If a small or medium-sized Swiss company is looking to start doing business with an Iranian company, what are its options to organize financial transactions?
Organizing financial transactions is clearly the main hurdle for companies willing to do business in Iran today. However, solutions exist. At first, a thorough reflection is of the essence in order to properly apprehend the transaction and the needs of both parties (Swiss and Iranian). Only then, a banking solution can be suggested. This solution will include payment facilities and trade finance instruments such as Letters of Credit, which can be discounted to generate the necessary working capital. Since the network of banks is rather sparse, our expertise will help Swiss SME’s to find the most suitable financial partner.
Which challenges are likely to occur doing business with Iran in general and how can an SME overcome them?
A major challenge is the proper establishment of the financial channels and instruments. Another one is the cultural dimension. Iran has been disconnected from international trade for decades, therefore, a careful approach when doing business is paramount. The country is a multi-faceted culture comprising Islam, ancient local Persian and Western dimensions. A proper network is key, not only to avoid cultural misunderstandings but also to identify the right opportunities. Also, the bureaucracy is heavy, not efficient, so patience is key when entering this market. The main opportunity lies in very high margins.
How do you think Swiss Iranian trade will develop over the coming years?
Switzerland enjoys a very good reputation in Iran, thanks to its innovative mind-set, cutting-hedge technology and political stability. An important catch-up effect is currently occurring in Iran, so the country is hungry for knowledge, technology and engineering. With a decreasing inflation and shrinking trade deficit, Iran represents the latest (if not the last) untapped market. With the re-election of Mr. Rohani, the stage is set for stability and continuity of the JCPOA, so I am confident about the rise in trade between Switzerland and Iran.
About Laurent Sciboz
A specialist of Emerging and Frontier markets, Laurent Sciboz has worked in banking for 15 years. He successfully assisted entrepreneurs from Europe with their endeavours in Iran and India. He has built up a vast network of financial services providers which can help Swiss SME’s in their international ventures. Laurent Sciboz is currently completing an Executive Master Degree at the University of Geneva, with a research focus on the importance of networks when entering the Iranian market.
PARfinance is an External Asset Management company based in Geneva and Lausanne. It employs 30 people and has existing relationships with 35 banks worldwide. The company can therefore leverage this network in order to answer all needs from entrepreneurs in Switzerland and Europe.