Key Cultural and Business Considerations for Foreign Businesses When Relocating to Saudi Arabia
Gaining a deep understanding of the Saudi culture is crucial to ensuring a successful business relocation.
Saudi Arabia forms an ideal place to work and live, renowned for the diversity of its metropolitan culture and a conducive environment for business relocation. The Kingdom is now considered the second-best place to live for expats after Denmark, highlighting the proliferation of opportunities for career growth and the improved business landscape and infrastructure.
For foreign companies, embarking on a Saudi expansion journey is a rewarding experience. But, ensuring long-term success in the Saudi market is contingent on gaining a deep understanding of the country's cultural nuances and business landscape.
From taxes and cultural intelligence to education, this article delves into the most important factors to consider when expanding to Saudi Arabia and provides tips for a successful business relocation.
What Foering Businesses Need to Know About Work Culture in Saudi Arabia: A Guide to Living in Saudi Arabia
Navigating the cultural norms in Saudi Arabia is a vital prerequisite to maintaining a positive brand image and supporting the establishment of an adaptive work environment.
By doing so, the company can tailor its product offerings and marketing strategies to resonate with the specific desires and requirements of Saudi customers and pave the way for a high-performing company culture.
Language
While the majority of Saudis speak English, there are cases where foreigners face situations that require communicating in Arabic, especially when dealing with elders or in certain settings like landlord interactions or immigration offices. The language differences can make certain transactions and processes more challenging.
Business Calendar
The business calendar in Saudi Arabia can take some time to get used to for foreigners. The work week in Saudi Arabia runs from Sunday through Thursday, unlike other countries where the work week starts on Monday and ends on Friday. This shift in the work week can require some adjustment.
Religious Holidays
The Saudi culture is deeply rooted in Islamic principles and practices. For context, prayer time should be taken into consideration when planning a business's day-to-day schedule.
Religious holidays, such as the holy month of Ramadan, can also have an impact on daily life in Saudi Arabia. Business activities during Eid El-Fitr and Eid Al-Adha can be subject to a slowdown.
Foreign businesses are expected to foster respect for and familiarity with these important cultural and religious occasions.
Lifestyle
Some expats can struggle with the entertainment options available in Saudi Arabia.
Adapting to Saudi Arabia’s customs and practices, and leisure activities can present a learning curve for those unfamiliar with the country.
Networking
Personal relationships are the bedrock of business dealings in Saudi Arabia; as such, there is a need to develop an understanding of common values in the country, which is crucial to forming meaningful connections.
Businesses need to prioritize relationship-building, which can be done at networking events, business dinners, and meetings. This demonstrates a genuine interest in understanding Saudi cultural norms.
Nurturing cultural intelligence at a foreign business in Saudi Arabia requires a multi-pronged approach, one that can involve providing cross-cultural training to employees, and forming multicultural teams. Planning activities that can integrate foreign employees into the local culture and traditions is essential to promoting awareness of Saudi culture.
Essential Aspects to Consider When Relocating a Foreign Business to Saudi Arabia
Below are the important areas that shape a successful Saudi expansion journey as well as best practices to ensure streamlined business relocation.
Taxes
Saudi Arabia is highly regarded as an attractive jurisdiction to set up a business due to its tax regime, which is designed to align with the dynamism of its evolving business landscape.
Taxation is a crucial aspect of compliance in Saudi Arabia for businesses looking to establish a presence in the Kingdom.
The top three common tax types include value-added tax (VAT), which stands at 15%; corporate income at 20%; and withholding taxes (WHT), which range from 5% to 20%, depending on the business activity.
Foreign companies can get tax breaks, partial exemptions and other incentives offered in certain governmental programs; these facilities can further help companies increase their likelihood of success in the Saudi market and contribute to nation-building.
Cost
Saudi Arabia offers one of the most straightforward processes for Saudi Arabian business relocation. However, a careful consideration of total expenses involved in Saudi expansion helps foreign businesses effectively manage their cash flows and align their budgets with growth goals.
Our newly launched cost calculator enables companies to accurately gauge a cost-benefit analysis of their expansion costs, thus accelerating their Saudi expansion journey.
Growth
Establishing a business in Saudi Arabia provides international companies with the launchpad to tap into an array of global and regional opportunities that can catapult a business forward.
Case in point: 75% of the companies within AstroLabs’ expansion network generate less than $50 million annually, with 13 companies generating over $1 billion annually.
This highlights Saudi Arabia's growing stature as a global business hub, which is gaining popularity among high-growth mid- to large-sized companies.
Top Practices to Accelerate a Foreign Business Relocation
Accommodation
Ensuring improved access to suitable accommodation for the company's staff is key to maintaining their productivity and morale.
In doing so, working with local relocation experts such as EER and RelocateME, which count as AstroLabs’ partners, will help address the logistical and emotional hurdles of the relocation process.
Such entities possess first-hand experience in the local real estate landscape, providing their services to streamline companies' and individuals' access to apartments and other residential properties in Riyadh and beyond.
Offices
Transitioning a business to the Saudi market typically entails having an office with a national address.
In fact, relocating to a private office space is generally seen as a crucial step to facilitate a smooth market entry process for businesses and their employees.
The interest in moving into a private office is escalating among new entrants to the Saudi market. This was evidenced in the AstroLabs 2023 Saudi Market Entry Report, which indicates that a substantial percentage of companies planning to enter the Saudi market look to establish their own private offices within a year.
Located at the heart of Riyadh, AstroLabs' recently established string of private offices routinely serves as the springboard for international companies looking to achieve a faster soft landing in the Saudi market.
Overview of the Saudi Educational Landscape
Navigating the educational systems for foreign employees can play a crucial role in ensuring a successful business relocation and empowering them to adapt and thrive in this new environment.
The schooling system in Saudi Arabia includes both public and private institutions. Public schools primarily serve Saudi nationals and follow a curriculum set by the Ministry of Education.
Private schools, on the other hand, offer international curricula, including British, American and International Baccalaureate programs, providing a more familiar environment for foreign students while incorporating local cultural activities.
For admission, non-Saudi students must present certified academic documents and proof of legal residency. These documents must be certified by the appropriate educational authorities.
Additional requirements may include health certificates, the guardian's employment details, and proof of address.
By embracing cultural diversity, a company is able to set itself up for elevated prospects of long-term growth in Saudi Arabia and become an integral part of the current socio-economic transformation.
International companies can benefit from local business setup organizations such as AstroLabs by facilitating key interactions in Arabic and English with an ever-growing network of Saudi public and private entities.
Over the past six years, AstroLabs’ on-ground team has been helping global companies traverse culture-related challenges and increase their familiarity with the work culture landscape.
