With Expo 2030, Football World Cup 2034, and numerous giga projects, Saudi Arabia is becoming one of the most attractive business destinations in the world. Foreign B2B companies are now looking for ways to get business from Saudi Arabia, and many of them seek to rely on local business agents. However, as many cases show, getting a professional and well-connected person to represent your business in Saudi is not enough. There are several more steps every business needs to take to make sure their reps network in Saudi Arabia gets the best they can.
Saudi Arabia is a unique country in terms of business agents. For centuries the main activity of Arabs was trade, and the culture of trading and mediatorship is still strong here. From my impression, it is a country that probably has the highest number of trade and business agents per capita. Why do I think this way? Dealing with local businesses, I have been in situations when local business people offered their help in mediation or representation. The Saudi Arabian market is all about relationships, so the best way for people to make money without producing anything is to leverage their connections.
It can be both an advantage and a disadvantage. On the one hand, it means that there are a lot of potential agents out there who can help you grow your business. On the other hand, it can be challenging to find trustworthy partners who have the most powerful connections, and who are ready to spend more time than others to make those connections work for your business.
There are a few reasons why you might need agents and representatives in Saudi Arabia. Firstly, you may not have the resources to risk your company to open its own office here without having a constant cash flow. Agents can help you manage your business in Saudi Arabia without investing in a physical presence.
Secondly, you may not know the market well enough to be successful on your own, so agents can help you understand the market, identify potential clients, and close deals.
Finding the right agent for your business in Saudi Arabia requires strategic timing. You should start looking for agents when you already know your company has some potential, or when you signed a couple of clients. It may also happen that you don’t have clients from Saudi Arabia yet, but you have seen a lot of interest in your products from Saudi business people at some international exhibitions or conferences or through online campaigns.
It is crucial to avoid directly asking someone in Saudi Arabia to be your agent or representative as you risk partnering with someone passive, waiting for opportunities rather than actively seeking them, someone who might be over-committed with several representation agreements, or someone lacking sufficient influence and connections in the relevant industry. Create situations where they express interest in representing your business instead, ensuring an active and committed partnership.
If you want to start getting representation proposals, there are two ways to achieve that. The first way is to participate in local industry exhibitions, where many attendees will be looking for international businesses they can represent in the local market. Investing in a booth at these exhibitions, you are likely to attract individuals interested in representing your company in Saudi Arabia.
The second way is to proactively pitch your products and services to local companies within your industry and hope they see a fit for their clients or as a complement to their existing product lines. You should target companies that either maintain, install, or have some other relation to your products or those of your competitors. This method, while time-consuming, has lower direct cost.
In doing so, avoid explicitly asking for representation. However, if they perceive your products as having potential in the local market, they may offer their representation services to you.
Keep a few rules in mind when engaging with potential agents and representatives.
Rule number one is don’t be swayed solely by big names. Not everyone from a well-known family or business clan necessarily has real influence. It is better to focus on the business experience of potential agents and their understanding of your niche and assess their ability to sell your products and services independently.
Rule number two is to consider how much value your business could add to theirs. Wealthy and influential individuals may have limited motivation as they might prioritize their existing revenue streams. Seek representatives with a genuine interest in boosting their revenue through your products, balancing motivation and influence. Ideally, your representative should see your product line as a significant business opportunity, potentially boosting their revenue by at least 10-20%.
Due to the prevalence of representation in Saudi Arabia, ensure agents’ efforts don’t overlap but avoid granting exclusive market rights to a single person or company. Instead, select multiple agents for different niches, ensuring they don’t interfere with each other’s efforts. This is crucial for maintaining your business reputation and preventing potential clients from receiving duplicate proposals.
The next rule is to consider the timeframe when negotiating agency agreements. When you negotiate agency agreements, most Saudi agents will demand exclusivity rights from you, explaining it by their necessity to make sure their efforts don’t overlap with others so that your company is not misrepresented. That’s valid, but you should also think about the timeframe for which you give the exclusivity. Don’t give the exclusivity for a long period right away. Begin with a limited period, such as 6 to 9 months, and extend if expected results are achieved.
Regarding market segments, you should grant exclusivity based on the agent’s connections. For instance, give telecoms exclusivity to those strongly connected in that sector, or banking exclusivity to those well-connected with banks. For significant big clients like Saudi Aramco, you might offer exclusivity for representing your company solely to them. Considering Saudi Aramco’s size, you could even have multiple agents, each one with exclusivity for different departments.
In summary, when granting exclusivity rights, distribute them judiciously among various agents, managing risks and ensuring that their efforts do not conflict.
Wishing you great success in your business ventures in Saudi Arabia!
