Core conclusions:It's a plywood and multi-layer board factory located in Linyi, Shandong. Initially, the factory mainly supplied products to local markets and construction projects. We addressed the regulatory requirements of the Gulf market by obtaining SABER dual certificates, SASO ISO 12460 formaldehyde emission testing, and ISPM 15 fumigation certification for pallets. Then, we adjusted the product structure according to the actual specifications of local building materials wholesalers and furniture manufacturers. In just 16 months, we managed to increase exports to Saudi Arabia and the UAE by 4.2 million yuan. We have signed contracts with 5 distributors, and the average value of each shipment is 214,000 yuan.
1. Customer background
This factory is located in Linyi, Shandong. It mainly produces plywood, multi-layer boards, and a small amount of veneer products. The production process involves hot pressing and sanding techniques. The annual production capacity is approximately 40,000 cubic meters. Our customers are mainly domestic wholesalers and local contractors. Payments are made on a monthly basis, with a payment cycle of 30 days. The products are manufactured according to the standard dimensions of 1220×2440 millimeters, which are commonly used in China.
The triggers for this transformation are two changes in the domestic trade sector: first, the payment terms for local engineering orders have been extended from 30 days to 60 to 90 days, resulting in a significant increase in capital occupation; second, competition among peers has intensified, and the gross profit per ton of materials of the same specifications has decreased over the past two years. After comparing options, the factory decided to target the Gulf market: the demand for building materials there is stable, and the payment terms are shorter compared to those in the domestic trade sector.
II. Problem Analysis: The issue isn’t a lack of customers, but rather that four obstacles remain unresolved.
- Missing compliance documents.The factory has never engaged in exports before. All they have are domestic quality inspection reports, and there is no report indicating the formaldehyde emission levels in accordance with SASO ISO 12460 standards.
- I’m not familiar with the customs clearance procedures.The accounts for the SABER system can only be registered by local importers in Saudi Arabia. The product compliance certificates are tied to the importers; any changes to the customers will require re-registration. The factories were initially unaware of this rule.
- The specifications and packaging do not match expectations.The dimensions of the wood panels commonly used in China differ from those used in the Gulf market. Additionally, wooden packaging does not undergo fumigation treatment according to ISPM 15 standards.
- The quoted price does not include any taxes.Starting from January 1, 2026, the import value-added tax rate in Saudi Arabia will be 15%. The first two quotes from the factory did not include this portion of the cost. As a result, the prices quoted are no longer competitive after being shipped to the destination country.
Among the four issues, the first two are related to access restrictions, while the last two involve implementation difficulties. The conclusion is that there are no technical obstacles associated with the product itself; all the problems lie in the data and processes. These issues can be resolved through a one-time investment at the initial stage.
3. What have we done?
- The main products have been divided into three series. They have been tested for formaldehyde emission limits and adhesive strength. The test results are presented in English, and the reports are issued by laboratories that have obtained ISO/IEC 17025 certification.
- Organized tags and instructions in both Arabic and English. Created standard templates for product names, specifications, manufacturers, countries of origin, and usage instructions.
- Connecting with Saudi importers: The SABER process involves the importer registering an account and applying for a Product Compliance Certificate (PCoC), which is valid for 1 year. After each shipment, the importer must also obtain a Shipment Compliance Certificate (SCoC).
- The wooden packaging must be fumigated according to ISPM 15 standards, and should be marked with IPPC labels. The specifications of the pallets should be adjusted accordingly to match the common shipping methods used in the Gulf region.
- Re-calculating the net cost: The ex-factory price, shipping costs, insurance fees, tariffs, 15% import VAT, and local delivery costs are all listed separately, resulting in a cost breakdown report that can be directly sent to the buyer.
4. Execution rhythm
Month 1: Complete the necessary paperwork; no further client development efforts needed.
This month, all my efforts were focused on compliance matters: I submitted three series of documents for review, prepared English reports, organized bilingual label templates, and confirmed the corresponding Saudi technical regulations and standard numbers for each product. Additionally, I established contact with two Saudi suppliers to understand their purchasing habits and payment procedures. There were no orders placed this month, but we have already decided whether we will be able to take on any orders in the future.
Month 2: Conduct a trial order with two different specifications
The specifications of 1220×2440 and 1830×2440 were selected as the trial products. The first order was processed through local importers, including the submission of the SABER application and customs clearance procedures. This first order consisted of only one 40-foot container, with the goal of understanding the entire process thoroughly and documenting the actual time and costs involved in each step.
Months 3 to 9: Expand sales channels through both wholesale and furniture factories.
