1) Saudi Arabia has a population of over 26 million people and an economy reliant on oil exports. 2) The official language is Arabic and Islam is the dominant religion, greatly influencing Saudi culture and laws. 3) Saudi Arabia has experienced rapid modernization and infrastructure development due to oil wealth but maintains a conservative society adhering closely to traditional Islamic values.

2. INTRODUCTION:
Flag
green background, with in white letters the Muslim creed in Arabic: "There is no god but God: Muhammad is the
Messenger of God."
Population
as of the 2010, 247 million, including nearly 8.5 million expatriates.
Religion
Islam, which is the basis of the legal system and of government.
Language
Arabic; English widely spoken in urban areas.
National Day
September 23, commemorating the foundation of the modern Kingdom of Saudi Arabia in 1932.
Rulers
King Abdulaziz bin Abdelrahman Al-Saud, the founder (1932-1963), followed by his sons: King Saud (1953-64),
King Faisal (1964-75), King Khalid (1975-82), King Fahd (1982-2005) and the current ruler, Custodian of the Two
Holy Mosques King Abdullah bin Abdulaziz, seen on the left with the late King Fahd and the late Crown Prince
Sultan bin Abdulaziz.

3. Land Area 2 200 000 sq. km
Population: 26m
Population density: 13 sq. km
Life expectancy: Men: 72 yrs
Women: 76 yrs
Adult literacy: 85%
Average per household 5.4
Divorces per1,000 : 1
The Economy
Currency: Riyal
GDP: $376 bn
GDP per heads: $14,800
Employment (% of total): Agriculture 3%
Industry 20%
Services 75%
Unemployed 5%
Main Exports: Type: Crude oil & refined petrolium
Destinations: (% total) Japan 15%
China 12%
South Korea 12%
USA 10%
Main Imports:Type: Machinery
Transport equipment
Foodstuffs
Chemicals
Main countries of origin: USA 13%
China 11%
UK 5%
S Korea 5%

4. THINGS TO KNOW ABOUT SAUDI ARABIA
 The Kingdom of Saudi Arabia was formed in 1932 by King Abdul Aziz bin Abdul Rahman
 Al Saud. The Kingdom is also referred to as KSA, Saudi, Saudi Arabia
 Saudi Arabia represents a $1.4 Trillion market opportunity
 Saudi Arabia is the largest economy in the Middle East, comprising 25 percent of the Arab world's GDP
 His Excellency King Abdullah has embarked on the development of impressive economic cities,
universities, and
 Investment in the Kingdom. Thus, creating jobs, infrastructure and vast opportunities
 United States is the Kingdom’s largest trading partner in the region
 Saudi Arabia is the 19th largest exporter and the 20th largest import market in the world
 Saudi Arabia’s non‐petroleum exports totaled $2.3 billion in 2007, up 7% from 2006
 In 1985 Prince Sultan bin Salman traveled aboard the space shuttle Discovery becoming the first Arab and
first Muslim to travel in space
 The Saudi government signed 3,200 contracts worth $22.2 billion with the private sector in 2007
 Saudi Arabia’s annual growth target is 5.6% in 2008
 Saudi Arabia is the world's leading oil exporter, possessing one‐fourth of the worlds proven oil reserves.
 Saudi Arabia joined WTO in 2005 since then KSA has focused more on persuading economic reform and
diversification
 Having a median age of 21 makes Saudi citizens almost half as young as American citizens
 Saudi currency, Riyal, has allowed high confidence in trades by staying constant at an exchange rate of
1/3.75
 There are estimated to be five times more mobile phones in Saudi than land lines
 Saudi Arabia is the world's largest producer of desalinated water: thirty‐three plants produce nearly two
million cubic meters of fresh water from the sea
 The Saudi Company, ARAMCO, is the world's largest producer of oil. Saudi Arabia has twenty‐six
percent of the world's share of present oil production
 Women in Saudi Arabia run companies, schools, play sports and are dedicated to family
 Saudi Arabia enjoys a very low crime rate
 Saudi Arabia is a founding member of OPEC (Organization of the Petroleum Exporting Countries)
 Saudi Arabia is the birthplace of Islam and home to Islam's two holiest shrines in Mecca and Medina
HOW WORLD SEE’S SAUDI ARABIA
The Kingdom of Saudi Arabia means different things to different people. For millions of followers of Islam across
the world it is the ultimate Holy Land and pilgrimage destination. For a large number of expatriates from Asia,
Europe and the United States, it is a land of opportunities.
For the rest of the world, Saudi Arabia means oil the lifeline of present and future economies. Saudi Arabia has so
far lived up to all these definitions, and is now entering a new phase of its development.
On September 23, 1932, King Abdulaziz Al-Saud laid the foundation of the modern Kingdom of Saudi Arabia.
Large reserves of oil were discovered soon after, and within a span of six years, commercial production of oil began.
The fortune of Saudi Arabia changed forever and the Kingdom rapidly moved on the path of a modern industrial
state.

5. The technical and vocational training sector is important in responding to the labour market needs for qualified
national workforce able to respond to the fast paced developments in the country with higher education, this sector
constitute the base for all aspects of economic development.
It also plays a significant role in providing some of the graduates of general education and with the skills and
expertise necessary to fill labour-market vacancies in various professions and specialties, in addition to upgrading
the skills and training of employees.
FACTORS FORCES OF GLOBLIZATION
The dominant power on the Arabian Peninsula, the Kingdom of Saudi Arabia, has long been one of the world’s least
accessible societies, with a famously inscrutable government. Even Saudi Arabia’s smaller Gulf Arab neighbors,
who share ethnic, religious and other ties with the Kingdom but who are separated from it by their heritage as British
protectorates, regard it with a mixture of envy, apprehension, and perplexity. Saudi Arabia is, after all, the only non-
western polity to have successfully barred intrusion by Euro-American missionaries and soldiers.
1
The Saudi monarchy is the only traditional ruling structure to have survived the era of colonialism intact and on its
own terms.
2
Its oil wealth and the international influence derived from it have made Riyadh the fourth corner of the
traditionally triangular Arab East.
3
The Kingdom was (with Israel) the only polity to have been successfully established by military conquest in the
Twentieth Century.
4
(Had the East India Company and its successor British Indian Empire not intervened to suppress piracy and
preempt other powers from establishing a foothold in the Gulf, Saudi Arabia’s traditional borders would almost
certainly have expanded to include the smaller emirates along the coast of the Persian Gulf and these small polities
would have been absorbed by their larger neighbor.)
The Kingdom’s decision-making processes are largely invisible or opaque to those outside the inner circle of its
royal family. It continues to defer to the uniquely demanding religious doctrines and social traditions of Wahhabi
Islam, which many other Muslims in the region deride as aggressively austere and intolerant. Saudi law and custom
forbid the practice of religions other than Islam. Saudi universities do not offer instruction in the Hellenistic
philosophical traditions that were at the center of Islamic civilization at its height (and that subsequently flowed
from there to Europe, where they inspired the Renaissance).
Despite this dedication to traditional ways, the discovery of enormous reserves of oil in Saudi Arabia’s Eastern
Province in 1938, rapid growth in global demand for energy, and huge royalties from oil exports have enabled the
Kingdom to manage a three decade-long program of modernization that is unprecedented in the scope of its speed,
intensity, and breadth. Almost unbelievably impoverished and backward 5
within living memory, Saudi Arabia now
possesses a physical infrastructure that any developed society would envy. This modernization has, moreover, been
accomplished with remarkably little apparent social stress. Other cultures challenged by their sudden, humiliating
encounter with superior Euro-American wealth and power have attempted, usually with disastrous results, to import
Western technology without permitting contagion by the values associated with it.6
Saudi Arabia may be the only
example anywhere to date of prolonged success in such an attempt.

6. Negotiating International Business - Saudi Arabia
Though the country’s culture is quite homogeneous, Saudi businesspeople, especially those among younger
generations, are usually experienced in interacting and doing business with visitors from other cultures. Until the
discovery of oil, the Kingdom of Saudi Arabia produced very little, and the primary business activity was trading.
This merchant culture helped them become shrewd and highly skilled bargainers. However, that does not necessarily
mean that they are open-minded. When negotiating business here, realize that people may expect things to be done
‘their way.’
Always keep in mind that this is an Islamic country. Showing any disrespect for the religion could have disastrous
consequences.
Relationships and Respect
Saudi Arabia’s culture expects its members to have a strong sense of loyalty to their group. At the same time, it
leaves room for individual preferences. Building lasting and trusting personal relationships is very important to most
Saudis, who often expect to establish strong bonds prior to closing any deals. People in this country prefer to do
business with those they know and like. Establishing productive business cooperation requires a long-term
perspective and commitment. Social interactions are just as important as business contacts, if not more.
Consequently, proceed with serious business discussions only after your counterparts have become very comfortable
with you. This is usually a slow process.
Business relationships in this country exist between people, not necessarily between companies. Even when you
have won your local business partners’ friendship and trust, they will not necessarily trust others from your
company. That makes it very important to keep company interfaces unchanged. Changing a key contact may require
the relationship building process to start over. Worst case, such a change may bring negotiations to a complete halt.
Establishing relationships with others in Saudi Arabia can create powerful networks, especially if they reach into the
extensive royal family. Whom you know may determine whether people want to get to know you. Maintaining
cordial relations is crucial. Third party introductions can be very helpful as a starting point to building a trusting
relationship with a potential partner, especially since Saudis may initially not trust Westerners..
In Saudi Arabia’s business culture, the respect a person enjoys depends primarily on his status, rank, and age. It is
vital to treat elderly people with great respect. Showing status is important since people will take you more
seriously. Carefully select your hotel and transportation. Use the services of others, such as a porter, to avoid being
viewed as a low-ranking intermediary. Admired personal traits include poise, sociability, and patience.2 Copyright
2006-2010 - Lothar Katz

