Going International Analysis Project (GIAP)

Target Market: Saudi Arabia

Company: Vinacafé Bien Hoa Joint Stock Company

Product name: Wake-up Coffee Weasel Flavored

Group 5’s members

Phạm Đỗ Tố Như – 2014710072

Huỳnh Hải Anh – 2014710006
Nguyễn Thị Hồng Hạnh – 2014710029
Bùi Minh Khuê – 2014710044
Trần Thị Thu Trà – 2014710102
Bùi Khánh Linh – 2011710028
Nguyễn Thu Trang – 2014710109
Tăng Hoàng Ngọc Diệp – 2013710022
Đồng Lan Hương – 1917710513
 TABLE OF CONTENTS
Contents Page

TABLE OF CONTENTS...............................................................................................1
APPENDIX....................................................................................................................4
PART 1. EXECUTIVE SUMMARY.............................................................................6
PART 2. FACTORS FOR ANALYSIS..........................................................................7
Country Overview......................................................................................................7
A. A. Factual data...................................................................................................7
1. Geographic location........................................................................................7
2. Neighboring countries....................................................................................7
3. Population.......................................................................................................7
4. Natural resources............................................................................................7
5. Main industries and locations within the country...........................................7
B. B. Background...................................................................................................7
1. Historical development...................................................................................7
2. Histories of key industries..............................................................................8
Section 2. Political and Legal Analysis......................................................................8
A. A. Political ideology..........................................................................................8
1. Narrow participation.......................................................................................8
2. Totalitarianism................................................................................................8
B. B. Political risk..................................................................................................8
1. Level of political risk......................................................................................8
2. Sources of political risk..................................................................................9
3. How to adapt to the political risk....................................................................9
C. C. Legal system..................................................................................................9
1. Theocratic law................................................................................................9
2. Difference of Saudi Arabia and Vietnam’ legal systems..............................10
3. National enforcement of property rights (patents, trademarks, and copyrights)
.......................................................................................................................... 10

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 4. Presence of product safety and liability laws................................................11
5. Level and focus of taxation...........................................................................11
D. D. International relations.................................................................................11
1. General relations with other countries..........................................................11
2. Multilateral agreements with other nations...................................................12
3. Bilateral agreements with Vietnam...............................................................12
Section 3. Economic Analysis..................................................................................12
A. A. Economic system........................................................................................12
1. Centrally-planned system.............................................................................12
2. Fiscal and monetary policies.........................................................................13
B. B. Economic development...............................................................................13
1. GDP and GDP per capita..............................................................................13
2. Level of black market activity......................................................................13
3. Level of human development........................................................................14
4. Developing country......................................................................................14
5. Macroeconomic indicators............................................................................14
C. C. Economic transition.....................................................................................15
1. Quality of managerial expertise....................................................................15
2. Capital availability........................................................................................15
3. Cultural issues...............................................................................................15
4. Environmental degradation...........................................................................16
D. D. Financial markets........................................................................................16
1. Exchange rates with key currencies and recent trends..................................16
2. Presence of currency controls/restrictions.....................................................17
E. E. Infrastructural forces....................................................................................17
1. Transportation (logistics)..............................................................................17
2. Communications...........................................................................................18
Section 4. Market Potential.......................................................................................19
A. A. Identify basic appeal...................................................................................19

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 1. Suitability of climate.....................................................................................19
2. Absolute product bans..................................................................................19
3. Access to financing.......................................................................................19
B. B. Measure market potential............................................................................20
1. Measure current level of imports of your product category..........................20
2. Measure current level of sales.......................................................................20
3. Calculate market potential indicator.............................................................20
4. Quality of infrastructure................................................................................21
C. C. Select the market or site..............................................................................21
1. Competitor analysis......................................................................................21
a. Number of competitors.............................................................................21
b. Market shares of each competitor.............................................................21
c. Appeal of competitors to segments or mass market..................................22
d. Customer loyalty to competitors...............................................................22
e. Threat from substitute products.................................................................23

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 APPENDIX

Figure 1. GDP of Saudi Arabia from 2011 – 2021

FCL Price – VND LCL Price - VND

Container Container
20 ft 36.338.200 - 67.987.600 at least 1 1.312.864 - 1.805.188
40 ft 46.888.000 - 93.776.000 CBM/VND
Figure 2. Sea freight shipping from Vietnam to Saudi Arabia

