6 things to be a business success in Saudi Arabia

Saudi Arabia is undergoing the biggest transformation in its history and is restructuring its economy for a post-oil era. With an ambitious 2030 National Vision and a young and dynamic Deputy Crown Prince in charge of economic changes, the Kingdom has plans to become an international hub and open the doors for private sector companies from around the world. Start-ups are welcome too.

As the biggest economy in the Middle East by far, the world’s largest producer of oil, and home to 30 million people, Saudi Arabia has massive opportunities for those looking to do business here.

But many entrepreneurs and businesspeople are put off by perceptions about Saudi that are not always accurate, and stand in the way of exciting opportunities.

I’d like to share six lessons that can be used by anyone wanting to enter the market that will greatly improve their changes of success. Over the past four years AEI has helped over 300 companies win business in Saudi, so the formula does work!

There is a wealth of opportunity, but it is important to be realistic and build a pipeline of qualified, validated prospects and setting the right expectations for your company leadership. We often hear clients tell us that Saudi is slow moving, but due diligence in Saudi is done through relationships. Genuine relationships can’t be built overnight, but once formed can last a lifetime.

Planning can seem like an endless cycle, but the reality is that setting out clear goals, budgets and timescales is vital. This builds on the first point, patience. Saudi is not a market to jump into without doing your homework. Prepare a strategy with clear incremental growth points. For instance, you won’t need a Saudi Commercial Registration on day one, but you should know when you might and how to best attain it.

Most importantly, there is no substitute for being on the ground. Managing the market remotely is almost impossible and many Saudi clients are unsympathetic towards those who try to win business from headquarters on other continents or even bases elsewhere in the Gulf. This said, being in Saudi does not necessarily require setting up an entity or signing an exclusive local partnership as there are various operating models for foreign companies which are low risk and low cost.

The perceived need for a local partner often keeps legal, compliance and tax departments up late at night but and there are many examples of foreign companies supplying goods or services without a one. There are however many more examples of highly successful partnerships created over time and, critically, on the right terms. An insightful matrix of Saudi partners each with authentic client intimacy to different silos of the economy can reach the parts of the market your competitors can’t, because they chose exclusive partnering arrangements.

As with many GCC economies, payment risk is often a major concern for foreign companies. But the answer is actually very simple: risk is cut by both proximity and close relationships. Or in other words, presence. Boots on the ground enable you to chase down debtors over a coffee in their finance office. In fact the process can actually enhance the account relationship because it amounts to extra face time. An email from abroad rarely has the same effect.

Patience, Planning, Presence, Partnering and Payment could apply to other markets particularly in the Gulf. But there is one P unique to Saudi alone; Princes. There are now believed to be approximately 15,000 Princes in the Kingdom. Some of the top 100 or even 1000 are undoubtedly excellent, shrewd and well connected business partners. But you may never get much of their time, particularly if you’re an SME. Don’t be that star struck business development manager who signs an exclusive agreement with the wrong Prince, this is one of the most common Saudi pitfalls.

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