Kareem Mohamed, the head of Cottonil’s franchisee company in Saudi Arabia, said that it currently has around 30 branches but plans to increase this to 50 this year and to 150-200 in 2019. Most of the stores are located in Riyadh and Jeddah, but there are others in Dammam and Khobar.
“The Cottonil brand is popular and it is fit for the Saudi market. It is neither too expensive nor too cheap,” Mohamed told Zawya.
The economy of Saudi Arabia, the world’s top exporter of oil, was hit hard by the sharp fall in oil prices that began in 2014, putting pressure on consumer spending as the government introduced austerity measures including fuel subsidy cuts and a value-added tax.
Despite this, Cottinil’s general manager in Egypt, Mohamed Eissa, explained that the Saudi market held a lot of appeal.
A love affair
“Saudi Arabia loves Egypt and Egypt loves Saudi Arabia,” Eissa told Zawya.
“And Saudi Arabia is a big country, so it was logical and right for us to decide to enter this market and to plan an expansion in it,” he added.
The relationship between the two Arab states strengthened last year when Egypt joined Saudi Arabia, the UAE and Bahrain in their decision to sever economic and transport ties with Qatar.
The kingdom also backed Egypt’s President Abdel Fattah Al-Sisi’s crackdown on the Islamist political movements such as the Muslim Brotherhood group.
Earlier this month, Saudi Arabia’s Crown Prince Mohammed bin Salman visited Egypt and met President Al-Sisi. During the visit, the two leaders agreed to set up a $10 billion joint fund to develop more than 1,000 square kilometers in the Egyptian South Sinai area.
Eissa said Cottonil’s business in Saudi Arabia has not been impacted by the newly introduced 5 percent value-added tax that was implemented this year in both Saudi Arabia and the UAE.
“The VAT does not have an impact on the consumer purchasing power as five percent is not a big thing and people will always consume products,” Eissa said.
According to Eissa, investment is “all about good thinking and good decisions”.
“Decisions on when and where to invest are important. If the right thinking is found, money would be easy to get and make.”
(Reporting by Yasmine Saleh; Editing by Michael Fahy)
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© ZAWYA 2018