Hi, I'm Dmytro Shvets, your host at The Start Global Insights, where I interview experts
from different countries about local business secrets and international expansion experience.
Today we will talk about the Kingdom of Saudi Arabia and my guest today is Konstantin Gridin.
He has more than 20 years of experience in advising clients as a partner at CFC Big Ideas
and International Business Consultancy, where he is responsible for business development
in the UAE and Saudi Arabia.
Hi, Konstantin.
Hi, Dmitry.
Could you tell a bit more, how come that you ended up dealing with these interesting markets?
Yes, 27 years ago, almost, I made a very important decision of my life.
I started learning Arabic language at the Ukrainian University of International Relations.
So since then, I managed to study in Arab countries, to work with different Arab countries.
And it was mainly because of the language studies that drove me towards learning more
about the culture, willing more to do business with these countries, setting up an office
in Dubai, and then spending significant time in Saudi Arabia, where I am right now.
Can we start our conversation with this case that just happened when you have been running
to this interview?
What you should know not to be late to the meeting.
Absolutely.
Saudi Arabia has a very special culture that generally tolerates people being late.
For everyone being late, they said, inshallah.
So that means, by God's will, he was not on time for the meeting.
That's the general tradition.
But in the modern business world, obviously, people, if you are meeting a high profile
decision maker, you have to make it on time.
And one of the pieces of advice I was given in my recent videos on my own YouTube channel
that I started recently, that you need to keep a driver with you.
It's not advisable to have a taxi and get from meeting to a meeting by calling a taxi.
Of course, Uber is here.
In the local Uber also is here, and they're quite developed, but roads of Riyadh and other
big cities of Saudi Arabia like Jizya and the Mam are also very hectic during the rush
hours, especially now.
It's about two to three o'clock is when people are getting off their work and go to schools
to pick up their children.
And then they may come back to work an hour or two hours later.
So it's not a traditional nine to five working hours, but rather flexible working day, which
also includes time when they go and spend time with for their children during the day.
Coming back to the general understanding of the country, because it is quite mysterious
and closed to the Western world and the information that is in internet might be not exactly what
it is in reality.
From your experience, what steps should the foreign company or, for example, Ukrainian
company like Candy Producer or software development company make to expand its sales to Saudi?
What first things that they should keep in mind?
First things keeping in mind is that who are your target clients and which language do
they speak?
Because if you talk in business to business environment, like consultancies, companies
like we are, everybody's good in English, but if you're expanding with B2C products,
you have to understand your final customer who not have a good understanding of English.
That's the one.
And then if you don't speak Arabic, of course, you need to have someone who does speak Arabic
and also understand the nature of your product and help you advise on marketing.
This could be your local agent, of course, who speak English to communicate to you and
also have a good understanding of the local market.
But then there are also a few important rules how you have to select those agents.
This is quite important not to be mistaken by this because you actually invest all your
time and resources in this agent and you rely on them on making business on your behalf.
Yes, but generally people prefer not to invest time and especially money into agents.
So they rely on agents doing the business for them in exchange for some kind of commission.
On one part, that's the right thing to do.
This is what the agents are for.
On the other hand, you have to manage those agents and understand if they're doing well,
you have to continue the relationship, if they are not doing well, then you have to
have means and provisions in your contract to let them go.
While the nature of people who work as agents in Saudi Arabia is rather to request you an
exclusive agreement for a long period of time right when you start the relationship with
them.
And that's a mistake many companies I know have made, not only Ukrainian ones, but companies
generally coming from different parts of the globe.
They were impressed by someone's maybe a big name or connections or primarily big name
and connections.
I'm related to this famous business clan or even some people were part of the royal family,
which also has many members.
Some of them are more influential, the others are not.
They got into this trap of signing with them for two, three, sometimes five years, exclusive
agreement, giving them rights to represent them on the whole market of Saudi Arabia instead
of maybe selecting a niche to try with them first.
They ended up having nothing without being able even to fire that agent or cancel the
agreement.
That's the first thing everyone coming to Saudi Arabia, which looks for agents to have
in mind.
And before selecting an agent, you really need to test the waters yourself.
First of all, to understand if the agent is right, if the agent understands your niche
and product well, talk to different agents and compare their level of expertise and connections.
So all that work, you cannot delegate it to agents themselves.
That is something that you have to do by yourself before selecting the agents who would represent
you on the crowd.
And if I understood right, you need to make a test with them.
So you need to select some niche and some small period of time of agency.
Yeah, so generally these agents requesting exclusivity for one main reason.
