Best Business In Saudi Arabia – Starting an export or import business with Saudi Arabia can be exciting and rewarding. The countries of the Middle East region have great financial power and great purchasing power, thanks to oil. But most of them do not have other natural resources, and agricultural land. This is the reason, there is a demand for imported agricultural products, food, consumer goods, cars, machinery. One of those countries – Saudi Arabia, imports such products in large quantities.
So, is that a potential market for your export business? What are the Saudi products, with great potential to import and export, how to ship to Saudi Arabia, and how to import from there? How to get customers and how is the right way to start a business there? All the above and other important questions we will cover in this article, all to help you start and grow your international business and start shipping to Saudi Arabia. We also hope the following will give you many business ideas related to Saudi Arabia.
Best Business In Saudi Arabia
First of all, it is important to remember that this country is Islamic. The Halal industry, which provides products and services that meet standards for Muslims, has become an important sector with great potential and continues to grow in the region, especially in Saudi Arabia. Besides, the import demand in Saudi Arabia is high compared to other countries in the GCC region due to its large population. It is considered a great opportunity for businesses looking to invest and find new export markets.
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Below is a figure that summarizes the country’s export and import sector and economy. It is important to understand the structure of the country’s economy and the main export and import sectors because from there come business opportunities.
Saudi Arabia occupies a large area of the Arabian Peninsula and has the shores of the Red Sea, the Indian Ocean and the Persian Gulf. It is the only country with a coastline on the Red Sea and the Persian Gulf. Saudi Arabia, administratively, is divided into 13 provinces and cities, and its capital is Riyadh.
It is the largest economy in the Gulf region. This country is also one of the countries that produce and export oil and gas in the world. The main resource of Saudi Arabia is oil, with reserves of more than 265 billion barrels, which is more than 16% and the second in the world.
Saudi Arabia imports food, chemical machinery, consumer goods … As well as many important consumer goods such as rice, sugar tea, coffee, meat, poultry … are exempt from duty. However, it implements a free trade policy, in relation to products, which is highly dependent on competitive prices, product quality, and on-time delivery, so this is a competitive market.
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Thanks to the reserves of oil and gas and taking advantage of this reason to develop the oil and gas industry, while the vast area of the desert is not suitable for the development of agriculture and production, the Arab economy of Saudi Arabia is highly dependent on the sale of petroleum products and oil extracts. oil and gas.
Saudi Arabia is the world’s largest producer of crude oil, with an output of about 4 billion barrels per year. The development and great prosperity of Saudi Arabia is entirely thanks to the exploitation of large reserves of oil and natural gas (reserves of about 265 billion barrels). In addition, Saudi Arabia also has gas, copper, gold and bauxite.
Saudi Arabia’s crude oil exports in May 2020 were about 6 million barrels per day, of which exports to the US market are more than 600,000 barrels per day.
Reduced production and transportation of oil also means reduced output of associated gases. The gas is used as a feedstock in the petrochemical industry and for electricity generation.
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The top three countries selling polymers to China in 2021 are Saudi Arabia, South Korea and Taiwan. Compared to the same period in 2018, total polymer imports from Saudi Arabia increased by approximately 30% and 7% by imports from South Korea and Taiwan in 2019.
The natural conditions (other than the desert) are not good for agricultural development, so Saudi Arabia has to import agricultural products to meet domestic consumption needs.
Saudi Arabia is the leading rice importer among the GCC countries with a value of US$ 1.67 billion in 2014, equivalent to 1.4 million tons.
The major rice supplying countries are India and Pakistan (mainly basmati rice, prices range from 900 to 1700 USD / ton). Saudi Arabia and the UAE are the two largest importers of rice among the GCC countries. The value of Saudi Arabia’s rice imports from India and Pakistan accounts for 90% of Saudi Arabia’s rice imports. This could mean a great business opportunity for Indians.
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Saudi Arabia has a major food shortage in the region and imports 70% of its food and foodstuffs. Therefore, food security is a problem in these countries. It means that this country will continue to rely on seafood and seafood imports and gradually reduce exports to focus on domestic consumption.
Saudi Arabia and Iraq are the most potential seafood markets. The price of seafood in the Arab region is increasing, thus confirming the rise in domestic consumption. This is an opportunity for businesses that sell seafood in neighboring countries, who want to increase their exports.
The habit of drinking tea and coffee is increasing worldwide. In 2020, Saudi Arabia imported about 60,000 tons of tea and 220,000 tons of coffee. The main supplier of coffee is Brazil. But this can also mean good opportunities for other coffee and tea countries like Vietnam, Indonesia, India, Malaysia, African countries also for China (tea).
Because the country produces and processes a lot of oil and fuel and chemical products, then there are many processing plants. A large amount of special equipment, machinery is imported for these plants. The machinery includes for example pumps, valves, special mills, columns, controls, and high-tech equipment and monitoring equipment, etc. This type of equipment is expensive and is a very profitable export business for manufacturers and trading companies in China, India. and Europe.
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On the other hand, it is not easy to reach the right purchase-communication for such devices. The end users of such equipment and products are often large state-owned companies like Saudi Aramco. That’s why, to ship such equipment to Saudi Arabia you should have local agents, who can help reach the right addresses and do local marketing for you.
The shipping and documentation process includes many steps that are closely related. Therefore, to successfully ship to Saudi Arabia by sea or air, you need to understand the process and documentation at each step.
After finding a customer, who is ready and interested in the order, you need to negotiate with the customer and finally sign the foreign trade contract for shipping. This is a procedural step.
When communicating and negotiating with the Saudis, you must know that they are excellent businessmen and negotiators. They discuss everywhere and all aspects of business, whether in the shop or in the chat room. Make a decision slowly. The negotiation process with the Saudis can be bureaucratic and slow. Do not use high pressure methods as they will backfire and may result in rejection of your order.
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At the end of this step, you should have a sales-purchase order (PO) signed (contract signed) by the importer from Saudi Arabia. You should also provide a proforma invoice to the importer, we recommend at least 20% advance payment after the order is signed.
An export license is a proof of legitimacy, allowing your country’s goods and services to be sold by other countries. An export permit is a document related to a specific product that is exported or imported in various ways. If you do not have an export license, you can go to your country’s authorities to apply for one. Depending on each country’s regulations, some products do not require an export license. Also, in some countries there is no need to apply for an export license, for example in many European countries there are such requirements.
It is also important to note that in exporting, the original set of documents must be attached with a translation in Arabic if required. Certain products, such as antiques, animals or ancillary products, require special export licenses and permits.
A warehousing is a shipper who makes reservations with an international shipping line or distribution company (a service provider that carries goods for import and export). Saving is an easy task. It is important to choose a good shipping company, make an appointment for shipping products in advance. Be sure to ask for offers from many different providers to see which one can offer you the best price and terms. Sometimes there is no need to book a complete tool.
Saudi Arabian Culture
After the order is signed and the advance payment is received, you need to arrange the delivery. The need to produce or export goods to obtain the quantity and quality promised in the contract.
A Certificate of Conformity (CoC) is required for every shipment (for specific products) exported to Saudi Arabia, and only the SASO Approved Compliance Organization is authorized to issue this certificate.