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Hi, I'm Dmytro Shvets, your host at The Start Global Insights, where I interview experts

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from different countries about local business secrets and international expansion experience.

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Today we will talk about the Kingdom of Saudi Arabia and my guest today is Konstantin Gridin.

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He has more than 20 years of experience in advising clients as a partner at CFC Big Ideas

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and International Business Consultancy, where he is responsible for business development

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in the UAE and Saudi Arabia.

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Hi, Konstantin.

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Hi, Dmitry.

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Could you tell a bit more, how come that you ended up dealing with these interesting markets?

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Yes, 27 years ago, almost, I made a very important decision of my life.

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I started learning Arabic language at the Ukrainian University of International Relations.

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So since then, I managed to study in Arab countries, to work with different Arab countries.

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And it was mainly because of the language studies that drove me towards learning more

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about the culture, willing more to do business with these countries, setting up an office

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in Dubai, and then spending significant time in Saudi Arabia, where I am right now.

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Can we start our conversation with this case that just happened when you have been running

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to this interview?

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What you should know not to be late to the meeting.

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Absolutely.

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Saudi Arabia has a very special culture that generally tolerates people being late.

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For everyone being late, they said, inshallah.

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So that means, by God's will, he was not on time for the meeting.

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That's the general tradition.

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But in the modern business world, obviously, people, if you are meeting a high profile

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decision maker, you have to make it on time.

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And one of the pieces of advice I was given in my recent videos on my own YouTube channel

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that I started recently, that you need to keep a driver with you.

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It's not advisable to have a taxi and get from meeting to a meeting by calling a taxi.

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Of course, Uber is here.

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In the local Uber also is here, and they're quite developed, but roads of Riyadh and other

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big cities of Saudi Arabia like Jizya and the Mam are also very hectic during the rush

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hours, especially now.

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It's about two to three o'clock is when people are getting off their work and go to schools

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to pick up their children.

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And then they may come back to work an hour or two hours later.

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So it's not a traditional nine to five working hours, but rather flexible working day, which

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also includes time when they go and spend time with for their children during the day.

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Coming back to the general understanding of the country, because it is quite mysterious

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and closed to the Western world and the information that is in internet might be not exactly what

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it is in reality.

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From your experience, what steps should the foreign company or, for example, Ukrainian

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company like Candy Producer or software development company make to expand its sales to Saudi?

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What first things that they should keep in mind?

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First things keeping in mind is that who are your target clients and which language do

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they speak?

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Because if you talk in business to business environment, like consultancies, companies

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like we are, everybody's good in English, but if you're expanding with B2C products,

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you have to understand your final customer who not have a good understanding of English.

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That's the one.

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And then if you don't speak Arabic, of course, you need to have someone who does speak Arabic

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and also understand the nature of your product and help you advise on marketing.

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This could be your local agent, of course, who speak English to communicate to you and

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also have a good understanding of the local market.

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But then there are also a few important rules how you have to select those agents.

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This is quite important not to be mistaken by this because you actually invest all your

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time and resources in this agent and you rely on them on making business on your behalf.

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Yes, but generally people prefer not to invest time and especially money into agents.

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So they rely on agents doing the business for them in exchange for some kind of commission.

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On one part, that's the right thing to do.

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This is what the agents are for.

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On the other hand, you have to manage those agents and understand if they're doing well,

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you have to continue the relationship, if they are not doing well, then you have to

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have means and provisions in your contract to let them go.

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While the nature of people who work as agents in Saudi Arabia is rather to request you an

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exclusive agreement for a long period of time right when you start the relationship with

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them.

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And that's a mistake many companies I know have made, not only Ukrainian ones, but companies

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generally coming from different parts of the globe.

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They were impressed by someone's maybe a big name or connections or primarily big name

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and connections.

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I'm related to this famous business clan or even some people were part of the royal family,

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which also has many members.

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Some of them are more influential, the others are not.

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They got into this trap of signing with them for two, three, sometimes five years, exclusive

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agreement, giving them rights to represent them on the whole market of Saudi Arabia instead

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of maybe selecting a niche to try with them first.

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They ended up having nothing without being able even to fire that agent or cancel the

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agreement.

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That's the first thing everyone coming to Saudi Arabia, which looks for agents to have

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in mind.

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And before selecting an agent, you really need to test the waters yourself.

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First of all, to understand if the agent is right, if the agent understands your niche

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and product well, talk to different agents and compare their level of expertise and connections.

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So all that work, you cannot delegate it to agents themselves.

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That is something that you have to do by yourself before selecting the agents who would represent

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you on the crowd.

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And if I understood right, you need to make a test with them.

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So you need to select some niche and some small period of time of agency.

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Yeah, so generally these agents requesting exclusivity for one main reason.

