Entering the Saudi Arabian market opens the door to a unique economy among global businesses and commerce. The Kingdom has a powerful economy. Its strength is built on holding 15% of the planet’s known oil reserves and being the largest global exporter of crude oil. As Saudi Arabia increases its international profile, the government is striking a balance between attracting foreign investment into an increasingly entrepreneurial environment and seeking to protect the Saudi Arabian workforce.

Most private sector workers are expats, which the government is countering with its Saudization program known as Nitaqat. This sets quotas for the balance between expats and locals in the private sector. Launched in 2011, the program has accelerated since 2018. Only Saudi Arabians can be employed in specific sectors, and by September 2023, employees such as branch managers, supervisors, customer services, and sales agents will all have to be locals.

Even so, Saudi Arabia has issued over 40 licenses to multinationals such as PepsiCo, Deloitte and Unilever as it seeks to rival the United Arab Emirates as the No. 1 business hub for the Middle East and West Asia. By 2023 only companies with a regional headquarters in KSA will be allowed a license.

Starting a business in Saudi Arabia

International companies entering the Saudi Arabian market must set up subsidiaries to hire staff in the country and operate their payroll. The most popular route is to open a limited liability company (LLC), which operates under the Companies Law, as updated in 2016.

In a further move, the Ministry of Commerce and the Capital Markets Authority published a ‘Draft Law’ which removed the restriction on a single shareholder LLC being owned by another single shareholder LLC. Even so, there is a long list of requirements, regulations and responsibilities that go with establishing a legal entity in Saudi Arabia and dealing with several Saudi Arabian authorities. They include:

  • The Ministry of Investment Saudi Arabia (MISA), formerly the Saudi Arabia General Investment Authority (SAGIA) – to obtain pre-approval for an international investment license application by submitting a comprehensive business and financial plan.
  • The Ministry of Commerce (MOC) – reserve a unique company name and submit Articles of Association.
  • Zakat, Tax and Customs Authority (ZATCA) – company registration is required.
  • General Organisation for Social Insurance (GOSI) – employers and employees must be registered for making health, social security, pension and unemployment insurance contributions.
  • Submit municipality lease, tax number, registration certificate, and bank’s confirmation of deposited share capital to MISA, who then issue the foreign investment license. At this point, the business can start operating.
  • A minimum of one shareholder is required under the new Companies Law (2016), before which the requirement was for two. The shareholder can be a person or entity. There is no requirement for the number of directors.


  • Sign a lease agreement for the business premises and register with the appropriate municipality. This process can take up to three months.
  • Open a business bank account. There is no statutory minimum for share capital, but MISA requires foreign LLCs to have a minimum capital of at least SAR 500,000 (€130,750, US$133,180).
  • The subsidiary must publish a résumé of the Articles of Association in the Official Gazette, register with the relevant chamber of commerce and produce a company seal.

However, there are speedier alternatives to launching a subsidiary, with Bradford Jacobs opening the door to a hassle-free route into Saudi Arabia. Work alongside our Professional Employer Organisation (PEO) recruitment specialists, then utilise our Employer of Record (EOR) in-country experts to handle every aspect of compliance. Employers can depend on our in-depth knowledge of Saudi Arabia and how to navigate its legislative issues around Business Law.

Expanding your business into Saudi Arabia

Saudi Arabia is a magnet for foreign investment and workers, but there are inevitably issues in complying with the relevant employment legislation. This revolves around the Labour Law and the Saudization program in Saudi Arabia, which sets quotas to protect the number of local workers in the expat-dominated private sector.

Opening a business in any overseas territory can be challenging. Moving staff worldwide means lengthy processes to obtain visas and work permits. When employees are in place, who will handle payroll? How will your company deal with regulations on taxation, entitlements and benefits, termination, and severance? Drawing up an expansion blueprint is not enough; your business plan must answer all these questions. By partnering with a PEO and EOR such as Bradford Jacobs, companies can plot a time-efficient and cost-effective path to locating and employing staff in Saudi Arabia. But for those who want to ‘go it alone’, here are some of the necessary steps.

Finding an office in Saudi Arabia

A booming economy is only one of the attractions of the Kingdom, which is opening its doors to international trade and investment. The government’s Vision 2030 initiative stimulates the environment for private enterprises, from start-ups to multinationals, widening its financial, digital, and economic perspectives. It encourages a more talented expatriate workforce while promoting and investing in its citizens through Saudization (Nitaqat).

What opportunities are available in Saudi Arabian cities?

Jeddah is a modern and lively city blending the old and new, famous for its shopping malls, providing a diverse cultural experience to live and work, and being the country’s commercial hub. It is also the home to many famous names such as Nestlé, Siemens, Proctor & Gamble and Unilever – to name but a few and in line with Vision 2030 to attract top companies to establish their headquarters in the country.

