Dubai is known for many things: its booming economy, advanced infrastructure, upmarket lifestyle, and business-friendly environment. Coupled with an unmatched geographic location, it offers a growing range of opportunities to entrepreneurs and investors across various sectors, including the garment industry. Despite having to contend with a large number of competitors, opening a garment trading business in Dubai can be very rewarding. Our comprehensive guide will help you navigate the ins and outs of the entire business setup process.
Why start a garments trading business in Dubai?
You should consider starting a garment business in Dubai for many reasons. Some of the most prominent reasons include having access to a world-class logistics system and the opportunity to expand their market reach thanks to Dubai’s esteemed re-export system.
Other reasons include:
- Tax exemptions and other benefits can help improve the profit margins of the business.
• Dubai hosts many distinguished local fashion events that are ideal for networking. - With e-commerce still gaining traction in the UAE, the potential for online sales and regional expansion continues to rise.
How to open a garments trading business in Dubai
There are a lot of things you need to do when setting up a garments trading business in Dubai. Here are the steps you need to follow to ensure your business is set up correctly and has the best possible chance at long-term success.
Step 1: Choose your business activity and structure
The first step entails determining the exact activities your business will be involved in. The importance of choosing the correct business activity, cannot be highlighted enough. It impacts a variety of things such as the licenses you will require and the scope of your business. When opening a garments trading business, you will generally choose between two activities on the list provided by either the DED or relevant free zone authority: ‘Retail Sale of Clothing’ or ‘Garment Trading’.
After you have identified the correct activity, you need to decide on the most appropriate legal structure for your new business.
Popular choices include:
Limited Liability Company (LLC) – a good choice for businesses with a focus on mainland trading and direct market access.
Sole Proprietorship – has many benefits for smaller business with a singular owner
Free Zone Entity – best-suited to businesses focused on global trade
Step 2: Select your jurisdiction: mainland vs free zone
The next step will require you to decide where you want to set up your business. Set time aside to familiarize yourself with the advantages and disadvantages of both mainland and free zone before making a decision.
- Mainland:
If you set up your business on the mainland, you can trade directly in the UAE without requiring a local sponsor or distributor. This is a good setting if you want to establish showrooms, retail outlets, or boutiques that serve local consumers.
- Free Zone:
Free zones allow for full foreign ownership and also offer easy business processes and a range of tax benefits. This is a very good choice for international and online trading. Free zones may offer many benefits but it is also important to remember that a local sponsor or distributor is needed for direct market access.
Step 3: Register your business and get approvals
You can now go ahead and register your business. Here are the most important things you need to remember:
Reserve a trade name: Choosing a trade name for your business is not always as straightforward as it seems. Apart from suiting your business, it also has to be unique and free of any religious or slanderous terms.
Apply for initial approval: Before continuing with the registration process you need to make sure that the DED or relevant free zone authority, to make sure there are no objections against your proposed activities.
Draw up a Memorandum of Association and shareholder documents: The MOA outlines the structure of the business and the responsibilities of shareholders.
Get a business bank account: You need to open a bank account for your business to manage your transactions and stay compliant.
Step 4: Establish office or warehouse space
If you want to open a garment trading business, you will likely need a physical space to display and store your stock. Depending on the scope of your operations, you can consider the following:
- Rent a retail space, showroom, or warehouse.
• Choose a flexi-desk solution. - Explore the various e-commerce options if you do not require a retail space.
Step 5: Apply for an import/export code
You will need an import/export code if you are planning to import or export garments. The code can be obtained from the Federal Customs Authority and will enable you to legally move inventory through the ports and airports in the UAE.
If you are establishing your business on the mainland, you will get your codes through the DED and customs. Free zone businesses will apply directly to the relevant zone authority.
Cost of opening a garments trading company in Dubai
Before opening a garments trading company in Dubai you need to be aware of the costs associated with it. The total cost, which excluded inventory and marketing, can be anywhere from AED 25,000 to AED 130,000.
Here is a more detailed breakdown of the various costs:
Business license: AED 10,000 to AED 20,000
Office space: AED 10,000 – AED 100,000 depending on size and location
Visas: AED 3,500 – AED 7,000 depending on number of people
Import/Export code and customs registration: AED 1,000 – AED 2,000
Documents required to start a garments trading business
There are many documents you need to compile and submit when starting a garment trade business in Dubai. Here is a list of the most common requirements:
- Passport copies of all shareholders
• Emirates ID or visa page, if applicable
• Proof of trade name reservation
• A tenancy contract if renting office space
• Shareholder resolution, if applicable
• Relevant government approvals, if applicable
• Business plan outlining your goals and projections
Depending on the exact nature of your business operations, additional documentation may be required.
Tips to grow your garments business in Dubai
Here are a few tips to help you grow your garment business in Dubai:
Define your audience
Analyze the spending habits and preferences of your ideal target audience. This will help you align your product range with the needs of your target market more effectively.
Take advantage of the power of e-commerce
E-commerce is thriving in Dubai. You can boost your business by selling online even if you have a physical store as well.
Invest in your branding
You help ensure a competitive advantage for your business by building a robust brand with a memorable logo, quality packaging, and a very clear value proposition.
Frequently asked questions
How to start a garments trading company in Dubai?
There are a number of things you need to do when you start a garment business in Dubai. This includes choosing the correct business activity, registering your business name, and obtaining your business license.
How much does it cost to open a trading company in Dubai?
There are many things, such as licensing, visa requirements, and required office space that can impact the cost of opening a garment trading business. You will generally need between AED 25,000 and AED 130,000.
Is clothing business profitable in Dubai?
Yes, a clothing business can be very profitable in Dubai thanks to a booming retail landscape, large influx of tourists, and expanding e-commerce sector. In order to maximise your profits, you need to pay close attention to the quality of your products, pricing structures, and marketing strategies.
About Set Hub
Starting a new business requires a lot of research, hard work, and dedication. Thankfully, this is not a journey you have to embark on without any assistance. At Set Hub, we have helped entrepreneurs with all their business setup needs for more than a decade. We are proud that our 96% customer satisfaction rate reflects our dedication to excellence. Our multilingual, passionate team is standing by to help you navigate every step of your business setup in Dubai.