Doing Business In Saudi Arabia - Bna

Saudis are gracious hosts and will try to put a visitor at ease, even during arduous
business dealings. A large portion of upper and middle class Saudis were educated in
the United States or in Europe.
Financing and credit facilities may be offered as part of a sales proposal, usually after
a solid relationship has been established. Recently, the Saudi Government approved
the Capital Markets Law, which will regulate the stock market and pave the way for a
more sophisticated financial market.
In a significant further opening up of the market, foreign investors will be able to own
up to 75 per cent of local companies in the insurance, air and rail sectors as well as in
the wholesale and retail trades.
Many Saudi companies handle numerous product lines (sometimes even competing
product lines), making it difficult to promote all products effectively. Saudi agents
typically expect the foreign supplier to assume some of the market development costs,
such as hiring of dedicated sales staff (especially for high-tech or engineered
products), setting up workshops and repair facilities, and funding local advertising.
Foreign suppliers often detail a sales person to the Saudi distributor to provide
marketing, training, and technical support. Absent such an arrangement, U.S. firms
should expect to make frequent, periodic visits each year to support their Saudi
distributor.
Electronic Commerce Return to top
Internet services are freely available and the main cities have several Internet Service
Providers (ISPs) and Internet café's. High speed DSL Internet is also available.
States of the Arabian Gulf will increase their IT spending by 11.6 per cent to $8.6
billion during 2008, on the back of rapidly growing investment in software, according to
a regional consultancy firm. Saudi Arabia will be the biggest spender at $3.76 billion in
2008.
According to another study, Internet users in Saudi Arabia spent more than $3.2 billion
in 2007. Almost half of all Saudi Internet users reported that they purchased products
and services online and through their mobile handsets in 2007. The same study
estimates E-Commerce users in Saudi Arabia to exceed 3.5 million consumers
representing 14.26 percent of the population. The Saudi Government has already
passed a number of regulations to control and monitor electronic transactions, namely,
regulations for E-Transactions and E-crimes. Additionally, the government has
allocated close to $800 million to implement the E-Government initiative.
Nevertheless, obstacles are still present, which hinder the rapid and smooth
implementation of electronic business in the Saudi market including:
The unfilled (and ever-increasing) demand for bandwidth
The relatively high cost of an e-business transaction compared to the cost of
conducting a voice transaction
The social adaptation that is necessary for people to gradually understand and use
E-commerce
5/13/2008