Saudi Arabia has been welcoming foreign investors for years and there are many opportunities presented in various Saudi markets. However, foreign investors will likely discover some challenges of doing business in Saudi Arabia.
Therefore, if you are interested in doing business in this country, you must be able to overcome those challenges effectively. As a result, you will be able to do business in this region smoothly and easily.
Challenges of Doing Business in Saudi Arabia
What are the challenges of doing business in Saudi Arabia? Recognizing these challenges will allow you to anticipate them beforehand and help you succeed in doing business.
The challenges of doing business of Saudi Arabia are:
- Saudization
The Saudization program may pose a challenge for foreign investors and business owners in Saudi Arabia. This program forces certain businesses to have a minimum percentage of Saudi Arabian employees. Meanwhile, other businesses are forced to have 100% of Saudi employees.
It is reported that some US companies in Saudi found difficulties in finding enough qualified Saudis to fill certain positions. Therefore, they need to spend more money to train them.
- Arabization
It can be challenging for foreign investors and business owners to communicate and start a business in Saudi Arabia because everything is done in Arabic. Licensing, banking, labeling of goods, and communication with customers, government, and employees are done in Arabic.
Therefore, investors who don’t speak and write Arabic will have difficulties in doing business in this country.
- Geography
Saudi is a large country. It is divided into three regions; they are Western region, Eastern Region, and Central region. As a result, most companies need to have at least an office in each region.
This geographical condition may cause difficulties for foreign business owners who plan to expand their business to Saudi. Managing an office in Saudi is quite challenging, let alone three offices.
On the other hand, companies need to beat the local presence to reach success. Therefore, having only one office is not an option.
- Legal System
Saudi Arabia’s legal system is based on Islamic law, i.e. Sharia Law. In consequence, investors and business owners need to have some knowledge on this law and put this law into consideration when they are doing business in the country.
- Business Culture
The business culture of Saudi Arabia may pose a challenge for American or European investors. Saudis prefer to do business with someone they know and trust so that foreigners may find difficulties having a business relationship with the locals.
Saudis also value time as flexible. They don’t care much about deadlines and may cancel an appointment at the last minute. Moreover, business has hierarchical structure so that decision making is only in the hand of the top executives.
How to Overcome the Challenges
To overcome the challenges above, it is recommended for you to hire one of the business consulting firms in Saudi Arabia. This firm will be happy to help you to face those challenges and to create a plan to anticipate other problems that may appear in the industry.
Therefore, you don’t need to worry much about the challenges or problems of doing business in Saudi. The assistance of a business consulting firm allows you to do business in this region easily and smoothly.