Kg Price – VND Kg Price - VND

1 1.600.000 - 2.200.000 3 3.000.000 - 3.600.000
2 2.400.000 - 2.800.000 4 3.800.000 - 4.400.000
Figure 3. Air freight shipping from Vietnam to Saudi Arabia cost

Year 2017 2018 2019 2020 2021

Population (million) 34.19 35.02 35.83 36 35.95
Urban population (%) 83.62 83.84 84.07 84.29 84.51
Figure 4. Saudi Arabia population from 2017 – 2021

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 Year 2019 2020 2021
GDP (billion USD) 803.62 703.37 833.54
GDP growth rate (%) 0.3 -4.1 3.2
Figure 5. Saudi Arabia’s GDP from 2019 - 2021

Market Size 5 Commercial infrastructure 48

Market growth rate 37 Market receptivity 15
Market intensity 32 Economic freedom 32
Market consumption capacity 45 Country risk 61
Overall score: 21/100
Figure 6. Saudi Arabia’s MPI in 2022

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 PART 1. EXECUTIVE SUMMARY
Vinacafé Bien Hoa JSC is a Vietnamese company specialized in the production,
processing and distribution of coffee and instant cereal mix. The company’s mission is
to make, market and sell unique, high quality brands of beverage and food products
that satisfy consumers at home and abroad. This is done by understanding the needs of
consumers, customers and other stakeholders and by operating within a clearly defined
set of values. 
We are determined to globalize the company’s products and services so that the
brand is reputable worldwide. Thus, Saudi Arabia is chosen to be our target market as
the country is known for its rich coffee culture in traditional, social events and
everyday life. 
To do our analysis, we based on the following factors and evaluate them from the
scale of 1 (being the lowest) to 5 (being the highest)

1 2 3 4 5
Country Overview x
Political and legal analysis x
Economic Analysis x
Market Potential x

Pursuant to our analysis, we concluded that Vinacafé should go international now

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 PART 2. FACTORS FOR ANALYSIS
Country Overview
A. A. Factual data
1. Geographic location
The Kingdom of Saudi Arabia is the largest Arab country in the Middle East between
the Arabian Gulf and the Red Sea.
2. Neighboring countries
Saudi Arabia borders Jordan and Iraq to the north and northeast, Kuwait, Qatar,
Bahrain, and the United Arab Emirates to the east, Oman to the southeast, and Yemen
to the south.
3. Population
The population of Saudi Arabia is 35.950,396 as of 2021
4. Natural resources
Saudi Arabia has the world's largest oil reserves and significant natural gas, gold, and
copper reserves.
5. Main industries and locations within the country
The Saudi economy is heavily dependent on the oil and gas industry, which accounts
for around 50% of GDP. Other major industries in the country include petrochemicals,
mining, agriculture, and tourism. The main industrial cities in Saudi Arabia are Riyadh,
Jeddah, and Dammam.

B. B. Background
1. Historical development 
Saudi Arabia has a long and diverse history, with multiple civilizations including
the Nabataeans who built Petra in Jordan, and the Lihyanites who built Dedan in Saudi
Arabia.
In the 7th century, Islam emerged in the region, and the city of Mecca became the
spiritual center of the religion. In 1932, the modern Kingdom of Saudi Arabia was
formed, uniting various tribes and territories under the rule of the House of Saud. The

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discovery of oil in the country in the 1930s had a profound impact on the nation's
economy and development and has become the driving force for the country.
Recently, Saudi Arabia has been diversifying its economy and reducing its
reliance on oil as part of the Vision 2030 program. The program includes initiatives
such as developing tourism, expanding mining, and promoting entrepreneurship and
innovation.
2. Histories of key industries 
Saudi Arabia's central location for trade between Asia, Europe, and Africa dates
back to ancient times when it was a hub for caravan routes connecting the Arabian
Peninsula to the Mediterranean and beyond. Saudi Arabia's oil reserves are the largest
in the world, which heavily contribute to the country's economy. The country also has
substantial natural gas, gold, and copper reserves. Over the years, the Kingdom has
diversified its economy, focusing on developing industries such as petrochemicals,
mining, and tourism.

