Digital change in the Gulf region: Swiss exporters must adapt

The Arabian Gulf region has arrived in the digital age with impressive speed. Fast internet even in the most remote deserts, the playful use of mobile phones and the enthusiasm and acceptance of digital technologies are turning Saudi Arabia, the United Arab Emirates, Bahrain and Qatar into a growth region that is overtaking Switzerland in terms of digitalisation in some areas. Local exporters need to adapt their strategies in order to be successful in this highly digitalised environment.

A very young population is driving digitalisation in the Gulf states (Bahrain, Qatar, Kuwait, Oman, Saudi Arabia and the United Arab Emirates): in Saudi Arabia, a third of the population is under twenty years old – in Switzerland, only a fifth. As “digital natives”, they are familiar with digital services in all areas of life and have high expectations in terms of their availability, quality and convenience. In the Gulf region, private individuals favour different social media platforms than in Switzerland for political (surveillance; censorship) and cultural reasons. Snapchat, for example, is exceptionally popular in the Gulf States, which is in stark contrast to Switzerland (Fig. 1). When communicating with customers in the Gulf States, exporters must take into account the different use of social media platforms and their advertising reach and adapt their digital advertising measures accordingly.

Fig. 1: Snapchat can be used to reach almost three quarters of the advertising-relevant target group in Saudi Arabia – in Switzerland, however, Snapchat is quite insignificant.

Import processes are part of e-government

Authorities in the Gulf region are increasingly using digital technologies to increase the efficiency and transparency of procurement processes (Fig. 2) and are sometimes ahead of European countries in the E-Government Development Index. The United Nations E-Government Index measures the level of development of countries in the use and provision of digital technologies and online services. Saudi Arabia in particular is currently taking major steps to replace paper bureaucracy with digital solutions. One example of this is “Fasah”[1]a system that automates customs clearance. Exporters need to familiarise themselves with the new, digital administration and align their processes accordingly.

Fig. 2: Digital administration: The United Arab Emirates have already overtaken Switzerland, Saudi Arabia is catching up fast

Digital tenders increase price pressure

Since 2021, all public contracts in Saudi Arabia have been awarded on the digital platform Etimad[2] have been put out to tender. However, it is not only tenders that are submitted there. This platform also facilitates the submission and tracking of financial claims and the review of digital contracts. Saudi Arabia wants to increase transparency in the awarding of lucrative contracts in order to reduce procurement prices and curb corruption in the country. Exporters have no choice but to familiarise themselves with this online platform and the new procurement rules if they want to win major government contracts.

Conclusion

A very young population and digitally savvy governments are accelerating digitalisation in the Arab Gulf states. Swiss companies can effectively strengthen their market position in this dynamic economic region by facing up to the digital realities and proactively adapting their business strategies accordingly. An understanding of local digital preferences and the considered use of new technologies are crucial for tapping into new business opportunities.

Publication on the topic

In their recently published book, BFH researcher Paul Ammann and BFH lecturer Georg Drissner show how companies from Germany, Austria and Switzerland can do business successfully in the Arab Gulf states. The region, especially Saudi Arabia, is currently reinventing itself beyond oil and gas – and offers lucrative opportunities for many industries. The book’s analyses are based on over 30 interviews with predominantly Arab managers and it offers indispensable recommendations for action as well as insider tips.

Ethical questions that arise in this difficult region are not ignored, but are addressed from various perspectives. Often invisible hurdles for European managers are made visible. A guide for all those who are looking for dealers in the Gulf region, want to find customers or set up branches – and not only want to know things, but also understand them.

References

[1] https://www.fasah.sa/trade/sau/html/en_US/ImporterServices.html

[2] https://portal.etimad.sa/en-us/aboutetimad/indexabout