In the recent past Bangladesh’s macroeconomic performance has come to be increasingly dependent on the performance of her external sector. This is manifestly demonstrated by the shift in the relative importance of aid and trade in the economy of the country. In 1990 the country’s earnings of the foreign exchange from export and remittance was 1.3 times that of the aid disbursed; by the year 2001 it was almost 5 times as high.
Bangladesh’s graduation from a predominantly aid recipient country to a predominantly trading country is one of the major achievements of the 1990s. The structural shift from primary to manufacturing exports, from resource-based to process based exportables and from the traditional jute-centric to the emergent RMG-centric export is remarkable by any standard. Over the same period the country had also to import an increasing amount of production and non-production related commodities. Increasing exports have allowed the country to service a large part of this growing import demand without seriously undermining the balance of payments position of the country and the country’s debt servicing record.
However, narrow export base and lack of diversification of exports has led to a situation where the Bangladesh’s export sector performance has come to predominantly hinge dependent on the performance of the RMG sector. So, in this project we are trying to explore possible opportunities for a new product in a foreign market. We are planning to export Fish Powder to Saudi Arabia. This would hopefully contribute to the effort of product diversification in the export sector.
Fish powder is a very known and consumed product all over the world. It is a very popular product in U.S.A., Asia and Europe. It is mainly consumed in western countries where fast foods are more popular. We selected Saudi Arabia from all these countries to export our product.
Why Saudi Arabia?
We have chosen Saudi Arabia to export fish powder. A thorough analysis of the Saudi food market will reveal the potential of our product in this market.
The vast majority of food products are subject to a 5 percent import duty which is very low. The Saudi market for imported consumer food and edible fishery products increased by seven percent from 1999 to 2000, reaching 2.6 billion U.S. dollars in CY 2000 (total Saudi food and agricultural imports totaled about $5.5 billion in 2000).
Client Base and Consumer Preferences
Saudi Arabia is located between Europe and Asia. With its large expat population, the Kingdom is a multi-ethnic society. Consequently, foods from around the globe are found in Riyadh, Jeddah, Dammam, and other urban areas in the Kingdom. There are two basic consumer categories in the Kingdom:
Saudi citizens (16 million)
Expatriates temporarily residing in the Kingdom (7 million)
Saudi buying and eating habits have changed significantly since the introduction of Western-style supermarkets and restaurants in the late 1970s. Built initially to cater to Western expatriates, modern Western-style Class A supermarkets are popular with the Saudis and continue to increase in number in the major urban areas of the Kingdom: Riyadh (Central Province), Jeddah (Western Province), and Dammam, Al Khobar, and Dhahran (Eastern Province).
Most expats are from South Asia (Indian, Pakistan, Bangladesh), Egypt, the Sudan, Yemen, the Philippines, and East Africa. There are about 40,000 Americans residing in the Kingdom and about 30,000 British citizens. The American and British tend to occupy “white collar” or professional positions. Many Saudi food and supermarket companies hire Americans and British as general managers, operation managers, and executives.
Saudis and Western expats are the largest consumers of western consumer-oriented products and the principal shoppers in Class A supermarkets. The Saudi consumer is becoming more enlightened to quality, nutritional value, price, and packaging. Saudis pay attention to expiry dates on products. Saudis and Westerners enjoy new products and supermarket managers acknowledge that those companies offering a wide variety of products will ultimately succeed in this competitive market.
Saudis prefer eating fresh foods, but changing lifestyles and an increasing number of women entering the workplace have created a demand for prepared foods. A significant percentage of Saudis continue to purchase a large percentage of their food at wholesale markets, but more and more Saudis are shopping regularly at supermarkets, especially women. The number of Saudi businesses owned and managed by women is significant and growing rapidly. The latest published figures showed that Saudi women own and run about 16,390 companies, more than 4.5 percent of registered Saudi businesses. With the advent of the Internet, an increasing number of Saudi women are starting businesses from their home. So, the demand for canned and prepared foods would also increase as the women are becoming busier.