Learning to Partner: How U.S. Companies Can Succeed in Saudi Arabia
The United States has enjoyed a mutually beneficial commercial relationship with Saudi Arabia for many years. But the U.S. share of the Saudi market has been shrinking for the past decade. Amer Kayani, a senior commercial officer in the U.S. and Foreign Commercial Service, talks about some of the strategies that U.S. firms can use to succeed in this market.
Amer Kayani has been posted in Saudi Arabia since 2008. His previous tours of duty with the U.S. and Foreign Commercial Service have included Egypt, Pakistan, and Turkey. He recently spoke with Doug Barry of the Trade Information Center about commercial opportunities for U.S. exporters in Saudi Arabia.
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|Amer Kayani (center), the Commerce Department’s senior commercial officer in Saudi Arabia, with Saudi delegates attending Power-Gen, an energy trade show that was held in Las Vegas, Nevada, this past December. (U.S. Department of Commerce photo)
Barry: You’ve spent most of your professional life in Egypt, Pakistan, and Turkey. What made you choose those not-so-easy markets?
Kayani: They are fascinating in terms of business opportunities because they are all emerging economies. As a result, there are a lot more opportunities that come your way than in a developed country. If I were posted in a developed country, I would have a hard time figuring out what to do there.
Barry: Some people might say “Yes, there are opportunities in Saudi Arabia, but the images I see in the news lead me to think there are security risks.” How would you respond to that?”
Kayani: The United States has engaged in trade with Saudi Arabia since 1945. The two countries have a very, very close relationship. Today, there are tens of thousands of Americans who are living in Saudi Arabia with their families doing business. They represent U.S. companies, work for Saudi companies, or work for multinationals. There are more U.S.–educated PhDs employed by the Saudi government than by our own government. So this is not a group of people who are out to get us or hate us. To the contrary, they actually love everything that America represents in terms of business, technology, and education. They are interested in doing business with us.
Barry: Why aren’t more Americans applying for visas and going to Saudi Arabia?
Kayani: The number of U.S. companies and Americans coming into the kingdom has increased substantially over the past year or two. But between 2001 and 2008, there was a pattern of disengagement. As a result, the United States lost market share. For example, today the United States has about 14 percent of the Saudi import market. China has about 11 percent. But in 2001, China’s share was negligible, less than 1 percent. There is a similar picture if you look at export growth. Between 2002 and 2008, Chinese exports to Saudi Arabia grew 645 percent. South Korea’s grew close to 400 percent. India’s was at a similar level. But U.S. exports grew only 200 percent.
Barry: How do we get back market share?
Kayani: By visiting Saudi Arabia and partnering with Saudi companies. This is a new business model that U.S. exporters need to look at. In the old days, U.S. companies would come in and sell. If it was a long-term project, they would put somebody in Dubai or Abu Dhabi or Bahrain or Cairo, and a senior vice president would come over once or twice a month, look over the project, and leave. That business model no longer works.
Barry: How do you facilitate this partnering? How can U.S. companies without experience in Saudi Arabia take advantage of the services that you offer?
Kayani: An exporter needs to identify its niche and find out exactly where it is going to be competitive. A company can certainly go on its own, set up business, and sell directly. However, we strongly recommend that exporters find a strong, reputable business partner. The U.S. and Foreign Commercial Service can help. We have three offices: Dhahran, Jeddah, and Riyadh. And this is what we do—we match U.S. companies with potential Saudi counterparts.
Barry: Do Saudis purchase online or look for potential suppliers there?
Kayani: Compared to other countries, Internet penetration is low here—about 25 percent. Broadband penetration is even lower—in the single digits. But Saudis, per capita, are the largest spenders on information technology in the Gulf region. Forty-seven percent of all Saudi Internet users also shop online. So, yes, there are opportunities for online business.
Barry: Is there an entrepreneurial culture there?
Kayani: Absolutely. It is a trading society. Saudis have been trading for thousands of years; they made their living through caravans. So if anyone thinks that they can beat a Saudi in negotiations across the table, it is wishful thinking.
Barry: Is it also wishful thinking to believe in the importance of engaging with people we might have unformed or negative views of? More than business and profits, is there a greater benefit to changing perceptions on both sides?
Kayani: Interpersonal relationships are the key in this part of the world. People still need to meet face to face. It is much harder to dislike or hate people when you know them personally. And if you have developed and generated goodwill among Saudis through this interaction, I think the future will look much brighter for both sides.
For More Information
For more information on doing business in Saudi Arabia, including links to numerous resources and the most recent Country Commercial Guide, visit the Department of Commerce’s Middle East and North Africa Business Information Center Web site. The U.S. and Foreign Commercial Service’s post in Saudi Arabia also maintains a Web site which includes direct links to in-country staff members and to exporter services and upcoming events. For general questions about exporting, contact the Trade Information Center, tel.: 1-800-USA-TRAD(E) (1-800-872-8723); www.export.gov.