7. Communication
Saudis usually speak in quiet, gentle tones. A raised voice usually indicates anger, which is a very bad signal. At
restaurants, especially those used for business lunches and dinners, keep conversations at a quiet level. Being loud
may be regarded as bad manners. People in the country generally converse in close proximity, standing only two
feet or less apart. Never back away, even if this is much closer than your personal comfort zone allows. Doing so
could be read as a sign that you are uncomfortable around them.
Communication is generally rather indirect. Saudis often use circuitous language, which can make it difficult for
Westerners to figure out the exact message. They love flowery phrases, exaggerations, and other rhetoric, and
generally consider eloquent people more respectable and trustworthy. Open disagreement and confrontation are rare
and best avoided. You will usually not hear a direct ‘no.’ When a Saudi says ‘yes,’ he may actually mean ‘possibly.’
Ambiguous answers such as ‘we must look into this’ or ‘we will think about it’ usually mean ‘no.’ Silence is another
way to communicate a negative message. It is beneficial to use a similarly indirect approach when dealing with
Saudis, as they may perceive you as rude and pushy if you are too direct.
Gestures and body language are usually more restricted than in other Arab countries. Men tend to make frequent
physical contact, though. They may greet each other by hugging and kissing as a sign of friendship. However, never
touch someone’s head, not even that of a child. Since Muslims consider the left hand unclean, use it only if
inevitable. The soles of your shoes are also considered unclean and you must avoid showing them to others, even
when seated on a cushion. Pointing at people or objects is impolite. Instead, wave your open hand toward the object.
The thumbs-up gesture is an offensive gesture throughout the Arab world. Eye contact should be frequent, almost to
the point of staring. This conveys sincerity and helps build trust. Saudis enjoy showing positive emotions as long as
it is done in a controlled fashion. However, they may smile less often than some of their neighbors.
Initial Contacts and Meetings
Choosing a local intermediary who can leverage existing relationships to make the initial contact is crucially
important. Having a sponsor is also a legal requirement for visiting the country. A person who can introduce you to
the right contacts and help you build relationships is essential when doing business in this country. This person will
help bridge the gap between cultures, allowing you to conduct business with greater effectiveness. Let him set the
pace of your initial engagements.
If possible, schedule meetings at least three to four weeks in advance. The length of a meeting is usually
unpredictable, so do not try to schedule more than one per day. Since Saudis want to know whom they will be
meeting, provide details on titles, positions, and responsibilities of attendees ahead of time.
Saudi names can have several parts and may be difficult to identify. It may be best to inquire from someone upfront
or politely ask the person how to address him or her correctly. In that case, make sure you do the same for your own
name. Titles, such as Doctor or Professor, are highly valued. Always use them when addressing a person who
carries one. Do not call Saudis by their first name unless they offered it. Arabs may see mispronouncing their names
as a sign of disrespect. Greet the most senior person first, and then greet everyone else in the room individually.
Introductions and greetings are accompanied by extensive compliments as well as handshakes using the right hand.
Saudi women generally do not shake hands with men. Saudi businessmen may be reluctant to shake the hand of a
foreign woman.
.

8. Negotiation
Attitudes and Styles - Leveraging relationships is an important element when negotiating in Saudi Arabia.
Nevertheless, Saudis often employ distributive and contingency bargaining. While the buyer is in a superior
position, both sides in a business deal own the responsibility to reach agreement. They expect long-term
commitments from their business partners and will focus mostly on long-term benefits. Although the primary
negotiation style is competitive, Saudis nevertheless value long-term relationships. They will ultimately look for
win-win solutions and show willingness to compromise if needed. Saudi negotiators may at times appear highly
competitive, fiercely bargaining for seemingly small gains. They respect hard bargainers as long as they avoid
creating direct conflict. You earn your counterparts’ respect by maintaining a positive, persistent attitude. It is criti-
cally important to remain calm, friendly, patient, and persistent, never taking anything personally.
Bargaining : Saudi businesspeople are usually shrewd negotiators who should never be underestimated. Most of
them thoroughly enjoy bargaining and haggling. They expect to do a lot of it during a negotiation and may be
seriously offended if you refuse to play along. In addition, they may expect flexibility on your side, so avoid coming
with overly narrow expectations of how a deal might be reached.
Saudi negotiators avoid openly aggressive or adversarial techniques but may use more subtle versions. Making an
extreme opening offer is a standard practice to start the bargaining process. Negotiators may also make indirect
threats and warnings, or subtly display anger. Use these tactics with caution yourself since they may adversely affect
the relationship if employed too aggressively. Do not walk out or threaten to do so as your counterpart may take this
as a personal insult..
Corruption and bribery : are quite common in Saudi Arabia’s public and private sectors. However, people may
draw the line differently, viewing minor payments as rewards for getting a job done rather than as bribes. Also, keep
in mind that there is a fine line between giving gifts and bribing. What you may consider a bribe, a Saudi may view
as only a nice gift. So much as hinting that you view this differently could be a grave insult to the person’s honor. It
may help if you introduce and explain your company’s policies early on, but be careful not to moralize or appear to
imply that local customs are unethical.
Decision Making – Company hierarchies can be very rigid, and people expect to work within clearly established
lines of authority. Although the pace of business is accelerating, decision making can be a slow and deliberate
process in Saudi Arabia. Decision makers are usually individuals who consider the best interest of the group or
organization and may consult with others in the organization. Decisions therefore often require several layers of
approval. Final decision-making authority may be delegated down, but that can change quickly if subordinates fall
out of favor. Consequently, it will be important to win the support of senior executives.

9. Agreements and Contracts
Capturing and exchanging meeting summaries can be an effective way to verify understanding and commitments.
While these serve as tools to improve the communication and strengthen commitments, they should not be taken for
final agreements. Any part of an agreement may still change significantly before both parties sign the final contract.
Agreements are only final when the participants part. Until then, the Saudi side may unilaterally abrogate them,
possibly even if they were already signed. Oral agreements are not binding under Saudi law.
Although businesspeople in the country understand the role of contracts well, they may view them only as general
guides for conducting business, expecting that both parties are willing to change terms if there is a change of
conditions. Written contracts are usually kept high-level, capturing only the primary aspects, terms, and conditions
of the agreement. Writing up and signing the contract is a formality. Saudis believe that the primary strength of an
agreement lies in the partners’ commitment rather than in its written documentation. Accordingly, do not propose an
overly detailed contract since that may cause hurt feelings.
International contracts in the country usually include ‘offset’ requirements, which are spelled out by law. As
compensation for the gains the foreign company expects to receive from the business deal, it is required to support
efforts the local economy will benefit from, such as training local staff or transferring technological know-how.
Saudi law also requires having a local representative on a continuous basis. It is strongly advisable to consult a local
legal expert before signing a contract. However, do not bring your attorney to the negotiation table. Saudis may read
it as a sign of mistrust if you do.
Since personal honor is highly valued in Saudi Arabia, contracts are usually dependable and your partners will strive
to keep their commitments. However, business partners commonly expect the other side to remain somewhat
flexible if conditions change, which may include agreeing to modify contract terms.
Women in Business
Saudi Arabia remains a male-dominated society. Although some women are working, they still have very traditional
roles and rarely attain positions of similar income and authority as men. The relative scarcity of women in Saudi
business may make local men uncomfortable in dealing with Western women, who should not expect to be met with
the same respect as men. Women find themselves subjected to many restrictions in the country. Displaying
confidence and assertiveness can be counterproductive. Appearing overly bold and aggressive may create major
issues and must be avoided under all circumstances.
As a visiting businesswoman, emphasize your company’s importance and your role in it. A personal introduction or
at least a letter of support from a senior executive within your company may also help. Even with these credentials,
you may still not find sufficient attention, making it advisable to take a male colleague along for the trip and act
‘behind the scenes.’
Female business travelers should exercise great caution and act professionally in business and social situations. They
need to dress in accordance with local customs, which means that collarbones and knees need to be covered at all
times and that clothes should not be form-fitting.
Male visitors should not speak to a Saudi woman unless the situation clearly requires it. In addition, avoid bringing
up the subject of women with your male business partners. Do not even inquire about a wife’s or daughter’s health.
Furthermore, while there may be intensive contact between men, it is vitally important not to stare at any woman
you may meet.7

10. The Potential of Saudi Arabia for International Business
One of the most devout and insular countries in the Middle East, Saudi Arabia has emerged from being an
underdeveloped desert kingdom to become one of the wealthiest nations in the region thanks to vast oil resources.
With strong government control over major economic activities, Saudi Arabia has the largest reserves of petroleum
in the world, ranks as the largest exporter of petroleum and plays a leading role in OPEC. The petroleum sector
accounts for roughly 75% of budget revenues, 40% of GDP, and 90% of export earnings. However, she faces
serious economic and political challenges vulnerable to world oil price fluctuations.
There are three major marketing regions in Saudi Arabia: The Western Region, with the commercial centre of
Jeddah; the Central Region, where the capital city Riyadh is located; and the Eastern Province, where the oil and gas
industry is most heavily concentrated. Each has a distinct business community and cultural flavour and there are few
truly "national" companies dominant in more than one region.
The Saudi Arabian leadership has embarked on a wide ranging restructuring of the entire Saudi economy with strong
emphasis on increased levels of foreign investment and on private sector expansion. Saudi Arabia's young and
rapidly growing population have accelerated the need to diversify the economy, expand the technology base,
increase exports and create jobs for Saudi citizens. The Saudi government's economic reform programme provides
exporters and investors real opportunities. The most important market reform initiatives are in the areas of
information technology and basic infrastructure. .