So that if they represent you today and they are coming to you to a potential client, like
a big company, or they start doing business for you, so that tomorrow another agent does
not come to the same market, to the same client, and does the same to overlap their efforts.
That's a very justified request because many people in Saudi Arabia do trade or sales because
this is their most traditional business field, not the oil, which emerged only 70 years ago,
or not production, which also started emerging about 20 to 30 years ago.
Trade and mediatorship was the traditional business of the Saudi people for centuries.
And to be able to represent you effectively, they need to have some kind of exclusivity.
But the thing is, you don't have to give them exclusivity for the whole market.
For example, if someone is very good and has good relations in understanding, let's say,
of the telecom industry, you may give them the exclusive agreement for the telecom for
maybe three to six months for the first trial period.
If they are able to deliver what they promised, then you can extend for one more year.
So the more they deliver, the more you can extend the agreement.
And that also relates to regions.
For example, if someone is located in Riyadh and they know the market well, if this is
a B2C product that they have to distribute in the supermarkets, for example, the candies,
sweets, oil, honey, whatever, then you don't have to give them exclusivity for the whole
Saudi Arabia, which is three times bigger than Ukraine, which is the biggest country
in Europe.
So basically, you have to be smart and cautious when managing your agents network, whom you
definitely need on the local market, but again, have to manage them.
Clear.
So coming back to the steps.
The first step is to understand your client.
So you are either selecting the B2C or B2B and then the language and understand.
So this is like actually any market that you are entering in.
So you need to understand your client.
So there is not much difference, but when it comes to agents, Saudi Arabia is very special.
So you'll need to learn from distributors, but their requests may be kind of different
from what the agents in other countries are requesting.
Okay, clear.
So you identified your clients.
You understood that it is this segment, for example, the B2B segment.
So you are selling to companies.
What is your next step?
What I mean by the process of identification.
So identifying the customer is not just finding them on the map or finding them on the list
of some companies.
By identifying the customer, it means you have already talked with them.
You send them a proposal.
You got feedback.
And those from whom you got the best feedback are probably your ideal customer.
You adjust your proposal.
You come back to them.
And basically the process from identification of the ideal customer to selling, there is
no clear border when the one process end and then the other process starts.
They all make part of the same process when you start approach someone until you finally
close a deal.
And there are many issues that come up along the way from setting the right price, terms
and conditions that come from both physical goods or B2C products and B2B from setting
the right price, the TNC that you work with your distributors or with your customers directly
and ending up with payment terms, delivery terms and so on.
You are starting all of that by doing or learning by doing business.
Learning by doing.
So identifying clients and investigating the country and the market at the same time.
How easy it is now to find clients?
Are there any open source databases or are they active on LinkedIn?
How do you approach the market?
B2B providers are present on LinkedIn.
I wouldn't say that they are more active on LinkedIn than Europeans or Americans.
I would say the biggest social network in Saudi Arabia is Twitter.
They discuss social issues, sports.
Of course, they don't discuss politics internally because this is a monarchy.
They watch a lot of videos on YouTube.
If you're trying to reach the B2C customers, Twitter and YouTube and Instagram are the
best social media.
If you're trying to reach the B2B customers, LinkedIn is the best as everywhere.
What about the trade shows and exhibitions?
Are they still working?
Is it worth going there?
Absolutely.
They are working and I would say they are working like never before.
So today is the third day of LEAP, the tech conference and exhibition that claims to be
the most attended tech event worldwide.
That's one example.
Last week it was the Big 5 Construct exhibition, which is a replication of the Big 5 Construct
exhibition in Dubai.
It's gaining traction year by year.
A few years ago they started, there was a really small exhibition and now the focus
of attention of the construction industry is shifting towards Saudi Arabia big time
and a lot of companies are coming to get their new business.
So if you are attending an exhibition, it could be hard for you to get your head around
what you're going to do because if you try attending an exhibition and you try to sell
your product to someone exhibiting there, to me that's a waste of time.
But if you invest in the booth and you do it the right way and your value proposition
and right, you may see many customers, that's one thing, and many people who are coming
as your potential agents to represent you.
So instead of looking for those agents online and asking if someone is ready to represent
you, you would rather see many people coming if you invest in a booth at a local trade
fair.
Coming back to the lead generation, so imagine that we will have a company that is not having
any network in Saudi.
So they are new to the market.
How would you advise them to find clients apart from the expo, for example?
Yeah, so the traditional lead generation methods work in Saudi as well, like they are in other
countries, though my observation that those leads have a relatively lower rate of conversion
into customers.
So they generally like clicking ads, registering, dropping their details at landing pages.
