April 2004
The Dutch company Cordstrap B.V., which has been selling its load securing products in Saudi Arabia for just one and a half year, is checking out the possibilities of building a local production facility.
Cordstrap operates in the Kingdom through GS Packaging, a Dammam-based company established under a commercial agreement between Cordstrap and the Bahrain-based Season International Trading. The new technology, service and added value of the Cordstrap/ GS Packaging product range and team resulted in a fast growing demand for its products and services. GS Packaging therefore opened last month a new sales office and warehouse in the Riyadh area, to be able to supply the market there with the same highly valued products and services, as proven successful in the Eastern Province since the end of 2002.
Little by way of alternative strapping and load securing materials were available when Cordstrap entered Saudi Arabia in August 2002. Old conventional materials such as steel strapping, wire rope, wood and chains were still being used. Costly product damage, safety as well as environmental problems of discarded rusting steel, made customers realise the long-term financial impact of using outdated packaging products.
Since then Cordstrap has successfully introduced cost effective, safe and environmental friendly methods of securing valuable goods for many industrial applications. (www.cordstrap.net) Mr. Marco van Diessen, General Manager of GS Packaging, in an interview with “SAUDI COMMERCE” cited a number of reasons why Cordstrap was possibly interested in setting up a manufacturing facility here in theKingdom.
• Firstly, Cordstrap has already earned customers’ loyalty and built a permanent customer-base, which includes Saudi Aramco, SABIC, Zamil Group and other leading companies.
• Secondly, the local availability of raw materials needed to produce their product from e.g. SABIC
• Thirdly, Saudi Arabia itself being the largest market in the Middle Eastern region and its strategic location towards the Far East and Africa.
Apart from these advantages, Mr. Van Diessen noted that government’s liberalization and privatisation policies, adequate infrastructure facilities, availability of local partners and Kingdom’s
imminent accession to the WTO are some of the major causes, which made Cordstrap consider building a possible joint venture in Saudi Arabia.
Lack of Information
While talking about some of the obstacles faced by potential foreign investors, Mr. Van Diessen, felt that non-availability of adequate information is a major problem. He recounted his own experience when he conducted a market study for the Cordstrap products. He elaborated: “The preliminary sources of data and information are chambers of commerce, government departments and other trade related agencies. When I approached these agencies, I found, in most cases, the people responsible either did not understand what I was looking for due to linguistic problem or they did not have adequate information. Although some data and information was available, I found them mostly either erroneous or too old to use.
For instance, “I purchased a trade directory published by an organization, in which I discovered most of the contact telephone numbers of local companies were no longer correct. This was due to a change in the telephone numbering system that occurred, except this happened two years before I bought the directory”. Another problem is that the Kingdom is still left behind in the field of information technology. In today’s world, the world-wide-web is a valuable fountain of information. But in the case of Saudi Arabia, many websites are not developed or not properly developed (e.g. Yellow Pages, Commercial Phone Directories, etc.), although Internet was introduced here several years ago, said Mr. Van Diessen. He added that foreign investment promoting agencies did not benefit properly from their own or sponsored websites, because of mainly two reasons. Firstly the websites are mostly in Arabic and secondly they are not updated on a regular basis.
A possible improvement in this sector could be the increased involvement of the new, dynamic and young generation of highly educated people. They should be able to communicate with interested foreign investors and to show the them vast opportunities in the Saudi Arabian market.
WTO Accession to Benefit Local Industries
He hoped that Saudi Arabia’s imminent entry into the WTO would come as a boon to the local industries. There will be a mass importation of foreign technology and expertise by the local manufacturers in order to strengthen their competitive edge both in domestic and international markets. In this aspect opening up the market could be that extra incentive for foreign manufacturing industries to enter Saudi Arabia, already besides the abundant availability of raw materials, man power and many other resources perceived positive by foreign investors.
Regarding unemployment, Mr. Diessen said, it is a worldwide phenomenon especially at the moment with the economy slowing down globally. Every country adopts its own strategy to solve this problem. Saudi Arabia is no different. It has introduced its own strategy. He is very much in favour of the implementation of the Saudization program in every company whether it is a 100 % foreign-owned, or a joint venture or a local company.
In order to prevent foreign companies to perceive Saudization as a reason not to enter the Saudi market or even re-locate their operations resulting in a “Brain Drain” and less jobs available in the market, there should be some alternative facilities. For example; a 5 to 10 years period, depending on the size of company, for every new entity entering the Saudi market, in which they can go from initially e.g. 10% locals to 90%. This would create a position in which Saudi Arabia would benefit from both sides; they will acquire the know-how and the long-term investments.
