Procurement, sourcing and import from Saudi Arabia

Purchasing products or services seems easy, but this is not always the case. How do you know that you have the best deal, especially if you haven’t done much business before in Saudi Arabia?

It already helps if you have a structured approach for your procurement and to keep your options open. Working with a local consultant or agency may help to identify more potential suppliers and to get the products that you just bought accross the border to their destination.

Find the right suppliers in Saudi Arabia

Saudi Arabia, located in the Middle East, exports a range of products that reflect its significant natural resources and industrial capabilities. The country is renowned for exporting petroleum and petroleum products, which form the backbone of its economy. It also exports natural gas, cement, and fertilizers, leveraging its rich reserves of these resources.

The Kingdom of Saudi Arabia is the largest economy in the Arab world. It accounts for 25% of the Arab world’s Gross Domestic Product (GDP). Saudi Arabia has an oil based economy with strong government controls over major economic activities.

Strengths of the Saudi market include:

No taxation on personal income
Proximity to other Gulf markets
Key member of the Gulf Cooperation Council (GCC)
Largest economy and population in the Gulf region

Challenges include:

Identifying suitable sponsors for initial entry into the market
Finding an appropriate Saudi partner for joint ventures
Lead time to establish legal entities and obtain licenses from appropriate ministries

You must apply through the relevant government ministries for licenses to do business in Saudi Arabia.

Wages in Saudi Arabia vary depending on the industry and job type, but they are generally competitive compared to neighboring countries in the region. The cost of living in major cities like Riyadh and Jeddah is moderate, which helps balance out the wage levels.

The country has a growing manufacturing sector, particularly in petrochemicals, plastics, and construction materials. Additionally, Saudi Arabia is investing heavily in renewable energy projects, particularly solar power, to diversify its economy and reduce dependence on oil exports.

Shipping your products

If you purchase tangible products, you have to ship them out of the country. Depending on the country where you want these goods, this may have implications.

First of all you may have to pay import duties or settle VAT. There are certain thresholds for both of these charges, e.g. while importing in the EU you don’t have to pay import duties on any shipment worth less than € 150.

There may also be non-financial barriers, like certifications or approvals to be obtained. Especially for food, cosmetics or medicine this may be the case. Check this in advance, even before you invest in your marketing.

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A structured sourcing approach in Saudi Arabia

Step 1

Supplier search

Try to identify in total 6 to 10 possible suppliers and check their websites. Approach them with a general request to see whether they have the products or services you need.

Step 2

Supplier selection

Submit your requirements to a group of three to five selected suppliers and ensure you get the right comparable quotations to make a choice. Negotiate with one or two of them to get the best result.

Step 3

Supplier management

Now start collaborating, making sure you have an efficient ordering process and limited risks where it comes to quality control and shipping the products.