Octagona Srl/Internationalization News/How to export to Saudi Arabia?
How to export to Saudi Arabia?

How to export to Saudi Arabia?

Relations between Italy and Saudi Arabia are strengthening at various levels: political, economic, commercial and cultural. In fact, Italy looks at Saudi Arabia as an investment opportunity in the context of Vision 2030, an ambitious plan of reforms and an economy based on services, knowledge, tourism and start-ups. Among Vision's projects, there are giga-works such as the futuristic city of Neom, luxury resort along the coast of the Red Sea, Qiddiya theme park and the tourist development of archaeological sites such as Al Ula and Diriyah.

In this article we will therefore analyze the latest Made in Italy trends in Saudi Arabia, and then move on to the study of the most successful sectors in the market. Finally, we will review everything you need to export to Saudi Arabia, including new regulations and required documentation.

 

Why export to Saudi Arabia

 

In this section, we will explore the reasons why Italian companies should consider exporting to Saudi Arabia, taking advantage of the opportunities offered by Vision 2030 and the tax advantages present in the country.

 

Saudi Vision 2030: a new development strategy

Vision 2030 was adopted by Saudi Arabia in 2016 and is aimed at radically transform the country economically, socially and culturally. The objective is to create national production chains, promote private initiative and start production with a high local content, involving the Saudi workforce. This transformation process will be supported by major projects led by the Saudi sovereign wealth fund, such as the futuristic NEOM smart city, the Qiddiya entertainment park and the Red Sea Project resorts.

 

Strategic geographic location and infrastructure

Saudi Arabia is the main Gulf country and enjoys a strategic geographical position that quickly connects to Africa, Europe and Asia. The country has excellent infrastructure, including transportation, telecommunications and information technology, as well as a well-capitalized banking and financial system. With 28 airports welcoming over 90 million passengers annually from over 45 countries, accessibility to the Saudi market is simple and convenient.

 

Demographic dividend and young market

With a population of 36.4 million inhabitants, of which two thirds are young people under 35 years of age, Saudi Arabia offers a dynamic and growing market. This demographic dividend represents a great opportunity for companies looking to enter sectors such as technology, fashion and the cultural industry, which are particularly attractive to younger segments of the population.

 

Tax advantages

Saudi Arabia offers attractive tax advantages for business and investments. The country does not tax personal income and applies a tax rate of 20% on corporate income and 15% on VAT. Numerous agreements have been signed to avoid double taxation, including an agreement with Italy. Furthermore, there are no import duties for materials, equipment and technologies necessary to start new production investments. There are also exemptions to the legislation on Saudization and facilitations for visas and residence permits for qualified personnel.

 

What to sell in Saudi Arabia?

 

Despite efforts at economic diversification, the oil industry still benefited from the increase in oil prices during the year.

Despite an overall negative balance in the trade balance, Italy is positioned among the top 10 suppliers for Saudi Arabia, after Germany. Italian exports to Saudi Arabia in 2024 are aincreased by 18.7% compared to 2023, reaching a total value of 8.2 billion euros.

But what are the main sectors in which to export Made in Italy to Saudi Arabia? By analyzing the data published by the Ministry of Foreign Affairs, we can draw up a real ranking of the most promising sectors for Italian exporting companies.

In detail, the general purpose machinery sector is the one that occupies the first position, with 1,598 million euros in the first half of 2024, therefore representing 32.8% of total Made in Italy exports. In second place we find electrical appliances, which with 444 million euros represented 9.1%% of total Italian exports. The means of transport sector closes on the podium with 428 million euros in value (8.8%% of the total).

 

The fastest growing sectors

 

The fashion industry it also has room for improvement, since Italian brands represent a point of reference for the Saudi market, especially among the younger segments of the population, which constitute approximately two thirds of the total.

In the data relating to exports for the first two years of 2024 to Saudi Arabia, equal to a total of 8.2 billion euros, our machinery and other electrical appliances, which together with means of transportation, already constitute more than the 50% in the basket, demonstrating the high recognition our technology enjoys on this market, especially of an industrial nature. In fact, Saudi Arabia looks to our manufacturing industry as a reference model within the framework of its National Industry Strategy.

In the wake of the ongoing strong development of the urban-real estate sector, it is also reasonable to expect an increase in sales of furniture and furnishings, in light of the renowned Italian tradition in interior design. Prestigious brands of the caliber of Poltrona Frau, Minotti, iGuzzini and Cavalli Casa are already present on this market. Looking ahead, the growth of hospitality in connection with tourism could fuel further demand for our furniture and furnishings, taking into account that the large hotel chains already present in Saudi Arabia cover their interiors with Italian design.

 

Three effective ways to sell in Saudi Arabia

 

As seen, exporting to Saudi Arabia offers enormous advantages for Italian companies interested in expanding their horizons and accelerating their growth process. But, in fact, how do you go about exporting to the Saudi market?

There are many options available to companies, but according to Octagona only 3 can really make a difference and we present them below:

  • Online sale through marketplace or e-commerce: it is certainly the cheapest option, as it avoids the physical component of doing business abroad, such as transfers or costs for a network of agents, participation in trade fairs, or a direct physical presence with a subsidiary. This is a suitable solution for those who want to test the Saudi market without having to spend excessive resources and time, but with the great disadvantage of having to wait a long time to see results;
  • Relying on a Temporary Export Manager: with a slightly more demanding, but still limited budget, SMEs can achieve great results by relying on a Temporary Export Manager (TEM). These are professional figures or companies of international trade specialists who operate directly on Saudi territory, and who act as the company's interface in Saudi Arabia. In other words, the figure works as a hybrid between a foreign salesperson and a sales agent, who for a limited time (usually at least one year) works on the commercial development of the company: it is an extremely flexible solution that is perfect for companies that they want to start an internationalization process;
  • Physical presence: this is the most economically demanding solution, but also the one that guarantees greater results. It is suitable for medium or large-sized companies, or in any case for companies that can have a large capital: the activity begins with frequent trips and commercial missions to Saudi Arabia, and then culminates with a real company incorporation abroad, with its own office and dedicated resources.

 

Conclusions

 

Saudi Arabia represents a market full of opportunities for Italian companies who wish to expand their international activities. Vision 2030 and the country's economic transformation offer a number of benefits, including local supply chains, major development projects and a young, growing population. Furthermore, the favorable business environment and tax advantages make Saudi Arabia an attractive option for Italian companies seeking new international partnerships.

 

Are you interested in exporting Made in Italy products to Saudi Arabia? Then contact us and tell us about your project: we will study the best solution together with you.

 

READ ALSO:

New business opportunities in the United Arab Emirates for Italian companies

How to export Made in Italy to Germany? Here's everything you need to know

Why should you export to ASEAN?

SHARE ARTICLE

If you want to learn more about the content of this article

RECENT ITEMS

Exporting to the USA: focus on legal forms

Exporting to the USA: focus on legal forms

Costituire una società negli Stati Uniti è spesso la scelta ideale, se non necessaria, per le aziende che desiderano esportare...
Digital Export Call 2024-2025 Emilia Romagna – Unioncamere

Digital Export Call 2024-2025 Emilia Romagna – Unioncamere

Il 2 settembre 2024 verrà aperto da Unioncamere Emilia Romagna e dalla Regione Emilia Romagna il Bando Digital Export 2024-2025;...
Exporting to Canada, conditions and prospects

Exporting to Canada, conditions and prospects

Esportare in Canada offre un'opportunità significativa per le imprese italiane, grazie alla storica apertura del paese al commercio internazionale e...

Get in contact
with us

Are you interested in our service?
Fill out the form or contact us at the number
+39 059 9770184