oing Business in Saudi ArabiaSaudiArabia is not the easiest place in the world for West-::rn enterprises to do business. On the one hand, the oil--ch kingdom offers many opportunities for enterprising.isinesses. Western construction companies have long

:: ayed a role in building infrastructure in the kingdom.estern brands from Coca-Cola, Nike, and McDonald's to

30dy Shop, Next, and Benetton have a significant pres-:; ce. Western aerospace companies such as Boeing and.ockheed have sold a significant number of aircraft to::: udi Arabia over the years. The Saudi market is one of--e larger in the Middle East, with a growing population of=- million and purchasing power parity per capita of:. 2,845 in 2003. Since 2000, the government has sig--3 ed that it is more open to foreign investment in certainsectors of the economy, although oil and gas extraction is--: reserved for state-owned enterprises.

On the other hand, Saudi Arabia is a historically con-servative country where a large segment of the popula-- 'I desires to preserve the religious values and ancient-"3ditions of the region, and this can spill over into the_~siness sector. The culture of the country has been:-aped by Islam and the Bedouin tradition. The source of- -: in Saudi Arabia is Islamic law (the Shari'ah). and reli-= s edicts derived from this influence on everyday life.=-:- example, stores and restaurants close at the five daily-3yer times, and many restaurants, including Western-es such as McDonald's, have separate dining areas foren and women. Women in Saudi Arabia are not allowed

- drive a car, sail a boat. or fly a plane, or to appear out--: rs with hair, wrists, or ankles exposed-something

a- Western companies need to keep in mind when do-:::business in the country or with Saudis elsewhere.Saudi adherence to Islamic values has also given riseanti-American sentiment, which has been increasinge the American-led invasion of another Muslim nation,. Cultural solidarity has expressed itself in consumercotts of American products. More disturbing than con-er boycotts has been a rise in terrorist attacks againsttern expatriates in Saudi Arabia, significantly increas-he perceived risks of doing business in the kingdom.

Bedouin traditions have been just as strong as Islamics in shaping Saudi culture. Less than a hundred

rs ago, the Arabian Peninsula was populated by no-ic Bedouin tribes. Values that were important to

:se proud nomads, and enabled them to survive in their~-5h desert landscape, are still found in modern Saudircetv. They include loyalty, status, an emphasis on in-

ersonal relationships, the idea of approximate ratherc" precise time, and an aversion to any behavior that

seem menial or servile (including manual labor).=leflecting Bedouin traditions, Saudis will often conduct- 'less only after trust has been well established-a:cess that might require (by Western standards) a large

number of face-to-face meetings. Saudis may resent beingrushed into a business decision, preferring to let discus-sions proceed in a more relaxed fashion-something thatWesterners with their attachment to precise rather than ap-proximate time might find taxing. Business meetings maybe long because many Saudis maintain an "open office"and will interrupt a meeting to conduct other business,which can be traced back to the Bedouin tradition where alltribal members havea right to visit and petition their leaderswithout an appointment. Given the cultural importance at-tached to status, Saudi executives will not react well if a for-eign company sends a junior executive to transact business.

Loyalty to family and friends is a powerful force, andjob security and advancement may be based on familyand friendship ties, rather than, or in addition to, demon-strated technical or managerial competence. Westernersmight construe this negatively as nepotism, but it reflectsa nomadic culture where trust in family and tribe wasplaced above all else. Saudi executives will also consultwith family and friends before making a business deci-sion, and they may place more weight on their opinionsthan that of experts whom they do not know as well.

The Bedouin aversion to menial work has produced achronic labor problem in the kingdom, and foreign compa-nies will quickly discover that it is difficult to find Saudi na-tionals who will undertake manual labor or basic servicework. Currently, some 6 million foreign nationals reside inSaudi Arabia. These expatriates, who are primarily fromother Muslim nations, undertake many of the menial occu-pations that Saudis disdain Although oil revenues havemade this social stratification possible, the Saudi govern-ment sees it as a potential long-term problem-almost90 percent of all private-sector jobs in SaudiArabia are filledby foreign nationals-and has launched a program of"Saudiazation." The aim is to change cultural values towardwork perceived as menial, and by doing so, to help build amodern economy. So far success had been halting at best.

Saudi society is starting to change in other importantways. Slowly the rights of Saudi women are being ex-panded. In 1964, Saudi girls were not allowed to go toschool; today 55 percent of university students in thekingdom are women. In 2004, Saudi women weregranted the right to hold commercial business licenses, asignificant advance considering the women held some$25 billion in deposits in Saudi banks and had little oppor-tunity to use them. As Saudi society evolves, women maycome to play a greater role in business.Sources: G. Rice, "Doing Business in Saudi Arabia," Thunderbird In-ternational Business Review, January-February 2004, pp. 59-84;A. Kronemer, "Inventing a Working Class in Saudi Arabia," MonthlVLabor Review, May 1997, pp. 29-30; "Out of the Shadows, into theWorld-Arab Women," The Economist, June 19, 2004, pp. 28-30;and B. Mroue, "Arab Countries Boycott U.S. Goods over MideastPolicies," Los Angeles Times, July 29, 2002, p. C3.

