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All you need to know about Local partners in Saudi Arabia

Writer's picture: Konstantin GridinKonstantin Gridin
How to find a local partner in Saudi Arabia

Did you know that partnering locally in Saudi Arabia can actually increase your contract profitability compared to direct client relationships? According to Saudi regulations, foreign bidders can win tenders if their price is 25% lower than the nearest local competitor.


This means you can increase your price by 10%, allocate a 10% commission to your local partner, and still enhance your chances of winning tenders while improving your profit margin. This financial advantage is just the tip of the iceberg when it comes to working with local partners in Saudi Arabia.


Having facilitated numerous business entries into the Saudi market since 2008, I'm thoroughly convinced that local partnerships are the optimal approach. While you might secure a few direct contracts through existing client relationships and product appeal, maximizing your success during market entry strongly depends on local partnerships.


Why local partner in Saudi?

The financial benefits in local tenders are just one consideration. The primary advantage of local partners is their access to crucial unofficial information that's impossible to find online: current client pain points, upcoming unpublished tenders, and insider knowledge. By building a network of partners, you'll be significantly better prepared for tenders and proposals than by operating independently or making occasional country visits.


From 2017 to 2020, my primary focus was my telecom technology startup. Anyone familiar with the telecom industry knows its bureaucratic nature. Despite securing meetings with top decision-makers across major telecoms in the UAE and Saudi Arabia, none resulted in actual deals or RFPs. Then I shifted strategies. I began connecting with existing telecom technology partners, which yielded much better results. I quickly secured management meetings and received multiple proposal requests, as these companies knew the internal pathways to decision-makers and could obtain unofficial feedback rapidly. While my startup didn't ultimately secure major deals, I learned an invaluable lesson:


The right local partners in Saudi can achieve far more than direct approaches.

Beyond improved client access, local partnerships are more cost-effective and less risky since you avoid immediate company registration, licensing, and relocation costs before generating revenue. In a previous analysis comparing office costs between the UAE and Saudi Arabia, I concluded that establishing a Saudi office only becomes justifiable after reaching $1 million in local revenue. Before that threshold, working through local partners is significantly more advantageous.

Now that you're convinced about the value of local partnerships in the Saudi market, you're probably wondering:


How can you find and select the right partner in Saudi Arabia?

The most common mistake companies make is broadcasting partnership requests through DMs and seeking connections indiscriminately. Active on LinkedIn since 2017, I extensively tested this approach. Despite connecting with thousands before LinkedIn's invitation limits, my direct pitches yielded minimal responses. This wasn't due to poor products, but rather because pitching without proper preparation is ineffective - that was my key learning.


My primary advice is to avoid rushing:

Don't approach potential partners until you've confirmed local market demand for your product.


This means starting with ground-level conversations and seeking advice. These initial contacts don't need to be partners or decision-makers, but rather industry veterans, those familiar with your potential clients, mid-level managers, etc.

Why? Because preparing for high-stakes meetings requires learning from less critical interactions where people will provide honest negative feedback rather than simple rejection.


LinkedIn is ideal for these conversations - connect and seek advice from your network contacts in Saudi Arabia. You'll be surprised how many meaningful connections emerge from simply asking for advice versus trying to sell something.

In a recent project, simply seeking advice led to two partnership interests and several referrals, besides valuable insights. This far exceeded the results of direct product or service pitches.


When advice-seeking generates positive feedback, leads, and referrals, it signals your Saudi business venture's potential. That's when you should proceed to partner searching.


Where and how to look?

While LinkedIn is valuable for B2B connections, it's not comprehensive. The real opportunities lie on Etimad, the government tender website. Many successful Saudi companies maintain minimal social media presence yet excel in their sectors. Don't overlook them by focusing solely on LinkedIn.

After identifying potential partners with relevant tender wins and expertise, the next step is outreach.


Most companies either search through networks or send direct messages like "We're seeking a Saudi partner and think you're ideal." Many of you, like myself previously, have tried this approach. The problem is that such direct messages reveal your position too early - a strategic error I advise against.

Offering partnership without gauging interest risks aligning with unmotivated or time-constrained partners. I've heard numerous stories of unproductive partnerships in Gulf countries.


A typical scenario unfolds like this: An international company finds a Saudi partner showing one major opportunity - usually a significant tender or RFP. Attracted by potential profits, the foreign company signs an exclusive long-term agreement. When the tender fails, the local partner shifts focus to other opportunities, leaving the foreign company unable to pursue other contracts or partners.

Therefore, approach local partners as you would industry contacts - seek advice rather than openly pursuing partnership. Interested parties will initiate partnership discussions themselves. This approach leads to easier negotiations, more flexible exclusivity terms, and broader opportunities.


Wishing you all the best in your Saudi Arabian business ventures, inshallah!

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Smart Station, First Floor, Incubator Building, Masdar City,  Abu Dhabi, United Arab Emirates

Smart Station, First Floor, Incubator Building, Masdar City,

Abu Dhabi, United Arab Emirates

© 2024 Vision Business Development

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