What Should You Know Before Setting Up a Business in Saudi Arabia?



Through Vision 2030 announced in April 2016, which maps Saudi Arabia’s strategic direction for the next 15 years, the nation has made it clear to the world that innovation and entrepreneurship will drive the next phase of development in the Kingdom.


Moving away from its heavy dependence on oil, the Saudi Arabian Government implemented numerous socio-economic reforms to create the perfect ecosystem for businesses to thrive. This, with the country’s growing youth population, its evolving consumer market and geographical advantage of being the nexus between Asia, Africa and Europe, make Saudi one of the most lucrative business destinations in the middle-eastern region, and across the world.


Owing to this, there has been an influx of startups, businesses and foreign investments in the largest economy of the MENA region.


If you are thinking about expanding your business into Saudi Arabia, there has never been a better time to get started. However, when setting up a new business in a new country, there are quite a lot of moving parts and it’s easy for you to get some of them wrong.


Based on our track record helping over 70 international companies expand into the Saudi market, we have learned that there are five crucial components you should know and consider when setting up a business in Saudi Arabia.


(1) Understand the unique Saudi market dynamics


The Saudi Arabian consumer market has been rapidly evolving in the last few years thanks to the changes in social and cultural norms made possible by global exposure through internet penetration, digital media and governmental reforms. This has created massive opportunities for businesses in various sectors especially technology, entertainment, e-commerce, tourism and culture.


Here’s what you should know about the Saudi market before you set up your business in the country.


Saudi Arabia has one of the youngest populations in the world

About two-thirds of the total population of Saudi Arabia is under 35 and the percentage of youth that are under 25 comprise 50% of the country’s population. Wide mobile usage combined with high internet connectivity has made the Kingdom one of the fastest growing digital consumer market segments in the world.


Social media and other apps are widely popular among the young tech-savvy demographic encouraging technology-led businesses to unlock opportunities in terms of both product innovation and meeting market demands.


Arabic-first

The official language of Saudi Arabia is Arabic. While English is a widely spoken language among the business community, the documentation, government official papers, publications, media, etc. use Arabic. Communication on social media also happens largely in Arabic. It is absolutely essential to use Arabic in your business communication and marketing so that you can earn brand loyalty, increase your website traffic and reach and connect with a larger audience base across the region.


Product-market and brand-market fit

As a new business in Saudi Arabia, one of your strategies should be to align your product and brand with the market. Some of the ways to achieve this would be to have your marketing communication in the local language, selecting the right channels and social media to reach your target demographic, upholding the values of the country through your brand and taking special precaution to not offend the religious or cultural sentiments of the population. Social media like Twitter is an essential part of the national conversation and should be a part of every company’s marketing strategy.


(2) Hire local talent


When setting up a business in KSA, make local hiring a top priority. Saudization rules require all companies to hire Saudi nationals, with minimum requirements set based on the business activity type and size of company. Which is why, every business sector requires meeting strict quotas for hiring local employees. Hiring locally can prove to be advantageous as it brands your business as being supportive of the locals and the government vision.


It’s a common misconception that there’s scarcity of quality talent among the local population in Saudi Arabia, when in fact there’s a wide pool of highly talented and skilled people in the country. However, finding them can prove to be a bit challenging especially for a new business entrant in the market. Partnering with expert recruitment consultants and agencies can make this process hassle-free for you as opposed to hiring expats, which can mean going through time-consuming and costly immigration processes.


(3) Be locally present


Some business owners manage to conduct business in Saudi Arabia while working remotely without having a local business entity in the country. While that can help close a few deals in the short-term, it may not be the best idea if you want to stay in the market for long.


Having a local presence in terms of an owned company gives a strong message about your business as being authentic and reliable. This also ensures you are viewed seriously by your partners, prospects and customers, opening multiple doors of opportunities for you to scale and expand your market. Moreover, not having a local business setup or an establishment renders you non-eligible to accept Government bids and RFPs.


If you’re considering setting up a business in KSA locally, you can hire experts to take care of the complete company setup process including licensing, registration and even providing you with an early office space so you can get your business up and running in no time.


(4) Understand the culture and tradition


Religion has a strong influence on people’s values and their relationships with their family, community and professional counterparts in Saudi Arabia. Having a sound understanding of the culture and tradition will keep you away from social gaffes.


Professional and personal relationships often overlap because people in Saudi believe in building strong relationships, which helps build trust. Being in a hurry to close deals will not do much good. Instead, invest time in nurturing relationships that will lead to lasting business partnerships.


As religion has a strong dominance on people’s way of life, being mindful and respectful of the daily religious practices such as prayer times will be highly appreciated by your local business partners and clients.


(5) Invest for the long-term


Building anything worth building takes time, and that’s true when setting up a successful business in KSA. Whether you’re expanding your existing business into this region or starting a new one, establishing your credibility in the market and building relationships with future business partners/clients will require you to invest time. Those who have patience reap the reward in the end.


With economic diversification, favorable business environment and incoming foreign investments, Saudi Arabia offers you the perfect conditions to build your next successful venture in this ripe and largely untapped market.

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