Section 2. Political and Legal Analysis

A. A. Political ideology
1. Narrow participation
The Saudi Arabians have no freedom of speech, voting, and giving their opinion
to the government. Human rights are also being abused in the country. According to
Human Rights Watch, 48 people were executed in Saudi Arabia in the first third of
2018, half of them for non-violent crimes. As a result, free trade might be a challenge
for Vinacafé.
2. Totalitarianism
Due to the narrow participation, Saudi Arabia lacks the basic features of a
democracy. The country is a totalitarian country, ruled by the King with the hereditary
monarchy. Therefore the company must pay attention to disadvantaged factors such as
vague law, oppressive policies, government intervention in the economy.

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B. B. Political risk
1. Level of political risk
Very High   High            Moderate     Low             Very Low
                                 0 – 49.9       50 – 59.9     60 – 69.9     70 – 79.9     80 or more

Political Risk  

Saudi Arabia’s overall level of political risk is 70 in September 2019 and it

remains unchanged in 2020 and 2021. This shows that the country has a medium
political risk and is still keeping at the same level. 
2. Sources of political risk
Regional violence conflict is the main source of Saudi Arabia’s political risk. The
country faces external threats, notably from Iran and Iran-linked groups. While a full
regional war might not happen, Saudi Arabia is at risk of attacking its territory. From
the sources of political risk, terrorism is often occurs. Houthi militants in Yemen posed
the greatest security threat to Saudi Arabia with numerous cross-border attacks. These
can damage the company’ assets and reduce ability to distribute products. 
3. How to adapt to the political risk
As terrorism causes market uncertainty, economic destruction, trading obstacles
with political risk, it is best for the company to stay alert from the damaging effects by
monitoring the political situation on the mass media and warnings on the websites of
the Ministry of Industry and Trade or gather information to help predicting and
forecasting any risk from political risk services. Localization is also a way to lessen the
country’s violence conflict. By adapting the instant coffee mix into something close
and recognizable to the culture, Vinacafé might get a better chance in promoting the
product.
C. C. Legal system
1. Theocratic law
Saudi Arabia follows theocratic law and its judicial system is based on Islamic
law (Shari’ah). This system relies on religious teachings, as they are enshrined in the

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religious scriptures. As instant mix coffee is the main product, the company will have
no trouble in exporting according to the country’s Prohibited and Restricted Imports.
Additionally, the company must also look out for the high requirement of food safety
by The Saudi Standards, Metrology and Quality Organization (SASO) and Saudi Food
and Drug Authority (SFDA)
2. Difference of Saudi Arabia and Vietnam’ legal systems
The Basic Law of Saudi Arabia, which serves as the Constitution of the
Kingdom, provides that Sharia is the fundamental law of Saudi Arabia. The Basic Law
further provides that the King is the ultimate authority of the State and that regulations
are enacted by Royal Decree. Since Shariah could not cater to all aspects of human
activities and in order to keep up with modern life developments and requirements, the
Saudi government has enacted various regulations (often based on best international
practice)
Whereas, Vietnam's legal system is based on the socialism legal theory and
French civil law. The national Assembly is the highest office responsible for the law
making activities
Because of these differences between the legal systems of two countries, when
importing to Saudi Arabia, the company must strictly comply with the country’s law
and regulations to prevent any conflicts and avoid any upsets to the Kingdom’s custom.
3. National enforcement of property rights (patents, trademarks, and copyrights)
Besides the Saudi Authority for Intellectual Property (SAIP),  most recently, 
Saudi Arabia adopted the unified Gulf Cooperation Council (GCC) Trademark Law
(effective in September 2016) and is also a member of the GCC Patent Law and GCC
Customs Law, which helps to harmonize IP practices in Saudi Arabia. The company
will be sure to have their product protected by Saudi Arabia enforcement on property
rights
 Trademark: The GCC member states have well implemented provisions
to deal with trademark infringers. Similarly, the Trademark Law addresses the
infringement of both registered and unregistered trademarks.