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So that if they represent you today and they are coming to you to a potential client, like

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a big company, or they start doing business for you, so that tomorrow another agent does

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not come to the same market, to the same client, and does the same to overlap their efforts.

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That's a very justified request because many people in Saudi Arabia do trade or sales because

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this is their most traditional business field, not the oil, which emerged only 70 years ago,

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or not production, which also started emerging about 20 to 30 years ago.

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Trade and mediatorship was the traditional business of the Saudi people for centuries.

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And to be able to represent you effectively, they need to have some kind of exclusivity.

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But the thing is, you don't have to give them exclusivity for the whole market.

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For example, if someone is very good and has good relations in understanding, let's say,

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of the telecom industry, you may give them the exclusive agreement for the telecom for

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maybe three to six months for the first trial period.

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If they are able to deliver what they promised, then you can extend for one more year.

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So the more they deliver, the more you can extend the agreement.

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And that also relates to regions.

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For example, if someone is located in Riyadh and they know the market well, if this is

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a B2C product that they have to distribute in the supermarkets, for example, the candies,

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sweets, oil, honey, whatever, then you don't have to give them exclusivity for the whole

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Saudi Arabia, which is three times bigger than Ukraine, which is the biggest country

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in Europe.

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So basically, you have to be smart and cautious when managing your agents network, whom you

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definitely need on the local market, but again, have to manage them.

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Clear.

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So coming back to the steps.

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The first step is to understand your client.

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So you are either selecting the B2C or B2B and then the language and understand.

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So this is like actually any market that you are entering in.

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So you need to understand your client.

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So there is not much difference, but when it comes to agents, Saudi Arabia is very special.

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So you'll need to learn from distributors, but their requests may be kind of different

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from what the agents in other countries are requesting.

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Okay, clear.

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So you identified your clients.

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You understood that it is this segment, for example, the B2B segment.

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So you are selling to companies.

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What is your next step?

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What I mean by the process of identification.

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So identifying the customer is not just finding them on the map or finding them on the list

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of some companies.

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By identifying the customer, it means you have already talked with them.

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You send them a proposal.

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You got feedback.

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And those from whom you got the best feedback are probably your ideal customer.

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You adjust your proposal.

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You come back to them.

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And basically the process from identification of the ideal customer to selling, there is

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no clear border when the one process end and then the other process starts.

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They all make part of the same process when you start approach someone until you finally

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close a deal.

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And there are many issues that come up along the way from setting the right price, terms

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and conditions that come from both physical goods or B2C products and B2B from setting

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the right price, the TNC that you work with your distributors or with your customers directly

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and ending up with payment terms, delivery terms and so on.

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You are starting all of that by doing or learning by doing business.

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Learning by doing.

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So identifying clients and investigating the country and the market at the same time.

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How easy it is now to find clients?

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Are there any open source databases or are they active on LinkedIn?

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How do you approach the market?

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B2B providers are present on LinkedIn.

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I wouldn't say that they are more active on LinkedIn than Europeans or Americans.

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I would say the biggest social network in Saudi Arabia is Twitter.

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They discuss social issues, sports.

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Of course, they don't discuss politics internally because this is a monarchy.

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They watch a lot of videos on YouTube.

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If you're trying to reach the B2C customers, Twitter and YouTube and Instagram are the

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best social media.

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If you're trying to reach the B2B customers, LinkedIn is the best as everywhere.

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What about the trade shows and exhibitions?

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Are they still working?

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Is it worth going there?

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Absolutely.

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They are working and I would say they are working like never before.

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So today is the third day of LEAP, the tech conference and exhibition that claims to be

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the most attended tech event worldwide.

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That's one example.

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Last week it was the Big 5 Construct exhibition, which is a replication of the Big 5 Construct

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exhibition in Dubai.

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It's gaining traction year by year.

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A few years ago they started, there was a really small exhibition and now the focus

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of attention of the construction industry is shifting towards Saudi Arabia big time

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and a lot of companies are coming to get their new business.

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So if you are attending an exhibition, it could be hard for you to get your head around

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what you're going to do because if you try attending an exhibition and you try to sell

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your product to someone exhibiting there, to me that's a waste of time.

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But if you invest in the booth and you do it the right way and your value proposition

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and right, you may see many customers, that's one thing, and many people who are coming

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as your potential agents to represent you.

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So instead of looking for those agents online and asking if someone is ready to represent

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you, you would rather see many people coming if you invest in a booth at a local trade

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fair.

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Coming back to the lead generation, so imagine that we will have a company that is not having

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any network in Saudi.

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So they are new to the market.

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How would you advise them to find clients apart from the expo, for example?

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Yeah, so the traditional lead generation methods work in Saudi as well, like they are in other

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countries, though my observation that those leads have a relatively lower rate of conversion

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into customers.

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So they generally like clicking ads, registering, dropping their details at landing pages.

