Selling Factors/Techniques in Saudi Arabia

A Hot Tip about Sales in Saudi Arabia

Posted on: 24 May 2010

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 a few years ago. Saudi consumers are increasingly becoming more discerning and sophisticated.

 

Although details of a transaction can be handled electronically, no serious commitment is likely to be made without a face-to-face introduction. Business cards are usually printed in English on one side and Arabic on the other.

 

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. Passed in 2003, the Capital Market Law (CML) created the Saudi Arabian Stock Exchange (SASE), as well as the Capital Market Authority (CMA), to oversee and regulate the exchange. The law established a new regulatory framework designed to encourage greater participation in the financial market. It also establishment the SASE as the exclusive securities market in Saudi Arabia. The CMA was created to ensure that Saudi Arabia’s capital markets are faire, transparent and efficient.

 

The CML provides for the establishment of two committees to settle securities disputes, the Committee for the Resolution of Securities Disputes (CRSD) and the Appeal 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 Appeal Panel, which was formed by the Council of Ministers, will hear 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. CML also created the Securities Deposit Center (SDC), which is operated by Tadawul a Saudi Stock Exchange Company. SDC is in charge of 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 & Inspection; and Corporate Finance, Enforcement & Market Supervision.

 

The Government has liberalized the wholesale, retail, and franchise sectors, allowing foreign investors to establish joint ventures and retain a 51% share. The foreign partner’s capital requirement is set at $5.3 million and his equity share can be increased to 75% after 3 years from the contract date. All industrial enterprises are open to non-Saudis, and they can also trade in the products they manufacture. Restrictions on individual professions also are in force, such as who can practice law, medicine, accounting and financial services, architect and engineers, and other similar professions. A Saudi joint venture partner is a requirement for any entity or individual to practice the above-mentioned professional services.

 

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, American firms should expect to make frequent, periodic visits each year to support their Saudi distributor.

 

 

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Posted: 24 May 2010

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