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  Copyright: The Kingdom is party to the Berne Convention which sets
out basic principles including "national treatment" and the "automatic"
protection of copyright works.
 Patent: The GCC patent system provides for a unitary system which
includes all six GCC member countries; but it does not provide for a unified
court system. Pursuant to the GCC patent law, infringement matters are to be
handled directly in each country pursuant to the country’s own national patent
laws 
4. Presence of product safety and liability laws
The new Saudi food law has been put together by renewing existent inspection
policies and applying international standards to comply with the World Trade
Organization (WTO) membership requirements, such as the Sanitary and Phytosanitary
(SPS) Agreement and the Technical Barriers to Trade (TBT) Agreement specifications.
Vincafe will have to look out for these laws to ensure the product safety is up to
standard
5. Level and focus of taxation
The tax system of Saudi Arabia is made of several levies. These are: the income
tax, levied on different types of earnings; the corporate tax, applied to local and foreign
companies; the capital gains tax, one of the levies that needs to be paid by natural
persons; the Zakat payment, a special donation imposed on the surplus income of
taxpayers; and the value added tax, the newest levy entered in the Saudi taxation
system. Additionally, when Vietnamese companies export coffee products to Saudi,
and in this case Vinacafé, have to pay a rate of general duty of 5% and the average
VAT rate applicable in Saudi Arabia is 0. Therefore, Vinacafé should take advantage of
low tax to export the product.
D. D. International relations
1. General relations with other countries
Saudi Arabia has built good relations with most countries of the world.
Specifically, there have been close consultations with the U.S, China, Australia on

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international, economic, and development issues for the past few years. Additionally,
Saudi Arabia is a founding member of several multinational organizations, including
OPEC, the United Nations, the Arab League. The country plays a prominent role in the
International Monetary Fund, the World Bank, and joined the World Trade
Organization in 2005. Thanks to the country’s “openness” to the world, plus the
mutual friendship between Arab and Vietnam, Vinacafé should make use of this
chance to export its products to Arab. 
2. Multilateral agreements with other nations 
Saudi Arabia has signed many multilateral agreements with other nations in the
world. Agreement on Facilitating and Developing Inter-Arab Trade (Major Arab Free
Trade Area), GCC Free Trade Agreement, Trade and Investment Framework
Agreement (TIFA) are just a few examples. Such multilateral agreements have played
a crucial role in the country's development and openness to trading. 
3. Bilateral agreements with Vietnam
Vietnam and Saudi Arabia established diplomatic relations on October 21, 1999.
Over the past 20 years, bilateral relations between Vietnam and Saudi Arabia have
achieved encouraging progress, making them  important partners of each other in the
two regions. The two sides signed many important cooperation agreements such as a
Framework Agreement on Economic, Trade, Investment and Technical Cooperation
and Agreement on Double Taxation Avoidance. Due to the mutual friendship of the
two countries to promote cooperation, investment and trade relations, this can increase
the chance of Vinacafé exporting its product to Saudi Arabia

Section 3. Economic Analysis

A. A. Economic system
1. Centrally-planned system
Saudi Arabia is a centrally-planned economy. It is a resource-based economy
with strong government controls over major economic activities. 

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 Since the government is the ultimate decision maker and better than any other
business, manager, or consumer in allocating the country's resources, Vinacafé may
find it difficult to export goods here if the government's consensus is not reached, even
though the people of this country have a demand for our products.
2. Fiscal and monetary policies
From June 10, 2020, the Government of Saudi Arabia officially applied Decision
No. 559 on amending the harmonized tariff schedule and raising the general import tax
for goods of foreign origin. Accordingly, coffee is also subject to adjustment and the
tax rate increases from 5% to 12%. The company needs to pay attention to the change
in the new tax rate to calculate profits and costs correctly.
In Saudi Arabia, the interest rate decisions are taken by the Saudi Arabian
Monetary Agency. Because the Riyal is pegged to the dollar, Saudi Arabia typically
follows the US central bank policy. The Saudi Central Bank has recently raised its repo
rate by 25 bps to 5.5% following the move of the US central bank. As a result of this
interest rate increase, Saudi imports will become relatively cheaper as the dollar
strengthens. In addition, the fact that Saudi consumers and businesses may want to take
advantage of lower prices will likely increase the demand for imports in the country.
Vinacafé will have a higher chance of exporting goods.
B. B. Economic development
1. GDP and GDP per capita
According to the report of the World Bank, the GDP and GDP per capita of Saudi
Arabia in 2021 are USD 883,541,236,569 (Figure 1) and USD 23,185.9 respectively.
With such a high level of GDP and GDP per capita, Saudi Arabia can be ranked
as a rich country. The citizens of Saudi Arabia are likely potential customers of the
company; therefore, Vinacafé can export the product to their country at a good and
stable price (Figure 1)
2. Level of black market activity
Black market activity in Saudi Arabia declined over the last period thanks to
solutions such as-cash transactions and e-invoices, along with legislations regulating

