Compared to a decade ago, Dubai is a whole new and is still under construction.
In addition to the famous seven-star Burj Al Arab and the world-class Burj Khalifa, the new modern hotel with the concept of living space, the towering "Dubai Golden Photo Frame", and the futuristic museum with the design of an oval hollow ring have become a new landmark in the local area and attract a large number of young people to check in.
The city's development and transformation also show the change of Dubai's economic powerhouse, which was originally promoted by the convention and exhibition industry, tourism and financial industry, is turning to a diversified direction that focuses on emerging technology and digitalization to try to connect the past and the future.
The number of Chinese brands entering the Middle East is increasing. On Dubai's spacious main street, BYD and Huawei's giant billboards are quite conspicuous, and BYD even has a high-profile slogan "We are the global champion in new energy vehicle sales". Local young people habitually use Tiktok to socialize and buy Made in China on cross-border e-commerce platforms such as Shein, Temu and AliExpress.
One of the world's largest shopping malls, the Dubai Mall, opened its Chinatown this year. A large area on the ground floor of the Dubai Mall is home to a mix of Chinese elements such as red lanterns, pink peach trees and giant panda sculptures, bringing together several Chinese brands such as Haidilao and Xiaomi.
Although intuitively speaking, compared with Southeast Asia, there are not as many Chinese brands and technologies that have landed in the Middle East as imagined, more and more Chinese companies are increasing their layout in the Middle East market, and they are also increasing their own international needs and Dubai and other Middle East regions to attract Chinese enterprises to go to China and accelerate the opening of the situation. This phenomenon is particularly evident this year.
The Dubai Legion prefers China
"China is one of the most successful countries in the world in terms of digital economy. We believe that many Chinese companies have the ability to provide diversified products and strong value after their success at home...... As a result, there are plenty of opportunities for Chinese companies to use Dubai as a base for growth and globalization. ”
H.E. Mohammad Ali Rashed Lootah, president and chief ·executive of the Dubai Chamber of Commerce, told Yicai in early July that they are seeing more and more Chinese companies creating international versions and coming to the Middle East to recruit diverse talent to better understand the local business culture. For a large number of companies that have come to Dubai to find strong service providers in the digital economy, they are also happy to see Chinese companies entering, and hope to use China's digital economy technology and resources to help each other expand the global market.
As Dubai's largest trading partner, China is a strategically important market. As of the first quarter of 2024, the Dubai Chamber of Commerce has more than 5,100 active Chinese member companies. Of these, 362 joined in the first three months of the year.
In order to increase efforts to attract Chinese enterprises to join, in late August this year, the Dubai Chamber of Commerce will also bring the political and business corps to Beijing to hold the Dubai Business Forum, which is also the first international version of the forum - China, with its key role in the global economy, especially in the fields of industry, commerce and advanced technology, has become the preferred destination for this event to start the international journey, "all forums will be conducted in Chinese at that time", in order to fully reflect Dubai's importance to the Chinese market.
The event is an important step towards achieving Dubai's Economic Agenda (D33), and attracting emerging technology companies from China is also seen as a key pillar in driving the U.A.E.'s digital economy. The strategy plans to double the size of Dubai's economy over the next decade and cement Dubai's position among the world's top three cities.
Not only the digital economy, Mohammed told Yicai that agriculture and food security, clean energy, artificial intelligence and infrastructure projects are also key areas that they hope to attract Chinese companies to Dubai and deepen strategic cooperation between China and Argentina.
After a roadshow in Shanghai in March, Ahmed · Ben · Sulaiim, Executive Chairman and CEO of Dubai Multicommodities Exchange (DMCC), returned to Shanghai after four months. He jokingly told the CBN reporter that he once asked his employees why they always wanted to go to China roadshows, and his employees told him that among the companies that came to the center for consultation, Chinese companies were the most, which was why they wanted to go to China.
Ahmed's efforts are beginning to pay off. According to DMCC, the number of Chinese companies settled in DMCC increased by 9% in the first half of 2024 to a total of 900. He told reporters that bilateral non-oil trade between China and the U.A.E. will double to $200 billion by 2030, and he believes that Chinese companies settled in DMCC will continue to grow in the coming years.
The landing of Chinese enterprises is still in the early stage of exploration
While the Middle East is increasing its efforts to attract Chinese investment, Chinese companies seeking globalization are also accelerating their influx into the Middle East. Dubai is the gateway to the Middle East for all international companies, including Chinese companies.
However, just as the digital economy in the U.A.E. has just started, the current digitalization-related Chinese enterprises are still in the early stage of exploring the local operation layout, and Chinese enterprises in more fields are expected to usher in greater opportunities and challenges in the improvement of local digital infrastructure.
According to official data, the share of e-commerce retail sales in the U.A.E. jumped to 11.4% in 2023 from 4.2% in 2018 to $7.1 billion, while overall retail sales increased by 6% year-on-year to $63 billion. E-commerce sales in the U.A.E. are expected to reach $11.5 billion by 2028.
As far as the payment side is concerned, Alipay and WeChat, which are already available in many places in Southeast Asia, are not yet widely used in the U.A.E., but some merchants, including Dubai International Airport Duty Free Shop, have accepted digital payment methods from China, and related landing cooperation is also accelerating.
