RIYADH: Industrial small and medium enterprises in Saudi Arabia will have to transform into resilient and technologically savvy operations in order to go global and be able to compete internationally, according to a report by the multinational professional services network KPMG.
Outlining a road map for the Saudi SME sector in a report titled "Growing new industrial supply chains," KPMG said that local SMEs need to conduct market research to decide what region or sector they should focus on.
It suggested that SMEs will also need to use third parties to accelerate digitization, enabling them access to the technical skills and experience required to build new digital solutions, elevate capabilities, monitor performance, and sustain contractor relationships.
In addition to this, local SMEs are also urged to leverage technology in such a way that allows them to resolve business challenges without having to depend on a skilled workforce.
Moreover, the report said, SMEs should also raise their speed to market by boosting innovation and product development through utilizing technology and specialized skillsets respectively.
To become globally competitive, the report said quality management is also crucial for SMEs to ensure that their products abide by the relevant international standards and enter global value chains established by transitional corporations.
"Throughout their journey of establishing local industrial supply chains, SMEs may face various challenges, which can be exacerbated by global occurrences and shocks, such as the global COVID-19 pandemic," said Kenan Nouwailati, head of Procurement, Supply Chain and Local Content Advisory at KPMG in Saudi Arabia.
Going global can help industrial SMEs curb several challenges they face on a domestic level, the most prominent of which are fluctuations in supply and demand, attracting a skilled workforce with the right experience, attracting investments, regulatory challenges, and keeping up with digitalization.
With proper financial support and advisory services – such as the National Industry Strategy – SMEs will have the opportunity to achieve long-term success and overcome the challenges faced, it added.
“As Saudi Arabia looks to diversify its sources of revenue, grow its non-oil-based economy and increase the contribution of SMEs and the industrial sector to the GDP, supporting emerging industrial enterprises in the country will be vital,” asserted Omar Alhalabi, director, Global Strategy Group at KPMG in Saudi Arabia.
This comes as the Social Development Bank signed an agreement with the National Technology Development Program to operate a financing opportunity worth SR200 million ($53.2 million) to be allocated to technology-centric SMEs to ensure enhancing their competitiveness and playing their vital role in the national economy in line with the Saudi Vision 2030.
Saudi Arabia’s SME sector witnessed a growth trajectory in the first half of 2022, as the Kingdom pushes ahead with fostering entrepreneurship and stimulating investment in startups and small businesses as part of Vision 2030.
The number of registered SMEs in Saudi Arabia hit 892,063 at the close of June, registering a 25.6 percent increase from the fourth quarter of 2021, according to the General Authority for Small and Medium Enterprises.
Riyadh and Makkah were the most attractive regions for startups, accounting for 35.4 percent and 21 percent of the Kingdom’s SMEs respectively, according to Monsha’at quarterly report titled SME Monitor.
The Eastern province was placed third with 12.7 percent of the total SMEs in Saudi Arabia.
