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In this page: Market Access Procedures | Distributing a Product

 

Market Access Procedures

 
 

Customs Procedures

Import Procedures
The following is the list of documents required for customs clearance in Saudi Arabia. The list subject to modification. Please visit the website of the Saudi Ministry of Commerce for future updates.

  • Commercial Invoice, indicating the country of origin, name of the carrier, brand and quantity of goods, and description of the goods including weight and value.
  • Certificate of origin, authenticated by a local chamber of commerce and translated into Arabic.
  • A bill of lading (or airway bill)
  • A steamship (or airline) company certificate, which is an Appended Declaration to Bill of Lading or airway bill) should be issued by the steamship (or airlines) company in at least one original
  • An insurance certificate (if goods are insured by the exporter)
  • Packing List

Saudi Arabian Standard Organizations (SASO) is the regulatory authority controls quality of goods imported into Saudi Arabia. The conformity certificate is required to ensure all imported goods conform with Saudi standards

For more information, please visit the website of the Saudi Customs Authority.

Specific Import Procedures
Depending on the nature of exported goods to Saudi Arabia, or according to a request from the Saudi importer, certain documents may also be required.
Requirements for labeling food and food products sold in the Kingdom of Saudi Arabia are determined by the SASO. Exporters of these products should must provide the following certificates: Food Manufacturer’s Ingredients Certificate, Consumer Protection Certificate and Price List.
In addition to the general shipping documents all meat shipments must be accompanied by the following certificates: a certificate of "Halal" meat and an Official Health Certificate.
The Health Certificate is required for all exports to Saudi Arabia of all kinds of meats, (including poultry and seafood), meat products, livestock, vegetables, fruits, and human blood, attesting to the fact that they are free from pests and/or disease.
Furthermore, the exporter of seeds or grains must provide the following authenticated certificates: Certificate of Inspection, Phytosanitary Certificate, Seed Analysis Certificate, Certificate of Weight.
Other special shipping documents are required for shipment of livestock, pets, horses, importation of fruit and vegetables, electrical appliances and equipment, motor vehicles and medicines and pharmaceuticals.
Importing Samples
Samples for display in shows/exhibitions are exempt from Saudi labelling and shelf life regulations, but are subject to inspection at ports of entry. Samples must contain a commercial invoice specifying that the product is not for sale and has no commercial value. Saudi Arabia will adopt soon the ATA (Temporary Admission) carnet
 

To go further, check out our service Import Controls and Export Controls.

 
 

Customs Duties and Taxes on Imports

Customs threshold (from which tariffs are required)
No customs threshold.
Average Customs Duty (Excluding Agricultural Products)
4.85%
Products Having a Higher Customs Tariff
On May 27, 2020, the Saudi Customs Authority released its amended Harmonized Tariff Schedule to increase various customs duty rates effective June 10, 2020. Among the products affected by the rate changes there are: food and Beverages (from 7% to 25%), mineral products (15%), chemicals (from 5.5% to 6.5%), textiles fabrics and clothing (from 10% to 15%), plastic and rubber items (from 6.5% to 15%), building materials (up to 15%), metal products (20%), machinery, equipment and parts (up to 15%) and finally motor vehicles and spare parts (15%).
In April 2017, the country began levying a 50 percent excise tax on soft drinks and a 100 percent tax on cigarettes, tobacco products, and energy drinks.
Preferential Rates
Certain goods are exempt from the common external tariff.  Imports of rice, baby milk and animal feed are subsidized; while coffee, tea and fresh red meat enter the country duty-free.  Saudi Arabia has no tariff rate quota (TRQ) requirement.
Moreover Saudi Arabia has signed various trade agreements (especially with the Gulf Co-operation Council – GCC) which allow the member countries total exemption of the customs duties. In addition, for certain Muslim countries of the League of Arab States (Jordan, Kuwait, Libya, Morocco and Tunisia) the customs duty has been reduced to 10%.
Customs Classification
Saudi Arabia applies the Harmonised Customs System.
Method of Calculation of Duties
The customs duties are calculated Ad valorem on the C.I.F value.

However, a limited number of items are subject to customs duties calculated on the basis of metric weight or capacity, rather than ad Valorem. The rates for these items are fairly low.