As a digital payment gateway technology service provider, Sayed Munaf, chief sales officer of Telr, a financial technology company in Dubai, told Yicai that the most mainstream payment methods in the Middle East are still credit cards such as Visa and MasterCard. In terms of digital payments, Apple Pay holds the largest share, followed by Samsung Pay and Google Pay. As China's presence continues to grow in Dubai and the Middle East, Telr is increasingly focused on enhancing the digital payment shopping experience familiar to Chinese consumers for its merchants. As a result, Telr has entered into a partnership with UnionPay and is actively seeking to partner with other Chinese digital payment service companies to provide more comprehensive payment solutions.
"There are three types of Chinese customers who will need our services: e-commerce platform companies that want to open up the Middle East market, companies that have set up physical or official websites in the local market, and Chinese payment platform companies." Munaf said that these enterprises need corresponding support for both C-end and B-end receipts and payments. At the same time, through one interface, the resources of multiple collection and payment channels are efficiently aggregated, which is equivalent to obtaining a one-stop capital service solution, and will also be able to get greater help in market development.
Tan Jun, head of Ant International's Alipay+ business in the Middle East, told CBN that Alipay opened merchant acceptance in the U.A.E. in 2018. Up to now, Alipay has cooperated with 4 local licensed acquirers, of which the top three institutions have their own merchants, covering 90% of the U.A.E.. Today, Alipay is available to more than 100,000 merchants in the U.A.E., including Dubai and Abu Dhabi International Airport. Since the fourth quarter of 2023, Alipay's cross-border services in the Middle East have been upgraded to the Alipay+ cross-border solution stage.
In addition to the payment side, the development of local e-commerce is also inseparable from the upgrading of the express logistics industry. At present, J&T Express has also entered the Middle East market. In January 2022, J&T Saudi Arabia and U.A.E. operations officially opened at the same time, becoming the latest expansion of its logistics network in the Middle East. Jiang Jun, vice president of J&T Middle East, told Yicai that since entering the Dubai market, J&T's business volume has grown steadily, with an annual growth rate of 25%. At present, J&T has a number of logistics centers and distribution outlets in Dubai, and its service network covers the entire Middle East.
During a site visit in July, Aziz Alharbi, CEO and co-founder of RoboStores, a Dubai-based logistics and warehousing company, took the initiative to share a recent story: a female entrepreneur who makes cosmetics in China wants to export her products to the Middle East, "She knows her products very well and knows how to market them, but she has encountered a lot of difficulties in local operations and logistics, as well as business licenses." They provided a solution of importing unlabeled products from Chinese customers in Dubai, then generating an order and pasting the product information on the items, and developed and built an official website according to the customer's needs, took and uploaded product photos, and linked the payment gateway for digital payment and payment, "We also developed a biodegradable packaging for her, and provided a series of delivery solutions such as logistics."
Through such localized enterprises, Chinese supply chain companies have obtained a complete set of landing solutions to open the Middle East market, "no need to hire a local team, no need to have a warehouse, and no need to negotiate prices with local express companies, we can do one-stop work".
The main advantage of the Ahabi team is the automated sorting and warehousing and the integration of resources in express logistics. He told Yicai that thanks to the automation system of Kuka, a subsidiary of Midea Group, the goods that can only be put down in four warehouses can be stored in one warehouse, and it only takes 30 seconds to find the items, "10 people in a warehouse, the daily processing capacity is more than 5000~15000 goods, and the busiest day can process 50,000 pieces, and by rapidly increasing the machine production line, the production capacity can be quickly expanded." As for the logistics link, it mainly cooperates with local express companies, and J&T Express is also one of them, "but it is not a major logistics provider."
Ahabi said that at present, they only have two customers directly from China, and "they have not reached out to a lot or attracted customers in China." However, more than 60% of non-Chinese customers are dealing with China in some way, whether it is import or export." Sensing the significant increase in demand from Chinese companies to explore the Middle East market, he will also visit China more frequently to find potential customers.
"We've seen a surge in demand from countries like China and India to enter the Middle East market." Mina Ayoub, communications and partnerships manager at Astrolabs, a Dubai-based venture capital incubation platform, told Yicai that start-ups are increasingly seeing business opportunities in e-commerce, fintech, AI and digital economy. However, any business entering the Middle East needs to think about its differentiation positioning, as well as its value proposition and go-to-market strategy.
In Jiang Jun's view, although Dubai's logistics infrastructure is relatively complete, the infrastructure in other parts of the Middle East still needs to be improved. At the same time, cross-cultural management and customer service require enterprises to have strong local adaptability. In terms of cost, the high logistics costs and complex tax policies in the Middle East are also a major challenge for business operations. To do this, they work with local businesses and governments to leverage their resources and networks to drive the market together by building local teams. At the same time, we use advanced technology to improve operational efficiency and reduce costs.
According to a recent report jointly released by the Dubai South E-commerce Zone in U.A.E. and Euromonitor International, a global market research agency, the e-commerce market size in the Middle East will be about US$29 billion in 2023, a year-on-year increase of 11.8%; It is expected to maintain a compound annual growth rate of 11.6% in the next five years, and grow to more than $50 billion by 2028.
(This article is from Yicai)