The first time I sat at a boardroom table with Chinese executives in Riyadh, I noticed a certain pause in the conversation every time a local consultant mentioned Saudization (沙特化政策). As the conversation moved back and forth between Mandarin and English, it became clear there was a lot of apprehension—and just as much confusion. Over years advising on global mobility and workforce compliance, I have watched this pattern repeat itself. So, if you’re with a Chinese EPC firm or tech company considering business or project expansion in Saudi Arabia, I want to share what I’ve learned. This is my Mandarin-native breakdown of Nitaqat, Saudization, and how it touches everything from hiring quotas to company formation and local HR strategy.
Saudization is an employment policy that requires companies operating in Saudi Arabia to prioritize hiring Saudi nationals over expatriates. In Mandarin, you might hear it called 沙特化政策. The Government’s objective is to increase employment opportunities for locals, reduce reliance on foreign labor, and gradually transform the skills of the domestic workforce.
While the intention has always been clear, the way this policy is enforced has changed over time. The landmark adjustment began in 2011, when the Ministry of Labor & Social Development launched the Nitaqat program.
“Nitaqat isn’t just a rule—it’s a classification that shapes your company’s freedom to recruit.”
What does this look like for a Chinese EPC (Engineering, Procurement, Construction) player? It’s not only about the construction workforce—engineers, supervisors, HR, even finance might fall under the localization framework. And if you think you can just “hire Saudis for HR and nothing else,” the labor ministry has rules to prevent that approach, too.
Who is affected and how does Saudization apply to Chinese firms?It’s a fair question—and perhaps not always clear, especially for companies used to the regulatory environments of China or Southeast Asia. In my own experience, here’s where it often gets misunderstood:
A partner once asked me: “Is there any exemption for foreign EPC companies if the project is government-backed?” The answer is usually “no,” but on government “giga-projects” (think NEOM, Red Sea), you may be able to negotiate quotas or timelines with the labor ministry in particular circumstances. But, in general, there are almost no permanent exemptions for foreign companies; temporary arrangements often require negotiation and ministerial approval, and policy trends are moving toward stricter enforcement for all expatriates.
If you want to see recent numbers and concrete policy shifts, I recommend reading through the World Bank’s Economic Monitor for Saudi Arabia, which tracks labor market reforms and the impact of Saudization on foreign enterprises.
“Saudization applies to you, whether you’re in Jeddah, Dammam, or a remote project camp.”
In the Nitaqat framework, companies are sorted into color-coded bands. Here’s a quick run-down in plain language, based on my experience:
The classification is not permanent. Even one month of non-compliance can bump you to a lower tier. These real-time shifts impact your ability to:
Relevant news coverage of Saudi Arabia’s Nitaqat program and its direct compliance impact for workforce planning is well reported in articles like this from Arab News.
Let’s say you have 200 staff. If your quota is 25%, you need 50 on Saudi nationality visas (with employment contracts, social insurance, and regular wage payment). Contractors and sub-vendors must be compliant, as the ministry often requires consolidated reporting for the entire project workforce.
One quick lesson: localizing only “dummy” or desk roles without genuine skills transfer is risky—labor authorities conduct random and targeted audits looking for real Saudization, not paperwork tricks.
Sometimes it’s hard, I know. But the costs go beyond a fine. Firms that miss their quota may face:
From my experience, consistently missing your Saudization target results in a real loss of business agility in the Saudi market.
If you want a macroeconomic perspective, with practical recommendations for workforce planning, the International Monetary Fund’s working paper is incredibly helpful.
Which jobs are reserved for Saudis? And what does this mean for Chinese HR?Not every job is open to expatriates any longer. This is one of the most immediate challenges I’ve seen for Chinese companies. The Saudi government regularly updates a list of job titles that must be filled only by Saudi nationals.
In the engineering, procurement and construction sector, it’s often harder to localize technical roles, but these jobs are still counted in your overall Saudization calculation. If you’re planning a project, you need to plan for training, career development and some real investment in upskilling Saudi staff.
Academic research, such as the study on the effects of Saudization on the private sector, underscores these operational challenges and the reason why proactive planning matters so much.
“If you don’t plan for Saudization in HR, you’re already late.”
From a Mandarin-speaking HR director’s view, the process looks something like this:
Let me be honest. Recruiting Saudi nationals, particularly for demanding EPC projects, can be challenging if you expect immediate “plug-and-play” results. The best results I’ve seen come from structured programs:
A side note: Many Chinese companies have discovered that backing a handful of Saudi “champions” early—not just on paper, but by giving real responsibility—pays off. Including these champion employees in management meetings often smooths relations with government partners, too.
Let me say something that surprised a lot of Chinese businesspeople I know: Labor law compliance and company formation are tightly linked in Saudi Arabia. You can’t just “create a shell entity” and run payroll from abroad. The government will check that you’re paying the right wages, funding local social insurance (GOSI), and providing adequate benefits.
When preparing for market entry, I’ve found it’s not enough to simply check company formation requirements. You need a practical checklist for compliant international hiring too. I often reference this international hiring compliance checklist to avoid common mistakes, especially when setting up payroll, immigration and employment contracts for first hires.
For further reading on regulatory trends, sector-by-sector quotas, and risk of non-compliance, the Middle East Journal’s analysis is especially helpful if you want more policy context and adaptation strategies.