Riyadh is the largest city and administrative capital. A great city for business with all the facilities of a world-class destination but with little to offer in the way of nightlife. However, there is quad biking and hiking with plenty of green space even though the city is located in the desert with no coastline. It is a high-salary area and offers top-quality health care, education, and many shopping places and sites to see.

Dhahran, the top area for oil production, and maybe because of it, provides excellent facilities in a contemporary setting. It offers a well-developed IT industry with high-paying jobs. Although not offering much in music and entertainment, it is more of a traditionalist city and a place to chill with the locals; however, there are shopping malls, restaurants and things to keep the children entertained.

Some of the considerations when locating your office are:

  • What government funding, grants and subsidies or tax benefits are there for start-ups and new businesses?
  • Are the premises near to wholesalers, manufacturers and distributors offering ‘just-in-time’ inventory management?
  • What business hubs or clusters offer networking opportunities, improved supply chains, and research and development opportunities with appropriate office space?
  • How active and vibrant is the locale with a healthy business environment and proximity to commercial services?
  • Does it provide good facilities for staff, impress clients, and provide good transport links, air conditioning and safe car parking?
  • Is it fit for purpose but within budget … and yet still has room for expansion?
  • Does it have good infrastructure with appropriate services such as WIFI, internet, maintenance and cleaning, air-conditioning, and availability of a prayer room?
  • How does the nature of your business affect your choices? For instance, administrative or commercial?

Taking advantage of all this country has to offer to optimise profits, but staying compliant, means research and a good understanding of the region and the Muslim culture. 

Finding a manufacturer in Saudi Arabia

The Vision 2030 initiative aspires to huge social and economic reforms to integrate local Saudi Arabians into the workforce and employment. The main aim is diversification from oil dependency towards a sustainable manufacturing ecosystem creating specialised clusters, investment and productivity to ensure a prosperous future. 

Areas targeted to encourage efficiency and competitiveness and promote integration and expansion are the automotive and pharmaceutical industries. Also, the Research Products Development Company (RPDC) melds expertise from educational institutions and facilities for research in biotechnology through an R&D Cluster started in 2018 aimed at supporting clinical trials for emerging vaccines and medication.

In July 2022, KSA issued over 400 permits for projects in the metal, rubber and chemical sectors for new factories and facilities to encourage expansion in the manufacturing sector. Up to 2022, there were over 10,000 projects, with small enterprises accounting for over 90% of the industrial licenses. Investment has been more than SAR 1.3 billion (US$347 million).

Companies expanding into Saudi Arabia who have located their office and who have a product that requires manufacturing should not find this a problem, with the right advice and expertise from Bradford Jacobs. Partnering with the best company to launch your project and achieve production goals is a boon for any business.

A first-class manufacturer can help with the culture and local customers, the language and making the right contacts while hitting targets for quality and quantities. However, practice ‘Due Diligence’ with new contacts – start small before financially committing to large orders and seek out reviews and recommendations. Check out local embassies, most have country guidelines offering good information. Here are some of the questions you could ask:

  • Are they licensed and quality assessed?
  • Can they produce goods in the quantities needed?
  • Can they deliver directly to your customer or distributor?
  • Have they produced similar products, and can they provide recommendations?
  • Can they keep pace with your expansion plans?
  • Are they financially sound, and can they provide a previous audit?
  • Do they have payment terms and require a deposit?
  • Will there be a language problem?
  • Will you have a single point of contact, e.g., an account manager?
  • How are their supply chains for sourcing or outsourcing their raw materials?
  • What are their potential lead times to deliver?
  • Processes for dealing with poor quality or missed deadlines?
  • Do they provide sampling or a prototype?
  • Is their manufacturing equipment up to date?

Other considerations:

  • Run market research to avoid saturating the market.
  • Finding a company to both manufacture and distribute.
  • Legalities in the country to protect your intellectual property rights.
  • Regularly monitor your manufacturer’s performance.

Finding a distributor in Saudi Arabia

Since May 2016, foreign companies can wholly own retail and distributor trading businesses without partnering with Saudi Arabian companies to distribute goods. The Dow Chemical Company became the first in June 2016 to receive a trading license.

However, it is recommended for companies new to the KSA markets to initially partner with a local company. The three main areas of commercial trade are around Jeddah, Riyadh in the central province, and the Eastern area where the oil industry is located. Luxury goods are in high demand, as are food and beverages. Retail goods in the domestic market, especially food, are becoming more competitive with the heavy presence of hypermarkets such as Carrefour, Al Raya, Panda Retail Co., and Lulu Group.

