Saudi Arabia - Selling Factors and Techniques Saudi Arabia - Selling Factors
Expatriate managers have had a strong influence in introducing advanced selling techniques into a market that relied heavily on word-of-mouth and established buying patterns until recently. Saudi consumers are becoming more discerning and sophisticated. Although preliminary contact and exchanges may be handled electronically, no serious commitment is likely to be made without a face-to-face encounter and negotiation. Exchange of business cards, usually printed in English on one side and Arabic on the other, is customary in the first meetings. American business visitors should bring a large supply of business cards to share with contacts during their visits.
Saudis are gracious hosts and will try to put a visitor at ease, even during arduous business dealings. Many upper and middle-class Saudis were educated in the United States or in Europe, are comfortable in English, and receptive to doing business with foreigners.
Financing and credit facilities may be offered as part of a sales proposal, usually after a solid relationship has been established. The 2003 Capital Market Law (CML) created the Saudi Stock Exchange (Tadawul), as well as the Capital Market Authority (CMA). The CMA is charged with overseeing and regulating the Saudi Stock Exchange and ensuring that markets operate fairly, transparently, and efficiently. The CML also established a new regulatory framework designed to encourage greater participation in the financial market. It also established Tadawul as the exclusive securities market.
The CML provided the basis for the establishment of two committees to settle securities disputes: The Committee for the Resolution of Securities Disputes (CRSD) and the Appeals Panel. The CRSD has jurisdiction over disputes falling under the provisions of the Capital Market Law, the rules and regulations issued by the CMA, and the Stock Exchange. The Appeals Panel hears appeals against decisions issued by the CRSD. A decision issued by the CRSD may be appealed to the Appeal Panel within thirty days of the notification date. The CML also created the Securities Deposit Center (SDC), which is operated by Tadawul. SDC oversees managing deposits, transfers, settlements, clearing, and registration of all Saudi securities on the exchange. Other entities created by the CML include the Department of Authorization and Inspection, the Corporate Finance, and Enforcement and Market Supervision Divisions.
The SAG 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, including U.S. firms, are taking advantage of the new regulation. 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 dedicated sales staff (especially for high-tech or engineered products), setting up workshops, repair facilities, and funding local advertising. Foreign suppliers often appoint a sales person to the Saudi distributor to provide marketing, training, and technical support. In the absence of such arrangements, American firms should expect to make periodic visits each year to support their Saudi distributor and maintain their “share of mind” with that distributor.
There are licensing restrictions limiting who may or may not offer certain professional services, including law, medicine, accounting and financial services, architecture, engineering, and other similar professions. In this case, having a Saudi joint-venture partner is a requirement for any entity or individual to practice the above-mentioned professional services.