The Kingdom of Saudi Arabia is on the verge of becoming the hub for foreign investors. From India to UAE, business owners are looking for profitable opportunities in Saudi Arabia. During an elaborative meeting, The Executive Director of Investment Advisory Relations, Mr. Khalid pointed out the opportunities for foreign investors’ Business Expansion in Saudi Arabia with the support of Mr. Hatem, The CEO of Business Link, and SAGIA Authorities in collaboration.
Business Link helps companies set up in Saudi Arabia and grab fruitful opportunities for the benefit of the investors. As a foreigner, it is complicated to understand the functioning of Saudi Arabia. However, with the help of BusinessLink, now companies can contribute to foreign investors’ business expansion and gain profit. Understanding the financial status with stats will help you assess the market better.
Unprecedented Leap
The value of foreign investors’ ownership at the end of the third quarter of last year amounted to 145.05 billion riyals. Compared to 16.50 billion riyals at the end of the same quarter of 2018. This recorded an unprecedented jump during eight quarters.
Foreign wallets
Despite the difficulties faced by the global economy during the past year. The qualified foreign investors continued to increase their shares in the Saudi financial market “Tadawul” and it grew on an annual basis. At the end of the penultimate quarter of 2020 by 37%, compared to about 16.50 billion at the end of the same period of 2019.
Investment rates
During the past year, foreign portfolio investment rates in Tadawul witnessed a growth of 21.4%. During the second quarter, reaching 124.30 billion riyals, compared to 102.86 billion in the previous quarter (First quarter of 2019). This continued to rise by 16.7% in the third quarter, equivalent to 20.75 billion riyals.
SAGIA|MISA
Under the new foreign investment law passed in 2000. The Saudi Arabia General Investment Authority is responsible for providing you with a foreign investment license to conduct business in any part of the Kingdom without the need for any local partner (note: some activities such as medical and counseling are restricted). With the help of Business Link, you can smoothly finish the process and become a successful foreign investor in Saudi Arabia.
Foreign investments require formalities and firm decisions. For expansion, you need investment and acquisition. The stats are witnesses that Saudi Arabia is a booming ocean for investors. However, you can succeed only if you invest properly.
What Do Big Companies Do To Grow?
It is the stage of anxiety or tension that immediately follows success after the project stands on its feet and achieves small or large success. Moments of fear or anxiety begin to run through the veins of the entrepreneur or project owner. Every moment a number of annoying questions come to mind, such as What next? Where are we going? How do I stand longer and how do I beat the potential competition?
Yes, we should expand, but how? Thus, the obsession turns from the obsession of fear of lack of success to the obsession of fear of weak growth (expansion of success). This is an important and inevitable obsession, but it may turn into an obsession that destroys the previous success. Unless the project takes the decisions of expansion or growth correctly and in accordance with the reality of the current stage heading towards with all ambition towards a clear future.
That’s why I’m going to put in your hands the Ansoff Matrix, a strategic tool that helps the entrepreneur/owner of small or medium-sized enterprises who has succeeded in establishing the first experience to look at expansion in a systematic and organized way that removes his anxiety and puts him face to face with new options.
The Ansoff Matrix stems from two main areas of expansion/growth:
- Markets
- Products
The four strategic expansion options:
- Market penetration strategy,
- Market development strategy,
- Product Development Strategy,
- Diversification strategy.
Market penetration strategy
In this option, you focus on achieving more sales of your existing products in your current market to increase your market share. This means more advertising and marketing effort to be able to acquire a larger percentage of the market share. Expanding customer base, and trying to make the most of the energies of the current market with the current products.
For Example- Al Baik Restaurants Company expands in Jeddah (same market x same products) as the number of its branches reached more than 30 branches
Market development strategy
You focus in this option on selling your existing products in new markets. The idea of expanding this option is to increase the market segments targeted by Market Segments. This will increase your growth in sales very significantly compared to the first strategy. The reason is that the chances of Opening new markets with the same products are higher than the opportunities to focus on one market.
For Example, The expansion plan of the McDonald’s restaurant company uses the option of developing the market globally. As it copied the experience through the Franchise system to reach more than 36,000 branches in 118 countries around the world. They sell the same products (with minor technical modifications to match the culture and religions of customers in different markets) in new markets.
Product Development Strategy
In this strategic choice, you focus on selling new products in your existing markets. Opportunities for expansion and growth in this option involve a key premise (that your current market is able to absorb and thirst for new types of products. Which will enable you to resell your new products to your existing customers)
For Example- The decision to expand Jarir Bookstore in the Kingdom of Saudi Arabia. This accompanied its launch of the slogan (not just a library) focused on the third option, which is the product development strategy. Jarir was no longer just a bookstore but was able to expand the range of its products in a very bold way to include on its shelves and its exhibition yards other products such as computers, smartphones, library tools, drawing tools, architecture, and a number of other products. As some estimated statistics indicate that book sales (the main and first product) do not exceed 5% of the annual sales volume.
Diversification strategy
In this last and most dangerous option, you focus on selling new, never-before-seen products in new markets where you have not worked before. This strategy is often followed by large and intercontinental investment companies. Where they have tools, relationships, and sufficient funding to conduct marketing research in new markets. That have not previously been worked in and do not have sufficient time experience in them. They are ready to implement the outputs of this research. The new products that you propose to them to succeed in new markets and on which previous research and studies were conducted.
For Example- The board of directors of a large-sized company working in the field of investment in banknotes and shares in Kuwait took the work in the field of hotel and tourism (which is a completely new product) in the Republic of Turkey (which is a completely new market), and this decision was correct, as the company has high cash flow that coincided In 2012 with the height of maturity of the tourism sector in Turkey.
The strategies work only with the right support. BusinessLink will work as the catalyst that will help you set up a business in Saudi Arabia by jumping all the hurdles and landing on the finishing line spotless. From shipping agents to scientific and technical offices, you can invest in any industry you perceive as profitable. Businesses worldwide are now showing interest in the flourishing industries of Saudi Arabia. With the help collaboration of the authorities, companies such as Business Link, and the Ministry of Investment, foreign investors’ business expansion can witness a steep rise.
Conclusion
You can become one of the successful foreign investors in Saudi Arabia. BusinessLink will help you with its commercial services to set up your dream business in the land of Saudi Arabia. Saudi Arabia is filled with business opportunities at the moment. You have to strategic approach in order to do the business expansion. The first step would be research, followed by availing of professional services. BusinessLink is supporting Saudi Arabia in improving the foreign investors’ business expansion by providing services such as SAGIA Company Formation, Business Visas, Services Licenses, PRO Services, and other crucial services required to set a profitable foot in Saudi Arabia.
The professional team of Business Consultants helps you build your dream business within your budget. Thus, the Executive Director in Investor, Advisory, and Relations (Ministry of investment of Saudi Arabia) highlighted the role BusinessLink in the future of Foreign investments in Saudi Arabia. BusinessLink is a Global Corporate Service provider based in the UAE. Which helps entrepreneurs to set up and can do a business expansion in and out of the UAE. The process of foreign investment will become seamless when you hire someone experienced.
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