12. Women, Gender, Problem of Globalization in the Arab World
In countries like Saudi Arabia, women are beginning to outpace men in graduating from college, a trend that has
been steady since the 1970s. Women are even graduating higher in their class and they are getting the same degrees
as men in quicker time than men, yet unemployment stays high. This may seem like a conundrum at first, but it does
make sense. Historians Eleanor Doumato and Marsha Posusney refer to women as "victims of their own success" (1)
in Saudi Arabia, and the economy has to be rapidly changing in order to be able to take in these large number of
college graduates, which, obviously, has increased with the addition of the second gender. Arab nations, especially
those that are more traditional than others as Saudi Arabia is, have a high amount of segregation of sexes in society,
including the workplace, and women are restricted to more "traditional" female jobs such as education and
healthcare, resulting in a more heavy gender segregation with female college-graduates.
With the spread of globalization and free-market capitalism into the Arab world, with modernization comes better
technology and better education from Western countries, including an invasion of cultural and economic ideas from
the West. As the world continues to globalize, meaning that the world (in more than just an economic sense) is
becoming more and more integrated culturally and politically as well as economically, those in power who are
threatened by the modernization and integration into the world scene tend to revert more heavily to traditional
values, such as segregation of gender in the workplace. Because of this, despite women graduating from college at a
record rate in the Middle East, unemployment persists and even gets worse because of the advances women have
made. Globalization, often thought of as a positive thing with the advances in technology and education, in this case
has adverse effects in a country like Saudi Arabia.

13. CULTURE
Saudi Arabian culture mainly revolves around the religion of Islam. Islam's two holiest sites, Mecca and Medina,
are located in the country.
Five times every day, Muslims are called to prayer from the minarets of mosques which are scattered around the
country. The weekend begins on Thursday due to Friday being the holiest day for Muslims. Most Muslim countries
have a Thursday-Friday or Friday-Saturday weekend.
The public practice of any religion other than Islam, including Christianity and Judaism, the presence of churches,
and possession of non-Islamic religious materials is not allowed except in Aramco compounds in which many
expatriates attend church services. Saudi Arabia's cultural heritage is celebrated at the annual Jenadriyah cultural
festival.
However, secret negotiations are rumored to be taking place between the Vatican and Saudi Arabia regarding
authorization to build Catholic Churches in the Kingdom.

14. Other Important Things to Know
Impeccable appearance is very important when doing business in any of the Gulf Arab states and many other Arab
countries. Male business visitors should wear conservative suits on most occasions. Always cover your whole body.
Make sure shoes and suit are in excellent condition.
Saudi hospitality is world-famous. You are not expected to reciprocate at similar levels.
Tea will be served at many occasions. It would be a mistake not to accept it, even when you are not thirsty.
Social events do not require strict punctuality. While it is best to arrive at dinners close to the agreed time, being late
to a party by 15 to 30 minutes or more is expected. There may be little conversation during meals, allowing
everyone to relish the food. Remember that alcohol is illegal in Saudi Arabia.
Topics to avoid in discussions are Saudi Arabia’s internal conflicts with Islamic extremists as well as its political
role in the Gulf and Iraq wars.
Lastly, never overly praise something your host owns. He may feel obliged to give it to you, which could create a
very difficult situation.
Music and dance
One of Saudi Arabia's most compelling folk rituals is the Al Ardha, the country's national dance. This sword dance
is based on ancient Bedouin traditions: drummers beat out a rhythm and a poet chants verses while sword-carrying
men dance shoulder to shoulder. Al-sihba folk music, from the Hejaz, has its origins in al-Andalus. In Mecca,
Medina and Jeddah, dance and song incorporate the sound of the mizmar, an oboe-like woodwind instrument in the
performance of the mizmar dance. The drum is also an important instrument according to traditional and tribal
customs. Samri is a popular traditional form of music and dance in which poetry is sung especially in the Eastern
Dress
Saudi Arabian dress follows strictly the principles of hijab (the Islamic principle of modesty, especially in dress).
The predominantly loose and flowing but covering garments are helpful in Saudi Arabia's desert climate.
Traditionally, men usually wear an ankle-length shirt woven from wool or cotton (known as a thawb), with a
keffiyeh (a large checkered square of cotton held in place by a cord coil) or a ghutra (a plain white square made of
finer cotton, also held in place by a cord coil) worn on the head. For rare chilly days, Saudi men wear a camel-hair
cloak (bisht) over the top. Women's clothes are decorated with tribal motifs, coins, sequins, metallic thread, and
appliques. Women are required to wear an abaya or modest clothing when in public.
Food
Islamic dietary laws forbid the eating of pork and the drinking of alcohol, and this law is enforced strictly
throughout Saudi Arabia. Arabic unleavened bread, or khobz, is eaten with almost all meals. Other staples include
lamb, grilled chicken, falafel (deep-fried chickpea balls), shawarma (spit-cooked sliced lamb), and Ful medames (a
paste of fava beans, garlic and lemon). Traditional coffeehouses used to be ubiquitous, but are now being displaced
by food-hall style cafes. Arabic tea is also a famous custom, which is used in both casual and formal meetings
between friends, family and even strangers. The tea is black (without milk) and has herbal flavoring that comes in
many variations.

15. Saudi Arabia Appearance
 Never show bare shoulders, stomach, calves and thighs.
 Visitors are expected to abide by local standards of modesty however, do not adopt native
clothing. Traditional clothes on foreigners may be offensive.
 Despite the heat, most of the body must always remain covered.
 A jacket and tie are usually required for men at business meetings. Men should wear long
pants and a shirt, preferably long-sleeved, buttoned up to the collar. Men should also avoid
wearing visible jewelry, particularly around the neck.
 Women should always wear modest clothing in public. High necklines sleeves at least to
the elbows are expected. Hemlines, if not ankle-length should at least be well below the
knee. A look of baggy concealment should be the goal, pants or pant suits are not
recommended. It is a good idea to keep a scarf handy, especially if entering a Mosque.
Saudi Arabia Behavior
 It is common to remove your shoes before entering a building. Follow the lead of your
host..
 In the Muslim world, Friday is the day of rest.
 There are several styles of greetings used; it is best to wait for your counterpart to initiate
the greeting. Men shake hands with other men. Some men will shake hands with a woman;
it is advisable for a businesswoman to wait for a man to offer his hand. A more traditional
greeting between men involves grasping each other’s right hand, placing the left hand on
the other’s right shoulder and exchanging kisses on each cheek.
 Men walking hand in hand is a sign a friendship.
 Try not to cross your legs when sitting. Never show the bottom of your feet.
 The "thumbs up" gesture is offensive.
 Gifts are not necessary, but appreciated. Avoid admiring an item too much, you host may
feel obligated to give it to you. When offered a gift, it is impolite to refuse.
 Women in Saudi Arabia are not permitted to drive vehicles.

16. Saudi Arabia Communications
 Do not discuss the subject of women, not even to inquire about the health of a wife or
daughter. The topic of Israel should also be avoided. Sports is an appropriate topic.
 Names are often confusing. It’s best to get the names (in English) of those you will meet,
speak to, or correspond with before hand. Find out both their full names and how they are
to be addressed in person.
 Communications occur at a slow pace. Do not feel obligated to speak during periods of
silence. "Yes" usually means "possibly".
 Your Saudi host may interrupt your meeting or conversation, leave the room and be gone
for 15 to 20 minutes for the purpose of his daily prayers.
 At a meeting, the person who asks the most questions is likely to be the least important.
The decision maker is likely a silent observer.
 A customary greeting is salaam alaykum. Shaking hands and saying kaif hal ak comes
next.
LANGUAGE
The 1 and only language of Saudi Arabia is Arabic, but here is a list of ALL varieties of all languages
spoken there:
1. Arabic, Gulf Spoken
2. Arabic, Hijazi Spoken
3. Arabic, Najdi Spoken
4. Arabic, Standard
5. Saudi Arabian Sign Language
6. English (as a second language only)
Geert Hofstede Analysis for Saudi Arabia
Power Distance
The high Power Distance (PDI) ranking is indicative of a high level of inequality of power and wealth within the
society. These populations have an expectation and acceptance that leaders will separate themselves from the group
and this condition is not necessarily subverted upon the population, but rather accepted by the society as their
cultural heritage.
Uncertainty Avoidance
The high Uncertainty Avoidance Index (UAI) ranking of 68, indicates the society’s low level of tolerance for
uncertainty. In an effort to minimize or reduce this level of uncertainty, strict rules, laws, policies, and regulations

17. are adopted and implemented. The ultimate goal of these populations is to control everything in order to eliminate or
avoid the unexpected. As a result of this high Uncertainty Avoidance characteristic, the society does not readily
accept change and is very risk adverse.
Masculinity
The Masculinity index (MAS), the third highest Hofstede Dimension is 52, only slightly higher than the 50.2
average for all the countries included in the Hofstede MAS Dimension. This would indicate that while women in the
Arab World are limited in their rights, it may be due more to Muslim religion rather than a cultural paradigm.
Individualism
The lowest Hofstede Dimension for the Arab World is the Individualism (IDV) ranking at 38, compared to a world
average ranking of 64. This translates into a Collectivist society as compared to Individualist culture and is
manifested in a close long-term commitment to the member 'group', that being a family, extended family, or
extended relationships. Loyalty in a collectivist culture is paramount, and over-rides most other societal rules

