Doing Business in Saudi Arabia - International Franchise Association

Pricing Return to top
The government maintains a free-trade approach and, since 1981, the Saudi Arabian Monetary
Agency (SAMA, the Central Bank), has pegged the Saudi Riyal to the U.S. Dollar to facilitate
long term planning and minimize exchange risk for the private sector. As such, Saudi importers
expect American producers to practice a more stable pricing policy than their foreign
competitors. In the last couple years, there have been numerous speculations that the Saudi
Government would revalue the Riyal, but SAMA has consistently stated that it has no intention
to do so, and given SAMA’s huge stock of foreign assets, there doesn’t appear to be a need.
Products are usually imported on a CIF basis, and mark-ups depend almost entirely on what the
vendor feels the market will bear relative to the competition. There is no standard formula to
come up with the mark-up rates for all product lines at different levels in the relatively short
distribution chain.
Contrary to popular belief, pricing is very important to the average Saudi. Therefore, where
there are competitive products, Saudi buyers frequently will compare prices before making a
decision. For the American supplier, some give-and-take is expected in preliminary
negotiations.
An economic study by a local bank has stated that for much of 2008 inflation was a serious and
pressing issue for Saudi Arabia, with prices rising 9.2 percent on average. In 2009, however,
inflationary pressures subsided due to a slowdown in demand and lower prices for commodities,
food, rents, etc. The inflation rate for 2009 is estimated at 4.4 percent. In 2010 inflation will
continue to decrease, to around 4.0 percent, reflecting an lower domestic demand.
Sales Service/Customer Support Return to top
Saudi Arabia is a relatively open market, which makes it highly competitive. Brand loyalty and
established preferences are less developed than in some other countries. Consequently, sales
service and customer support is indispensable to win and maintain new clients.
Saudis view a foreign firm’s physical presence in the Kingdom as a tangible sign of a long-term
commitment. Prompt delivery of goods from available stock and the presence of qualified
support technicians have become more important, and they influence repeat business much
more now than ten or even five years ago. Government agencies usually require equipment
suppliers to commit to providing maintenance and spare parts for an average of three years.
Protecting Your Intellectual Property Return to top
Saudi Arabia became the 149 th member of the WTO on December 11, 2005. As part of its
accession, the Kingdom committed to fully implement the TRIPS Agreement without any
transition period.
The Saudi legal system protects and facilitates acquisition and disposition of all property rights,
including intellectual property. The Government has acceded to the Universal Copyright
Convention; implementation began in 1994. The Saudi Copyright Law was amended in August
2003 to improve protection and to provide for serious deterrent penalties for violators. The
government also endorsed the country’s joining the “Paris Convention for Protection of Industrial
Property” and the “Berne Convention for the Protection of Literary and Artistic Works.”