Doing Business In Saudi Arabia

Saudi Arabia is the 13th biggest country in the world and the largest within the Middle East. It is bordered by a number of different nations, including Jordan, Iraq, Kuwait, Bahrain, Qatar, Oman, Yemen and the UAE.

It is a rich nation, partially due to its abundance of oil. However, it also has a number of other natural resources such as gold, silver, zinc, manganese, iron, tungsten, copper and lead. It has a growing agricultural sector and is one of the largest producers of dates. The country relies on imports of chemicals, equipment and machinery, vehicles, textiles and some food.

In recent years, many businesses have invested or partnered with businesses in Saudi Arabia, and this is only set to increase. If you are considering visiting the country and conducting business, take a look at our quick guide to get you started.

Religion

Saudi Arabia is an extremely religious country where the majority of the workers are Muslim. If you are a guest worker or visiting a Saudi business, you may feel disrupted by the calls to prayer throughout the day, however, this is something you will have to get used to. Prayer calls can mean that there are breaks throughout the day that last between 30 and 40 minutes.

Employment Contracts

Unlike in many Western countries, Arab culture is less focused on written contracts and more on negotiating and discussion, which can be a culture shock to many Westerners. Through negotiation, an agreement will be reached, and it may be documented in a formal contract. It is, however, important to note that these contracts do not hold as much weight as you would expect with many Saudi partners changing terms with no notice – they see the contract as an intention rather than a fixed arrangement.

When there is a dispute, there is little in Saudi law to protect foreign workers, with the country not signing many international labour agreements. The terms of a contract are likely to be upheld if you are a large foreign company, however.

If you are employed by a Saudi company, your visa will be issued by them. This means that if you want to change company, you will need the cooperation of the government, your existing employer and your new employer, which can be difficult. You will also require permission from your employer to leave the country or leave your job.

Finally, if you are considering lending money to a Saudi company, be wary as Islam generally does not agree with paying interest. This can mean that borrowers do not pay the interest back, as it is against Sharia law. Insurance is also frowned upon as it is seen as gambling.

The Saudi government are taking steps to help foreign businesses work in the country, establishing Special Tribunals to help out industries manage their company within the Sharia Law of the country. These tribunals will hear cases where there is a conflict and try and suggest a solution.

Negative Comments

No one likes to be criticised, and this is especially relevant in Saudi Arabian culture. Criticism of Saudi businessmen or workers by foreigners are often seen as personal insults and can damage business relations. Therefore do not criticise anyone directly or through a third party as this can damage their reputation.
If you need to deliver bad news, then it is important to frame it in a way that ensures no responsibility is on your Saudi partner, instead, putting it down to bad luck. This will maintain your positive working relationship.

Bureaucracy

There is much bureaucracy in Saudi Arabia, like many other developing nations, and to conduct business, you may need a large amount of documentation and licences. Saudi workers only are permitted to work in the civil service, and therefore, it employs a large number of people. There is no getting away from it, bureaucracy is rife in the country, and this is something you will need to accept. Consider consulting an expert within the country who can help you file any necessary paperwork and ensure you are doing things correctly. This will give you peace of mind and make your life easier.

Greetings

Men usually greet each other by shaking hands and introducing to themselves to each person individually. It is recommended you learn some Arabic greetings to show you are making an effort.

Men and women should not shake hands or touch unless they are family. In a business setting, some women may have worked in the West and be more comfortable, but it is recommended that you follow their lead.

When exchanging business cards, swap these at the beginning of the meeting and placed them on the table in front of you. If you put the business card straight into your pocket, this is seen as rude. As a general rule, print your business cards in Arabic on one side and English on the other.

You are likely to be offered coffee or tea to gain a meeting, and it is polite to take some. Be sure to use your right hand when taking the cup and apologize if you cannot.

Additionally, ensure that you are not pointing the sole of your foot towards anyone in the room, as this is considered rude and insulting. To avoid doing this accidentally, place your feet on the ground rather than crossing your legs.

Business Negotiations

As mentioned previously, Saudi Arabian business works around a series of negotiations and bargaining, and this process can be lengthy. Decisions are made by those at the top, but there will be several meetings with people below the boss before a decision is made.

When discussing prices, Saudis are known to make an offer that is very low when looking to buy a product or very high when looking to sell. This is when the negotiation begins to reach a fair deal. Repeat your points during negotiations to show you are being truthful and honest but do not be pushy, as this can be seen as rude. Many top executives from Saudi Arabian businesses have worked in the West, or at least studied there and therefore are more comfortable in conducting business with them. It is important, however, to still respect the county you are in and its traditions.