18. Saudi Arabia - A Collectivist Society:
Individualism, one of the four Hofstede Dimension's, gives Saudi Arabia a low ranking of 38/100. This translates
into a Collectivist society as compared to Individualist culture. The average ranking is 64/100 while the United
States is ranked 91/100.
 Collectivist societies involve close long-term commitments/relationships in a group, family, extended
family, or extended relationships.
 Saudi Arabians tend to see a person as a member of one or several groups from which he/she cannot
remove his/her self.
 Family and clan are the most important unit of society and a primary source of identity.
 Loyalty in a collectivist culture is imperative, and is predominant over most other societal rules.
 In a collectivist culture, people often yield to their own desires for the sake of the community. For
example, meals and recreation are communal, not individual activities.
 Cultural differences between Arabs and Americans were investigated using Wagner's individualism-
collectivism survey. Arab subjects were significantly more collectivist than U.S. subjects
Collectivism and its affect on Business:
 Lack of innovation:
o Saudi Arabia is doing everything it can to compete in the world market in industries other than
oil. It made its first step toward innovation when the King Abdullah University of Science and
Technology (KAUST) opened. This is an international, graduate-level research university.
Research at KAUST focuses on the advancement of science, technologies, and innovations for the
betterment of the future of Saudi Arabia and the entire world. King Abdullah contributed $10
billion making it the sixth wealthiest school in the world.
 Stiffles individuality :
o Because of its collectivist orientation, a successful communications campaign in Saudi Arabia
would primarily address the family instead of an individual, or would perhaps seek to address
family leaders or elders. Messages like Nike's "Just do it" would probably not be very successful
in Saudi Arabia since it has very individualist overtones.
The political spectrum:
The politics of Saudi Arabia takes place in the context of an absolute monarchy founded upon the tenets of Islam.
The King of Saudi Arabia is both head of state and the head of government, but decisions are, to a large extent,
made on the basis of consultation among the senior princes of the royal family and the religious establishment. The
Qur'an is declared to be the constitution of the country, which is governed on the basis of Islamic law (Shari'a).
Government is dominated by the vast royal family, the Al Saud, which has often been divided by internal disputes
and into factions. The members of the family are the principle political actors. Political participation outside of the
royal family is limited, but there has been pressure for some time to broaden participation. In recent years, there has
been a rise in Islamist activism, which has also resulted in Islamist terrorism
Saudi Arabia-Criminal Justice System:
Two categories of crime are delineated in the sharia: those that are carefully defined and those that are implicit in the
requirements and prohibitions of the sharia. For the first category, there are specific penalties; for the second,
punishment can be prescribed by a judge (qadi) of a sharia court. A third category of crime has developed through
the years as a result of various governmental decrees that specified codes of behavior and regulations considered
necessary to maintain public order and security. The first two categories are tried in sharia courts. The third, dealing

19. with corporate law, taxation, oil and gas, and immigration, is handled administratively by government officials (see
The Legal System , ch. 4).
The sharia carefully defines crimes--such as homicide, personal injury, adultery, fornication, theft, and highway
robbery--and prescribes a penalty (hadd) for each. Various degrees of culpability for homicide and bodily injury are
recognized depending on intent, the kind of weapon used, and the circumstances under which the crime occurred.
Homicide is considered a crime against a person rather than a crime against society in which the state administers
justice of its own volition. Under the sharia, the victim or the victim's family has the right to demand punishment, to
grant clemency, or to demand blood money (diya)--a set payment as recompense for the crime.
An act of self-defense is recognized as a right nullifying criminality. Retaliation is permitted to the male next of kin
of the victim by killing the criminal in the case of a homicide or exacting the same bodily injury that was inflicted
on the victim. Acceptance of diya is, however, considered preferable under the sharia. In cases involving death or
grievous injury, the accused is usually held incommunicado. Imprisonment before trial can last weeks or even
several months. The right of bail or habeas corpus is not recognized, although persons accused of crimes are
sometimes released on the recognizance of a patron or employer. The accused is normally held not more than three
days before being formally charged, but it is common for detainees to be held for long periods if the investigation is
incomplete.
INFLATION IN SAUDI ARABIA:
Saudi Arabia Population:
The total population in Saudi Arabia was last recorded at 28.1 million people in 2011 from 4.0 million in 1960,
changing 595 percent during the last 50 years. Population in Saudi Arabia is reported by the World Bank.
Saudi Arabia GDP:
The Gross Domestic Product (GDP) in Saudi Arabia was worth 576.82 billion US dollars in 2011. The GDP value
of Saudi Arabia represents 0.93 percent of the world economy. GDP in Saudi Arabia is reported by the The World
Bank Group.
Saudi Arabia Balance of Trade:
Saudi Arabia recorded a trade surplus of 239682 Million SAR in the second quarter of 2012. Balance of Trade in
Saudi Arabia is reported by the Saudi Arabian Monetary Agency.
Saudi Arabia GDP Annual Growth Rate:
The Gross Domestic Product (GDP) in Saudi Arabia expanded 5.87 percent in the third quarter of 2012 over the
same quarter of the previous year. GDP Annual Growth Rate in Saudi Arabia is reported by the Saudi Arabian
Monetary Agency:
 Saudi Arabia Money Supply M1:
Money Supply M1 in Saudi Arabia increased to 847205 SAR Million in October of 2012 from 823115
SAR Million in September of 2012. Money Supply M1 in Saudi Arabia is reported by the Saudi Arabian
Monetary Agency (sama).
 Saudi Arabia Government Spending :
Government Spending in Saudi Arabia increased to 127588 SAR Million in the second quarter of 2012
from 121712 SAR Million in the first quarter of 2012. Government Spending in Saudi Arabia is reported
by the Saudi Arabian Monetary Agency.
 Saudi Arabia Foreign Exchange Reserves :
Foreign Exchange Reserves in Saudi Arabia increased to 2384864 SAR Million in October of 2012 from
2330591 SAR Million in September of 2012. Foreign Exchange Reserves in Saudi Arabia is reported by

20. the Saudi Arabian Monetary Agency.
Major areas of law
Constitutional law:
Saudi Arabia is an absolute monarchy,[62]
and has no legally binding written constitution.[63]
However, in 1992,
the Basic Law of Saudi Arabia was adopted by royal decree.[64]
The Basic Law outlines the responsibilities and
processes of the governing institutions but is insufficiently specific to be considered a constitution.[65]
It declares that
the king must comply with Sharia (that is, Islamic law) and that the Quran and the Sunna (the traditions of
Muhammad) are the country's constitution.[64]
Interpretation of the Quran and the Sunna remains necessary, and this
is carried out by the ulema, the Saudi religious establishment.[63]
Criminal law:
There are no jury trials in Saudi Arabia and courts observe few formalities.[67]
The country's first criminal
procedure code was introduced in 2001 and contains provisions borrowed from Egyptian and French
law.[68]
Human Rights Watch, in a 2008 report, noted that judges were either ignorant of the criminal procedure
code or were aware of it but routinely ignored the code.[69]
Criminal law is governed by Sharia and comprises three categories: hudud (fixed Quranic punishments for
specific crimes), Qisas (eye-for-an-eye retaliatory punishments), and Tazir, a general category.[68]
Hudud
crimes are the most serious and include theft, robbery, blasphemy, apostasy, adultery, sodomy and
fornication.[70]
Qisas crimes include murder or any crime involving bodily harm.[68]
Tazir represents most cases,
many of which are defined by national regulations such as bribery, trafficking, and drug abuse.[68]
The most
common punishment for a Tazir offence is lashing.[68]

21. Family law:
Laws relating to marriage, divorce, children and inheritance are not codified and fall within the general
jurisdiction of the Sharia courts.[86]
Polygamy is permitted for men but is limited to four wives at any one time.[87]
There is evidence that its practice
has increased, particularly among the educated Hejazi elite, as a result of oil wealth.[88]
The government has
promoted polygamy as part of a return to "Islamic values" program.[88]
In 2001, theGrand Mufti (the highest
religious authority) issued a fatwa, or opinion, calling upon Saudi women to accept polygamy as part of
the Islamic package and declaring that polygamy was necessary "to fight against...the growing epidemic of
spinsterhood".[88]
There is no minimum age for marriage in Saudi Arabia and the Grand Mufti reportedly said in
2009 that girls of the age of 10 or 12 were marriageable.[89]
Commercial and contract law:
Business and commerce is governed by Sharia.[93]
Commercial jurisdiction rests with the Board of Grievances
composed of Sharia-trained judges.[93]
For foreign investors, uncertainties around the content of commercial
law, because of the Sharia aspect, constitutes a disincentive to invest in Saudi Arabia.[93]
As it is governed by
Sharia, contract law is not codified.[94]
Within the general limitations of Sharia, it allows considerable freedom
for the parties to agree contract terms.[94]
However, contracts involving speculation or the payment of interest
are prohibited and are not enforceable.[94]
If a contract is breached, Saudi courts will only award compensation
for proven direct damage.[94]
Claims for loss of profit or opportunity will not be allowed as these would
constitute speculation, which is not permitted under Sharia.[94]

22. Labor law:
Employers have a number of obligations, including at least 15 days paid holiday after a year's
employment.[99]
Terminated employees must receive an "end-of-service" payment of a half a months' salary for
each year employed going up to one month if employed for more than 5 years.[99]
Land law:
Most land in Saudi Arabia is owned by the government and only cultivated land and urban property are subject
to individual ownership.[100]
All land titles must be registered, but there is no accurate information as to the
extent of registration.[100]
Real estate could only be owned by Saudi citizens[100]
until 2000, when the property
laws were amended to allow foreigners to own property in Saudi Arabia.[101]
Property investments by non-
Saudis of more than 30 million Saudi riyals require approval of the Council of Ministers and foreigners remain
prohibited from owning property in Medina and Mecca.[101]
Saudi Arabia has three categories of land: developed land (amir), undeveloped land (mawat), and "protective
zones" (harim).[102]
Developed land comprises the built environment of towns and villages and agriculturally
developed land, and can be bought, sold and inherited by individuals.[102]
The undeveloped land comprises
rough grazing, pasture and wilderness.[102]
Rough grazing and pasture is owned in common and everyone has
equal rights to its use.[102]
The wilderness is owned by the state and may be open to everyone unless specific
restrictions are imposed.[102]
Harim land is a protective buffer between the owned land and the undeveloped
land, and is defined, in the case of a town, as the area that can be reached and returned from in a day for the
purposes of collecting fuel and pasturing livestock.[102]