After the customs clearance process is completed, the factory now has all the necessary compliance documents and accurate customs clearance records. This improves our development efficiency. During this phase, we have established two channels: one for dealing with wholesale suppliers of building materials, focusing on selling standard-sized panels; another for local furniture manufacturers and decoration companies, focusing on selling laminated panels and custom-made panels to increase profits. In seven months, we have signed contracts with five distributors, among whom three have decided to continue doing business with us in the future.
Months 10 to 16: Turn the UAE into a second market, ensuring consistent repeat purchases.
After stabilizing relations with Saudi channels, we can use the same compliant materials and packaging strategies to enter the UAE market. By working through local importers, we can connect with Dubai’s building materials distribution networks. At the same time, we will establish a consistent renewal schedule: sending updates on product specifications and inventory reports once a quarter. For new customers, we will follow up within 45 days after they place their first order, thereby ensuring a stable renewal rate.
V. Outcome data
After 16 months, the export activities in both markets have become more stable. The main indicators have changed as follows:
- Export value:4.2 million yuan
- Signed dealer:of 5(3 in Saudi Arabia, 2 in the UAE)
- Average value of goods per cabinet:21.4 million Yuan
- Transfer and repurchase rate of trial orders:60%Out of 5 customers who placed orders, 3 completed repeat purchases.
- Average payment cycle:45 days
- Gross profit margin of export business:18.5%(About 11% of products are for domestic trade and similar specifications.)
| indicators | before starting | after 16 months have elapsed |
|---|---|---|
| export business | 0 | 4.2 million yuan |
| compliance documents | Only domestic quality inspection reports are provided. | ISO/IEC 17025 English report + Bilingual labels |
| wooden packaging | Ordinary wooden pallets | ISPM 15 fumigation + IPPC certification |
6. Which factories can this method be replicated to?
The first category of businesses suitable for replication is those involved in the manufacturing of building materials and wooden products. These businesses have mature products, but they lack experience in exporting their goods. The technical requirements for such businesses are not very high, with the main challenges lying in aspects like documentation and processes. After making necessary investments to meet regulatory requirements, these resources can be reused in future projects. Boards, wooden doors, flooring, decorative trim, and gypsum boards all fall into this category.
The second category of businesses that are suitable for replication is those factories that require extended payment terms in domestic markets, and which need external cash flow to support their operations. In the Gulf market, payment methods are relatively flexible. By using a combination of letters of credit and telegraphic transfers, the payment cycle can be shortened to around 45 days. This compares to the 60 to 90-day payment terms commonly seen in domestic markets. However, buyers in smaller language-speaking markets tend to offer lower prices. Therefore, factories must ensure they maintain a minimum gross profit margin and should not reduce prices to near the cost level just to secure orders.
Q: What are the costs and duration of the SABER certification process?
A: The Product Compliance Certificate (PCoC) is applied for by the Saudi importer through the SABER platform. It is tied to the importer’s account and has a validity period of 1 year. For each shipment, it is also necessary to obtain a Shipping Compliance Certificate (SCoC). The processing time varies depending on the category and risk level of the product. For simple documents, the processing time is usually between 3 and 7 days. However, for high-risk products that require additional inspections, the time may take up to 7 to 14 days. The factory can only prepare the inspection reports, bilingual labels, and product images to help shorten the review process.
Q: Is it necessary to conduct testing for formaldehyde emissions? Can reports from China be used as valid results?
A: It is necessary to conduct such tests, and the results must be reported in accordance with the standard systems applicable in Saudi Arabia. The formaldehyde emission levels of engineered wood products such as plywood, particleboard, and fiberboard should be tested according to the requirements of SASO ISO 12460 series. The test report must be issued by a laboratory accredited under ISO/IEC 17025 standards. It is recommended that the report date be within one year. Test reports that comply with only domestic standards are generally not accepted; therefore, it is necessary to conduct the tests again.
Q: Who is responsible for paying the 15% import VAT? Will this affect the pricing?
According to the rules implemented by Saudi Arabia starting from January 1, 2026, the value-added tax on imports is paid by the importer at the time of customs clearance. The party responsible for bearing this tax typically shares it among various components of the price through negotiations. The factory practices by listing the value-added tax separately in the cost statement, so that buyers can clearly see all the costs involved, rather than hiding the tax burden within the unit price of the product.
For factories that produce materials such as boards, wooden doors, and flooring, the challenge in the Gulf market doesn’t lie in pricing. Instead, it lies in whether they are willing to ensure that three essential documents are obtained before accepting any orders: the SABER certificate, formaldehyde test reports, and proper packaging measures.
Qihang Zhilian Foreign Trade Research Institute·Let China's intelligent manufacturing industry set sail to sea·Tel: 180-0327-6609