Import Taxes (Excluding Consumer Taxes)
None
 

List of tariffs and local taxes that apply to your product on our service Customs Duties and Local Taxes.

 

Labeling and Packaging Rules

Packaging
The packaging standards are set by Saudi Arabian Standards Organization - SASO, which are of international standards. The Ministry of Commerce and Industry implements SASO guidelines through its inspection and test laboratories at ports of entry in Saudi Arabia.
Languages Permitted on Packaging and Labeling
Arabic labelling is required on all consumer products. Samples imported must be labeled at least in English.
Unit of Measurement
All imported goods as well as transport documents must show metric units of measurement and weight.
Mark of Origin "Made In"
Obligatory
Labeling Requirements

Labelling requires information such as product name, country of origin, producer's name and address, production and expiry/use by dates, in Arabic and English languages.

Specific Regulations
Labelling is particularly important for companies marketing food products, personal care products, healthcare products, and pharmaceuticals.

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Distributing a Product

 

Distribution Network

Types of Outlet

Hypermarkets
A hypermarket is a superstore with large retail facility, thus combining a supermarket and a department store. Hypermarkets sell a wide range of products under one roof, ranging from grocery to general merchandise
Hyper Panda,
Othaim Supermarket
Danube Supermarket
Bin Dawood Supermarket
Carrefour Saudi Arabia
Al Sadhan Supermarket
Nesto Hypermarket
Lulu
Manual Hypermarkets
Supermarkets
These are large scale retail shops operating at lower costs, selling at lower price; and offering a wide variety of consumer goods of regular use such as food items.
Panda
Othaim Supermarket
Farm Supermarket
Al Raya Supermarket
Tamimi Supermarket
Danube Supermarket
Bin Dawood Supermarket
Balsharaf Supermarket
Al Sadhan Supermarket
Convenience stores

Pandati Convenience
Department Store
A department store is a retail establishment which specialises in selling a wide range of products without a single predominant merchandise line. Department stores usually sell products including apparel, furniture, appliances, electronics, and additionally select other lines of products such as paint, hardware, toiletries, cosmetics, photographic equipment, jewelery, toys, and sporting goods.
Bin Dawood, Harvey Nichols, Saks Fifth Avenue
Shopping Malls

Khurais Plaza, Riyadh Sahara Mall, Al-Rashid mall
Specialised Store

Paris Gallery
Corner grocery stores (called 'Bakalahs')
These are small stores or shops often located alongside residential areas, busy roads, or at corners and gas/petrol stations. They sell all types of general consumer goods of regular use like bread, butter, paper and pencils, etc. Some of them may remain open 24/7.
 

Evolution of the Retail Sector

Growth and Regulation
Saudi Arabia is the largest consumer market in the GGC countries. Despite the fall in oil prices, the market in Saudi Arabia has been continuing to enjoy a robust growth, due to its solid base of domestic consumers and growing youth population with high disposable income, the rising level of disposable income (higher than the global average), and high consumer confidence index. In 2020, total retail sales were estimated at approximately USD 37 billion (USDA). Euromonitor expects Saudi Arabia’s retail market to grow by about 20% by 2022 (Retail Gazette).
Consumer spending increased by 10% in February 2022 compared to the previous month, Saudi consumers spending about SR 88.5 billion (SAMA). Fitch Solutions forecasts real household spending to post growth of 3.5% in 2022.

