Saudi SMEs Eye Major International Expansion

Around two thirds of the small and medium enterprises (SMEs) in Saudi Arabia are planning to expand in international markets, a survey found.

According to an Oxford Economics survey, nearly 63 per cent of the SMEs in the Kingdom have either completed, are undergoing or planning a business transformation.

Of those, around 65 per cent of the SMEs, nearly the double the global average of 37 per cent, are planning to enter new geographical markets. The survey found that in three years, the number of Saudi SMEs operating in six or more countries will rise from 16 to 41 per cent.

The survey attributed Saudi SMEs’ international ambitions to increased use of technology.

Nearly one-third (31 per cent) of the Kingdom’s SMEs use cloud computing, but that figure is projected to reach 54 per cent in the next three years.

Around 37 per cent of the respondents said that they used mobile technology and social media to expand their business. The use of mobile technology and social media is set to rise by 52 per cent and 43 per cent respectively in the next three years.

However 66 per cent of the SMEs polled said that they will only invest in technology when there is clear evidence of return on investment.

The current investment priority for SMEs in the Kingdom is software related to business management (52 per cent), business analytics (45 per cent) and cloud computing (37 per cent).

“SMEs in the Kingdom of Saudi Arabia are not only growing in the country and creating vital new jobs, they’re increasingly looking to expand beyond the Kingdom’s borders to seize new regional opportunities,” said Ahmed Al-Faifi, managing director, SAP MENA.

“Clearly, much of this growth will be fuelled by technology that increases insight, flexibility and overall competitiveness.”

SMEs are expected to be key drivers for Saudi’s economic growth, as the Kingdom continues to diversify its economy in line with the Ninth Development Plan 2010-2014.

Part of this plan calls for strengthening and developing SMEs, including providing them with specialised credit, technical assistance, and removing organisational and marketing barriers in some regions of the Kingdom.

SMEs are also expected to make a significant impact on lowering the unemployment rate, which stood at 5.8 per cent as of Q1 2013, according to the Kingdom’s Central Department of Statistics and Information.