Unlike in Europe or North America, local partners in the UAE and Saudi Arabia across all B2B industries demand to be your exclusive partner from the beginning. Having worked with clients from multiple industries, including IT, industrial equipment, consulting services, security, and others, the first question any potential local partner of my clients asked was: “Do you have anyone representing you here?”
If the answer was “yes,” the conversation ended immediately. “Sorry, I don’t want to waste my time.” That’s what I’ve heard multiple times.
The main reason is that both the UAE and Saudi Arabia have a deeply rooted trade and mediatorship culture, where local companies represent foreign brands and businesses for various purposes, including government contracts and private deals.
Even if someone in your Saudi contacts doesn’t work in a business that can represent a foreign product, many Saudis are familiar with trade and mediatorship practices on a family level. If they see a good opportunity, almost anyone, regardless of their job or occupation, can play the role of a trade agent.
A common story I’ve heard from my Saudi friends is this. A foreign businessman comes to Saudi Arabia for initial market exploration. He meets with multiple companies that can potentially represent their interests. Without taking care of proper exclusivity rights, he ends up agreeing with multiple entities to work as their agents. These agents start approaching clients, and as a result, the biggest clients end up receiving a proposal for the same product multiple times from different entities. That obviously irritates the big clients and ruins the foreign company’s reputation. Once and for long.
That’s why all serious companies always demand to be your sole representative to ensure no one else can come and represent your company to the same clients. They want to protect their interests and ensure the time they dedicate to your business development isn’t wasted, which is logical.
However, exclusivity contracts also have a flip side. Some companies, after signing an exclusivity agreement, don’t devote enough time and energy to actively promote a foreign product. They may simply wait for opportunities without actively pursuing them. Even more, some of them may have multiple exclusivity agreements with several foreign companies for competing products or services, which means the efficiency of such partnerships for all of them gets under threat.
The solution with companies you see as potential partners is to give them partial exclusivity, limiting their mandate to a specific sector where they’ve proven to have the strongest connections or even individual companies without granting exclusivity for the entire country.
The initial exclusivity period should also be limited, allowing one partner to prove themselves while leaving room for you to try other partners in different niches.
Finally, one of the most important clauses in your partnership agreement should be the avoidance of conflicts of interest. Be as detailed as possible in describing what a conflict of interest may mean to your business and your partnership. Don’t hesitate to even put specific company names that your local partner is not allowed to represent on the ground while working with you.