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contracts with expatriates, said Minister of Economy and Planning Faisal Alibrahim in
the Zakat, Tax and Customs Conference. He also added that the underground economy
in Saudi Arabia nowadays accounts for 15% - similar levels as in advanced economies.
Almost all kinds of goods can be exchanged on the black market; however, most
of them are prohibited by law. Considering the company's export product is coffee,
which is not banned or lacking in quantity, the operation of the black market does not
have a significant impact on the export of goods.
3. Level of human development
Saudi Arabia ranks 25th in terms of gross national income (GNI) per capita yet
ranks 35th (a disparity of minus 10) in terms of the Human Development Index (HDI)
with an HDI of 0.875 in 2021. In 2021 Saudi Arabia is in the Very High Human
Development group in the ranking. The number 0.875 also shows that the people of
Saudi Arabia have a long and healthy life, an education, and a decent standard of
living. 
Therefore, after having their basic needs such as food, clothing and shelter, the
citizens of Saudi Arabia would still have the ability to fulfill other personal interests
and needs. This will be a condition for the company to be able to export products to
their country.
4. Developing country
Despite having a high Gross National Product (GNP) per capita (USD 21,540 in
2020 according to the World Bank), according to the definition from the International
Monetary Fund (IMF), Saudi Arabia is a developing country because of its lower
economic performance. 
5. Macroeconomic indicators
According to the International Labour Organization, we can find macro-economic
indicators as follows. Using 2010 as a benchmark, the consumer price index in 2021
Saudi Arabia is 126.2. In the same year, Saudi Arabia recorded an unemployment rate
of about 6.7%, an increase of 0.9% compared to that of 2020, which is higher than
Vietnam's unemployment rate of 2.5%. This may suggest that there is a potential

Page 14
market for Vinacafé’s products in Saudi Arabia, as the country may be seeking to
create more job opportunities through economic development. However, the inflation
rate rising to 14.8% in 2021 from -8.7% in 2020 may impact the affordability and
competitiveness of Vinacafé’s products in the Saudi Arabian market, particularly if the
exchange rate between the Saudi Arabian riyal and the Vietnamese dong is
unfavorable.
C. C. Economic transition
1. Quality of managerial expertise
The quality of managerial expertise in Saudi Arabia significantly impacts
Vinacafé's exports. Skilled professionals in finance, engineering, and technology
ensure smooth logistics, effective marketing, and optimal distribution channels.
However, Saudi Arabia's centrally-planned economy may hinder innovation and
entrepreneurship. Understanding regulatory frameworks is crucial for Vinacafé to
adapt and comply. Cultural factors influence management styles and decision-making
processes, requiring Vinacafé to respect and navigate these nuances. By leveraging
local expertise, understanding regulations, and adapting to cultural dynamics, Vinacafé
can establish a successful presence in the Saudi Arabian market.
2. Capital availability
Capital availability in Saudi Arabia significantly impacts Vinacafé's export
prospects. As one of the world's wealthiest nations with abundant oil and natural gas
reserves, Saudi Arabia possesses substantial capital resources.
The government's investment funds, such as the Public Investment Fund (PIF),
diversify the economy and provide potential funding for Vinacafé's expansion and
infrastructure development. Private equity firms and investment companies further
contribute to capital acquisition. Regulated by the Saudi Arabian Monetary Authority
(SAMA), the financial sector ensures stability and confidence for investors.
Overall, this capital availability empowers Vinacafé to fuel growth, enhance
market position, and seize opportunities in the Saudi Arabian market.