23. IMPORT AND EXPORT
IMPORT
The term import is derived from the conceptual meaning as the goods and services into the port of a country. The
buyer of such goods and services is referred to an "importer" who is based in the country of import where the
overseas based seller is referred to as an "exporter". Thus an import is any good (e.g. a commodity)
or service brought in from one country to another country in a legitimate fashion, typically for use in trade. It is a
good that is brought in from another country for sale. Imported goods or services are provided to
domestic consumers by foreign producers. An import in the receiving country is an export to the sending country.
Imports, along with exports, form the basics of international trade. Import of goods normally requires involvement
of the customs authorities in both the country of import and the country of export and are often subject to import
quotas, tariffs and trade agreements.
SAUDI ARABIA IMPORTS
Imports in Saudi Arabia increased to 117,295 Million SAR in the first quarter of 2012 from 98,369 Million SAR in
the fourth quarter of 2011. Imports in Saudi Arabia is reported by the Saudi Arabian Monetary Agency. Historically,
from 1968 until 2012, Saudi Arabia Imports averaged 84646.2 Million SAR reaching an all time high of 222985.0
Million SAR in December of 2005 and a record low of 2578.0 Million SAR in December of 1968. Saudi Arabia

24. mostly imports machinery and equipment, foodstuffs, chemicals, motor vehicles and textiles. Its main import
partners are European Union countries (Germany, Italy, UK), United States, China, Japan and South Korea.
PRODUCTS IMPORTED IN SAUDI ARABIA
Products which are imported to Saudi Arabia include foodstuffs, textiles, clothes, medicines, chemical products,
wood and wood products, jewellery, base metals and metal articles, electrical machines, cars and spare parts and
other transportation.
The following graph shows Saudi Arabia’s imports for the years 2008 and 2009. (All data are in US dollar billion.)
IMPORT PARTNERS OF SAUDI ARABIA
Saudi Arabia main import partners are European Union countries (Germany, Italy, UK), United States, China, Japan
and South Korea, England, Switzerland, France and Holland.

25. The chart shows the distribution of Saudi Arabia’s major import partners. (All data are in percentages.)
IMPORT RESTRICTION
The following goods are not allowed to be imported into the Kingdom of Saudi Arabia under any circumstances and
will be destroyed upon arrival at the Saudi border.
 Alcoholic beverages
 Alcohol distilling equipment
 All kinds of Liquor, or items containing liquor as an ingredient
 All narcotics without exception regardless of form.(Including poppy seeds)
 Annoying car horns or horns that play tunes
 Antiques & works Art
 Christmas Trees
 Crosses, Crucifixes or stars of David
 Dangerous goods, hazardous or chemical combination materials
 Explosives except by licensed importers (Over & above DHL restrictions)
 Frogs meat
 Furs & Ivory
 Gambling devices or Slot machines
 Masks
 Massage equipment indecently packaged
 Musical greeting cards
 Night vision binoculars or similar items
 Nutmeg, seeds & powder
 Phonographic/Audio Visual media products, subject to authorization by the Ministry of Information
 Pigs (Swine) and pork products
 Pornography
 Postal envelopes
 Soil samples
 Tobacco advertising materials

26. EXPORT
The term export is derived from the conceptual meaning as to ship the goods and services out of the port of a
country. The seller of such goods and services is referred to as an "exporter" who is based in the country of export
whereas the overseas based buyer is referred to as an "importer". In International Trade, "exports" refers to selling
goods and services produced in the home country to other markets.
Export of commercial quantities of goods normally requires involvement of the customs authorities in both the
country of export and the country of import. An export's counterpart is an import.
SAUDI ARABIA EXPORTS
Saudi Arabia is the world’s largest producer and exporter of petroleum products, and is the second largest oil
producer after Russia. Saudi Arabia’s trade remains heavily dependent on the oil and petroleum-related industries,
including petrochemicals and petroleum refining. Oil export revenues have accounted for around 90% of the total
Saudi export earnings and state revenues and above 40% of the country's GDP. Exports in Saudi Arabia decreased to
365520 Million SAR in the second quarter of 2012 from 382476 Million SAR in the first quarter of 2012. Exports in
Saudi Arabia is reported by the Saudi Arabian Monetary Agency. Historically, from 1968 until 2012, Saudi Arabia
Exports averaged 211104.33 Million SAR reaching an all time high of 677144 Million SAR in December of 2005
and a record low of 9118 Million SAR in December of 1968. Saudi Arabia is the world's leading oil producer and
exporter and Saudi oil reserves are the largest in the world. Oil accounts for more than 90% of the country's exports
and nearly 75% of government revenues. Saudi Arabia main export partners are Japan, China, United States and
European Union.
EXPORT PARTNERS OF SAUDI ARABIA
Saudi Arabia main export partners are Japan, China, United States and European Union. Saudi Arabia is the UK’s
23rd
largest export market, with exports amounting to more than ₤2.270 million in 2008. The country is also the
UK’s largest trading partner in the Middle East. The UK, in turn, is Saudi Arabia's second largest foreign investor
after the USA. The UK’s main trading commodities with Saudi Arabia include oil, gas and petrochemicals, power,
water, financial services, construction materials and equipment, and consumer goods. Saudi Arabia’s trade with
China could exceed $60 billion by 2015, given that the target of $40 billion by 2010 was reached in 2008. During
2003-2008, the China-Saudi Arabia trade registered annual growth rates of 30% to 50%. In 2008, bilateral trade

27. surged by 64.7% to $41.8 billion, well ahead of the goal set in 2006. Trade between the two countries amounted to
$12.71 billion in 1H 2009, hit largely by the global economic crisis. China exports textiles, mechanical and electrical
products to Saudi Arabia, and imports crude oil. China's crude oil imports rose by over 12% last year to 800,000 b/d.
India’s total non-oil trade with Saudi Arabia for 2008-2009 stood at $25.08 billion. Indian imports from Saudi
Arabia were worth $19.97 billion, while the export figure for the period was $5.11 billion.
Saudi Arabia’s primary export commodities include petroleum and petroleum products. The following graph shows
Saudi Arabia’s exports for the years 2008 and 2009.
The next chart shows Saudi Arabia’s distribution of its major export partners.
EXPORT MADE TO VARIOUS COUNTRIES
U.S.A.
 Other parts of military aeroplanes
 Other parts for aeroplanes
 Private cars, 4+year old, spark ignition, over 3000 CC
JAPAN
 Private cars, spark ignition, current 1501-3000 CC

28.  Jeeps, curent year, spark ignition over 3000 CC
 Auxiliary plant for use with boilers
UNITED KINGDOM
 Other parts of military aeroplanes
 Gold ingots
 Other parts for aeroplanes
GERMANY
 Barley
 Private cars, current, spark ignition over 3000 CC
 Other parts for motor vehicles
SWITZERLAND
 Gold ingots
 Other parts for military aeroplanes
 Medicines containing penicillins
FRANCE
 Whole frozen chickens
 Military Weapons
 Refined sugar crystals
EXPORT PRODUCTS
The products exported from Saudi Arabia include live animals and animal products, vegetable products, animal &
vegetable fats and oils and their cleavage products, prepared foodstuffs; beverages; spirits and vinegar; tobacco,
mineral products, products of the chemical and allied industries, artificial resins and plastic materials; cellulose
esters and ethers, rubber, synthetic rubber, lactic, and articles, raw hides and skins, leather, fur skin, saddlers and
harness; travel goods, handbags & similar containers; articles of gut (other than silkworm gut), wood and articles of
wood: wood charcoal: cork and articles of cork; manufacturers of straw, esparto and other platting materials; basket
ware and wickerwork, paper making material; paper and paper board and articles, textile and textile, footwear,
headgear, umbrellas, sunshades, wigs, riding crops and parts; prepared leathers and articles; artificial flowers;
articles of human hair; fans, articles of stone, plaster, cement, asbestos, mica and similar materials; ceramic
products; glass and glassware, pearls; precious and semi-precious stones; precious metals; rolled precious metals and
articles; imitation jewelry; coins, base metals and articles of base metals, machinery and mechanical appliances and
parts; electrical equipment and parts, transport equipment and parts, instruments - photographic, cinematographic,
measuring, checking, precision, medical, surgical, clocks, watches, musical, sound, television, magnetic devices and
parts, arms, ammunition, and parts, miscellaneous manufactured articles, works of art; collector’s pieces, and
antiques.
DOCUMENTS NEEDED FOR EXPORT

29. The documents required for all commercial shipments to the Kingdom of Saudi Arabia are:
 commercial invoice
 certificate of origin
 a bill of lading (or airway bill)
 a steamship (or airline) company certificate
 an insurance certificate (if goods are insured by the exporter)
 packing list
Additional documents may be required, depending on the type of goods being shipped, on certain requests from the
Saudi importer or in the letter of credit (L/C), or according to a contract.
The exporter is responsible for authenticating the certificate of origin, the commercial invoice, and any special
documents. The documents must be certified in the following order:
1. Notarized by a Notary Public and certified by a local Exporting country Chamber of Commerce.
2. Certified by the Exporting country-Saudi Arabian Business Council.
3. Legalized by the Saudi Embassy or any Saudi Consulate in the Exporting country
All shipments must contain two basic documents — the Certificate of Origin and the Commercial Invoice — and
any other related documents required by the L/C to be certified and legalized. Each document should be prepared in
(at least) an original and one copy. All documents (original or copies) should bear the handwritten signature of the
person issuing the document. Facsimile signatures are not accepted.
In addition, two copies of the Export Information Sheet (EIS) must be filled out, signed by an official of the
exporting/shipping company and submitted with the other required shipping documents.
DESCRIPTION OF SHIPPING DOCUMENTS
COMMERCIAL INVOICE:
All commercial invoices must be on the exporting company’s letterhead. The invoice should contain the names and
addresses of the consignor and the consignee, and must accurately describe goods and components (including the
six-digit Harmonized System number), trademarks, name of the vessel (or airline) and the date of sailing, port of
loading and port of discharge, net and gross weight, quantity, unit price and extended price of each type of goods,
total value of the shipment, contents of each package and container, currency, L/C number (if applicable) and freight
and insurance.
As of May 18, 1996, Saudi customs authorities have emphasized that commercial invoices issued by exporters
should contain an accurate description the goods being exported to the Kingdom. It should include:
For equipment:
 line, number, and size of exported item

