For foreign investors looking to expand into Saudi Arabia there are an increasing number of opportunities in the Kingdom. However, with expanding into a new market come new challenges in day-to-day business. Differences in culture, legalities and ways of doing business pose new obstacles for foreign investors. To overcome these challenges, having knowledge of the market, business environment and the culture makes the transition smoother. We have detailed some common challenges that businesses face when moving to Saudi and how to overcome them.
Saudis prefer to do business with people they know and have a good relationship with, contrary to Western culture, where business and personal life are kept separate. Engaging in small talk is a suitable way to get to know a Saudi local and build a relationship.
For businesses operating in Saudi Arabia, it’s important to know this difference. If you want to do business deals with Saudis, you will most likely have many meetings to get to know them personally prior to discussing business matters. This means deals are generally made final at a slower pace.
When spending time getting to know your Saudi counterpart, asking questions about family, and personal interests and common hobbies are favorable topics.
Saudis operate in a high-context communication style. The significance of a message is conveyed more in the non-verbal body language. This can be seen through maintaining eye contact, hand gestures and body posture. Saudis generally view eye contact as an important gesture when communicating. If you are constantly looking away or avoiding eye contact, you may appear as untrustworthy.
Other forms of context observed are the tone of voice and pauses or silences in speech. Saudi communication style is indirect, pauses of speech are used to think, and a direct ‘no’ is seldom used.
Hence, face-to-face meetings are more valuable than phone calls and emails. It is best to do important business face-to-face where possible. As the communication style is high context, it’s valued over emails.
Attitude to time
In Saudi, the relaxed attitude to time means that meetings are generally less structured and time is spent conversing on a personal level. However, when scheduling meetings make sure to schedule them around prayer times and other religious obligations, as Saudis will pause business matters to pray.
In Saudi, the processing timelines for acquiring visas, business licenses and other legal activities are generally longer than those in Western countries. For Western companies going to Saudi, it’s important to keep in mind the timeline required for all the processes that they must complete with their expansion.
Miscalculation of the timeline can cause costly delays, however, there are ways to minimize these risks. Companies can use a government relations officer (GRO) in Saudi to process all their licenses and documents, a GRO can either be outsourced or an employee. A GRO will help with setting up your business in the Kingdom, attesting documents, processing visas and all other activities related to government and government ministries.
Saudization is an initiative that gives Saudi nationals fair opportunities in the workforce. For companies, that means that there’s a percentage of Saudi nationals that each company must hire depending on the company’s industry and size. Foreign companies moving to Saudi must be prepared to recruit and hire Saudi nationals that match the company’s requirements.
For companies to remain compliant, businesses must know where they need to stand in the Nitaqat rating system. However, this often brings other obstacles, as foreign companies now have to find Saudi nationals with the education and training that’s suitable for the position.
Tools such as TAQAT, the online portal, allows companies to find and hire suitable Saudi nationals and helps minimize the challenges associated with Saudization. It allows companies to search through a range of candidates who may be suitable for the job and hire the best one. Foreign companies can also outsource their recruitment to an outsourcing provider who will find the best local talent for your company needs. This is useful as they will know and understand the market, and complete this process while you focus on core business activities.
Risk management helps companies evaluate what risks and challenges may occur, and how to overcome them. It should be a point of reference before, during and after the move to Saudi. Effectively using risk management will give solutions to each problems, identifying which ones you can overcome, and which you will need to adapt to. Doing this will allow your business to effectively operate in the Kingdom.
Overcoming these common challenges of doing business in Saudi can be dealt with through proper risk analysis and understanding the market. This helps companies moving to Saudi transition into the culture and business environment and makes the transition smoother. Using an outsourcing provider is an effective way to help businesses expand into Saudi with less hassle as they will have a point-of-contact in Saudi who is familiar with the procedures.
For support in Saudization or recruitment, contact Proven on +966 11 411 1127 or email@example.com.