The Dutch company Cordstrap B.V., which has been selling its load securing products in Saudi Arabia for just one and a half year, is checking out the possibilities of building a local production facility.
Cordstrap operates in the Kingdom through GS Packaging, a Dammam-based company established under a commercial agreement between Cordstrap and the Bahrain-based Season International Trading. The new technology, service and added value of the Cordstrap/ GS Packaging product range and team resulted in a fast growing demand for its products and services. GS Packaging therefore opened last month a new sales office and warehouse in the Riyadh area, to be able to supply the market there with the same highly valued products and services, as proven successful in the Eastern Province since the end of 2002.
Little by way of alternative strapping and load securing materials were available when Cordstrap entered Saudi Arabia in August 2002. Old conventional materials such as steel strapping, wire rope, wood and chains were still being used. Costly product damage, safety as well as environmental problems of discarded rusting steel, made customers realise the long-term financial impact of using outdated packaging products.
Since then Cordstrap has successfully introduced cost effective, safe and environmental friendly methods of securing valuable goods for many industrial applications. (www.cordstrap.net) Mr. Marco van Diessen, General Manager of GS Packaging, in an interview with “SAUDI COMMERCE” cited a number of reasons why Cordstrap was possibly interested in setting up a manufacturing facility here in theKingdom.
• Firstly, Cordstrap has already earned customers’ loyalty and built a permanent customer-base, which includes Saudi Aramco, SABIC, Zamil Group and other leading companies.
• Secondly, the local availability of raw materials needed to produce their product from e.g. SABIC
• Thirdly, Saudi Arabia itself being the largest market in the Middle Eastern region and its strategic location towards the Far East and Africa.
Apart from these advantages, Mr. Van Diessen noted that government’s liberalization and privatisation policies, adequate infrastructure facilities, availability of local partners and Kingdom’s
imminent accession to the WTO are some of the major causes, which made Cordstrap consider building a possible joint venture in Saudi Arabia.
Lack of Information
While talking about some of the obstacles faced by potential foreign investors, Mr. Van Diessen, felt that non-availability of adequate information is a major problem. He recounted his own experience when he conducted a market study for the Cordstrap products. He elaborated: “The preliminary sources of data and information are chambers of commerce, government departments and other trade related agencies. When I approached these agencies, I found, in most cases, the people responsible either did not understand what I was looking for due to linguistic problem or they did not have adequate information. Although some data and information was available, I found them mostly either erroneous or too old to use.
For instance, “I purchased a trade directory published by an organization, in which I discovered most of the contact telephone numbers of local companies were no longer correct. This was due to a change in the telephone numbering system that occurred, except this happened two years before I bought the directory”. Another problem is that the Kingdom is still left behind in the field of information technology. In today’s world, the world-wide-web is a valuable fountain of information. But in the case of Saudi Arabia, many websites are not developed or not properly developed (e.g. Yellow Pages, Commercial Phone Directories, etc.), although Internet was introduced here several years ago, said Mr. Van Diessen. He added that foreign investment promoting agencies did not benefit properly from their own or sponsored websites, because of mainly two reasons. Firstly the websites are mostly in Arabic and secondly they are not updated on a regular basis.
A possible improvement in this sector could be the increased involvement of the new, dynamic and young generation of highly educated people. They should be able to communicate with interested foreign investors and to show the them vast opportunities in the Saudi Arabian market.
WTO Accession to Benefit Local Industries
He hoped that Saudi Arabia’s imminent entry into the WTO would come as a boon to the local industries. There will be a mass importation of foreign technology and expertise by the local manufacturers in order to strengthen their competitive edge both in domestic and international markets. In this aspect opening up the market could be that extra incentive for foreign manufacturing industries to enter Saudi Arabia, already besides the abundant availability of raw materials, man power and many other resources perceived positive by foreign investors.
Regarding unemployment, Mr. Diessen said, it is a worldwide phenomenon especially at the moment with the economy slowing down globally. Every country adopts its own strategy to solve this problem. Saudi Arabia is no different. It has introduced its own strategy. He is very much in favour of the implementation of the Saudization program in every company whether it is a 100 % foreign-owned, or a joint venture or a local company.
In order to prevent foreign companies to perceive Saudization as a reason not to enter the Saudi market or even re-locate their operations resulting in a “Brain Drain” and less jobs available in the market, there should be some alternative facilities. For example; a 5 to 10 years period, depending on the size of company, for every new entity entering the Saudi market, in which they can go from initially e.g. 10% locals to 90%. This would create a position in which Saudi Arabia would benefit from both sides; they will acquire the know-how and the long-term investments.
© Saudi Commerce and Economic Review 2004
