Walking through the Ritz Carlton this week in the Saudi capital Riyadh, one could see in every corner men dressed in traditional white starched Saudi thobes mingling with men in dark suits, conducting a frenzied exchange of business cards and faces glowing with the hope of new clients.
The hotel was hosting the fourth US-Saudi Business Opportunities Forum from March 22-23, the first time the forum has been held on Saudi soil.
The US-Saudi commercial relationship is a long and wealthy one, starting in 1933 when American energy giant Chevron won a concession to explore for oil in the country.
The Kingdom of Saudi Arabia was only one year old at the time. The US was already the largest economy in the world, but back then the Saudi economy was inconsequential.
Fast forward to today and the Saudi economy is the 19th largest in the world, roughly the same size as the economies of Turkey and Switzerland. Business with the US has played a key role in the expansion of the Saudi economy, and continues to today.
In the last decade Saudi-US trade rose from $26 billion to $74 billion and the US is the largest foreign direct investor in the kingdom.
The objective of the forum, organized by the ministry of commerce and industry, is to develop and expand the strategic business alliance between the two nations.
The two days consisted of speeches on the US-Saudi relationship and panel discussions revolving around different business sectors. In two grandiose ballrooms experts reflected on industries as wide ranging as health care, transport, agro-business, and information technology.
‘Relationships, relationships, relationships’
All of these industries were represented by the various companies present, ranging from small Saudi law firms all the way to national flagships like Saudi Arabian Airlines and Aramco, and multinationals like FedEx and JP Morgan.
The forum was held in a pleasing mixture of English and Arabic, with translations available via headsets. Although the forum was strictly business, many of the invited speakers were government officials from the two countries. As a consequence, some of the speakers reflected on the nature of the US-Saudi relationship, which has been intensely political in addition to being commercial.
The current Saudi Ambassador to the US, Prince Abdullah bin Faisal bin Turki spoke fondly about the “special and enduring relationship” with the US, and recalled the 1990 Operation Desert Shield, when the US sent military forces to the Kingdom at the request of King Fahd, as a response to Saddam Hussein’s recent invasion of neighboring Kuwait.
There are many challenges facing the Saudi economy, with oil prices at a ten-year low. The Saudi economy is still heavily dependent on oil exports, and diversifying the economy is becoming increasingly urgent. Transitioning from an economy based on resource extraction to an economy based on manufacturing and services is a priority of the Saudi government.
Another priority of the economy is to increase the rate of local Saudis in the workforce, a process known as “Saudization.” The private sector is dominated by foreign nationals. According to most estimates only 10-20 percent of the private sector workforce is comprised of Saudis.
The role of relationships and trust in doing business in Saudi Arabia was repeatedly stressed, with one speaker going so far as to say: “There are three important things to do business in the Kingdom. Firstly, relationships. Secondly, relationships. Thirdly, relationships.”
Some of the participants took that message to heart, and skipped the panelists in order to develop new relationships with others. “For me, the speeches are only talk, I am here to do business” said one man who worked for a Middle Eastern travel agency who preferred to remain unnamed.
Throughout the forum, many of the participants networked over coffee, discussed business in the lobby, and finalized deals behind closed doors, all while the panelists continued to deliberate in the two ballrooms. The presence of Saudi and American women highlighted the growing importance women have in the kingdom’s private sector.
The last year has not always been smooth sailing for the Saudi-US relationship. Regional conflicts and Obama’s more distant relationship with the kingdom than his predecessor have characterized a tense period. But business continues as usual.