30.  model number
 Trademarks
 manufacturer’s complete name
 any other information helpful in identifying the exported equipment
For other exported products:
 complete material description including type, size, weight, and percentage of its components if possible
 complete name(s) of manufacturer(s) or producer(s)
 Trademarks
 any other information pertaining to the type of the exported item
Commercial invoices should contain a notarized statement, signed by a responsible official of the exporting firm,
saying: "I certify this invoice to be true and correct and in accordance with our books, also that the goods referred to
are of ___________ origin."
CERTIFICATE OF ORIGIN
The certificate of origin must be issued by the manufacturer (or the exporting firm), and must include the name of
the vessel (airline) and the date of sailing, name(s), nationality(ies), and full street address(es) of the manufacturer(s)
of all items to be shipped to Saudi Arabia. Furthermore, the origin of each item or component must be specified. In
addition, a signed statement to the effect that the document is true and correct must be given. If the merchandise is
not solely and exclusively a product of the exprting country, a notarized "Appended Declaration to Certificate of
Origin" must be attached to the certificate of origin.
In addition, the certificate of origin must include the name and address of the Saudi importer, a description of the
goods, and the address of the shipping company.
THE BILL OF LADING (OR AIRWAY BILL)
One nonnegotiable copy of the bill of lading is to be presented to a Saudi Arabian Consulate. The bill of lading
should agree with the commercial invoice and show description, value, net and gross weight of shipped goods,
volume and measurement, marks, number of packages, name and address of the consignee (Saudi importer) and
consignor, name and address of shipping company and/or shipping agent, name of vessel and date of sailing, port of
loading and port of discharge. Marks and numbers should agree with those on the invoice and containers.
STEAMSHIP CERTIFICATE
This certificate (which is an Appended Declaration to Bill of Lading or airway bill) should be issued by the
steamship (or airlines) company in at least one original. It must be notarized and contain the following information
about the vessel (or plane), named in the Bill of Lading or the airline company certificate:

31.  name of vessel (plane), and previous name (if applicable)
 nationality of vessel (plane)
 owner of vessel (plane)
names of ports (airports) that the vessel (plane) will call on en route to the Kingdom of Saudi Arabia, including port
(airport) of loading and port (airport) of discharge.
Further, the steamship (airlines) company certificate should declare that the vessel (plane) shall not anchor or call on
any other ports (airports) than those mentioned in it, and that all information provided in the certificate is true and
correct. The standard form of "Appended Declaration to the Bill of Lading" (or airway bill) is available from the
Saudi Consulates.
INSURANCE CERTIFICATE
This certificate (issued by an insurance company in at least one original) must contain the actual amount of
insurance, description and value of insured goods, name of vessel, port of loading and Saudi port of discharge, and
name and address of beneficiary. In addition, the "Appended Declaration to Insurance Policy" (available from the
Saudi Consulates) should state that the insurance company has a duly qualified and appointed agent or
representative in the Kingdom of Saudi Arabia, giving his name and full address.
If the shipment is insured by an insurance company in Saudi Arabia, the exporter, on their letterhead, must state the
name and address of that company.
PACKING LIST:
This includes names and addresses of consignor and consignee, description and value of the exported goods, net and
total weight, number of packages and their contents, number of containers and contents, numbers of seals, and L/C
number

32. STOCK EXCHANGE OF SAUDIA ARABIA
Saudi Stock Exchange (Arabic: ‫السوق‬ ‫المالية‬ ‫)السعودية‬ or Tadawul (Arabic: ‫)تداول‬ is the only stock exchange in Saudi
Arabia. It is controlled by the Capital Market Authority. The Tadawul All-Share Index (TASI) had reached its
highest point at 20,634.86 on 25 February 2006 and listed among the 156 publicly traded companies (as of
September 2, 2012).
It operates from 11AM to 3:30PM, Saturday to Wednesday. Tadawul has replaced the Electronic Securities
Information System (ESIS) that prevailed in Saudi Arabia before the year 2001. Tadawul All Share Index (TASI) is
a chief stock market index which tracks the performance of all companies listed on the Saudi Stock Exchange. A
technical report stated that Tadawul All-Share Index (TASI), traded above the 20-day weighted moving average,
which signaled investors’ optimistic response. TASI closed its session on September 2012, adding 0.79%, or 55.53
points, to reach the 7105.04 level.
SAUDI ARABIA CURRENCY:
Introduction
Riyal is the term given to currencies of various countries lying in the Arabian Peninsula consisting of Iran, Saudi
Arabia, Oman, Qatar and Yemen. One of the most important riyal currencies of the countries mentioned is the Saudi
riyal that forms national currency of Saudi Arabia. Saudi riyal is often denoted by the sign SR in English language
or by "‫"س.ر‬ in Arabic. The ISO 4217 currency code for the currency is SAR and the numeric code is 682. The
subunit of Saudi riyal is "hallalah".
Overview
Saudi Arabia has got about one - fourth share in the total crude oil and petroleum reserve in the world and that
shapes the economy of the country. More than 70% of the country’s total revenue is brought in by crude oil and
accounts to 90% of the total exports done by the country. A currency as stable as riyal, does help in the overall
growth of country’s economy. To avoid the fluctuations in the value of riyal, it was pegged to the US dollar on a
fixed rate regime and continues to follow the peg. The Saudi riyal is also pegged fixed by the Bahraini dinar with the
exchange rate being 1 dinar = 10 riyals. The exchange rate between US dollar and riyal is fixed at 1 US dollar = 3.75
riyals.
Also, all the major currencies are accepted in Saudi Arabia alternatively. There are a few restrictions in context of
import and export of the currency like the import and export of the local currency is limited up to an amount of
100000 riyals. Exchange of all the other currencies by the way of import-export is permitted except for the Israel
shekel that is banned in the country.
Structure

33. The official subunit of the Saudi riyal i.e. "hallalah" was introduced for the first time in the year 1963, which is
1/100th part of riyal and it also converted the orthodox currency system into a decimalized one. The Saudi Arabian
Monetary Agency (SAMA) has been taking care of flow of currency in the country since riyal was made the official
currency. The coins too, are minted by SAMA and are in 5 denominations that are 5, 10, 25, 50 and 100 hallalahs. 1
hallalah coin is also a legal tender in the country but is not in circulation.
For denominations starting from 1 riyal up till 500 riyals, that is the highest face value in the Saudi Arabian
currency, banknotes are issued by SAMA. The 6 denominations in which the bank notes are issued are 1 riyal, 5, 10,
50, 100 and 500 riyals. The commemorative issues of banknotes of the value 20 and 200 riyals are also in
circulation. The different color combinations of the notes mentioned in the list below help them differentiate form
each other
 1 riyal note - Dark brown and orange
 5 riyal note - Dark purple, blue and brown
 10 riyal note - Grey, brown and purple
 20 riyal note - Grey, brown, blue and red
 50 riyal note - Green, gray and blue
 100 riyal note - Green, purple and blue
 200 riyal note - Green, red, gray and brown
 500 riyal note - Blue, green and gray.
History
The currency riyal owes its origination to the time when the country Saudi Arabia did not even exist. Before the 20th
century commenced, currencies of the foreign countries especially Maria Theresa thalers and British Gold
sovereigns circulated and served the monetary needs in Arabia with the exchange rate of 1 Gold sovereign = 5
Theresa thalers. With the establishment of two states, The Hejazi kingdom and the Sultanate of Hejd in quick
succession in 1916 and 1921, the need of a common currency was felt. Hejaz introduced "Hejaz riyal" as its official
currency that was equal to 20 qurush coin that was further subdivided in 40 para. In 1926, a foreign bank was
established in Jiddah and since then more and more banks started establishing as the oil business began to flourish.
Saudi Arabia was established in 1932 when both the states got united to form this new country and in order to
stabilize the monetary units, a common currency was launched i.e Saudi riyal. The exchange rate had some
corrections later and 1 unit of riyal was set equal to 22 qurush coins and the same rate prevailed till, in the end, in
1960 when it was devalued again to 20 qurush coins and finally in 1963, the currency was decimalized with the
introduction of a new subunit to the Saudi riyal i.e. "hallalah". Hallalah divides the riyal into 100 equal parts. In the

34. meanwhile, in 1952, Saudi Arabian Monetary Agency (SAMA) was established in accordance to the Islamic laws
with the help of USA and various reforms in the currency system were done enabling only a single currency to
circulate in the country.
Bank Notes
The first own banknotes that Saudi Arabia saw was in the form pilgrim receipts that were issued in the face value 10
riyals in around 1952. Later on they were also issued in face values 5 and 1 riyals. In 1956-57, the second issue of
banknotes was made in 5 face values that are 100, 50, 10, 5 and 1 riyal to be used as currency notes and they were
put into circulation in 1967. the third and fourth series of banknotes which were circulated in 1976 and around 1984
respectively are still in use up to the current date.
Income tax:
A zakat or income tax (a religious wealth tax) is assessed on the taxable income of most business organizations.
Since only Saudis and GCC nationals are subject to zakat, foreigners pay an income tax in proportion to their equity
interest. Foreign employees are not taxed on their salaries or wages. There is no sales tax. Capital gains fall under
the same umbrella as ordinary income. Taxable net income is fairly consistent for all types of business
organizations, foreign or resident. The residents of Saudi Arabia are not subject to income tax where as the
nonresident are subject to income tax in Saudi Arabia, which is the same for companies. Saudi individuals or
nationals of GCC states who conduct business in the Kingdom of Saudi Arabia in commercial goods are subject to
an Islamic Tax called 'Zakat'. Zakat is an Islamic direct tax on property and income.
Corporate Income Tax
Corporate income taxes are levied on the profits of foreign shareholders in a mixed company and the net profits of
branches of foreign companies. Company tax rates, which are applicable to limited liability and joint stock
companies, are taxed between 25 to 45 percent depending on profit. Petroleum and other hydrocarbon producing
companies, however, are subject to a flat tax rate of 85 percent of net operating income.
Social security contributions Employees in Saudi Arabia pay a contribution of 9% for insurance relating to oldage,
disability and death.
Certain employees such as civil servants, artisans, farmers, seamen, domestic servants, etc are excluded from the
insurance scheme.
Travel Notes
The import and export of local currency is limited to 100,000 riyals. The import and export of foreign currency is
free except for the new Israeli shekel, which is forbidden.