But if your lead generation funnel includes some kind of like webinar or a personal meeting,
not many people show up at those meetings.
So it's just come, I've done lead generation in other regions as well.
And I can say that the show up rate is relatively lower.
Therefore, you just have to consider this when doing those lead generation, don't be
upset that, let's say, you got 10 leads and only one of them scheduled a call with you.
What's the cost of your lead generation that you have to take into account when building
your sales funnel?
And the only advice I can give here is just to improve your value proposition so that
the number of leads will get higher and then the conversion rate will also be higher as
well.
How do you understand the value of position is correct and chosen?
How do you investigate that prior to marketing campaign?
There is no way to investigate it prior to marketing campaign.
Then you start the marketing campaign, you do the first test, you see the feedback.
The only chance to investigate or validate those ideas is to talk to people you already
know.
This is, let's say, this is my competitive advantage compared to someone who is just
doing an online campaign sitting outside of the country without knowing anyone.
Before doing that campaign, I'm, of course, checking out with my contacts who can give
me advice whether this product is interesting to them or not.
Then based on that feedback, I start building the online generation tools, landing pages
and sales funnel.
This is about the inbound lead generation.
Yes, when you are making a flow of potential clients to your account or to your landing
page, what about the outbound?
Is it possible to sell from scratch in Saudi by going to clients, making cold calls or
just visiting their offices?
Visiting their office without invitation, that's really hard.
If you just make a call myself, I had only one case when I sold through the cold call
in my 20 years of career.
Only one.
Then it is a very likely coincidence and one exception that only proves the rule.
They have to know about you before meeting you and probably know about your product before
they make a decision.
I would rather suggest finding a way to send them this information in the form of landing
page or the PDF file or any kind of proposal.
You mean by email?
Even by email, but also unsolicited email gives no trust.
You'd better do some more things on social media.
My advice and my own strategy, I myself minimize the time that I spend going to events.
I would rather maximize the time that I spend on doing content about myself or my product
or my client's products.
That pays off much better than you chasing clients.
You make clients that they will see your content and then you contact them?
Yes, they can see your content if it goes viral organically or they can see your content
if you pay for ads.
You can localize your content if you need it, especially when you're working on B2C
product.
You need to localize your value proposition and probably do something in the local language,
not only with people like myself who understand Arabic, but also with people on the ground
who speak Arabic throughout their life and who consume product locally so that they better
understand the local consumers.
In some cases, the localization of your product value proposition is needed.
In some cases, if you're targeting people who primarily speak English, you don't need
it.
At the end of the day, every product has its own customer journey.
There is a saying that, at least I've heard that, that before selling in Arabic Peninsula,
you need to drink tea with potential client for one year.
How true is that?
Yes, it was true five years ago and very true 10 years ago.
Why?
Because there was no social media.
The only way for a client to test you, to establish trust with you, was to go and drink
tea, to spend time, to see how you behave, how you talk, to know about your family, to
know more about your business.
Now the digital profiles that every one of us have and our companies have, they kind
of replace this long conversation and tea talks and other things.
Right now, you haven't established a public profile.
If you're very known overseas in your home country and you haven't established an English
profile digitally, you may save those months and years of drinking tea by going to business
straight away.
Yeah, so coming back to negotiations and negotiation culture, are there any tips and tricks that
you would advise to know while negotiating with your potential clients in Saudi Arabia?
First of all, that's a general rule that applies very much, I would say, to a big extent in
Saudi Arabia.
If you are impatient, don't show your impatience.
So you don't have to rush.
If someone wants to negotiate along with you, that means they simply have no urgent need
in your product.
The harder you're pushing, the less likely you get what you want in terms of price, in
terms of contract terms, in terms of time delivery and so on.
So it is a much better way to wait and look for another customer who has an urgent need
than pushing and following up and asking the feedback from the customers that don't have
that need.
So being patient, that's number one.
Second, the longer are the negotiations because negotiation is also part of your relationship
building.
You may have calls, you may have physical meetings, you may have email correspondence.
The longer they negotiate with you, the more likely they will sign with you.
Instead of spending the time that we talked about on tea and just knowing each other as
people, they may spend time with you, knowing you as a negotiator.
This is much better because you skip the social part of networking and you save time on that.
But your behavior in negotiation will affect how you go with them in business.
So don't show your impatience and don't rush with anything unless they want to do it.
And then when they can do it, they are willing to rush.
This is where you can catch your big fish.
How open you can be in this negotiation?
I mean, do they tend to have this hidden agenda or hide something and how open you can be
with negotiations with them?
Yes.