ing Business in Saudi Arabia:G~di Arabia is not the easiest place in the world for West-

enterprises to do business. On the one hand, the oil-kingdom offers many opportunities for enterprising

_= nesses. Western construction companies have longc ed a role in building infrastructure in the kingdom.estern brands from Coca-Cola, Nike, and McDonald's to

- -~y Shop, Next and Benetton have a significant pres-. Western aerospace companies such as Boeing and

- - heed have sold a significant number of aircraft to- _d' Arabia over the years. The Saudi market is one of: arger in the Middle East with a growing population of

-nillion and purchasing power parity per capita of_ 845 in 2003. Since 2000, the government has sig-eel that it is more open to foreign investment in certainrtors of the economy, although oil and gas extraction is

-eserved for state-owned enterprises.'1 the other hand, Saudi Arabia is a historically con-ative country where a large segment of the popula-desires to preserve the religious values and ancient

- tions of the region, and this can spill over into theess sector. The culture of the country has been

- ed by Islam and the Bedouin tradition. The source of'1 Saudi Arabia is Islamic law (the Shari'ah), and reli-

_s edicts derived from this influence on everyday life.example, stores and restaurants close at the five dailyer times, and many restaurants, including Western

: such as McDonald's, have separate dining areas forand women. Women in Saudi Arabia are not allowed

z=ve a car, sail a boat, or fly a plane, or to appear out-s with hair, wrists, or ankles exposed-something

estern companies need to keep in mind when do-c siness in the country or with Saudis elsewhere.Saudi adherence to Islamic values has also given rise

n-Arnerican sentiment, which has been increasinghe American-led invasion of another Muslim nation,

Cultural solidarity has expressed. itself in consumertts of American products. More disturbing than con-boycotts has been a rise in terrorist attacks againstrn expatriates in Saudi Arabia, significantly increas-perceived risks of doing business in the kingdom

ouin traditions have been just as strong as Islamicin shaping Saudi culture. Less than a hundred

ago, the Arabian Peninsula was populated by no-Bedouin tribes. Values that were important to

proud nomads, and enabled them to survive in their_ desert landscape, are still found in modern SaudioS_ . They include loyalty, status, an emphasis on in-esonal relationships, the idea of approximate rather

orecise time, and an aversion to any behavior that_ : seem menial or servile (including manuallabor).=e""ecting Bedouin traditions, Saudis will often conduct

ess only after trust has been well established-a::;5S that might require (by Western standards) a large

number of face-to-face meetings. Saudis may resent beingrushed into a business decision, preferring to let discus-sions proceed in a more relaxed fashion-something thatWesterners with their attachment to precise rather than ap-proximate time might find taxing. Business meetings maybe long because many Saudis maintain an "open office"and will interrupt a meeting to conduct other business,which can be traced back to the Bedouin tradition where alltribal members have a right to visit and petition their leaderswithout an appointment. Given the cultural importance at-tached to status, Saudi executives will not react well if a for-eign company sends a junior executive to transact business.

Loyalty to family and friends is a powerful force, andjob security and advancement may be based on familyand friendship ties, rather than, or in addition to, demon-strated technical or managerial competence. Westernersmight construe this negatively as nepotism, but it reflectsa nomadic culture where trust in family and tribe wasplaced above all else. Saudi executives will also consultwith family and friends before making a business deci-sion, and they may place more weight on their opinionsthan that of experts whom they do not know as well.

The Bedouin aversion to menial work has produced achronic labor problem in the kingdom, and foreign compa-nies will quickly discover that it is difficult to find Saudi na-tionals who will undertake manual labor or basic servicework. Currently, some 6 million foreign nationals reside inSaudi Arabia. These expatriates, who are primarily fromother Muslim nations, undertake many of the menial occu-pations that Saudis disdain. Although oil revenues havemade this social stratification possible, the Saudi govern-ment sees it as a potential long-term problem-almost90 percent of all private-sector jobs in Saudi Arabia are filledby foreign nationals-and has launched a program of"Saudiazation." The aim is to change cultural values towardwork perceived as menial, and by doing so, to help build amodern economy. So far success had been halting at best.

Saudi society is starting to change in other importantways. Slowly the rights of Saudi women are being ex-panded. In 1964, Saudi girls were not allowed to go toschool; today 55 percent of university students in thekingdom are women. In 2004, Saudi women weregranted the right to hold commercial business licenses, asignificant advance considering the women held some$25 billion in deposits in Saudi banks and had little oppor-tunity to use them. As Saudi society evolves, women maycome to play a greater role in business.Sources: G. Rice, "Doing Business in Saudi Arabia," Thunderbird In-ternational Business Review. January-February 2004, pp. 59-84;A. Kronemer, "Inventing a Working Class in Saudi Arabia," MonthlyLabor Review. May 1997, pp. 29-30; "Out q{ the Shadows, into theWorld-Arab Women," The Economist, June 19, 2004, pp. 28-30;and B. Mroue, "Arab Countries Boycott U.S. Goods over MideastPolicies," Los Angeles Times, July 29, 2002, p. C3.