Al-Rushaid Group sets new trend for Saudi businesses?
In a time of increasing tensions in Saudi Arabia, with almost daily Al-Qaeda attacks, the Saudi business community is trying to hedge the risks of continuing business as usual by forging alliances with global companies. An exodus of skilled foreign workers who have dominated the technical sectors of the Saudi economy over the past fifty years, is forcing the Saudi businessmen to come up with new strategies.
The obvious answer to address the shortage of technology and know-how is to make Saudi companies more global, making strategic acquisitions of niche companies. One of the dynamic Saudi companies making an increasing mark on the British business community is the Al Rushaid Investment Group of Saudi Arabia, with an annual turnover of $1 billion.
The ninth largest Saudi company, founded in 1977, has ambitious plans for expansion by buying into specialist companies. Its directors are gaining a global foothold by a series of strategic mergers. The latest is a deal almost completed with Skanska Whessoe. Negotiations are well advanced for the sale of the liquid natural gas contracting business. Its acquisition of Whessoe is part of the strategy to deal with the new challenges faced by the Saudi business community.
The Al Rushaid Investment Group includes manufacturing, training in oil field equipment, real estate, construction and electro-mechanical equipment. Other recent buy outs include High Point Rendel and the Cleveland Bridge Group.
It is likely that Saudi companies will increasingly turn to acquiring specialist units. This is also a good means for Western companies to continue trading with the world largest oil producer. Many Western companies, including Citibank and ABB have been forced to rethink their operations in the Kingdom following the risk of terrorism. Several ABB workers were actually killed.
Risks still remain, however. An Al-Rushaid building was targeted in the latest major terrorist attack in the industrial town of Khobar in Eastern Saudi Arabia, 29-30 May. People arriving for work at the Al-Rushaid Petroleum Office were attacked, and the militants moved on to a residential compound of villas and apartments belonging to expatriates.
There is no instant panacea to the threats to Al-Qaeda threat in Saudi Arabia. Al-Rushaid's current strategy, however, will allow the company to be better equipped to hedge the risks of losing valuable foreign skilled labor. The Al-Rushaid trend is likely to define business in Saudi Arabia over the next few years. (menareport.com)
© 2004 Mena Report (www.menareport.com)
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