After setting up your company, locating an office and partnering with a local manufacturer, you now have a product to sell. You need a distributor capable of starting small and locally who, in the future, can also expand to cover the whole country into the rest of the Middle East and farther afield. The KSA, as of 2022, does not have ‘Free Zones’, but as part of the Vision 2030 initiative, they are creating Economic Cities, and the NEOM Mega City is part of the expansion and diversification, with Free Zone areas part of the plans.

Situated alongside the north of the Red Sea but south of Jordan and Israel, the NEOM Mega City is estimated to cover 26,500 km2 with a 460km coastline along the Red Sea and is designed to host ‘smart-city’ tech companies as well as a holiday destination.

Apart from the main areas of distribution resting with wholesalers, major retailers such as supermarkets, department stores and huge shopping malls, e-commerce is booming; during January 2022, sales were around SAR266 million (€69.7 million, US$70.8 million) per day.

A top-rated distributor should be experienced with the larger markets, distribution channels and supply chains at home, in the rest of the Middle East, West Asia, Africa, and South Asia. They should have a handle on changes in the marketplace or emerging trends such as online shopping.

  Some pointers when vetting a distributor:

  • Do they provide good storage facilities and have up-to-date machinery for handling goods before they distribute?
  • How do they track changes to market trends?
  • How does your product match or fit in with their existing product line?
  • Do they have well-trained and enthusiastic marketing and sales teams with excellent customer service that can also assist with customs, cultural differences, and the language?
  • See their plans for your product distribution, and have they worked before with foreign companies?
  • Look at their processes and logistics for distribution.
  • You may want to check out their customers’ history, satisfaction, and financial stability.

Getting the right distributor can mean product success for both of you. It is not just about moving merchandise, it’s also about growing and developing markets together, expanding both of your horizons and increasing your market share.

How to find a distributor

  • Check out Trade missions, which are usually organised to encourage mutual trade. They can target relevant companies more easily, arrange face-to-face meetings, and be aware of the best trade fairs or conferences. They may offer financial incentives if this is a new market for you or your country.
  • Networking: Joining B2B groups, Chambers of Commerce, exploring social media, e.g., LinkedIn and Facebook – all good vehicles to become familiar with your new country or to elicit experiences or recommendations
  • Check out the local expatriate community, some may attend embassy functions, and many expatriates occupy top positions with international companies
  • Accessing local directories and magazines, and online websites. Many in-country embassies produce country guidelines
  • Why not ask your manufacturer, maybe they should be your first port of call.

Some Saudi Arabian Facts

  • Capital – Riyadh
  • Population – 34 million
  • Regions/Provinces – Geographically, there are six regions: Eastern, Central, Northern, Northwest, Midwest and Southwest. The provinces are Riyadh, Makkah, Eastern, Madinah, Al Baha, Al Jawf, Northern Borders, Qassim, Ha’il, Tabuk, Aseer, Jizan, and Najran.
  • Official language – Arabic
  • Economy and world ranking – GDP USD 842 billion (2021) – 19th 
  • Main exports – Mineral fuels and oil, plastics, organic and inorganic chemicals, fertilisers, aluminium, iron and steel, gems and precious metals, honey and dairy products, and copper.
  • Main imports – Machinery, mechanical appliances, electrical equipment, transportation equipment, chemical products, and vegetables.
  • Main trading partners – China, UAE, Turkey, France, Germany, Italy, Singapore, Belgium, Egypt, US, Kuwait, South Korea, and Malaysia.
  • Government – Absolute monarchy based on Islam.
  • Currency – Riyal.

Advantages and Challenges when entering the Saudi Arabian Market

Some advantages of entering the Saudi Arabian market include the following:

  • Economy: Diversification away from oil sees growth in hydrocarbons and natural gas, as well as an increase in tourism and consumer spending.
  • Manufacturing: Output is expected to increase alongside investment in domestic industries.
  • Finance: Insurance and business services are expected to grow based on increased private sector credit.
  • Vision 2030: The initiative aims to increase the role of private sector companies, SMEs, entrepreneurs and innovators.

Some challenges of entering the Saudi Arabian market include the following:

  • Oil: Dependency on international prices and an economy heavily dependent on the industry.
  • Labour force: Relatively high unemployment among the local population, which the government seeks to redress with the Saudization program enforcing quotas for numbers of expats in the private sector.
  • Stability: Potential tensions due to land borders with Yemen and Iraq, while neighbour Iran is seen as a potential regional rival.
  • Business operation: Late payment is common, not legally regulated, and late payment interest is not allowed.
  • Bureaucracy: Lacks transparency; the legal process can stretch over months, and precedents do not bind courts.


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