Export to Saudi Arabia: where to start?
The Kingdom of Saudi Arabia is the largest economy in the Arab world. It accounts for 25% of the Arab world’s Gross Domestic Product (GDP). Saudi Arabia has an oil based economy with strong government controls over major economic activities.
Strengths of the Saudi market include:
- No taxation on personal income
- Proximity to other Gulf markets
- Key member of the Gulf Cooperation Council (GCC)
- Largest economy and population in the Gulf region
Challenges include:
- Identifying suitable sponsors for initial entry into the market
- Finding an appropriate Saudi partner for joint ventures
- Lead time to establish legal entities and obtain licenses from appropriate ministries
You must apply through the relevant government ministries for licenses to do business in Saudi Arabia.
How to find your agent or distributor?
You must appoint a Saudi agent to conduct trading activities if you do not have a physical presence in the Kingdom.
You must have a physical presence in Saudi Arabia to be directly involved in the buying and selling of goods. Under Saudi investment law the establishment of a physical presence requires a joint venture with a Saudi partner. You should evaluate your business partner thoroughly. You should take local legal advice and consult.
Here are some practical guidelines:
- Prospective partner has the necessary legal entity in Saudi Arabia
- Prospective partner works in the same field that you are working in
- Choose the partner who will have an added value for your business
- Be professional. Do not base your partnership on friendship or personal relationship
- Have all legal contracts and MOUs reviewed by a local lawyer and an experienced consultant working in the same industry as yours
- Do all necessary due diligence prior to signing a contract
- Define clearly the roles and responsibilities of each party
- Always include an exit strategy in your contract
- Invest in finding the right partner. Visit them and meet them in person before making any commitment
Alliance experts can find the right agent or distributor within 6 to 8 weeks
Alliance experts helps companies with entering new markets profitably. In Saudi Arabia we work from Riyadh with experienced business development specialists, supported by the rest of our Middle East team.
We have a clear and structured approach to find the best partner
We first want to know what kind of partner you are looking for. Based on your information, we make a long-list of 15-20 potential partners that fit your description. After your approval we find the right decision maker, approach him or her personally and share your business profile with them. This mostly leads to 3-5 companies who are suitable as your partner and interested in working with you. Once we have found these companies, we plan your meetings and accompany you during the first visits.
More about Saudi distribution channels
The Government liberalized the wholesale, retail, and franchise sectors in 2016, allowing full foreign ownership of retail and wholesale businesses by removing the former 25 percent local ownership requirement. An increasing number of companies. All industrial enterprises are open to non-Saudis, and investors can also trade in the products they manufacture.
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, foreign firms should expect to make periodic visits each year to support their Saudi distributor.