35. Foreign Exchange Rate:
In June 1986, the riyal was officially pegged to the IMF's special drawing rights (SDRs). In practice, it is fixed at 1
U.S. dollar = 3.75 riyals, which translates to approximately 1 riyal = 0.266667 dollar. This rate was made official on
January 1, 2003.
As at December 17th
2012, 1.00 SAR = 0.266684 USD and as per PKR, 1.00 SAR = 26.06 PKR
Factors affecting the exchange rates between two countries
The volatility in the foreign exchange rates depends upon a numerous macro economic factors that have different
degrees of importance to different economies of the world. Some special and exceptional factors affecting the rates
may also exist in the case of different countries. Following are shown the common factors on which the foreign
exchange rate depends
 Flow of imports and exports between the countries
 Flow of capital between the countries
 Relative inflation rates
 Fluctuation limits on exchange rate imposed by the governments of the countries
 Merchandise trade balance
 Rate of inflation in the country
 Flow of funds between the countries for the payment of stock and bond purchases
 Relative growth
 Short term and long term interest rate differentials
 Cost of borrowings
SAUDI ARABIA FOREIGN EXCHANGE RESERVES

36. Foreign Exchange Reserves are the reserves that are held with the central bank of the country. The reserves
include gold, other specific currencies and marketable securities such as treasury bills, government bonds, corporate
bonds and equities and foreign currency loans.
Foreign Exchange Reserves in Saudi Arabia increased from2330591 SAR Million in September 2012 to 2384864
SAR Million in October 2012. Foreign Exchange Reserves in Saudi Arabia is reported by the Saudi Arabian
Monetary Agency. Reserves of foreign exchange and gold is $541,100,000,000, as of 31 December 2011,
The table shows the foreign currency and gold reserves of Saudi Arabia and other countries in billions of U.S.
dollars. Averages serve better for comparison across countries.
Country Value Country
United States 266.83
Saudi Arabia 224.96
United Kingdom 54.14
China 164.61
Saudi foreign reserves on the way to a trillion dollars
The cash reserves Saudi Arabia has been added already have about $ 100 billion in 2011, due to high oil prices
compared with the size of spending and the level of productive projects for up to 778 billion dollars by the end of
this year, according to a group of Saudi banks. By the end of 2013, the reserves that are subject to the control of the
Saudi Arabian Monetary Agency "SAMA" and the central bank could reach 926 billion dollars, according to the
report.
At this level, the reserves will be calculated on the basis of 144% as a rough draft of the Gulf kingdom of daily
production of up to 642 billion dollars next year.The "Samba" that the rise will be the result of high oil prices. The
Saudi oil production more than two thirds of the country's income, and that the increase in fuel prices last year
resulted in cleaner for more of the proceeds from the daily production year that promise to raise the level of output
growth to 6.8%.The average price of a barrel of oil $ 105 last year and expects many of the international agencies to
end the year at the highest rate, and at the same time Saudi Arabia said last month that it increased the flow of oil to
reach 10 million barrels per day.
The higher prices of oil and production support of the reserves of cash to Saudi Arabia, which amounted to about
352 billion riyals in 2011, and the highest rates ever to reach 2.057 billion riyals, until they reach a record high last
reached 2.154 billion riyals by the end of March this year.This was the largest rate of increase of annual reserve of
foreign currency since 2008, when it was such a solid reached to 513 billion riyals, mainly because of rising value of
50%, in the price of clean fuel, which allowed the economy to its highest revenues which amounted to 580 billion
riyals.
FOREIGN INVESTMENT POLICY:

37. The established policy does not aim to impose any restrictions on the movement of capital into and out of the
country, but foreign investment that fulfills the requirements of the Foreign Capital Investment Code is entitled to all
the privileges of national capital and same treatment, protection, and incentives.
 An income tax holiday of up to 10 years from the commencement of commercial production.
 Ownership of land according to the regulations governing land ownership by non-Saudis.
 For industrial projects, the same privileges as those enjoyed by Saudi capital under the National Industries
Protection and Encouragement Regulations. These include:
a. Exemption from customs duties on machinery, equipment, tools and spare parts imported for industrial
products.
b. Exemption from customs duties on primary raw materials, semi-finished goods, containers, etc., necessary
for industrial projects (provided that similar items are not sufficiently available locally).
c. Provision by the government of plots of land at a nominal rate for factories and residential quarters for
workers.
d. Low electricity and water rates.
e. No restriction on repatriation of profits.
f. Preferential treatment for local products in government procurement in addition to preferential treatment
accorded to national products by Arab League and Saudi Arabian bilateral trade agreements.
 Foreign Investment Law allows foreigners 100-percent ownership of the projects, as well as the property
required for the project itself or for housing company personnel.
 According to the law on foreign direct investment, revised in 2000, foreigners are now allowed to invest in
all sectors of the economy, except for specific activities. This list continues to shrink as Saudi Arabia
moving towards progress.
 Foreign investors are no longer required to take local partners in a number of sectors and may own real
estate for company activities. They are allowed to transfer their company money outside the country and
can sponsor foreign employees.
Saudi Arabia - foreign direct investment
Foreign direct investment are the net inflows of investment to acquire a lasting management interest (10 percent or
more of voting stock) in an enterprise operating in an economy other than that of the investor. It is the sum of equity
capital, reinvestment of earnings, other long-term capital, and short-term capital as shown in the balance of
payments. This series shows net outflows of investment from the reporting economy to the rest of the world and is
divided by GDP.

38. Foreign direct investment, net outflows (% of GDP) in Saudi Arabia was 0.90 as of 2010. Its highest value over the
past 5 years was 0.90 in 2010, while its lowest value was -0.11 in 2005. The latest value for Foreign direct
investment, net (BoP, current US$) in Saudi Arabia was $17,653,320,000.00 as of 2010
Major loss to the largest Saudi Dairy and Foodstuff Company due to boycott:
• In 2006 there were growing calls in Saudi Arabia and other Arab and Islamic countries for the immediate
boycott of Danish imports. The calls are being conveyed through leaflets, e-mails and text messages for
mobile phone subscribers from the Islamic regulatory authorities . The reason for this request comes after a
Danish newspaper published a series of cartoons mocking Prophet Mohammad.
• In 2006 ,the stock price of SADAFCO has been declined. SADAFCO was established in 1976 with the
formation of Danish Saudi Dairy Company. Although the company acquired the Saudi Danish Dairy
Company of Riyadh in 1987 and in the early 1990s merged with Gulf Danish Dairy Company and Medina
Danish Dairy Company, thereby forming SADAFCO and becoming a 100-percent Saudi company, people
still associate it with Danish companies. To minimize losses, SADAFCO tried to persuade consumers that
its imported milk powders and other ingredients for manufacture or sale come from New Zealand rather
than Denmark but they failed to do so.
• A statement attributed to Sadafco also says that the company has posted a net loss of SR25 million in the
financial year (up to March 2006) mainly due to a boycott of Danish products, increases in costs and high
raw material prices. Sadafco was unfairly implicated in the boycott of Danish products .Before the boycott;
the company enjoyed a “very strong” bond with its consumers. It had 47 to 50 percent of the share of the
market in the milk segment, 42 percent in tomato pastes and 29 percent in ice creams. Old links between
the company and a Danish partner, which used to hold a five percent capital stake, could explain why
Sadafco products were hit by the boycott. However, this relationship ended in 1987. But it must have
stayed in the minds of the people, and some publications said the links still existed. Which was untrue.
People of saudiarabia are strong followers of Islam, due to which they boycotted the diary products of
sadafco. Al Marai the direct competitor captured the market and most of the customers shifted to al Marai.
• Business quarters in Saudi Arabia claim that economic boycott on Danish goods would be economical
downfall because the majority of the products that mentioned in the leaflets are part of Saudi-owned
franchises. This means that those who will suffer the most are the Saudi owners.
global player interms of Petroleum industry :
Saudi Arabia being an oil rich country has attracted a large number of investors. Many of the global investor
have seen much growth in oil industry in future .Saudi Arabia mainly focuses on oil industry because it is its
major exports ,it is the largest reserves of petroleum in the world, ranks as the largest exporter of petroleum and
plays a leading role in OPEC
The petroleum sector accounts are
-75% of budget revenues,
-40% of GDP,
-90% of export earnings.