Saudis have a very important feature in their business culture.
They cannot say any unpleasant things straight to you in the face.
So if they, let's say, don't like your product, they can tell you tomorrow, inshallah.
Inshallah means by God's will.
And then they don't have intention to buy from you.
They may say, oh, maybe next month or maybe two months or maybe three months, whatever.
That means if they don't get back to you, don't push them.
Don't follow up too hard with them.
By saying tomorrow, they may have meant as just a polite no answer.
In terms of direct feedback on your product, that's the same thing.
They're unlikely to say any unpleasant things straight in the face to you.
You have to be ready for that and judge them not by the words, but by the actions.
If someone told you, oh, we're going to buy from you, don't take it by word.
Wait until they take an action.
Will they send you the contract?
Will they request a contract from you?
Will they ask you when are you going to deliver?
If they're not doing that, they probably have no intention to work with you or no intention
to work with you right now.
What about women in negotiations?
What is the attitude?
Because now I see a lot of my contacts and clients that they have women sending to sell
to Arabic countries and especially into Saudis.
Are there something that you should consider by doing that?
Because the role of women in Saudi Arabia has drastically changed in the last five years.
As you may know, in 2018, they were allowed to drive cars.
That was only one small change in the whole multitude of reforms and decisions that the
government made to advance the role of women in the society.
Even before the change of driving, it was quite okay or very normal to have women on
the other side of the negotiation table.
For someone who is European, you would be very surprised to see or sit across the table
with a woman who is wheeled.
You don't see her face and sometimes you may not see her eyes because their wheels, some
of their wheels cover their eyes as well.
But yesterday I was in an exhibition and an IBM stand and then a field woman just waved
me and approached me by herself to tell me about the new products of IBM in AI and machine
learning.
It was quite normal.
We connected on LinkedIn instantly.
I didn't see her face.
I only saw her eyes.
But it's very normal to talk to Saudi women in business.
It's very normal to have them on different positions.
It's very normal for foreign women to come to Saudi.
And I've heard a lot of feedback from foreign women that they feel much safer in Saudi Arabia
than in Europe or the United States in terms of their own personal safety.
I'm not talking about business.
Are there any rules that should be applied to European women coming to Saudi to negotiations
like wearing abaya or something like that?
Not necessarily.
That was a rule for wearing abayas also five years back, but that was abolished.
And usually you have to dress modestly.
That's the only thing.
Don't have a lot of body parts open, don't wear mini skirts and so on.
You may wear an abaya respecting local rules because still most of the local women still
wear an abaya even though it's not compulsory.
So don't hesitate if you have a talented woman who is willing to come to Saudi to send her.
You will have no regrets and she hopefully will have no regrets about that.
Okay, clear.
And just summarizing the part about negotiations, do you need to know something definitely and
consider while you are talking to your potential clients in Saudi?
They're very tolerant to different cultures as long as these cultures do not insult their
own traditions.
When it comes to my recommendations, I would strongly advise not to tell a lot of local
jokes because they may not understand.
Don't speak about politics, especially internal politics in any country you're visiting because
you may not understand all the nuances.
Also, don't talk about things that are sinful in Saudi Arabia like women, alcohol, pork.
Don't tell any jokes about that.
Okay, so religion still influences a lot the life in the country.
Absolutely.
This is one of the most religious societies in the world that I have seen.
Despite the religious rules being eased, not compulsory to wear an abaya, they also two
years ago abolished the prayer times which before were used to stop any business.
At these times, they had to close their doors and they all had to go for praying.
A lot of religious rules have been abolished but still, in their mentality, religion plays
a big role.
When people still go to mosque, they still wake up at 4 a.m., 4.30 to pray at the sunrise.
They respect the fasting.
They do fast in Ramadan.
They do celebrate Eid.
They are very close in their families because every family has, if they have, let's say,
father and mother living separately or in another city, they are visiting their families
very often.
That's a rule and a tradition.
Also, arranged marriages are still the most common in Saudi Arabia.
Not just you meet someone and fall in love and then you introduce it to your mother and
father.
No, you do it the other way around.
You first go to the mother or to the father and then you may meet the daughter sometimes.
Okay.
Maybe the last question to you and what would you advise?
One main advice for Ukrainian businesses that are now looking to expand globally and consider
Saudi as one of the destinations.
I would advise first, build your digital profile.
It will help you not only in Saudi Arabia but in any countries that you are going to
expand to.
Second, have patience.
Don't rush with follow-ups and anything and think long term.
Great.
Thanks a lot again and thank you for sharing your experience.
Thanks Dmytro.