Doing Business in Saudi Arabia - International Franchise Association

Distribution and Sales Channels Return to top
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.
American exporters may find it advantageous to appoint different agents or distributors for each
region having significant market potential. Multiple agencies and distributorships may also be
appointed to handle diverse product lines or services. Multiple agencies and distributors can
present logistical and management difficulties, so U.S. firms, particularly in the franchise sector,
often choose to appoint a master franchisor or distributor for states of the Gulf region, which
includes Saudi Arabia, Kuwait, Qatar, Bahrain, Oman, and the UAE.
While there is no statutory requirement that distributorships be granted on an exclusive basis, it
is clearly the policy of the Saudi Ministry of Commerce and Industry that all arrangements be
exclusive with respect to either product line or geographic region.
Selling Factors/Techniques Return to top
Expatriate managers have had a strong influence in introducing advanced selling techniques
into a market that relied heavily on word-of-mouth and established buying patterns until a few
years ago. Saudi consumers are increasingly becoming more discerning and sophisticated.
Although details of a transaction can be handled electronically, no serious commitment is likely
to be made without a face-to-face introduction. Business cards are usually printed in English on
one side and Arabic on the other.
Saudis are gracious hosts and will try to put a visitor at ease, even during arduous business
dealings. A large portion of upper and middle class Saudis were educated in the United States
or in Europe.
Financing and credit facilities may be offered as part of a sales proposal, usually after a solid
relationship has been established. Passed in 2003, the Capital Market Law (CML) created the
Saudi Arabian Stock Exchange (SASE), as well as the Capital Market Authority (CMA), to
oversee and regulate the exchange. The law established a new regulatory framework designed
to encourage greater participation in the financial market. It also establishment the SASE as the
exclusive securities market in Saudi Arabia. The CMA was created to ensure that Saudi
Arabia’s capital markets are faire, transparent and efficient.
The CML provides for the establishment of two committees to settle securities disputes, the
Committee for the Resolution of Securities Disputes (CRSD) and the Appeal Panel. The CRSD
has jurisdiction over disputes falling under the provisions of the Capital Market Law, the rules
and regulations issued by the CMA and the Stock Exchange. The Appeal Panel, which was
formed by the Council of Ministers, will hear appeals against decisions issued by the CRSD. A
decision issued by the CRSD may be appealed to the Appeal Panel within thirty days of the
notification date. CML also created the Securities Deposit Center (SDC), which is operated by
Tadawul a Saudi Stock Exchange Company. SDC is in charge of managing deposits, transfers,
settlements, clearing, and registration of all Saudi securities on the exchange.