The government has moved on in order not to rely solely on revenues from fuel as the global energy market dynamics is changing and demographics of the country is expected to enter the transition phase with an increasing number of working-age Saudi Arabians by 2030. One of the main characteristics of the retail market is the high demand for luxury products.
Saudi nationals make up 48.4% of the retail workforce, with just under half of these employees, some 125,000, being women. This strong representation in the retail workforce helped take the overall Saudi female economic participation rate to 19.7% as of the end of September 2019 (SAMA).
There are three main commercially active regions in the Kingdom: the Western Region, with the city of Jeddah as the main commercial centre; the Central Region, including the capital Riyadh; and the Eastern Province, where the oil and gas industry is concentrated.
In terms of product category, food & beverages account for a nearly one-third market and the segment is anticipated to maintain its market dominance in the short-term.
Some of the major players operating in Saudi Arabia retail market are Panda Retail Co (Savola Group), Abdullah Al Othaim Markets, BinDaWood Holding, Farm Superstores, Al Raya Supermarkets, Tamimi Super Markets, Lulu Group International (EMKE Group) and Carrefour Saudi Arabia (USDA).
Market share
The Saudi food retail sector is increasingly competitive, marked by the presence of domestic, regional and international outlets. The structure of retailing is characterized by the presence of supermarkets, hypermarkets and other convenience-oriented sales channels. The number of supermarkets and hypermarkets in Saudi Arabia increased by more than double between 2011 and 2016. In the fragmented domestic retail market, there is high pressure to innovate. Due to the recent government decision to reduce the share of the Saudi labor force consisting of low-skilled expatriate workers, relative margins have decreased, therefore driving up wage bills. This has disproportionately affected independent and convenience retailers (bakalas) and creates strong pressure to realize cost savings in other areas of operation without compromising consumer experience.
According to USDA, the total number of supermarkets and hypermarkets in Saudi Arabia was estimated at 1,255 stores in 2016 (latest data available). This is a relatively small number, and accounts for only 2.9% of the retail outlets. However, this 2.9% of outlets accounted for approximately 37% of total grocery sales in Saudi Arabia. They are mostly located in the three major cites of the Kingdom (Riyadh, Jeddah and Dammam).
Some of the major players operating in Saudi Arabia retail market are Panda Retail Co (Savola Group), Abdullah Al Othaim Markets, BinDaWood Holding, Farm Superstores, Al Raya Supermarkets, Tamimi Super Markets, Lulu Group International (EMKE Group) and Carrefour Saudi Arabia (USDA).
Traditional retailers and independent grocers collectively account for the large majority of sales in Saudi Arabia. Bakalas are well-suited to cater to day-to-day consumer needs, particularly in terms of small quantity purchases. Prices in bakalas tend to be high, but they maintain an advantage over supermarkets by providing different services to shoppers looking to buy quickly a few items.
Retail Sector Organisations
Saudi Arabia Grocery Association
 

E-commerce

Internet access
Saudi Arabia, with its 33.6 million inhabitants, has the third largest population in the Middle East after Iran and Iraq. It also has the second largest internet user population that reaches 24.1 million (Internet World Stats), with a penetration rate well above the regional average at 72% (as opposed to 57.8%). Moreover, Saudi internet users account for 16.4% of total digitally connected populations in the Middle East. Internet penetration growth is expected to grow at a rate of 6.9% to 73.5% by 2022. Saudi Arabia has a high smartphone penetration rate (65.2%), which is nonetheless behind regional leaders such the UAE (78%) and Israel (74%). Smartphone penetration is forecast to grow only slightly in the four next years to 66.7% (Eshop World). As far as search engines are concerned, Google dominates the industry with a 97.1% market share, followed by Bing at 1.3% and Yahoo at 1.19% (Statcounter).
E-commerce market
The Saudi e-commerce market has enjoyed steady growth in recent years, with turnover increasing by 11% on average, according to the Ecommerce Foundation. Total e-commerce revenue across all product categories was US$ 6.13 billion in 2017, and is expected to grow to US$ 9.41 billion by 2021, according to Statista. The market, with its 12.94 million users (50% of all internet users), is one of the largest across the MENA region and is expected to continue its growth in the upcoming years, albeit at a slower rate than the global average (12.5% as opposed to 24.8% worldwide). 6.34 million additional Internet users are expected to shop online, putting the number of e-shoppers at 19.28 million by 2022 (accounting for 54% of total population). With such a growth rate both in turnover and number of online shoppers, Saudi Arabia is expected to surpass the United Arab Emirates as the top e-commerce market in the Middle East. While Saudi Arabia ranks 46th on UNCTAD E-commerce Index worldwide, it has the third highest score in the Middle East after the UAE and Israel. Cross-border trade is significant, especially within the regional context, with UAE-based websites leading international shipments to Saudi Arabia. 65% of all online purchases were made from websites based in Gulf Cooperation Council countries and  Noon.com, based in the UAE but owned 50% by Saudi Arabia Public Investment Fund, launched a local version of its website in Saudi Arabia at the end of 2017 and is expected to contribute to the share of domestic online shopping. Souq.com (which was recently purchased by Amazon), as well as Amazon Global and Aliexpress are among the most visited e-commerce websites in Saudi Arabia. The market is dominated by big retail groups, as only 5% of SMEs use e-commerce in addition to traditional sales mediums, according to the Saudi Communications and Information Technology Commission.
Social media
Saudi Internet users are active on social media and spend on average 2 hours 55 minutes per day (behind the UAE and Israel that lead social media consumption in the region). Saudi Arabia has a total of nearly 19 million social media users (59% of total population and 79% of internet users) and 16 million of them also access their social media accounts via mobile (Hootsuite Survey 2017). Almost all social media users are reported to have a Facebook account (nearly 19 million) and 45% of them access the platform daily. As in most other GCC countries, WhatsApp is used by a large amount of internet users (88% of total - 21.2 million people). Twitter and Snapchat register their highest usage rates in Saudi Arabia across the MENA region, with 40% and 45% of social media consumers using these platforms. Twitter with 7.6 million users and Snapchat with 8.5 million. Despite decreasing popularity, the Japanese-owned Line is used by 20% of Internet users (4.8 million people), the highest rate by far in the Middle East, according to MidEast Media Survey 2017. Saudi social media users are among the most engaged ones in Arab countries, with 90% of all users posting messages or comments on social media and 88% via direct and instant messaging (second highest rate after the UAE).
 

