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Also See
King Fahd International
Airport
Business Customs
The official language of Saudi Arabia is Arabic,
but English is widely used in business and on signs and notices, making it easy
for the non-Arabic speaker to live and work in the Kingdom. Modern Saudi Arabia
has adopted many of the business methods and styles of the West, but some
differences remain. Most important is that business will only be conducted
after a degree of trust and familiarity have been established.
Considerable time may be spent exchanging courtesies, and several visits may be
needed to secure business. Business visitors should arrange their
itineraries to allow for long meetings, as traditional Saudis often maintain an
"open office" in which they will sign papers, take telephone calls,
and converse with friends or colleagues who drop by. Tea, soft drinks, and
traditional Saudi coffee are usually offered. One to
three cups of Saudi coffee should be taken for politeness,
after which the cup should be wiggled between thumb and forefinger when
returning it to the server to indicate that you have
finished.
Many Saudi businessmen have been educated or have traveled extensively in the West and are sophisticated in dealing with Americans. For the most part travelers can rely on the usual Western manners and standards of politeness to see them through, with a few additional rules that may be observed. One should eat with the right hand and avoid sitting at any time with the sole of the foot pointed at the host or other guest. It may be discourteous to ask about a man's wife or daughters; ask instead about his family. Shoes are sometimes removed before entering a Saudi Majlis (living room). If you are invited to the home of a Saudi for a party or reception, a meal is normally served at the end of the evening, and guests will not linger long after finishing. Customs and manners differ, so be observant and adapt your behavior to that of your host.
Saudi Arabia is a Muslim country that requires strict adherence to Islamic principles. Five times a day Muslims are obliged to pray in the direction of the holy city, Makkah. The prayer times are published in the newspaper and come at dawn, noon, afternoon, sunset, and evening. Stores and restaurants close for approximately one-half hour at these times. When staging promotional events or product demonstrations, one must anticipate these prayer breaks.
Dress is conservative for both men and women. Men should not wear shorts or tank tops, while women are advised to wear loose-fitting and concealing clothing with long skirts, elbow-length sleeves, and modest necklines. There is strict gender separation in the Kingdom and restaurants maintain separate sections for single men and families. Wives are often excluded from social gatherings or are entertained separately.
Business hours vary in different parts of the country. Saudi companies usually close for two hours in the afternoon and remain open through the early evening. Retail stores close for the noon prayer and reopen around 4:00 P.M. The normal work week runs from Saturday through Wednesday with many companies also requiring a half or full day on Thursday. Friday is the Muslim holy day.
Travel Advisories and Visas Travelers may not carry alcohol, firearms, pork products, religious items, or items deemed pornographic into the Kingdom. On occasion catalogs and videos deemed appropriate in the West are confiscated if they show men and women socializing together or in revealing dress. It is advisable to carry prescription drugs in their original labeled containers.
Photography of sensitive installations such as airports, seaports, oil and petrochemical facilities, and military bases is prohibited, as is photography that constitutes an invasion of privacy.
Theft or street crime is not a serious problem in Saudi Arabia, but normal precautions should be taken.
Travel to Saudi Arabia is not allowed without a visa issued with the assistance of a Saudi sponsor. Visitor visas are currently single entry and allow for a maximum 90-day stay. However, Saudi authorities may soon agree to issue multi-year, multiple-entry visas on the basis of reciprocity. Under present rules, to obtain a visitor's visa for business purposes, each U.S. company representative must have a letter of invitation from the Saudi sponsor. This letter must be in Arabic, the U.S. applicant must have the original copy (no faxes allowed), the letter must be on the Saudi company letterhead, and must bear an authenticating stamp of the local Saudi Chamber of Commerce. The visa applicant must apply for and receive the visa prior to departing the United States at either the Saudi Embassy in Washington or at Saudi Consulates in Houston, Los Angeles, or New York City. Business travelers should ask their Saudi sponsor whether more streamlined visa procedures announced in May 1998 have been put into practice.
The letter should name the visa applicant, passport number, company name and address, approximate dates of visit, and reason for visit (e.g. business meetings). The U.S. visa applicant may hold the letter for up to 60 days prior to making application. It is further recommended that the U.S. applicant's company use the company's letterhead when requesting the Saudi Embassy's/Consulates' cooperation in issuing the visa. Once the visa is stamped on the passport, it must be used or officially canceled before a subsequent visa will be issued.
The visa may be extended at the discretion of the Saudi Embassy or Consulate prior to the expiration date. Occasionally, the Saudi consular officer may require the applicant to obtain the visa through a more time-consuming process involving approval by the Saudi Foreign Ministry. These procedures are well-known in the Kingdom and will be handled by the Saudi sponsor. Women traveling alone, Americans of Arab origin, and private consultants are often required to use this process. Resident visas also are available through a separate process.