In my work with EWS Limited, companies often ask if they can simply run payroll for Saudi staff through their China HQ or a global payroll vendor. The answer is usually no. Saudi regulations require local, in-country wage payments, social security contributions, and proof that employment relationships are legitimate and transparent.
EWS Limited has supported various companies by providing local EOR solutions, where payroll, HR processes, statutory benefits, and Saudization quotas are managed on behalf of Chinese and other foreign entities.
Using a compliant EOR provider with multi-currency payroll and deep local HR expertise dramatically reduces your audit risk, supports staff onboarding, and helps with quota management.
If you’re considering this path, you may want to read about the risks of misclassification for international workers. Government audits now regularly cross-check wage transfers, contract status, and Saudization records in the same review. Non-compliance is a real threat to business continuity.
“Payroll outsourcing is a strategy, not a shortcut. Saudization compliance is always the end goal.”
The operational side: risk management, audits and documentationSaudi authorities do not just set quotas—they enforce them actively. Labor inspectors visit project sites, review payroll and contract documentation, and check if “paper” Saudis are really working.
In almost every engagement I’ve seen, the most successful Chinese investors are the ones who over-prepare. Here’s my running “quick list” of what I recommend for operational compliance testing:
It’s a common mistake to assume that local partners, agents, or PEOs will “do it all.” Ultimate compliance liability stays with your registered Saudi company, even if you subcontract HR, payroll, or hiring.
It’s also a good idea to review your HR model as the company grows. For support scaling up, many refer to frameworks like scalable HR strategies for international companies.
If your business is used to cross-border staff deployment (派遣员工), here’s the tough news: Saudi Arabia is tightening the rules about “seconded” workers, intra-company transfers, and remote payroll for locals.
Staff on assignment need properly documented sponsorship, work permits, and social security. Recruitment “on behalf” of another overseas entity is not a loophole.
If you have frequent cross-border moves, or project-based staff coming in and out, there’s a lot more to consider than just visa paperwork. EWS Limited specializes in global mobility support, including immigration, onboarding, and regulatory filings across Saudi Arabia and the Gulf.
“Saudi labor mobility is changing—what passed five years ago is not permissable today.”
In my experience, the Chinese companies that succeed in Saudi Arabia don’t just “survive” Saudization—they find ways to benefit from it. I’ve witnessed a few patterns worth sharing:
Saudization may look like a barrier at first. Over time, for those who adapt, it’s actually a gateway to true local market access, better project outcomes, and greater trust in the Saudi business community. One thing is certain—as workforce policy in Saudi keeps evolving, staying up-to-date and seeking on-the-ground insight is literally the foundation for success.
If you’re preparing to expand, it’s not something to approach with half-measures or copy-paste solutions from your last market entry playbook. Instead, you need a robust, Saudi-specific HR, workforce and compliance plan. EWS Limited has been honored to guide many Chinese and international companies through this process, connecting the dots between vision and reality, so you can move forward with confidence.
In short: Saudization is a business reality in Saudi Arabia, especially for Chinese EPC and technology companies looking to grow and operate within the Kingdom. The path to compliance is complex but absolutely manageable if you approach it methodically. Understand your quotas, plan for genuine Saudization—not paperwork alone—embed local staff in your business, and invest in strong HR, payroll, and legal structures from day one.
If you’re ready to turn Saudization from an obstacle into an advantage, I invite you to get to know EWS Limited better. Our team offers tailored workforce solutions, global mobility, payroll management, and company formation expertise for the Saudi Arabian market and beyond. Reach out to us, and together we can help you grow confidently in Saudi Arabia while meeting every regulatory expectation along the way.
Saudization is a government policy in Saudi Arabia that mandates companies to prioritize hiring Saudi nationals over foreign workers, aiming to increase local employment and reduce reliance on expatriates. It’s enforced through frameworks like Nitaqat, which set sector-specific quotas and monitor compliance.
Chinese companies registered in Saudi Arabia must comply with Saudization quotas, just like any local or foreign business. This affects their ability to recruit and retain expatriate staff, influences project timelines, and requires changes in company formation, HR, and payroll processes. Falling short on Saudization can mean fines, visa restrictions, or even the risk of losing government contracts.
The main steps are: understand your sector’s specific Saudization quota, structure your HR and recruitment plan to hire Saudi nationals, update employment contracts and payroll to reflect legal requirements (including GOSI/social security), and keep regular documentation for audit purposes. Using a local employer of record or payroll outsourcing service like EWS Limited can help manage compliance, but the final liability stays with your registered Saudi company.
Certain jobs are reserved exclusively for Saudi nationals—including human resources, reception, security, some driver and administrative posts, as well as many roles in sales and accounting. Specialized technical and engineering roles have more flexibility but are still subject to overall quotas and ongoing policy changes. It is essential to keep updated with the government’s latest announcements for your industry.
In my perspective, the Saudi market, despite its complex compliance needs, continues to present substantial business opportunities—especially for well-prepared foreign investors willing to engage seriously with Saudization. State projects are increasing, government incentives are available, and the market is open for companies who show commitment to genuine local hiring. With the right guidance, Chinese firms can succeed and even thrive while fully compliant with local requirements.
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