Doing Business in Saudi Arabia – II Part: Building Long-Term Trustworthy Relationships January 16, 2009Posted by jgarciaalvarez in Competitiveness, Emerging Markets, Entrepreneurship, Innovation, Middle East, Saudi Arabia, USA.
Understanding the history of modern Saudi Arabia requires reflecting upon the old and the new. As you set on this journey, several recesses are key stops. For instance, you may start by exploring how Ibn Saud leveraged ancestral claims to become the ruler of a region that acknowledged his political authority after he had captured Riyadh in 1902. Then, you could continue by reading about the early years of the American Company Standard Oil of California (SOCAL), its growth and consolidation into Saudi Aramco, and the contribution and effects of this anchored institution in Saudi society. Consequently, you could look into understanding the title of King Abdullah bin Abdulaziz, Custodian of the Two Holy Mosques, and why his leadership position in Saudi Arabia and the holiest shrines of Islam is a concern to millions of Muslims across the world. Although daunting at first, this process of reflection challenges us to contextualize historical events with current Saudi and Middle East politics.
Understanding the modern business environment in Saudi Arabia requires reflecting upon the prudent steps and interpersonal time needed to build trustworthy loyal client relationships. Take, for example, the Majlis, traditionally hosted by oasis emirs and tribal shaykhs, which were meetings known in Arabia for centuries designed to mediate, settle disputes, renew allegiances, and represent power. Although aspects of this tradition have changed in modern Saudi Arabia, the business environment does require a high level of trust and long-term relationships building to make business progress. Furthermore, in many instances, your personal word and honor becomes your presentation letter to, not only the person you are conducting business with, but also to the person’s closest circle of family, friends, and colleagues. In lieu of the mistrust and uncertainty that has resulted from the turmoil of the financial markets and the global economic recession, it is suggested that the Arab ways of building trust, serve to remind Western people about the basics of human social interaction.
Historical Anecdote: Did you know that in 1923, a New Zealand Oil entrepreneur named Major Frank Holmes, negotiated an oil concession with Ibn Saud? Five years later, Holmes could not find an oil company interested in buying it. In 1933, the SOCAL started exploration for oil. In 1938, the first valves pumping oil in commercial quantities were turned on. Just Imagine if Mr. Holmes had showed up a few years later! Talk about timing…
 Al-Rasheed, Madawi. “A History of Saudi Arabia”, Cambridge University Press, 2002.