So I’ve been quiet for some time but I’ve had my reasons (mostly laziness, get off my back). Iran is kind of the country that is not always portrayed positively in the news, okay let’s not kid ourselves… it is never portrayed positively in the news, and if you ask an average person, the first words coming out of their mouth is probably Ahmadinejad, sanctions, nuclear energy and maybe Persian Carpets I guess?. And if you ask the average American to point Iran on the map they would probably pick the north pole. Sorry, my American readers but your educational system sucks ass and if you are insulted by that, it probably means you are …well… kind of stupid. Anyways this post is not about bashing the American educational system, I have to write a book about that one… okay that was the final jab… I promise *wink wink*.
This blog series is about doing business in Iran and giving you a small insight behind the curtains of how it actually is doing business in Iran and how you could profit from it if you have the patience, money, and some set of balls (metaphorically speaking, of course, I mean I never understood the comparison since balls are quite fragile and it hurts like hell when getting kicked in it whether on purpose or by accident)…. anyyhoooow shall we begin?
Hard cold data
So the art of doing business lies not in following the news but following the data. The news is there only to either grab your attention or manipulate you, so I won’t pay any attention to whatever you think you have heard or read on your aunt’s Facebook page. I really don’t care for politics or your beliefs, if you care so much about those issues, stop buying shit from McDonald’s, Zara, Gucci and stop ordering from China and throw away your iPhone, go be a hypocrite woke fucker elsewhere if you have a double standard. In general, everywhere has its social, domestic, and international challenges. One thing that never has been the solution is isolation. Anyways, let’s get started with some data. I love data because it’s undiscriminating and pure until you spin it.
Communication:
Iran has over 120 million active mobile phones with almost all of them running on 4G. Fun fact, they have started rolling out 5G and I get mad speeds in Tehran. Now Iran has a population of 82 million people. So this means on average they have more phones running than actually people running around !. This should already tell you a lot about the telecommunication infrastructure in Iran and the potential opportunities.
Internet usage:
Of these 120 million active mobile phone users we have about 58 million active internet users, this means a good 70% internet penetration based on the 82million people in Iran. This alone puts them in the top 14 internet users around the globe!. Apart from the mobile phone penetration, we got another 10 million fixed broadband connection hooked up, putting them in the top 18 internet users per capita in the world.
Infrastructure:
I won’t bore you with how well the roads are build and trains running, but you can take it from my own experience that most of Iran are really good accessible, mobile and dead cheap. Just don’t go “hiking” near the border. I can’t believe people still believe that kind of story… really? hiking near the border with a drone? haha fuck off. Your best bet is to start in Tehran and expand from there.
Electric, gas, water:
I will be quite quick about this one, almost all of it is subsidized by the government making it really cheap to either live or run a business in Iran. It is so cheap that they often have to stop people from over at the border to bring fuel into Turkey because it is that cheap and profitable to just load up a truck with diesel and sell it over to Turkey. In Iran, there is a tiered system in place for usage of all these facilities. They have brilliant put in place a system. The less you use, the less you pay per M3 gas, liter water, or KW electricity. If you are a heavy user like a family of 4 running washing machines 24/7 then well, you are probably rich enough to pay more for it. Business rates are different but still very cheap if you are looking to run let’s say a factory for either export or domestic consumption.
Banking:
The banking system is quite streamlined and some features could really really be handy and should be implemented abroad. I particularly love the fact that any transaction is immediate and the mobile apps have matured and their online banking is quite good. It is quite safe as all online transfers or mobile transfers or even online payments need multiple verifications via either an OTP or second pin or a combination of both. While I am still waiting for confirmation when doing a transfer in Europe… In Iran everything is immediate. Iran still has a “cheque” option in place but with a twist. Iranian cheques could either be a personal one or a “bank cheque”.
Personal cheques is something most people are familiar with, you write a cheque and you hope it won’t bounce. Bank cheques are guaranteed by the bank and upon issuing it, they will deduct money from the account holder. They will write your name and personal identification on it to make sure you and only you can cash that cheque, just don’t lose it otherwise it will be quite a headache to get a new one. In general, avoid cheques where possible but when dealing with large figures it can be hard to avoid
Currency and Inflation:
Yikes, this one is a difficult one, Iran has been hit sanctions and this has had an impact on the economy with regards to importing products. This has driven up the price of products produced abroad, paired with inflation makes it kind of expensive to enjoy products made abroad. To give you a simple example, a bottle of milk will set you back 10 000 tomans (or 100 000 Rials), but a can of Red Bull will cost you 40 000 Tomans (400 000 Rials). Bread will cost on average freshly made around 3500 tomans (35 000 rials).
Iran’s currency is very dynamic and it has times of stability in between. The interesting part of Iran’s currency is that there is a secondary market for exchanging money. So you got the official set exchange rate but you also have the secondary market which is set much higher. So at the moment of writing 1 euro is officially around 5000 tomans (50 000 Rials) while exchange bureaus in Tehran pay around 30 000 tomans ( 300 000 Rials) for 1 euro. This discrepancy between the official rate and the secondary rate doesn’t sit well if you want to do inflation control but this shouldn’t put you off investing in Iran if you invest in the correct market.
I will explain this later on in part 2 when we get there. This secondary market kind of sets the tone when it comes to commodities of which the prices are internationally already set. Think of things like Gold, Precious metals etc. BUT there are things that are much cheaper here than abroad because Iran is rich when it comes to lots of minerals, homemade products that are scarce abroad (no wonder the US want’s to bring “freedom” to Iran … it has nothing to do with its geopolitical location or natural resources right? Oh, the hypocrisy). One of these things is Marble, for example, Persian carpets, saffron. If you have a bit of a business mind, your gears should already be turning and be googling what else Iran produces nationally which can be exported internationally, or another way around. But doing this could be tricky and a minefield when dealing internationally.
Isolation:
Iran’s isolation from the open market is a double-edged sword because it both provides opportunities as well as restrictions. With the correct map and navigation, you can actually get a really good ROI if done correctly and safely within both national and international laws. Its isolation means a lot of tested business ideas abroad can be ported to the Iranian market. Something a lot of US companies have done in Europe. Some of these are like Groupon, Uber, Just Eat etc.
Success stories:
A proper success story of this is the Iranian uber which is called “Snapp”. Snapp has been very successful in providing rides, food delivery, healthcare and other services to millions of Iranians. To paint you a picture, on average Snapp does 2 million rides per day! Yeah, you read that correctly…. 2 MILLION. Another success story is probably “DigiKala” which is the Iranian version of Amazon. You can search all you want and you can pick it, order it and it will be delivered to your door. The list has grown quite in the last 10 years. I remember 10 years ago, there were some startups trying to pave the way, but as of today, I hear so much chatter on startups it feels like Europe 2008.
Now again, if you have some brain cells, a little lightbulb should turn on by now and you should be googling every successful startup from 2008 till now and look which one is not present in Iran and find out how you can introduce that service into the Iranian market. They are connected already, the only thing they need is the right service.
Roundup
So to recap quickly, I churned some data and gave you some real-life examples. I won’t be spoon-feeding you during this series but I hope to make you aware of the potential of Iran’s massive connected market. In the next part, I will discuss more some of these opportunities before finishing with some advice when it comes to dealing in Iran as with these things, the devil is always in the details. But again, doing business is always a delicate process no matter where you are. I promise to write the next part in the next week…pinky promise…