Executive Summary
Jordan is one of the most stable and secured countries among Arabic countries. The security sector has played a fundamental role in the establishment and survival of the country since the early 1920’s. Currently, there are three entities that are entitled with the mission of maintaining security in Jordan, namely: the Jordanian Armed Forces (JAF), the Department of Public Security (DPS), and the General Intelligence Department (GID). On the other hand, the General Directorate of Civil Defense is the authorized governmental body to protect individuals’ properties against potential dangers and accidents. Based upon the statistics of the Central Intelligence Agency (CIA), Jordanian military expenditures in 2003 were estimated at US$ 2,043.2 million representing 20.2% of General Domestic Production (GDP) in that year.
The Jordanian security and safety market is divided into three market segments, which are: security equipment, personal protection equipment, and fire fighting. This market offers a plenty of promising marketing opportunities for the U.S. suppliers. One of the most emerging niches that deserves interest from the U.S. suppliers is security services which experience a growing demand by local firms from different disciplines. The experts in the industry foresee a positive outlook for the overall market over the coming three to five years. The total demand is projected to grow by 10% to 15% annually.
The local market mostly depends on imports as this industry is weak and still has a long way to match the international standards. The total market size increased by 4%, up from US$ 65,848,353 in 2002; up to US$ 68,497,302 in 2003; and it is estimated to reach US$ 71,252,813 in 2004. In 2003, U.K. imports hold the lion share of the total Jordanian imports with a share of 19.68% followed by China and Germany with 15% and 12.86%, respectively. Regarding the U.S. products, they represented around 12.22% of the total market imports. The U.S. suppliers face hard competition in the local market particularly from U.K and Chinese products. However, U.S. security and safety products are perceived as high quality performance products by the end-users and are known for their high durability and reliability.
The main competitive factors identified in the local market are as follow: technological advancements, quality, after-sale services, and price of products. The major end-users of security and safety equipment are: governmental institutions (JAF, GID, and DPS), hotels, airports, private large industry companies, hospitals, prisons, commercial building, malls and complexes, airlines, schools, private universities, banks, financial institutions, private villas and apartments, embassies, and jewelry shops.
The best sales prospects in the local security and safety market are identified as follow: security services (consulting, training, guard services…etc), access control & alarm systems, video surveillance devices (CCTV cameras), security and safety devices for buildings, personal identification access control equipment, fire fighting systems, laminated safety glass, doors, windows of iron or steel, burglar alarms and similar apparatus for vehicles, parts used for padlocks and locks of base metal, locks of a kind used for motor vehicles, of base metal, parts used for electric sound or visual signaling apparatus, fire fighting vehicles, hats and safety headgear, burglar or fire alarms and similar apparatus other than those for vehicles of heading, armored or reinforced safes, strong-boxes and doors and safe deposit lockers, parts used for electrical signaling, safety or traffic control equipment for railways, tramways, roads, inland waterways, parking facilities, and port installations or airfields, and other equipment used for electrical signaling, safety or traffic control equipment for roads, inland waterways, parking facilities, port installations, or airfields.
It would be worthy to mention that there are no significant tariff barriers impeding the export of security and safety products into Jordan. Security and safety products imported into Jordan are subject to custom duties that range between a low of 0% and a high of 30%. Also, a value added tax of 16% is applied to the sales of imported products in the local market.
To be successful and active in the local market, the U.S. companies are strongly recommended to have an agent or distributor in Jordan instead of distributing their products through one agent in the region. By doing so, they will form a clear view and understanding of the local market requirements in a way that enables them to know how to effectively compete in and penetrate the market. Also, with being directly involved with local agents and distributors, the U.S. companies will be able to establish good connections and relationships with the market participants which may result in gaining extra market share for U.S. products. On the other hand, the local agent or distributors, in turn, will receive more technical and marketing support from the U.S. suppliers.
Letter of Credit (L/C) is one of the most frequently used financial methods that is preferable by the local distributors when dealing with the original manufacturers of security and safety products. A grace period from 30 days up to 120 days is given to the local distributors to settle their accounts following the date of invoice. Additionally, the suppliers mostly provide a one year warranty against manufacturing defects under normal conditions to the local distributors.
Active organization of or participation in trade exhibitions are the most effective promotional tools to market U.S. security and safety. The Special Operations Forces Exhibition and Conference (SOFEX) is the most important trade exhibition in security and safety held in Jordan, which is the second largest defense exhibition within the Middle East and North Africa (MENA) countries.
A new promotional tool that could be used by the U.S. suppliers is to invite a selected group of the local first- class distributors to their factories and provide them on-site training about their products. Seminars, workshops, on-site product demonstrations, and brochures are other useful techniques that could be applied by the U.S. suppliers to market their products in the Jordanian market. Also, the U.S. suppliers may sponsor the training for fire-fighters so they will be more familiar with the U.S. products.