Saudi e-commerce valued at SR15bn annually

Updated 30 August 2013
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Saudi e-commerce valued at SR15bn annually

Economists confirm that e-commerce in Saudi Arabia is experiencing a high growth, estimating its value at SR15 billion per year. The size of the market is expected to increase at high rates in the coming years due to the eradication of trading obstacles, creating an ideal solution for buying low priced items and with minimal effort.
The Kingdom is progressing the fastest among all the Arab countries in the field of e-commerce as witnessed by the significant expansion in this area during the past two years, according to sources. The progress is due to the support of development in communications technology, and has allowed the acquiring of various goods at lower prices compared to what exists in the market.
However, a number of risks and challenges are associated with shopping online, namely the possibility of the leakage credit card information abroad, the incompatibility of expectations and the product received, and the new nature of this type of shopping. Also, some challenges emerge as a large number of shoppers, especially women and girls, must adjust their desire to preview the goods themselves before purchasing them. The high price of Internet connections in the Kingdom, as compared to the other developed countries, is also a problem.
Fadl bin Saad Al-Buainain, an economic expert, estimated the volume of e-Commerce trade in Saudi Arabia to be more than SR15 billion annually, adding that the Kingdom is advancing with all Arab countries in this area, and ranks first among Arab countries in terms of e-procurement practices.
Albuainain indicated that e-commerce in Saudi Arabia has witnessed significant growth over the past two years as a result of support in the development of technology and of direct communications with global retailers. Such expansions, he confirmed, will allow for the purchase of international brands, mostly apparel and electronic devices. Price is the main factor and that is motivating citizens toward e-procurement instead of buying locally.
Regarding the risks associated with shopping online, these risks are reduced when dealing with the known international companies, he said.
Abdul Rahman Al-Soniaa said that online shopping during Eid Al-Fitr saw an increase in sales volume exceeding SR300 million. According to Al-Soniaa, e-Commerce faces three hurdles — the novelty of this type of trade and the difficultly in building the trust of the shopper in a short period of time, the fear and apprehension toward e-procurement, especially with regard to credit card usage, and the adjustment from being able to preview goods in person prior to purchase.
The goods offered online do not compete with local markets in terms of the number of options offered, whether clothes, shoes, perfume or other goods, he added.
As an expert in the field of e-commerce, Mohammed Al-Sheheri, stated that the reasons behind delaying the growth of e-Commerce in Saudi Arabia is the higher prices of Internet connections, which are still too high and expensive compared to prices in developed countries.
“The cost of providing fiber optic service to homes in the Kingdom is double the cost in a country like the United States of America,” he said, adding that Internet prices in Saudi Arabia should decrease at a very fast rate. He also stressed the importance of issuing laws and regulations to protect both the seller and customers on the Internet, which could resemble similar laws in other countries with slight modifications to fit the Saudi market.


US eases restrictions on China’s Huawei to keep networks, phones operating

Updated 21 May 2019
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US eases restrictions on China’s Huawei to keep networks, phones operating

  • The company is still prohibited from buying American parts and components to manufacture new products without license approvals
  • Out of $70 billion Huawei spent buying components in 2018, some $11 billion went to US firms
WASHINGTON: The US government on Monday temporarily eased some trade restrictions imposed last week on China’s Huawei, a move that sought to minimize disruption for the telecom company’s customers around the world.
The US Commerce Department will allow Huawei Technologies Co. Ltd. to purchase American-made goods in order to maintain existing networks and provide software updates to existing Huawei handsets.
The company is still prohibited from buying American parts and components to manufacture new products without license approvals that likely will be denied.
The US government said it imposed the restrictions because of Huawei’s involvement in activities contrary to national security or foreign policy interests.
The new authorization is intended to give telecommunications operators that rely on Huawei equipment time to make other arrangements, US Secretary of Commerce Wilbur Ross said in a statement.
“In short, this license will allow operations to continue for existing Huawei mobile phone users and rural broadband networks,” Ross added.
The license, which is in effect until Aug. 19, suggests changes to Huawei’s supply chain may have immediate, far-reaching and unintended consequences for its customers.
“The goal seems to be to prevent Internet, computer and cell phone systems from crashing,” said Washington lawyer Kevin Wolf, a former Commerce Department official. “This is not a capitulation. This is housekeeping.”
Huawei, the world’s largest telecommunications equipment maker, declined to comment.
The Commerce Department said it will evaluate whether to extend the exemptions beyond 90 days.
On Thursday, the US Commerce Department added Huawei and 68 entities to an export blacklist that makes it nearly impossible for the Chinese company to purchase goods made in the United States.
The government tied Huawei’s addition to the “entity list” to a pending case accusing the company of engaging in bank fraud to obtain embargoed US goods and services in Iran and move money out of the country via the international banking system. Huawei has pleaded not guilty.
Reuters reported Friday that the department was considering a temporary easing, citing a government spokeswoman.
The temporary license also allows disclosures of security vulnerabilities and for Huawei to engage in the development of standards for future 5G networks.
Reuters reported Sunday that Alphabet Inc’s Google suspended business with Huawei that requires the transfer of hardware, software and technical services except those publicly available via open source licensing, citing a source familiar with the matter.
Google did not immediately respond to a request for comment on the new authorization.
Out of $70 billion Huawei spent buying components in 2018, some $11 billion went to US firms including Qualcomm Inc. , Intel Corp. and Micron Technology Inc.
“I think this is a reality check,” said Washington trade lawyer Douglas Jacobson. “It shows how pervasive Huawei goods and technology are around the globe and if the US imposes restrictions, that has impacts.”
Jacobson said the effort to keep existing networks operating appeared aimed at telecom providers in Europe and other countries where Huawei equipment is pervasive.
The move also could assist mobile service providers in thinly populated areas of the United States, such as Wyoming and eastern Oregon, that purchased network equipment from Huawei in recent years.
John Neuffer, the president of the Semiconductor Industry Association, which represents US chipmakers and designers, said in a statement that the association wants the government would ease the restrictions further.
“We hope to work with the administration to broaden the scope of the license,” he said, so that it advances US security goals but does not undermine the industry’s ability to compete globally and remain technology leaders.
A report on Monday on the potential impact of stringent export controls on technologies found that US firms could lose up to $56.3 billion in export sales over five years.
The report, from the Information Technology & Innovation Foundation, said the missed opportunities threatened as many as 74,000 jobs.
Wolf, the former Commerce official, said the Huawei reprieve was similar to action taken by the department in July to prevent systems from crashing after the US banned China’s ZTE Corp, a smaller Huawei rival, from buying American-made components in April.
The US trade ban on ZTE wreaked havoc at wireless carriers in Europe and South Asia, sources told Reuters at the time.
The ban on ZTE was lifted July 13 after the company struck an agreement with the Commerce Department that included a $1 billion fine plus $400 million in escrow and replacement of its board of directors and senior management. ZTE, which had ceased major operations as a result of the ban, then resumed business.
(Reporting by Karen Freifeld in New York and David Shepardson in Washington; Additional reporting by Diane Bartz in Washington and Angela Moon; Editing by Lisa Shumaker and Cynthia Osterman)