Challenges Of Doing Business In Saudi Arabia

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Challenges Of Doing Business In Saudi Arabia – The corporate culture in Saudi Arabia is unique and understanding how things are done in the Kingdom’s boardrooms, offices and meeting spaces is critical to successfully conducting business in the world’s largest economy, the Arab world.

Business etiquette in Saudi Arabia is unlike anywhere else in the world. This detailed guide explains it all, including the dos and don’ts of doing business and doing business in the country. It includes the following information:

Challenges Of Doing Business In Saudi Arabia

Challenges Of Doing Business In Saudi Arabia

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Saudi Arabia has been doing business with the outside world for decades. This is traditionally done through oil exports; which even today represents 90% of the state income. But petrochemicals, energy, telecommunications, healthcare and even tourism are now big businesses, attracting foreign investment and breathing new life and business opportunities across the country.

The Kingdom continues to be open to a world of global business that goes far beyond oil. Every year, CEOs from the biggest companies converge on the Future Investment Initiative (dubbed Davos in the Desert) in Riyadh.

Entrepreneurship is also thriving in the country as the government prioritizes the creation of small and medium enterprises (SMEs). Saudi Arabia’s ambitious development plan Vision 2030 accelerates the economy’s integration into the global system. Meanwhile, foreign investment in non-traditional economic sectors is on the rise. Government initiatives have helped eradicate corruption. For example, a popular campaign targeting members of the royal family, senior ministers and businessmen was launched in late 2017; Recovered assets of $106 billion.

The entrepreneurial culture in Saudi Arabia is adapting to this spirit of openness. However, it is still a conservative country with conservative values, and the corporate etiquette in this Kingdom reflects that. Therefore, developing a sixth sense for the rules of business engagement is a key ingredient for success.

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Although about half of the kingdom’s 13 million workers are expatriates, corporate culture in Saudi Arabia dances to decidedly local tunes. Most of the decision-makers are Saudis, and business people can expect unparalleled Arab hospitality, canceled meetings, intimate conversations and tough negotiations in Saudi Arabia. all washed down with plenty

(traditional Arabic coffee recipe). Flexibility, openness and a calm demeanor are essential when engaging in the trade battle in Saudi Arabia.

Local corporate culture revolves around personal relationships, consensus and organizational cohesion; be it family, extended family or business. Who are you and who do you know (aka

Challenges Of Doing Business In Saudi Arabia

In Arabic), is very important in business here. The time spent getting to know and gaining the trust of business partners was worth it. It is also useful to understand the unique interactions and influences between families (tribes) in Saudi society. It may take many meetings, both formal and informal, to help any particular business thrive.

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Corporate culture in Saudi Arabia is adapting to changes and new realities related to Saudi Arabia Vision 2030; where one of the goals is to establish a vibrant society. This can be seen in the expanding role of women in business and the workforce. For example, there is already a thriving community of women entrepreneurs in the country.

Vision 2030 also helps to improve business in the Kingdom. Accountability, transparency, ethics and governance are now receiving increased attention. The government’s National Anti-Corruption Commission started in 2011 to deal with corruption in public institutions. As a result, Saudi Arabia’s ranking in Transparency International’s Corruption Perceptions Index, an international think tank, continues to improve steadily.

Saudi Arabia may not have the business-friendly card of neighboring Dubai. However, the Kingdom offers unique opportunities for those willing to break local business etiquette.

Most offices are open Sunday to Thursday, perhaps 8am to 6pm or (less often) 7am to 7pm (with a long lunch break). According to the law, the maximum working week is 48 hours, and during the holy month of Ramadan, Muslim employees work only 30 hours per week.

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Work-life balance is not a familiar concept in Saudi Arabia, at least for expats. For most of them, life in the Kingdom is hard work and saving money. With Saudi Arabia long dependent on foreign expertise (but where employers actually own employees while they are in the country), the corporate culture often sees foreigners constantly looking for electricity for their company. This is especially true if it is a Saudi company. For most industries, the idea of ​​flexible/remote working is unprecedented.

