Distribution Channels

Using an Agent or Distributor
Doing business in Yemen require international companies in Yemen to hire a Yemeni agent, although this is not required by Yemeni law. Foreign exporters in particular may require a local agent/distributor to manage their distribution in Yemen. Due to infrastructure constraints and to ensure widespread distribution,  foreign companies may need multiple agents and distributors. Sanaa, Aden, Taiz, Mukalla and Hodeidah are the country’s primary commercial centers.

Yemeni Law 23/1997 (amended) regulates the branches and agencies of foreign trading companies. All agent/distributor agreements with local companies must be registered with the Ministry of Industry and Trade.

Establishing an Office
Following are the World Bank Guidelines:

Obtain a letter from a Yemeni bank indicating that the business has accounts in dollars. The cost is free.

Rent an office and keep a copy of the rental agreement.

Register the company with the Ministry of Industry and Trade (MOIT). On the registration form, indicate the type of business (i.e. import-export, services, wholesaler, and retailer), state the amount of capital, and whether it is a private or a public enterprise. Once approved, the Ministry will assign a registration number. This registration number must be presented upon request to any government agency. The fees for registration, permit and publication in the official gazette and announcement in the commercial register. These fees cover the initial payment for commercial registration at the Ministry and are valid for five years.

Apply for membership with the local chamber of commerce, indicating the name and type of business.

Apply to the municipality, indicating the type of business. The business will be given a permit with a number which must be displayed in the business office.

Register with the Yemeni government ministry that oversees the business.

Yemen's Investment Code (Law 22 of 2002 amended, see Chapter 7) encourages investment in franchising sector.

Direct Marketing
Telemarketing services have not yet common in the Yemeni consumer market. Direct marketing and advertising companies may, however, reach mobile phone users.

With the advent of Internet services in Yemen in 1996, direct marketing by major companies via email arrived in Yemen. Noting that high-end consumers are Internet customers, some Yemeni companies use e-mail to advertise their products/services. Two operators, TeleYemen and the Public Telecommunication Corporation (PTC), provide local Internet services. Connections are generally adequate. Dial up, cable modem and DSL services are available. According to the Central Statistical Organization’s Report of 2007, there are more than 80,500 internet subscribers and 7,526 telecommunication centers and internet cafes in Yemen.

Joint Ventures/Licensing
Most joint ventures are regulated through the new Investment Code, Law 22 of 2002, implemented in October 2003. Section VI (Investment Companies), Articles 42 to 57

To view the Investment Law, please double click on the General Investment Authority’s website: http://www.giay.org/GIA/index.php.

Selling to the Government
According to Yemen’s tendering law, government purchases are made through a tendering system managed by the Supreme Tender Committee, chaired by the Prime Minister. Law 3/1997 (amended) governs purchasing tenders valued at over 125 million rials (USD 641,025). Local agents can be a critically important factor in shepherding bids through the tender process. Tenders are announced in the local and foreign press. Tender conditions are based on standard international regulations used to evaluate tender offers. Price is usually the determining factor, although quality and nationality of the product also play a role.

Selling Factors/Techniques
Some producers will provide goods or stocks to retailers who guarantee to increase shelf space. While some supermarkets and stores are willing to guarantee space on the shelves to provide set quantities of products, legitimately imported products must often compete against an array of smuggled goods, including a large number of counterfeit items.

Electronic Commerce
While Internet cafés are sprouting rapidly in most major cities in Yemen, the general population does not use the banking system needed to facilitate financial transactions over the Internet, such as checking account, credit card or debit card purchases. In February 2005, the International Bank of Yemen introduced Yemen’s first credit card. Cash transactions dominate most of the consumer market even for most durable goods purchases.

Most items and products in Yemen do not carry price tags, as buyers and sellers usually negotiate with each other until they agree on a price. However, there are fixed prices on certain items, like pharmaceutical products, petroleum derivatives and items sold in western-style grocery stores.

The government of Yemen removed subsidies for wheat and flour in 1999. Subsidies for diesel, electricity, water, and sewage services were reduced slightly in 2001. Subsidies on petroleum products were further reduced in 2005. The free market sets all other prices. The CBY exchange rate by late 2007 was as follows: buying USD 1= YR199, selling USD 1= YR199.21.

Sales Service/Customer Support
Strong customer service can provide a competitive advantage in Yemen, but development of an effective sales/service team may require considerable training. Additionally, the use of promotional materials, like bumper stickers, posters, and gifts associated with the product or company help to engender goodwill in the community.