Direct Selling

Evolution of the Sector
Saudi Arabia's direct selling industry used to be dominated by expatriate workers but has recently shifted due to the influx of Saudi women in 2017 (35% increase). Euromonitor International explains this trend through greater customer trust in Saudi counterparts than expatriate women. Furthermore, the Government implemented a monthly fee for expatriate workers and their families, leading to increased desertion rates from expats in the country (and hence, from the direct selling industry).

There is limited information on Saudi Arabia's direct selling market. The World Federation of Direct Selling Associations classifies them under "Other Middle East" (which excludes Israel and United Arab Emirates), calculating 2016 retail sales at USD 158 million, a 9.7% increase in sales and 247,000 independent representatives.

In specific, the Saudi Arabia industry grew 2% in 2017 but continues to face strong competition from store-based retailers. Food and drinks led this sector, especially bottled water. The Al Manhal Water Factory was the main direct seller in 2017. Its alliance with Nestlé SA and Nestlé Waters allows them to distribute the Nestle Pure Life brand. Oriflame, a beauty and personal care company, has considered launching a protein and nutrition powders. 
 
 

Commercial Intermediaries

Trading Companies
 
  • Type of Organization
In Saudi Arabia, it can take the shape of a Distributor or Agent. A distributor acts as an importer and typically purchases the product on his own account and stocks the products before selling it to the retailer or even to an end user.
Wholesalers
 
  • Type of Organization
There are two types of wholesalers:

- Import-export wholesalers. They are particularly useful for their logistic organisation, information processing, product promotion and selection.

- Normal wholesalers who mainly offer a logistic service, stocking goods so as to supply retailers, as they need them.

Useful Resources
Saudi Chamber of Commerce and Industry
Riyadh Chamber of Commerce and Industry
Jeddah Chamber of Commerce and Industry
Saudi Arabian General Investment Authority (SAGIA)
 

Using a Commercial Agent

The Advantages
Saudi law allows for companies to make direct sales to the private sector from outside of the Kingdom. But in practice, appointing an agent or distributor is the most common procedure for companies wishing to enter the Saudi market. Foreign companies need a Saudi agent to bid for Saudi government tenders since government purchasing is conducted by local tenders where only Saudi companies bid.
Where to Be Vigilant
A company should choose its agent carefully, because terminating or changing agents can be a difficult process and could lead to a tainted reputation of the firm in the tightly-knit Saudi market.
Elements of Motivation
Local agents are helpful in providing insight into the working of the market, along with contacts necessary to deal with administrative issues. 
The Average Amount of Commission
Agents may receive compensation not exceeding 5% of the contract value. Sales commissions are entirely negotiable and typically range from 3 to 10% depending on the product being sold and the services required of the agent.
Breach of Contract
It is highly recommended that firms wishing to make contracts with an agenct consult with a local attorney to have a legally binding contract drafted. This contract should set forth the rights and obligations of each party involved, method of payment for sales commissions and mehtods for settlement of any dispute.
Finding a Commercial Agent
Saudi Chamber of Commerce and Industry
Jeddah Chamber of Commerce and Industry
Riyadh Chamber of Commerce and Industry
Council of Saudi Chambers
 