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3. Cultural issues
Cultural issues in Saudi Arabia have a significant impact on Vinacafé's export
efforts. With a deeply rooted Islamic culture, consumer preferences and behaviors are
influenced. Adapting to cultural nuances is crucial for Vinacafé to tailor its products,
marketing strategies, and packaging accordingly. Halal certification is essential, as it
governs food and beverage consumption for Muslims. Gender roles and segregation
require targeted marketing approaches. Building strong relationships through personal
interactions is important, and consideration of religious holidays and fasting periods,
such as Ramadan, is necessary. By understanding and navigating these cultural issues,
Vinacafé can effectively meet the preferences and behaviors of Saudi Arabian
consumers, boosting its export success.
4. Environmental degradation
Environmental degradation in Saudi Arabia has implications for Vinacafé's
exports. The negative impacts of the oil and gas industry on air and water quality, as
well as climate change, can indirectly affect Vinacafé's production processes, supply
chain, and brand image.
To take advantage of Saudi Arabia's environmental policies, Vinacafé can align
its operations with initiatives on renewable energy and sustainable agriculture. This
includes utilizing renewable energy sources in production and implementing
sustainable farming techniques. Collaborating with local organizations and
participating in government-led programs focused on sustainability can showcase
Vinacafé's commitment to environmental stewardship. Transparent and responsible
supply chain management, ensuring sustainable sourcing of coffee beans, is crucial. By
proactively addressing environmental concerns and leveraging Saudi Arabia's
environmental policies, Vinacafé can differentiate itself as a responsible and
environmentally conscious brand. This enhances its market position and appeals to
environmentally conscious consumers, contributing to the company's growth and
success.

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D. D. Financial markets
1. Exchange rates with key currencies and recent trends
The currency of Saudi Arabia is the Saudi Arabian Riyal (SAR). The exchange
rate of SAR to other key currencies can vary depending on market conditions and other
factors such as geopolitical events, trade policies, and economic indicators.
In recent years, the exchange rate of SAR has been relatively stable against major
currencies. According to the IMF, the average exchange rate of SAR to USD in 2020
was 3.751 SAR/USD, which was almost unchanged from the previous year. Similarly,
the exchange rate of SAR to EUR and GBP has also remained relatively stable. 
With a stable exchange rate, it helps maintain stable prices for exported goods
and services. Thereby, Vinacafé Bien Hoa can enhance the competitiveness of cafe
products in the international market as well as have better access to foreign customers
and retain their market share. Moreover, with a stable exchange rate, Vinacafé Bien
Hoa are not exposed to the risk of sudden exchange rate fluctuations. This ensures
stable profit margins and mitigates negative impacts on business operations.
However, it's important to note that exchange rates can be volatile and subject to
sudden changes. As such, Vinacafé may need to closely monitor exchange rate
movements and consider hedging strategies to manage currency risks.
2. Presence of currency controls/restrictions
Currency exchange restrictions in Saudi Arabia are virtually non-existent,
allowing for easy exchange of interest to Vietnamese currency and opening doors for
foreign investment such as Vinacafé Bien Hoa.
E. E. Infrastructural forces
1. Transportation (logistics)
Today, the Kingdom has a modern transportation network of roads, railroads, air,
marine and public transport.
With the developed transport system of Saudi Arabia, we have two alternatives
for shipping products from Vietnam to Saudi Arabia: sea freight or air freight
 Sea freight shipping from Vietnam to Saudi Arabia

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 Providing a specific pricing range is challenging due to various factors such as
departure and arrival ports, carrier, item type, quantity, and volume. Prices are
regularly updated to reflect market changes. The cost of shipping goods by sea depends
on their volume and weight. To determine this cost, the weight and volume of the
goods are crucial. The weight/volume ratio is calculated using the equivalency
approach of "1 ton = 1m3." Units of measurement can be either volume (cubic meters)
or mass (grams/kilograms). For example, if a cargo weighs 8 tons with a capacity of
10m3, the cost is 10 UP. Alternatively, if the cargo weighs 9 tons with a volume of m3,
the price is 9 UP (Figure 2)
 Air freight shipping from Vietnam to Saudi Arabia
Regarding air freight express, the weight/volume ratio is 1 ton/5m3, or 1:5. For
instance, 1m3 is equivalent to 200 kg (1:5). In the case of traditional air freight, the
standard guideline is 1 ton/6m3, or a weight/volume ratio of 1:6. Gross weight charges
apply for ratios less than or equal to 1:6. To establish a price reference, the actual
volume is divided by 6, generating a volumetric weight. For example, 1m3 is equal to
167 kg (1:6). (Figure 3)
2. Communications
The Kingdom’s landline telephone system is modern and efficient, using
extensive microwave radio relay, coaxial cable, and fiber-optic cable systems.
Internet usage is growing rapidly in Saudi Arabia. More and more lines are being
provisioned for Internet access to accommodate increasing demand, including high-
speed service such as DSL.
Compared to other countries in the world, phone and internet charges in Saudi
Arabia are much lower. And they can vary depending on the carrier and service users
subscribe to.
The average price for the basic mobile cost is around 50-100 SAR (equivalent to
about 313.000-625.000 VND) per month. Besides, the basic internet package is about
50-100 SAR for 2-5 GB of data. Major carriers such as STC, Mobily and Zain also

