiti national. Limited liability companies are not subject to taxation as there is no income tax and tax applies only to non Kuwaiti businesses.

Kuwait Shareholding Co (KSC)

A Kuwaiti joint stock company is open to UK investors but requires Kuwaiti shareholders (foreigners may own up to 49%). The liability is not restricted on an open company. A closed joint stock company, where the liability is limited to the extent of their investment requires official approval and cannot be involved in either banking or insurance. The drawback for a closed stock company is that the business is subject to a 5% contribution tax to the Kuwait Foundation for the Advancement of Science.

Joint Venture

This allows investors to conduct business with third parties. A joint venture may not carry out business in its own name and the venturers liability is unlimited. The investor who is not carrying out the transactions is only limited to the extent of their investment. If the individual carrying out the transactions is a non-Kuwaiti, then the company must guarantee any transaction.

Sponsorship of Kuwaiti registered company

UK companies are not permitted to establish a branch or an office in Kuwait but operations can be carried out by a foreign entity through a sponsorship arrangement with a registered Kuwaiti company.

Licensing

Licensing is the permission for someone else to use your intellectual property rights: either a patent, trademark, trade secret, or copyright. Different types of license include:

• Non-Exclusive License - A non-exclusive license implies that your intellectual property rights can be awarded to more than one licensee.
  

• Exclusive License - A little more complex because, although the license may not be exclusive to one licensee, it may be exclusive to a geographic location, a certain product, or limited area of use. For instance, you may grant a licensee exclusive use of the rights in France, yet grant another licensee its use in Germany.

• Patent License - The allowance of another party to use your patented product, design or process.
  

• Trademark License - Trademark licensing means permission is awarded to a licensee to sell a product or service. However, the licensor retains more control in order to ensure that quality is maintained. Quality control is in place to uphold the image of the brand / product / service / licensor, and therefore sustain customer confidence and satisfaction.

Franchising In Kuwait

Franchising is the licensing out of a business name, product, technique, philosophy, trademark, etc, for a percentage of the income. Instead of setting up new outlets as part of your expansion, you license your existing business blueprint out to franchisees who then set up and manage it for you.

The benefits of franchising your business in Kuwait include: more freedom, as the franchisee takes on major responsibilities; minimal expense; lower cost and higher profits; potential for fast growth; brand building.

Disadvantages of franchising a business in Kuwait: although few, rely predominantly on your franchisees. They include: poor quality franchisees; franchisees not declaring all income; poor performance.

The Kuwait franchise market is characterized as fiercely competitive. Japanese electronics and cars have a strong appeal to the Kuwaiti population. Brands such as Panasonic, Toshiba, Toyota, Nissan, Honda, and Subaru are examples of the Japanese presence in the Kuwaiti market. American brands such as McDonalds are also very popular and franchises are a popular route to the Kuwaiti market.

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