Setting Up a Commercial Unit

The Advantages
The Kingdom is trying to diversify into non-oil sectors and thus offers many incentives and tax benefits to attract foreign companies in such domains. The process of establishing an office in Saudi Arabia differs according to the type of business being undertaken. The most commonly practised method is to appoint an agent or a distributor who can set up an office under its own commercial registry.
Where to Be Vigilant
Set up a commercial unit only if the foreign company has long-term business interests in the country.

- Be careful about factors like availability and cost of the required labour force, labour relations and work culture, and proximity to resources and/or markets.

- The office and residential rentals are very high in Saudi Arabia.

- Females are not allowed to drive in Saudi Arabia, regardless of nationality; so make necessary additions to your office budget to provide sufficient cars and drivers for transportation of female family members and staff.

Different Possible Forms of Settlement
 
  • A Representative Office
The representative office may supervise and coordinate the foreign company's administrative activities within Saudi Arabia, but would be prohibited from directly or indirectly engaging in commercial activities. A foreign-company may obtain “representative office" license from the Ministry of Commerce to undertake multiple public sector contracts.
  • A Branch Office
A branch office is easy to establish and is useful as a liaison presence for a foreign company, without the more formal requirements of a joint venture company or needing a Saudi partner. It is possible for a foreign company to hold 100% ownership of a branch office and to benefit from the same incentives that a national company can receive. However, branch offices are limited to an administrative role and may not be able to engage in trading activities.
  • A Company
While a joint venture involves greater commitments for foreign companies, they may qualify for beneficial tax treatment or other economic incentives from the Saudi Government.

Joint ventures are of two types:

- Contractual joint venture: Foreign firm simply signs a contract with a Saudi company and obtains an operating license from the Saudi Government.

- Limited liability company: The foreign company may create a limited liability company in Saudi Arabia. Most foreign firms prefer to use this form of joint venture to establish a presence in the country. While Saudi participation is not a legal requirement, the Government strongly favours a company in which Saudi investors participate. In addition, if Saudis own a certain percentage of the company's capital, the company may qualify for certain tax breaks and other investment incentives.

 

Franchising

Evolution of the Sector
The franchising market is steadily gaining popularity. A growing number of international franchise companies are entering the market. The estimations show that the franchise market of Saudi Arabia has a value of $1.3 billion in annual fees and royalties. The expected average growth rate is 12-15% annually over the coming years. Many of Saudi Arabia’s Vision 2030 and National Transformation Plan reform objectives and priorities provide avenues for growth.  Franchising is a popular and successful approach to establish consumer-oriented businesses in Saudi Arabia.
The leading franchising sectors include restaurants and food and beverage, accounting for more than 17% of total spending, at about $44.6 billion; while clothing and footwear spending reached $14.8 billion in the same year.

Other franchising opportunities exist in apparel, laundry and dry cleaning services, automotive parts and services, mail and package services, printing and convenience stores. There are no verified figures for the number of franchise outlets and brands in Saudi Arabia, but industry sources estimate that there are more than 300 foreign companies with franchisees in Saudi Arabia.  Although there is no specific legislation governing franchises, a ministerial order was issued in 1992 allowing the Saudi Commercial Agency Law to apply to franchise businesses. The Saudi Arabia Government (SAG) liberalized the wholesale, retail, and franchise sectors in 2016 allowing full foreign ownership of retail and wholesale businesses by removing the former 25 percent local ownership requirement.
Some Big Franchises
Gap
T.G.I. Friday's
Ruby Tuesday
 
 
 
 

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Latest Update: April 2024