Business
2019.04.25 18:53 GMT+8

Business Inroads: Chinese tech firms expand in Mideast markets

Global Business and Jacob Greaves

With more Chinese tech firms involving themselves in the Belt and Road Initiative (BRI), the initiative once may have begun with an emphasis on massive infrastructure projects has become known as the Digital Silk Road - and the Middle East plays an important role.

The CEO of Mena Catalysts, Sam Blatteis, thinks the region presents a fertile ground for Chinese technology companies which are looking for areas for efficiency and leapfrogging. The Middle-Eastern government affairs firm bridges Chinese technology companies and the booming social media demand in the Middle East. It has advised dozens of Chinese tech multinationals which are looking to establish a presence in the Middle East.

Chinese companies have made a great presence in the region in the past few years. Technology giant Alibaba unveiled its 600-million-U.S.-dollar tech investment in the Middle East in 2017. Alibaba Cloud, the cloud computing arm of Alibaba, opened its first data center in Dubai in 2016 and plans to open its second in the coming months. Xiaomi, one of China's major phone manufacturers, has also opened stores in Dubai and Cairo in 2017 and Huawei is planning on opening six more stores and an e-commerce platform in the UAE this year.

Apart from opening new stores, the growing demand has also showed in people's daily life in the region.

"The most downloaded apps today in the UAE or Saudi Arabia are Chinese apps, which is quite a shift, compare to years before when the most downloaded apps are Facebook and Twitter," said Blatteis.

The high social media penetration and the huge amount of Internet users have made the Middle East a tempting market for Chinese tech companies. According to Deloitte's Going Digital report 2017, the social media penetration takes 99 percent in the UAE and sees a 73-percent year-on-year growth in Saudi Arabia. When it comes to internet penetration, the region is above the global average of 51.7 percent, with more than 60 percent of the population using the internet.

According to Blatteis, the region has 180 million internet users, which is larger than the whole populations in Russia and has also imported more smart phones than the UK or France last year.

In terms of challenges that Chinese companies have also run into, Blatteis said that Chinese companies have found that doing business here is like a contact sport. Companies have to have a physically present here and there is still a dearth of relationships, cultural knowledge and common language.

But he believes that there will be a growing number of synergy, which will unlock the significant untapped potential.

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