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But if your lead generation funnel includes some kind of like webinar or a personal meeting,

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not many people show up at those meetings.

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So it's just come, I've done lead generation in other regions as well.

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And I can say that the show up rate is relatively lower.

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Therefore, you just have to consider this when doing those lead generation, don't be

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upset that, let's say, you got 10 leads and only one of them scheduled a call with you.

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What's the cost of your lead generation that you have to take into account when building

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your sales funnel?

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And the only advice I can give here is just to improve your value proposition so that

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the number of leads will get higher and then the conversion rate will also be higher as

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well.

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How do you understand the value of position is correct and chosen?

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How do you investigate that prior to marketing campaign?

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There is no way to investigate it prior to marketing campaign.

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Then you start the marketing campaign, you do the first test, you see the feedback.

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The only chance to investigate or validate those ideas is to talk to people you already

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know.

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This is, let's say, this is my competitive advantage compared to someone who is just

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doing an online campaign sitting outside of the country without knowing anyone.

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Before doing that campaign, I'm, of course, checking out with my contacts who can give

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me advice whether this product is interesting to them or not.

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Then based on that feedback, I start building the online generation tools, landing pages

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and sales funnel.

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This is about the inbound lead generation.

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Yes, when you are making a flow of potential clients to your account or to your landing

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page, what about the outbound?

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Is it possible to sell from scratch in Saudi by going to clients, making cold calls or

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just visiting their offices?

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Visiting their office without invitation, that's really hard.

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If you just make a call myself, I had only one case when I sold through the cold call

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in my 20 years of career.

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Only one.

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Then it is a very likely coincidence and one exception that only proves the rule.

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They have to know about you before meeting you and probably know about your product before

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they make a decision.

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I would rather suggest finding a way to send them this information in the form of landing

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page or the PDF file or any kind of proposal.

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You mean by email?

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Even by email, but also unsolicited email gives no trust.

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You'd better do some more things on social media.

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My advice and my own strategy, I myself minimize the time that I spend going to events.

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I would rather maximize the time that I spend on doing content about myself or my product

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or my client's products.

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That pays off much better than you chasing clients.

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You make clients that they will see your content and then you contact them?

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Yes, they can see your content if it goes viral organically or they can see your content

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if you pay for ads.

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You can localize your content if you need it, especially when you're working on B2C

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product.

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You need to localize your value proposition and probably do something in the local language,

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not only with people like myself who understand Arabic, but also with people on the ground

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who speak Arabic throughout their life and who consume product locally so that they better

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understand the local consumers.

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In some cases, the localization of your product value proposition is needed.

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In some cases, if you're targeting people who primarily speak English, you don't need

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it.

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At the end of the day, every product has its own customer journey.

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There is a saying that, at least I've heard that, that before selling in Arabic Peninsula,

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you need to drink tea with potential client for one year.

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How true is that?

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Yes, it was true five years ago and very true 10 years ago.

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Why?

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Because there was no social media.

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The only way for a client to test you, to establish trust with you, was to go and drink

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tea, to spend time, to see how you behave, how you talk, to know about your family, to

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know more about your business.

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Now the digital profiles that every one of us have and our companies have, they kind

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of replace this long conversation and tea talks and other things.

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Right now, you haven't established a public profile.

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If you're very known overseas in your home country and you haven't established an English

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profile digitally, you may save those months and years of drinking tea by going to business

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straight away.

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Yeah, so coming back to negotiations and negotiation culture, are there any tips and tricks that

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you would advise to know while negotiating with your potential clients in Saudi Arabia?

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First of all, that's a general rule that applies very much, I would say, to a big extent in

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Saudi Arabia.

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If you are impatient, don't show your impatience.

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So you don't have to rush.

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If someone wants to negotiate along with you, that means they simply have no urgent need

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in your product.

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The harder you're pushing, the less likely you get what you want in terms of price, in

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terms of contract terms, in terms of time delivery and so on.

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So it is a much better way to wait and look for another customer who has an urgent need

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than pushing and following up and asking the feedback from the customers that don't have

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that need.

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So being patient, that's number one.

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Second, the longer are the negotiations because negotiation is also part of your relationship

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building.

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You may have calls, you may have physical meetings, you may have email correspondence.

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The longer they negotiate with you, the more likely they will sign with you.

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Instead of spending the time that we talked about on tea and just knowing each other as

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people, they may spend time with you, knowing you as a negotiator.

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This is much better because you skip the social part of networking and you save time on that.

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But your behavior in negotiation will affect how you go with them in business.

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So don't show your impatience and don't rush with anything unless they want to do it.

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And then when they can do it, they are willing to rush.

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This is where you can catch your big fish.

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How open you can be in this negotiation?

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I mean, do they tend to have this hidden agenda or hide something and how open you can be

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with negotiations with them?

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Yes.

