Strategy for Saudis' chemicals: gentlemanly marketing

Dr. Abdelaziz al-Jarbou moved a salt shaker and a pepper shaker toward him. The salt, he suggested, could be an end-user of petrochemicals -- a plastics company, for instance. The pepper could be the current supplier of the petrochemicals -- a company such as Exxon, Union Carbide, or, perhaps more appropriately, a European producer.

``If this guy comes and says, `I want to buy 50,000 tons of product' from us,'' Dr. Jarbou said, tapping the salt shaker, ``we ask him, `Where did you get your product before?' If he gets all his product from one source, we say, `Please don't waste our time.' We do not want [another supplier] to shut down because of us.''

This is how Jarbou describes the marketing efforts of Saudi Arabia Basic Industries Corporation. SABIC managing director Ibrahim A. Salamah, in a SABIC publication, describes this as ``entering the market as a fair, gentlemanly competitor.'' And the marketing director, Abdullah S. Nojaidi, says, ``We do not intend to undercut other marketers.''

SABIC sees the United States, Europe, and Japan as important markets, and it is keenly interested in the Indian Ocean region, Southeast Asia, and South America. It has marketing offices in London and Hong Kong and is to open a US office this year.

Jarbou says SABIC will not sell to trading companies or brokers, unless a nation's laws require it. Nor will any nation be ``targeted'' with chemicals, he says. ``We negotiate our sales on a deal-by-deal basis, and market conditions prevail. We don't just fill a ship and haul it to Rotterdam or Houston and say, `Now who's going to buy this?' ''

One-quarter of SABIC's output automatically goes to the partners in the joint ventures -- companies such as Exxon, Mobil, Shell. For those multinationals, the plan back in the 1970s was to expand and update their worldwide output by doing so in Saudi Arabia.

It won't be easy for SABIC, Jarbou acknowledges, given the possible protectionist sentiment. But ``basic market theory holds that the function of free trade and open markets is to assign tasks to the most efficient producers. The fact is that SABIC will be among the most efficient producers of petrochemicals and plastics in the world. We have a role to play, and we are committed to it.''

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