Saudis Seek to Bolster Trade in Their Country
Trade: State’s Exports, Once at $745 Million in 1999, Dropped to $222 Million in 2001
BY MANDY JACKSON
California exports to Saudi Arabia have decreased by two-thirds since 1999.
In order to increase trade with U.S. companies, two businessmen from Saudi Arabia visited San Diego recently during a West Coast tour to encourage investment in the kingdom.
Saudi Arabia has been a good market for San Marcos-based Nimbus Water International’s water treatment products, according to Sid Brandhuber, vice president of the company.
Nimbus exports reverse osmosis water treatment systems for residential, commercial and industrial uses to about 40 countries. The company has been doing business in Saudi Arabia for 12 years.
After a stop in Los Angeles and before a trip to Santa Barbara, Yousuf Alireza and Hassan Al Kabbani, members of the Chamber of Commerce and Industry from the city of Jeddah, met with the board of directors of the San Diego World Trade Center and representatives of local companies March 18.
“Because we are a much smaller economy, we are not on the radar screen,” Alireza said.
The United States and Saudi Arabia have been friends and business partners for many years, he noted. The U.S. is the biggest investor in the kingdom, and Saudi Arabian companies invested roughly $600 billion in the United States last year.
According to the California Technology, Trade and Commerce Agency in Sacramento, exports to Saudi Arabia from California have decreased by more than two-thirds over the last three years. In 1999, exports were about $745 million, dropping to $371.6 million in 2000, and $222 million in 2001.
Saudi Arabia was a major market for Nimbus until about two years ago, Brandhuber said. That’s when the company’s distributor began building its own water treatment products and the market became much more competitive. Companies from Asia and Europe began selling similar, but lower-cost products, he said.
“Hopefully, within the next 12 months, we will be able to regain some of our market share,” Brandhuber said.
Nimbus plans to increase its presence in Jeddah and Saudi Arabia’s eastern territory through a streamlined commercial and industrial line of products.
Science Applications International Corp., based in San Diego, has done business in Saudi Arabia for 18 years.
Giac Modica, a vice president in SAIC’s McLean, Va., office and deputy Middle East coordinator for the information technology research company, said most foreign companies operating in Saudi Arabia partner with Saudi companies to avoid major taxes.
“Generally speaking, they’re very eager to find quality U.S. partners,” Modica said.
SAIC operates in Saudi Arabia through a joint venture for its commercial business transactions. Foreign military sales are conducted through the U.S. government.
“As businesspeople in Saudi Arabia, we have been very behind in developing ties with cities in the United States,” Al Kabbani said. In the past, many Saudi companies have worked mostly with U.S. companies they met at trade shows.
Alireza said there is an effort to create a one-stop shop for quick licensing and approvals for foreign companies to do business in Saudi Arabia. Already, the government has loans with interest rates as low as 2 percent available for industrial development.
Because of the country’s vast oil resources, petrochemical products from polymers to gasoline remain the majority of Saudi Arabia’s exports, and exports of other Saudi-made products are increasing.
Alireza is a partner in the Xenel Group of Companies. Xenel’s subsidiary, SIDI, exports fiber-optic cables to 70 countries.
Modica said information technology services are depressed, but the telecommunications industry is booming because of privatization.
“The amount of hardware being bought is increasing,” Modica said. Prices for computers and related products are coming down as telecommunications systems are modernized.
Food production and construction are also major industries. Al Kabbani is vice chairman of the Isam Khairi Kabbani Group, which is involved in both industries.
Jeddah is a leading city in the Middle East for medical services and health care, Alireza said. A business park for biotechnology companies is being discussed.
The country has improved its airports, roads and industrial facilities over the last 20 years and its railroad system is being expanded.
“The biggest potential is the indigenous population that hasn’t been leveraged as a work force,” Alireza said. Many of the country’s young people are well educated, he said, and some have attended universities in the United States.
“Generally speaking, I would say the relationships (between SAIC and its Saudi Arabian customers) are good. They have prevailed since Sept. 11 especially,” Modica said.
After the terrorist attacks, relations were tense but have since eased. SAIC has not seen any change in its relationships with customers and business partners in Saudi Arabia, who have actually gone out of their way to make SAIC feel comfortable about doing business with them.