Saudi Arabia’s Strategy for the Consumer Goods Industry
Domestic appliances of larger size (refrigerators, cookers, freezers, washing machines etc) form markets served predominantly by local producers due to the size of the products and the logistics disadvantage that would be incurred due to transportation. While boasting of some local appliance assemblers, currently Saudi Arabia and the wider Middle Eastern market are predominantly supplied by long haul imports, particularly from the US, Korea, Italy and now China.
The market for these products in the Middle East and North Africa is quite significant and the Saudi Clusters Program intends to further study the feasibility of developing a consumer goods cluster to supplant the long haul imports and supply these products from within the region.
The manufacturing of consumer goods involves the fabrication of plastic and metals parts, incorporation of primary components and their assembly. Although each type of appliance uses a slightly different mix of materials, most appliances share a common base of a large metal housing or frame, stamped metal or molded plastic exteriors, molded plastic parts, circuit boards, switches, current-carrying wire and an electrical motor unit.
Analysis of the economics of the consumer goods value chain suggests that there is a large proportion of cost in components made from raw materials that should fundamentally be available for low cost in Saudi Arabia. The hypothesis driving this cluster is that if the components and assembly can be both executed in the country, in partnership with leading major international firms, then the combination of cost, design, and image can form a sustainable competitive cluster for Saudi Arabia.
For more information or to explore how your business may take advantage of these opportunities please contact us.