Page 18
offer premium service packages for 150-300 SAR (approximately 250.000-500.000
VND) per month, including mobile and internet.
With the low internet and phone charges in Saudi Arabia, our company can get
many opportunities when exporting coffee products. Firstly, it helps the company
access new media channels and markets to promote and reach potential customers.
Thereby, Vinacafé can promote products, increase sales and expand export markets. In
addition, low internet and mobile phone costs also help the business save
communication costs with partners and customers in Saudi Arabia, help reduce
shipping costs and increase the competitiveness of products.

Section 4. Market Potential

A. A. Identify basic appeal
1. Suitability of climate
Climate in Saudi Arabia is characterized by a desert climate, with the exception
of the southwestern part of the country, which exhibits a semi-arid climate. The climate
in Saudi Arabia makes it easy for people to feel tired, so our coffee can boost energy
for the body and limit the state of fatigue. Coffee also contains antioxidants such as
polyphenols, which can help restore cells damaged by UV rays in the sun, reducing
problems such as freckles, melasma,.. In terms of climatic conditions, our coffee
products are suitable for export to Saudi Arabia.
2. Absolute product bans
Coffee is not in Saudi Arabia’ product bans list, so it is legal to export the product
3. Access to financing
Saudi Arabia is a lucrative market for businesses to expand their operations, with
a booming economy and a rapidly diversifying range of industries. Thankfully, Saudi
Arabia is a favorable investment destination for corporations, with many pathways
available to secure the necessary funding.
There are a range of financial programs for foreign business to access, including:
the Arab Trade Financing Program, which offers medium- and long-term loans to boost

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trade. There is also funding for industrial projects through the Saudi Industrial
Development Fund (SIDF) as well as other government and commercial bank funding
mechanisms.
It can be seen that Saudi Arabia has many policies to facilitate for foreign
business to access local financing, which benefits Vinacafé a lot in the product export.
B. B. Measure market potential
1. Measure current level of imports of your product category
In 2021, Saudi Arabia imported USD 368 million in coffee, becoming the 20th
largest importer of coffee in the world. In the same year, coffee was the 94th most
imported product in Saudi Arabia. Therefore, the import value of coffee in this country
is considerable, which means the market for the company is likely to have potential.
2. Measure current level of sales
Revenue in the coffee segment in Saudi Arabia amounts to USD 2.42 billion in
2023, and is projected to increase to USD 2.78 billion by 2025. Coffee is replacing
many traditional beverages as a central part of the modern lifestyle in many regions of
Saudi Arabia. The surge in demand for coffee is due to the increased corporate culture
and urbanization. In addition, the rising popularity of coffee culture in the country
further promotes the Saudi Arabia coffee market. This indicates that Vinacafé can
benefit from exporting to Saudi Arabia, with the advantage of providing a new and
unique coffee flavor.
3. Calculate market potential indicator
Calculations of some important indicators: (Figures are updated to the latest)
 Market Size (Figure 4)
Saudi Arabia is the fourth largest state in the Arab world, with a population as
reported above. Due to urbanization and rapid economic development, most of the
population no longer leads a nomadic lifestyle. As coffee has become a modern
necessity for urban area people - many drink coffee for its energy boost effect, others
for its flavors, in terms of market size, Saudi Arabia is a suitable place for exporting
coffee.