Violation of foreign workers’ rights (especially in relation to manual labor) remains a problem in Saudi Arabia and local newspapers regularly report on the protests. At the end of 2018, seven new courts were established across the country to consider labor law cases. These agencies often resolve disputes involving employment contracts, wages, benefits, workplace injuries and compensation.

Accordingly, employers continue to routinely confiscate workers’ passports upon arrival in the country. Additionally, employees still need permission from their employer if they want to leave the country at any time. By the way, there are no trade unions or unions in Saudi Arabia.

Challenges Of Doing Business In Saudi Arabia

Islam is a cornerstone of life in Saudi Arabia, including the corporate world. Meetings and events are usually scheduled during prayer. Also, during the month of Ramadan, it is forbidden to eat or drink in public places (including offices) during the day.

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Because Saudi society is closely knit, an “us” and “them” culture between locals and expats can prevail in some businesses, and discrimination exists. The government’s Saudiization policy, in which citizens are quickly hired, trained and promoted at the expense of foreigners, can cause stress. Additionally, compensation and salary packages in Saudi Arabia in some companies may be based more on ethnicity than skills or experience.

Annual paid leave by law is 21 days. This increases to 30 days after five years of service. In Saudi Arabia there are three public holidays for employees of private companies: Eid Al Fitr (three to seven days, depending on the public or private sector), Eid al-Adha (three to seven days, depending on the public sector). or private) and Saudi Arabia’s National Day (September 23).

Business etiquette in Saudi Arabia reflects a larger society. It is conservative but unmistakably hospitable. For expats who have worked elsewhere in the Arab world, there are familiar themes.

The handshake is the standard first contact greeting for men in Saudi Arabia. If you are greeting a woman, wait for her to shake your hand before extending your hand. If not, keep your hand at your side. Greet everyone in the room with a handshake, starting with the most senior person in the room, followed by seniority; if you know the hierarchy in advance.

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Saudi Arabians and other Arab men may hug and/or kiss the cheek, nose, or forehead as a sign of respect and reverence. However, foreign men are not expected to do so.

Meeting and office environments in Saudi Arabia, like business, tend to be flexible and intimate affairs. Meetings can’t have agendas (or someone taking minutes from them) and not take it personally if a meeting starts late or they cancel at the last minute. Indeed, Saudis in general value punctuality. Meetings often start late and prayer times dictate the schedule. Some companies (especially multinational or large Saudi international organizations) now have employee timers.

Prepare for the disruption as well. The more advanced your relationship is, the more steady the flow of blessings, phone calls, and other interruptions will be! As annoying as it is to be interrupted, take a deep breath and smile politely!

Challenges Of Doing Business In Saudi Arabia

Much of it is small talk, especially in the first “getting to know” stage. Acceptable topics for discussion are family, business, art, culture and sports. Please be generous with your comments about the culture, history and achievements of Saudi Arabia and they will be warmly welcomed. However, stay away from local politics, religion or royalty unless (in the unlikely event) they ask your opinion on the matter. Knowing some Arabic greetings would also be great, although most Arab business people speak English well.

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During a meeting or negotiation, Arabs sometimes start speaking loudly and passionately. To Westerners, this may sound aggressive, but while it may indicate displeasure, it may also indicate enthusiasm for the subject at hand. There will also be a period of calm; therefore do not interpret the encounter with silence as anything other than a moment of reflection and reflection. Meetings are usually held in English if different nationalities are participating, but participants may discuss sensitive or technical points in Arabic.

When it comes to the trade goals of the negotiations, Saudi Arabia’s thinking becomes difficult to read. Communication becomes more centered around body language and other non-verbal cues. Rarely is a deal or business proposal rejected outright.

. There are some red lines that can be irritating and should be avoided. For example, never show your feet or openly argue with your owner; especially in the presence of others. Also, don’t raise your voice and only use your right hand when

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