39. franchishing :
The franchise law is relatively new in KSA.To establish a franchise, the foreign franchisor must select a franchise
and register the franchise.The franchisor must be the original franchisor and may not be a third-country sub-
franchise. The Ministry of Commerce must approve it.Saudi commercial agency law applies to the franchise
agreement.
joint venture :
The foreign companies simply signs a contract with a Saudi company along with the operating license approved
from the Saudi government .If Saudi firm own a certain percentage of the company’s capital, the company
may qualify for certain tax breaks and other investment incentives.
• Advertisement strategies :
• Saudiarabia do not allow any western advertisement on their channels , their ads are purely made in their
language and according to their culture which is acceptable in the media . The western advertising companies
have had no option than to adopt their adverts to fit the laws and rules governing Saudi Arabia.
distribution strategies :
• There are three major marketing and distribution regions in Saudi Arabia
• The Western Region,The Central Region ,The Eastern Province
Doing Business in Saudi Arabia
I. ENTERING THE SAUDI MARKET
Foreigners wishing to conduct business in Saudi Arabia may do so in one of the following ways:
 By establishing an incorporated entity
 By entering into a partnership
 By establishing a branch office
 By establishing a representative office
 By engaging a service agent
II. FOREIGN INVESTMENT IN SAUDI ARABIA
In 2000, Saudi Arabia implemented the Foreign Investment Act (the “Act”), which liberalizes the foreign
investment laws in the Kingdom. The Saudi Arabian General Investment Authority was created under the
Act, which has responsibility for licensing all new foreign investment in Saudi Arabia. Under the new Act,
foreign persons and entities are permitted to invest in all industries and services except for those which are
specifically excluded from foreign investment. The exempted industries include those related to the
manufacture of military materials, equipment and explosives; oil exploration and production; services
related to security, insurance and real estate brokerage; wholesale distribution and retail services;
telecommunications services; and land, air, and space transport, among others.

40. Licensing:
A project licensed under the Act enjoys the same privileges, incentives and guarantees as a national project, with the
exception of taxation. Subsidized loans from the Saudi Industrial Development Fund (SIDF) are available to both
foreign and Saudi owned enterprises. Additionally, sponsorship of the foreign investor and its non-Saudi employees
is undertaken by the licensed entity and not a local person/entity.
Licensed businesses are now permitted to own the real estate necessary for the project and to house necessary staff
(with the exception of Mecca and Medinah). Foreign investors may also obtain more than one license so as to
enable them to participate in more than one business venture.
The minimum capital requirements for projects licensed under the Act are SR 25 million (US$6.7 million) for
agricultural projects, SR 5 million (US$1.3 million) for industrial projects and SR 2 million (US$ 533,000) for all
other categories of projects.
Franchising:
Over the past 10 years, the number of franchises has increased in Saudi Arabia, the largest market in the Middle
East. Most of the international franchise concepts are available, some of them under “the exclusive agency” concept
by which agents are used to opening numerous stores and branches under their own ownership.
Sub-franchising is not a very familiar concept in the country, as the majority of Saudi franchisees are from strong,
wealthy groups who can open several branches without trying to sub-franchise. Recently, sub-franchising has started
to become an accepted concept, even for some of these groups. This option needs more development and awareness
among Saudis who are current and potential franchisors. Sub-franchising is the magic strike of franchising which
will contribute to real change in the economy and encourage entrepreneurial concept and participate in creating jobs.
Turnkey Operations:
A turnkey business is a business that includes everything you need to immediately start running the business.
Arabian Gulf Company is a general contracting company that undertakes construction as well as turn key operations.
Joint Ventures:
A joint venture (JV) is a business agreement in which parties agree to develop, for a finite time, a new entity and
new assets by contributing equity. They exercise control over the enterprise and consequently share revenues,
expenses and assets. There are other types of companies such as JV limited by guarantee, joint ventures limited by
guarantee with partners holding shares.

41. According to Article 52 of the Company Law, the establishment of a joint stock company generally requires an
authorization from the Minister of Commerce and Industry after reviewing a proposed company’s “feasibility”
study. The law requires the authorization through a Royal Decree based on the approval of the Council of Ministers
for the formation of any joint stock companies with concessions, undertaking public sector projects, receiving
assistance from the State, in which the State or other public institutions participate, or for joint stock companies
engaging in a banking business. In general, the provisions applicable to the administration of joint stock companies
are more detailed than those applicable to limited liability companies.
Problems with Collaborative Arrangements:
 Saudi Arabia is a Islamic country and Sharaih laws are being practiced. So, any foreign investor deciding to
do business in the country will have to abide to those laws thus creating a major cultural difference.
 Issues regarding difference in organizational culture may also b faced by employees of foreign company.
For example Saudi people are high in uncertainty avoidance so foreign managers such as of U.S where
people tend to take risk might face problems regarding shift in organizational culture.
 Ethical appropriations must also b considered by foreign companies since what might be considered ethical
in their home country might not b considered ethical in Saudi due to cultural and religious difference. For
Example selling alcohol beverages publically.
 Due to local employees being highly uncertainty avoidant bringing up change in an organization can
become very difficult for the top management.
MARKETING GLOBALLY
Marketing Strategies:
 Market Orientation
Saudi Market is in reality unpredictable for a foreign entity. It can respond in any way at any time. But, the
Saudi market gives one thing that no market in this world may give – respect where it is due. To gain
business in Saudi Arabia, a company must first gain respect. As strange as it may sound, market
intelligence in Saudi Arabia is very high. Companies often make the mistake of underestimating its
intelligence.
What matters in the end is the quality of service and the sincerity in its offing. If these two factors are
missing, no matter how big the marketing campaign is, the company will undoubtedly fail.
The advertisements should be according to the norms and ethical considerations since it is an Islamic
country also it should be there to remind people of the quality they already have experienced. This will add
to word of mouth promotion and will be more effective than mere descriptive and flashy advertisements
that are worth millions of riyals.

42.  Target Market
Saudi Arabia’s fast-growing economy is creating opportunities for both exporters and investors. These are
further boosted by moves to diversify the economy away from dependence on oil and gas, economic
reform, market liberalization and a growing private sector.
Promotion Strategies
Since Saudi culture basically comprises of Islamic values and Arab traditions, so the advertisement
companies then need to come up with such advertisements that abide by the laws as well as according
to the cultural considerations of the country. Western advertisement agencies have been observed to
promote their products through bold sexual appeals. However, this approach is impossible to carry
out in Saudi Arabia so, the foreign companies operating within the country have had to alter their
promotion and advertisement campaigns accordingly.
Distribution Strategies
Distribution strategies of many foreign companies usually comprises of segmenting the country into three major
regions and distributing their products effectively. There are three major distribution and sales regions in Saudi
Arabia: the Western Region, with the commercial center of Jeddah; the Central Region, where the capital city of
Riyadh is located; and the Eastern Province, where the oil and gas industry is heavily concentrated. Dammam is the
capital city of the Eastern Province, and includes Dhahran. Each city has a distinct business community and cultural
flavor, and there are only a few truly “national” companies dominant in more than one region.. Other than that few
software companies also collaborated with leading I.T distributor companies in distributing their products more
effectively.
Internal Handling
Foreign companies offering products of high price such as Rolce Royce or computer manufacturing companies
providing customized products also distribute their products personally and thus internally handle their distribution
system to ensure their customer’s satisfaction.
Qualifying Distributors
Many multinational companies selling into the Kingdom decide to appoint a local commercial agent or distributor.
Multinational companies often have good practical reasons for using Saudi Arabian commercial agents and
distributors. The Commercial Agency Regulations state that only Saudi nationals or companies organized under
Saudi law and wholly owned and managed by Saudi nationals may act as commercial agents. Commercial agents
must be properly registered in the Commercial Registry, and are required to submit each of their commercial agency
agreements for registration at the Ministry.
hidden Costs and Gains in Distribution

43.  Given the increased competition in the Saudi Arabian market, multinational suppliers may need local sales
promotion, customer liaison, servicing and “on-the-ground” market analysis. In addition, Saudi Arabian
customers are generally more at ease dealing with a local commercial agent or distributor, whether because
of long-standing friendships, business arrangements, or simply a shared language, customs and culture.
 Many foreign companies hire third party distribution company to effectively distribute their products since
local distribution company would have more clear vision on distribution channel as well as strong
connection with the retailers.
 Multiple distribution levels can result to have additional costs such as national wholesalers sell to regional
ones, who sell to local ones, and so on , Because each intermediary adds a markup, they drive prices up.
E-Commerce and the Internet:
The retail industry in the Kingdom of Saudi Arabia is the largest out of any of the the GCC countries, it’s predicted
to be worth $66.7 billion in 2012
International investors are setting their sights on the Middle East’s young but booming e-commerce industry, and
particularly on the promising opportunity in the Saudi market.
Saudi Arabia is the top destination for these e-commerce businesses. It ranks second in e-commerce sales in the
GCC, and more importantly represents the biggest retail sector in the region, with the promise of huge growth in e-
commerce in the near future. The challenges and opportunities of building an e-commerce business in Saudi Arabia
is one of the central topics that will be explored in depth at ArabNet Riyadh, the largest gathering of digital
executives and entrepreneurs in the Kingdom, taking place on Nov. 20-21 at the Four Seasons Hotel. The forum will
bring together more than 50 expert speakers and 600 attendees, and is hosted by the Badir Program for Technology
Incubators, part of the King Abdulaziz City for Science and Technology, and supported by the Communications and
Information Technology Commission of Saudi Arabia.
Some of the main challenges facing e-commerce businesses in Saudi Arabia and the region more broadly are
payment and logistics. More than 70 percent of online buyers in the region choose cash on delivery as their preferred
mode of payment, straining the cash flow of e-commerce startups. Cash on delivery purchases are 7 times more
likely to be returned, according to Aramex, and this puts e-commerce companies at the risk of incurring extra
shipping costs as well. Paypal’s recent entrance to the market could help alleviate some of these issues and stimulate
rapid growth in the sector.