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  Market Growth (Figure 5)
Saudi Arabia is one of the world's largest economies and is currently at rank 18. If
its GDP is calculated per inhabitant, taking purchasing power parity into account, then
Saudi Arabia ranks 28th in the list of the richest countries. These figures show that the
standard of living in Saudi Arabia is high and people will most likely be willing to
spend money on beverages, such as coffee. 
 Evaluation
The Market Potential Index (MPI) - 2022 released by Global Edge reports that
Saudi Arabia’s MPI ranks 64th out of 97 countries measured; with an overall score of
21/100. (All indicators are evaluated on the scale of 0-100). (Figure 6)
Even though Saudi Arabia is not one of the top countries in terms of MPI, there
exists a demand potential for our product, given the two previously mentioned
indicators. The risk to export to this country may be more prevalent with other
companies and products, but it is not very high for Vinacafé. 
4. Quality of infrastructure
Saudi Arabia’s transportation and logistics sector is large and strongly supported
by state-led investment in rail, maritime, road, airport and logistics infrastructure.
Saudi Arabia has managed to reduce the time, cost, and variability of importing
goods through process re-engineering and automation. Average declaration clearance
time at seaports has been cut in half to 2.2 days and at airports to 1.2 days. Saudi
Arabia also launched a port system to guarantee secure and efficient exchange of
information among all parties involved in the import/export process, covering vessel
and terminal operations, digital payment, and truck management. Therefore, the export
process to Saudi Arabia will not be a challenge to Vinacafé in terms of infrastructure.
C. C. Select the market or site
1. Competitor analysis
a. Number of competitors
Vinacafé Bien Hoa Joint Stock Company has to contend with other coffee makers
in Saudi Arabia domestically there are 3 main competitors: El Farouki Coffee Center,

Page 21
Al Najjar Co and Al Hamawi Coffee. Vinacafé should take a strategic approach when
dealing with those competitors.
b. Market shares of each competitor
El Farouki Coffee Center: As the market leader in coffee sales in the Kingdom of
Saudi Arabia, the company in 2010 commanded a 15% retail market share to retain its
dominance in the market.
In 2010, Al Najjar Co was the second largest coffee seller in Saudi Arabia where
it covered a market share of 13%; it was only second from El Farouki Coffee Center.
Al Hamawi Coffee: the company shares an 11% market share of the retail market
of coffee in Saudi Arabia.
c. Appeal of competitors to segments or mass market
After some research, we found that the above three competitors' appeal to
segments or mass market comes from diverse and quality products.
El Farouki Coffee Center are in the lead with diverse blend of refined flavor and
powerful taste of roasted coffee beans, specifically, Turkish coffee latte and traditional
Arabic coffee. Whereas, Al Najjar Co. focuses more on making the finest Lebanese
coffee from coffee beans prepared from NAJJAR RAQWA, a Najjar kettle made with
technological brilliance. This makes their coffee product packed with high quality and
exceptional flavor. Different from the two competitors, Al Hamawi Coffee's products
are mainly traditional Arabian coffee. Though there are not many options, customers
are still attracted to their simple but unique coffee taste
Thus, Vinacafé needs to create differences in its products and improve product
quality when dealing with these fierce competitors
d. Customer loyalty to competitors
Over the years, El Farouki Coffee Center, Al Najjar Co, and Al Hamawi Coffee
have built strong brands known for their quality coffee products that we have
mentioned above. In addition, customers also develop their sense of loyalty in these
brands for their excellent customer service.

Page 22
 El Farouki Coffee Center attracts their customers with great service and comfy
space with jazzy music that suit the purpose of any coffee drinkers there. Al Najjar Co
has a more modern and fancy vibe in their coffee shop but their menu is still at an
affordable price. This is a plus for customers to stay longer and come round. Finally,
Al Hamawi Coffee would go beyond with providing their customers with treat
alongside their coffee, metionably their Arabian sweets and premium roasted nuts
Knowing these information, Vinacafé needs to consider improving their business
strategy, have preferential policies on prices and discount programs. to stimulate
product demand and incorporate their coffee suitable with the local preferences
e. Threat from substitute products
In the specialty coffee industry, substitute products for coffee can be those non-
alcoholic beverages such as tea, soft drinks, fruit juices and energy drinks and other
caffeinated drinks. Facing threat from those substitute products, Vinacafé needs to
create differentiation in its products and customer value promotion. The company can
highlight its products with many different flavors. In addition, Vinacafé should offer
better pricing policies and have a lot of incentives to promote customer value.

Page 23
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