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Saudis have a very important feature in their business culture.

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They cannot say any unpleasant things straight to you in the face.

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So if they, let's say, don't like your product, they can tell you tomorrow, inshallah.

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Inshallah means by God's will.

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And then they don't have intention to buy from you.

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They may say, oh, maybe next month or maybe two months or maybe three months, whatever.

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That means if they don't get back to you, don't push them.

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Don't follow up too hard with them.

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By saying tomorrow, they may have meant as just a polite no answer.

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In terms of direct feedback on your product, that's the same thing.

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They're unlikely to say any unpleasant things straight in the face to you.

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You have to be ready for that and judge them not by the words, but by the actions.

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If someone told you, oh, we're going to buy from you, don't take it by word.

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Wait until they take an action.

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Will they send you the contract?

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Will they request a contract from you?

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Will they ask you when are you going to deliver?

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If they're not doing that, they probably have no intention to work with you or no intention

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to work with you right now.

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What about women in negotiations?

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What is the attitude?

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Because now I see a lot of my contacts and clients that they have women sending to sell

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to Arabic countries and especially into Saudis.

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Are there something that you should consider by doing that?

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Because the role of women in Saudi Arabia has drastically changed in the last five years.

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As you may know, in 2018, they were allowed to drive cars.

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That was only one small change in the whole multitude of reforms and decisions that the

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government made to advance the role of women in the society.

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Even before the change of driving, it was quite okay or very normal to have women on

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the other side of the negotiation table.

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For someone who is European, you would be very surprised to see or sit across the table

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with a woman who is wheeled.

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You don't see her face and sometimes you may not see her eyes because their wheels, some

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of their wheels cover their eyes as well.

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But yesterday I was in an exhibition and an IBM stand and then a field woman just waved

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me and approached me by herself to tell me about the new products of IBM in AI and machine

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learning.

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It was quite normal.

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We connected on LinkedIn instantly.

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I didn't see her face.

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I only saw her eyes.

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But it's very normal to talk to Saudi women in business.

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It's very normal to have them on different positions.

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It's very normal for foreign women to come to Saudi.

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And I've heard a lot of feedback from foreign women that they feel much safer in Saudi Arabia

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than in Europe or the United States in terms of their own personal safety.

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I'm not talking about business.

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Are there any rules that should be applied to European women coming to Saudi to negotiations

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like wearing abaya or something like that?

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Not necessarily.

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That was a rule for wearing abayas also five years back, but that was abolished.

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And usually you have to dress modestly.

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That's the only thing.

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Don't have a lot of body parts open, don't wear mini skirts and so on.

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You may wear an abaya respecting local rules because still most of the local women still

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wear an abaya even though it's not compulsory.

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So don't hesitate if you have a talented woman who is willing to come to Saudi to send her.

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You will have no regrets and she hopefully will have no regrets about that.

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Okay, clear.

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And just summarizing the part about negotiations, do you need to know something definitely and

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consider while you are talking to your potential clients in Saudi?

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They're very tolerant to different cultures as long as these cultures do not insult their

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own traditions.

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When it comes to my recommendations, I would strongly advise not to tell a lot of local

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jokes because they may not understand.

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Don't speak about politics, especially internal politics in any country you're visiting because

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you may not understand all the nuances.

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Also, don't talk about things that are sinful in Saudi Arabia like women, alcohol, pork.

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Don't tell any jokes about that.

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Okay, so religion still influences a lot the life in the country.

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Absolutely.

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This is one of the most religious societies in the world that I have seen.

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Despite the religious rules being eased, not compulsory to wear an abaya, they also two

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years ago abolished the prayer times which before were used to stop any business.

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At these times, they had to close their doors and they all had to go for praying.

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A lot of religious rules have been abolished but still, in their mentality, religion plays

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a big role.

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When people still go to mosque, they still wake up at 4 a.m., 4.30 to pray at the sunrise.

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They respect the fasting.

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They do fast in Ramadan.

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They do celebrate Eid.

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They are very close in their families because every family has, if they have, let's say,

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father and mother living separately or in another city, they are visiting their families

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very often.

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That's a rule and a tradition.

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Also, arranged marriages are still the most common in Saudi Arabia.

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Not just you meet someone and fall in love and then you introduce it to your mother and

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father.

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No, you do it the other way around.

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You first go to the mother or to the father and then you may meet the daughter sometimes.

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Okay.

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Maybe the last question to you and what would you advise?

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One main advice for Ukrainian businesses that are now looking to expand globally and consider

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Saudi as one of the destinations.

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I would advise first, build your digital profile.

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It will help you not only in Saudi Arabia but in any countries that you are going to

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expand to.

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Second, have patience.

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Don't rush with follow-ups and anything and think long term.

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Great.

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Great.

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Thanks a lot again and thank you for sharing your experience.

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Thanks Dmytro.