You could be excused for thinking that Saudi Arabia is one of the richest countries in the world! With a GDP per capita in the Top 50s and estimated cash reserves of over $500 billion at the end of 2010 prove this! Add to that the news of Qatar being the richest nation in the world on the basis of GDP per capita, the image of this regions riches is further perpetuated. What if I were to tell you that this is only half the story? And the other half is a complete paradox of what most would expect about Saudi Arabia.
Did you know that in a nation of 27 million only 10% of the population is making more than $4000 per month? With people in a government job making less than $1000 a month and those in a private company making about $2000 a month. This shows the great divide between the rich and the poor. The situation gets even worse when one looks at the impending real estate crisis prevailing today. On one hand we have some families who own more land than anyone can imagine and on the other there are thousands if not millions struggling to own a home. For perspective the Kindgom needs about 2 million new housing units over the next 10 years but the government is unable to do anything about it apparently because there is no vacant land available. There has been a royal decree to build 500,000 housing units with no project end date in sight. Why? The land owners have no incentive to sell. For a city like Riyadh, 50% of the land is vacant and unused. We are talking about 800 sq. km. of prime real estate laid to waste. With more demand and an artificially created shortage of land the average Saudi is forced to not only forget about ever owning a home (with a basic apartment costing about $150,000) but pay about $8,000 to $10,000 in annual rent on an income of about $24,000 per annum.
Add to this a bustling youth population of 5 million in the age bracket 18-30 with about 10% unemployed. We can expect one half of this segment – the men looking to marry and hoping to save about $20,000 as dowry. When you look at the complete picture the equation simply does not add up. Either they are going to be homeless or single! This is one aspect of the paradoxes that prevail in Saudi Arabia. A paradox that has been captured on film and recently exposed through social media. One is the short film “Monopoly” – an inspiring dark comedy made to raise awareness about the impending real estate crisis . The film was produced and directed by Bader Al-Hamoud. So far it had received over 1 million views (1.46 million to be exact!). You can check out the film with English subtitles here.
The other is a series of short films titled “”Mal3ob3lena”by Firas Bakna, a Saudi Blogger who went out to the poor districts of Riyadh to give the “have’s” a true picture of the “have not’s”. The total views on his YouTube channel for all “Mal3ob3lena” related videos exceeds 3 million. You can check out the film with English subtitles here (the video is blocked in Saudi Arabia).
What is the key learning? The paradoxes that exist across all aspects of Saudi life are not as apparent and this is something we as marketers often tend to overlook. If these paradoxes are real and deeply rooted then FMCG companies, for example might have to rethink all the key elements of their Marketing Mix. We have seen Hindustan Lever in India realizing this fact and customizing their SKU’s to meet the needs of the rural customer. They started using sachets as a big volume driver and at the same time have been engaging poor rural women as a network of saleswomen to not only drive product sales but be a source of employment for them as well. Similar kind of approaches might be be needed for Saudi Arabia as well that reflect these prevailing paradoxes. It could prove to be a win-win for both parties.
I originally wrote this post for the PDDB Blog – reposted from here!
This September I completed my sixth year of working in Saudi Arabia as Planning Director for DDB. Through the years I have come across many different perspectives and researches on the country and it was not so long ago that I tried to assimilate my learning and chalk out a point-of-view. It was triggered by the need to give an “outsider” – a client based out of Saudi Arabia an inside scoop on the market. The presentation was never made for whatever reason. Not seeing any use for it just lying around offline I decided to put it in the public domain online and share my perspective with the world.
Simply stated I believe Saudi Arabia is a very distinct country from a social and cultural context. It is unlike any other society where there would be minor extremes on both ends with a large majority in the middle. The parameters could be anything like the divide between modernity and tradition, rich and poor, from being culturally exposed to being culturally deprived etc. to name a few. For simplicity however, let’s just say that white is on one end, black on the other with gray in between. To my mind Saudi Arabia is one of those unique places in the world where there is a large white and a large black on either end, with a small gray in the middle. This is what makes Saudi Arabia a society of paradoxes, a society with extreme opposites co-existing together in large numbers. I cannot say if Saudi Arabia is the only country in the world which is so but I can surely say it is one of the few!
Below is my effort to put this perspective in a presentation form with supporting facts. Hope you find it both interesting and useful.
Update: On Sep 23, I learnt from the SlideShare editorial staff that they really liked this presentation and decided to feature it on their homepage! Despite many prior efforts this was the first presentation that I had ever posted publicly on SlideShare. Hurray!
I bumped across a tweet by Chris Voss on the subject and it intrigued me quite a bit. This is highly unusual considering the fact that in Saudi Arabia at Applebees there is a note on the bill that reminds you to please tip the server despite the service charge! It made me want to dig a little deeper on this subject and I discovered some fascinating contrasts between Saudi and Icelandic society. I also got some insight as to why waiters in Iceland would take offense if they were tipped.
For one Icelanders are a very homogenous society unlike Saudi Arabia which is a mix of Arabs from all over the Middle East to Asians from Pakistan all the way up to the Philippines. Most Icelanders are descendants of Norwegian and Celtic people who settled in the 9th and 10th centuries. Their language has essentially been the same over the centuries. For the common Icelander reading their old medieval sagas from the 1200s is relatively easy for the same reason. This gives them alot of pride in tracing their ancestral roots. They are also homogenous when it comes to religion – 87% belong to the state church. They are egalitarian and highly literate. They have a great love of literature. They publish more books than any country in the world, while there are hardly any libraries in Saudi Arabia. Doing well and finishing one’s education are widely held societal priorities unlike Saudi Arabia where it is only beginning to become a top priority
Icelanders are also known to be very independent and individualistic, while Saudi society is extremely interdependent and collectivist. Icelanders have a strong work ethic. The country’s work week is the longest in Europe. While in Saudi people have not developed the same sense about work. This explains why there are so many expats in the workforce.
In Iceland before the mid-70s working as a server was considered a demeaning job. Tipping was therefore considered an insult as it further emphasized the server’s position as a servant. Therefore there is no tradition to tip in Iceland. Before the 70s going out was also not popular and there were not many restaurants either. However, that has changed since then, but the tradition of no tipping has continued. While in Saudi Arabia, people eat out very often. Most servers are expatriates and they are only here to make money. Therefore they feel no shame in being tipped. Rather they would be very grateful for the gesture! Interesting contrast don’t you think?
