Summary of Saudi Arabia insights
Conducting business abroad has become more difficult than 3 years ago according to Saudi Arabian mid-cap CFOs. Despite the economic and regulatory difficulties facing all businesses, 98% of Saudi Arabian mid-cap CFOs we interviewed are confident that their three year plans to expand internationally will succeed. On average, they expect 35% of their revenues in 2014 to come from sales outside Saudi Arabia, up from the current 30%.
Saudi Arabian businesses are focusing on expanding into Qatar, UAE, China, Egypt, India and Kuwait while Saudi Arabia plays an integral part in the expansion plans of Chinese and Indian businesses.
Geo-political country risks, intensity of local competition, red tape & bureaucracy and finding the right local management are the biggest challenges faced by Saudi Arabian companies when expanding internationally.
Nearly half of Saudi Arabian businesses act fast once a decision to open a new office is made - 48% open an office in less than a year. According to Saudi Arabian CFOs, internal sources (42%) and investment banks (34%) are the most trusted sources when expanding abroad.
Outlook for cross border growth
- Qatar, UAE, China, Egypt, India and Kuwait are important markets for Saudi Arabian outward expansion
- Saudi Arabian expansion abroad is driven by familiar culture and growth opportunities
- Saudi Arabian businesses are more likely to ‘play it safe’, expanding in their core sector and with both new and existing products and services
- Investment in capital will be the main focus over the next 3 years for Saudi Arabian companies expanding abroad
Challenges faced when expanding internationally
- Geo-political country risks
- Intensity of local competition
- Red tape & bureaucracy
- Finding the right local management
Top insights for growth
- Do thorough research to improve your knowledge of the market
- Recruitment of good staff is key to success
- Have a strong business plan
- Ensure the product itself is right
- Ensure you have enough finance
The in-country summaries are given as general commentary only. The global BDO Ambition Survey 2011 is based on 751 CFOs’ responses of mid-cap companies across 13 countries (50 in Saudi Arabia). The survey was conducted by StrategyOne between 23 May – 8 July 2011