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Consultancy house offers help with cracking Iranian market

LONDON: Foreign investment in Iran has been unsteady ever since it was mooted in 1989, a full 10 years after the Islamic revolution that toppled the Pahlavi monarchy. Nevertheless over the past 14 years foreign, including Western businesses, have been exploring commercial and investment opportunities in Iran. And for such explorers, a must-see company is Atieh Bahar Consulting (ABC).

Established in 1993, it is the only primary and multi-disciplinary strategic consultancy firm in Iran. ABC, say its officials “assists companies to better understand the Iranian market, secure business and stay ahead of the competition.”

In an interview with The Daily Star, one of the directors of ABC, Siamak Namazi, said the company has a full-time staff of 26 people.

“Our people have diverse backgrounds in business, law, economics, languages and engineering,” Namazi said.

According to Namazi, ABC provides two core functions. These are the provision of nontechnical consultancy services to large oil companies and the undertaking of market research for non-energy clients.

“We help large oil companies with partnering strategies. If oil companies want to operate in the Iranian market they need to link up with a local partner, and this is where we step in and help them to find the right partner,” says Namazi.

ABC also provides large energy companies with market research services.

“Overall the energy sector accounts for 50 to 60 percent of our work,” says Namazi.

According to ABC’s director the other 40 to 50 percent of work is taken up with “market research.” This is generalist work and encompasses many things.

“Recently we helped a giant European automotive company to plan its entry into the Iranian market. We also provided feasibility studies for hypermarkets like Metro and Lyco,s” said Namazi.

ABC boasts clients in the automotive, telecom, heavy industry and leasing sectors.

The central personality at ABC since its inception has been its chairman and co-founder Bijan Khajehpour.

Operating a private strategic consulting firm in Iran inevitably carries many problems. Namazi divided ABC’s problems into two areas: internal and external.

Namazi outlined four main external problems. Public perception in Iran is a major problem he said. “ABC has to contend with the perception that it charges commission when working with the big oil giants. It is always at pains to explain that it is not connected in any way with the big energy firms,” Namazi said. In other words, Atieh Bahar does not become an interested party.

ABC encounters problems when it tries to gather information for its reports.

“Market research is not fully understood in Iran … there is no freedom of information act in this country,” Namazi said.

Atieh Bahar conducts studies into political risk for some of its clients. But as Namazi said, this type of work attracts a fair bit of political risk itself.

“As a result we have cut down on this type of work … there is less danger and more profit in market research,” he said.

Nevertheless, ABC continues to publish Iran Focus, a monthly journal that covers political and social issues alongside economic and commercial topics. This journal, alongside ABC’s other publication, Iran Energy Focus, is produced in conjunction with Menas Associates Ltd, a privately owned British consulting firm.

Iran has attracted $30 billion in foreign investment since the start of Mohammad Khatami’s presidency in August 1997. Two thirds of that has been absorbed by the energy sector.

Prospects for a significant increase in foreign investments look bright for two reasons. First, say analysts, the political climate is likely to improve, perhaps leading to enhanced relations with the European Union, and possibly even the United States. Second, Iran has one of the fastest growing economies in the region. Iranian Foreign Minister Kamal Kharrazi said in late September that Iran has recorded 7.6 percent economic growth in the current Iranian fiscal year (beginning March 21, 2003). He said Iran anticipated an annual growth rate of 8 percent for each of the next five years.

This level of economic growth is encouraging. It means that the growth of the Iranian economy has kept pace with the Chinese and Indian economies. Moreover Iran’s economic growth dwarfs that of the Persian Gulf littoral states.

In addition to the political uncertainties long surrounding the Islamic Republic, one of the primary obstacles to the rapid increase in foreign ­ especially Western ­ investment in the country has been the absence of business and commercial consultants. Indeed, foreign firms wishing to invest in the Iranian market need informational and analytical tools to identify opportunities and manage risks.

Namazi lamented the absence of effective competition. There is some competition but it is not cohesive and effective.

“There are lots of corner shops but not a single one-stop shop (like ABC),” he said.

An inability to work on a manpower/time basis is an important factor in the absence of competition.

“Most people here want to work on either a percentage basis or they want to become an interested party,” said Namazi, adding that an effective one-stop shop consultancy has to be, above all, a disinterested party.

Lack of expertise and problems with business culture act as barriers to the emergence of competition.

“Iranians are interested in short-term and fast-gain enterprises … running a consultancy means investing in the long-term,” he said.

Namazi identified lack of adequate human resources as the primary internal problem. “We have to take people in and train them extensively,” he said.

As a result, ABC has developed expertise in the field of human resources. It now boasts a human resources subsidiary called Atieh Roshan.

ABC boasts an impressive portfolio of clients. These include BP, Royal Dutch Shell, Statoil, Alcatel, British American Tobacco, Tokyo Bank, Vodafone and Norsk Hydro.

Hugo Harstad, a representative of Zagros-Hydro (a subsidiary of the Norwegian firm Norsk Hydro) in an interview with The Daily Star rated ABC’s services as “excellent.”

“They have good knowledge and maintain good dialogue with clients” Harstad said.

When pressed to elaborate on ABC’s shortcomings Harstad cited the lack of technical consultancy. “But this is not too much of a problem for us,” he said.

Apart from the provision of weekly newsletters and background reports on projects, ABC assists Zagros-Hydro with recruitment.

“They help us screen and employ local people,” said Harstad.

Harstad said that Zagros-Hydro has worked with three other consultancies.

“Two were companies and the other was a freelance lawyer,” said Harstad.

But one of the companies he named, the Norway-Iran Business Center is in fact a Norway-based consultancy.

Harstad predicted competition in the consultancy sector is likely to increase in the coming years. Namazi agreed with this analysis but is confident ABC will maintain its dominant position. “We will run them to the ground,” he quipped.

When asked what other ambitions ABC entertains apart from dominating the Iranian consultancy market, Namazi said Atieh Bahar might consider partnership with consultancy giants like McKinsey and the Boston Consulting Group, adding: “I doubt that we could ever compete with these people so we might decide to become their local partner in Iran.”

 

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