Why is China taking the dragon’s share of Saudi business?
الاثنين, 18 كانون الأول 2023

Why is China taking the dragon’s share of Saudi business?

Last week, the Saudi Ministry of Investment held its latest roadshow in China, where Minister Khaled Al-Faleh met his Chinese counterparts during a conference aimed at expanding trade, investments, and technology cooperation.

During these meetings, bold statements were made, expressing China’s willingness to collaborate with Saudi Arabia in jointly promoting Beijing’s Belt and Road infrastructure investment program and Riyadh’s Vision 2030 initiative.

The two countries also pledged to expand cooperation in energy, aircraft, photovoltaics, and artificial intelligence while working together to safeguard global industrial supply chains.

China's ties with Saudi Arabia have recently deepened. In June of last year, the Saudi minister of energy, Prince Abdulaziz bin Salman, declared that the Kingdom would seek collaboration with China rather than competition. The relationship, initially anchored in hydrocarbon ties, has expanded significantly, with the two countries signing a comprehensive strategic partnership agreement and a series of investment agreements a year ago.

During the conference last week, deals worth over $25 billion were signed, representing 60 agreements in energy, agriculture, tourism, mining, financial services, logistics, infrastructure, technology, and healthcare. A notable deal was signed in the information and communication technology sector, where the Saudi Esports Federation and Chinese Esports Tournament Operator VSPO signed a memorandum of understanding to promote opportunities, cooperation, and participation in electronic sports, amounting to $8.5 billion.

As an active participant in the Saudi Ministry of Investments' frequent global roadshows promoting foreign direct investments into the Kingdom, I believe China has taken the dragon’s share in Saudi business.

One of the leading family offices active in China, Ajlan & Bros Holding Group, also signed an agreement with the Oriental Energy Co. to explore areas of collaboration in manufacturing, amounting to $7.5 billion. Furthermore, the Saudi Ministry of Investment has signed a deal with China's state-owned CRRC Group to develop opportunities in the Kingdom, covering project development and manufacturing of renewable energy and sustainable mobility, with a total worth of $2 billion.

My encounters with Chinese companies began early last year when BMG represented a leading Chinese semiconductor manufacturer. Since then, this manufacturer has partnered with King Abdulaziz City for Science and Technology to conduct a comprehensive research and development exercise aimed at serving the Saudi market. As some may be aware, semiconductor technology forms the physical foundation of the third and fourth industrial revolutions. It is crucial for numerous applications, including AI, renewable energy, data storage, sensors, communication, and lighting. This technology-driven initiative, once commercialized, will be a game-changer in the Saudi market.

China is becoming Saudi Arabia's largest trading partner, with bilateral trade exceeding $106 billion last year, an increase of around 30 percent from 2021. As an active participant in the Saudi Ministry of Investment's' frequent global roadshows promoting foreign direct investments into the Kingdom, I believe China has taken the dragon’s share in Saudi business.

Basil M.K. Al-Ghalayini is the chairman and CEO of BMG Financial Group.

Source Arab News




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