Holidays
There are two Islamic religious holidays around which most businesses close for
at least three working days and all Government offices close for a longer period. During these holidays, it is
very difficult to make contacts and transact
business. The Eid al-Fitr holiday occurs at the end of the holy month of
Ramadan (month of fasting). Eid al-Adha celebrates the time of year when
pilgrims arrive from around the world to perform the Hajj. Their timing is
governed by the Islamic lunar
calendar.
In 1999, the Eid al-Fitr holiday will begin on or about January 18 and the Eid al-Adha holiday on or about March 27.
Business travel to the Kingdom during the holy month of Ramadan is also best avoided. During Ramadan devout Muslims abstain from food and drink during daylight hours. Office hours are shortened and shifted to the evening, and people may be affected by the fasting and customary late night social gatherings. During Ramadan business travelers should not drink, eat, or smoke in public during daylight or in the presence of fasting Muslims. Hotels offer special daytime food services for their non-Muslim guests. In 1999, Ramadan will start on or about December 19, 1998 and end on or about January 17, 1999. The Saudi national day is celebrated September 22. Almost all businesses and Government offices remain open on this day, with the notable exception of Saudi Aramco.
Business Infrastructure
The business centers of Riyadh, Jeddah, and Dammam/Al-Khobar/Dhahran each
have an international airport served by a variety of international
airlines. Air travel is preferred for inter-Kingdom travel with public
service restricted to the sole national airline, Saudia.
The Kingdom has a good highway system and rental cars and taxis/limousines are available at all airports; driving is U.S.-style, on the right. One rail line carries passengers and freight between Dammam and Riyadh. Jeddah and Dammam are the main international seaports for moving containerized and bulk cargo.
Modern communication facilities are available including telephone, fax, telex, and courier services. U.S. database log-on is available through a PTT Ministry trunk line service, Al-Waseet. In addition, a number of agreements have already been signed between various U.S. Internet service providers and Saudi companies to launch the service in Saudi Arabia. Use of private satellite communication transponders is not allowed. Facsimile machines are heavily utilized in the conduct of business. A cellular phone system based on the GSM standard is operational, while radiophones are restricted. The Government is embarking on a large-scale telecommunication upgrade program, and the shortage is expected to be resolved by the end of 2002. Internet service is expected to be operational by year-end 1998.
Four and five star hotel accommodations are readily available in the major business centers, and many of the better restaurants are located in the hotels. There are many excellent restaurants in the three major population centers. Well-known American fast food restaurants are also very popular. The food reflects the diversity of the country's expatriate population and generally can be considered safe. Use of bottled water is preferred although most tap water is potable in the major cities. Supermarkets are well stocked with Western products.
Housing for expatriate employees residing in the Kingdom is usually provided by the employer or through a housing allowance given to the employee. The major cities offer a wide variety of houses and apartments for rents considered high by U.S. metropolitan standards.
Most Western expatriates live in housing compounds that provide additional services such as cable television, recreation facilities, child care, limousine services for women (who are not allowed to drive in the Kingdom), and security.
The quality of health care is variable, ranging from excellent to poor depending on the region, hospital, and specialty. Most Western expatriates find it adequate for routine care and minor surgery. Only a few drugs available in the U.S. may not be available in Saudi Arabia.
There is a good network of private American schools serving communities with a high concentration of U.S. expatriates, including all the major business and industrial centers.
The schools offer only grades K-9 as Saudi Government policy requires expatriate children to receive their high school and college education outside the Kingdom.
Temporary Entry of Goods Temporary entry of goods is allowed provided that a guarantee of 12 or 20 percent of the value of the goods is deposited with Saudi Customs. A document and/or a participation agreement is needed to ascertain that the owner of the goods is officially participating in a trade show. If the goods are meant for demonstration purposes to a Government entity, a letter from that entity is required indicating the nature and purpose of the goods. The deposit will be reimbursed after Saudi Customs attests that the goods have left the Kingdom. Reimbursement may take somewhere between two to four weeks.
Information
on Typical Product Pricing Structures A rate of exchange of the dollar to the
riyal has been set at
3.7450 since 1987, a competitive dollar value compared to the Japanese and
European currencies, and reasonable interest rates have greatly facilitated
market penetration. Thanks to this, Saudi importers expect U.S. producers to practice a more
stable pricing policy than their foreign
competitors.
Products are usually imported on a CIF basis, and mark-ups depend almost entirely on what the vendor feels that 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 of the relatively short distribution chain. Pricing is very important to the average Saudi. Therefore, where there are competitive products, Saudi buyers frequently will compare prices before making a buying decision.
Stability of prices has been a policy of the Saudi Government for years, and after rising to five percent in 1995 as a result of the utility and gas rates hikes, inflation was down 0.4 percent for the 12-month period ending in December 1997.
For the U.S. supplier, some give-and-take is expected in preliminary negotiations. The asking price is usually lowered slightly to attract the client.
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