Financial Associated Press, May 14 (Editor Qi Ling) with China and Saudi ArabiaChristophermitchellrouletteWith the increasingly frequent economic and trade exchanges, Saudi Arabia is becoming a key expansion area for many Chinese enterprises. Ernst & Young, a well-known global accounting and consulting firm, recently released a report detailing the future trends and challenges of Sino-Saudi business cooperation, providing strong support for Chinese companies to invest in Saudi Arabia.
The China-Saudi Industrial Investment report, compiled by Ernst & Young (China) Enterprise Consulting Co., Ltd., points out that the Middle East market has strong industrial development incentives, medium-sized market space, accelerated construction of cities and living and leisure projects, as well as the population size and high consumption level and capacity given by rapid growth, which provides broad market opportunities for enterprises to go out.
The field of industrial cooperation is constantly expanding.
Due to the encouragement of national economic policies, the construction of large and super-large projects, rapid population growth and rich capital support, Saudi Arabia has achieved rapid development in many economic fields. China-Saudi Arabia industrial cooperation started from the traditional energy and petrochemical fields, and has been extended to many economic fields, such as new energy, metal minerals, building materials, digital economy, transportation and logistics.
In the field of new energy, so far, Saudi Arabia has issued four rounds of renewable energy bidding to attractChristophermitchellrouletteA large number of Chinese new energy enterprises participated. In addition, a number of new energy industry chain enterprises are planning to land production capacity in Saudi Arabia, covering many areas such as photovoltaic, wind and energy storage power plant construction.
In the field of digital economy, China and Saudi Arabia have carried out industrial cooperation and joint research and development in cloud computing, large models, 5G and other digital economy fields, and will further deepen the cooperative relationship in the future.
In the field of transportation and logistics, China and Saudi Arabia have carried out cooperation in high-speed rail, ports, express logistics and other fields. The wheat-wheat high-speed railway was officially opened in 2018, and the commercial port of Jizan Economic City officially opened for operation in 2022. Chinese logistics enterprises are also accelerating to participate in the Saudi express logistics market.
The report points out that in recent years, Saudi Arabia has actively supported the landing of Chinese production capacity locally. For example, Chinese enterprises and Saudi state-owned enterprises jointly set up a metal processing and manufacturing enterprise in Lashail. At the same time, Saudi capital is also actively laying out in China, investing in areas of the digital economy such as artificial intelligence and game e-sports, as well as a large number of cutting-edge science and technology industries such as health care, self-driving and car manufacturing. I hope to further promote the great-leap-forward development of Saudi high-tech industry.
Cooperation space
Looking to the future, the report believes that the capital cooperation between China and Saudi Arabia is expected to be closer. The stock exchanges of the two countries have signed a memorandum of cooperation to jointly study the joint listing of traded open index funds and stocks. In the future, close cooperation will also be formed between sovereign funds and investment institutions of the two countries to jointly explore high-quality projects.
While industrial cooperation is more diverse, under the influence of multiple factors such as Saudi industrial incentive policies, a large number of market opportunities, and rich capital support, with the new round of scientific and technological revolution and industrial reform, cooperation in frontier scientific and technological fields such as health care, new energy, aerospace, and artificial intelligence will be further expanded and deepened.
Four challenges
Chinese enterprises will also face many challenges when they go out and open up the Saudi market, mainly in four aspects: information asymmetry, differences in business habits, differences in culture and language, and uncertainty in the business environment, the report said.
One is information asymmetry. As an emerging investment destination, Saudi Arabia has few channels to obtain public information, and Chinese enterprises lack understanding of industry policies, access standards, supply chain and so on.
Second, business habits are different. The Saudi market is more inclined to European and American business habits, and requires high quality documents such as investment plans and financial calculations, but domestic enterprises still need to improve in this regard.
Third, language and cultural differences. It is difficult to learn Arabic, and there are also differences in culture and communication between China and Saudi Arabia, which leads to more attention in communication between the two sides.
Fourth, the uncertainty of the business environment. Saudi Arabia is in the process of reform and opening up, the organizational structure of government departments is constantly adjusted, policy content and application procedures are also constantly changing, and many emerging industries are still in their infancy, and the standards are not clear, which brings confusion to investors.