Author | Li Xiaotian
Recently, the world's attention has once again focused on the Middle East.
Located at the crossroads of Eurasia and rich in oil resources, the Middle East has always been a place for major powers to compete. Its every move has a profound impact on world stability and change. In the past, this land was long regarded as a mysterious area by the outside world, and the impression of Middle Eastern countries by outsiders mostly remained in states such as "people getting rich and flowing", "society being extremely conservative", "industry being scarce and backward".
However, in recent years, Middle Eastern countries represented by Saudi Arabia have accelerated their pace of change. In 2016, Saudi Arabia announced its national strategic transformation program, the "2030 National Vision," aiming to diversify its economy and reduce its dependence on the oil industry; On the occasion of the 50th anniversary of the founding of the United Arab Emirates in 2021, the "National Development Strategy for the Next 50 Years" was launched, focusing on investment and entrepreneurship in the fields of digital economy and advanced technology application; And Kuwait's "2035 National Vision", Qatar's "2030 National Vision", Oman's "2040 National Vision", and Egypt's "Revitalization Plan". Many Middle Eastern countries are undergoing profound changes in their social, cultural, economic, and diplomatic strategies.
Great changes contain great opportunities.
In order to deeply experience the changes and opportunities in the Middle East for Chinese entrepreneurs who aspire to go abroad, from October 9th to 16th, Xiaguang Society launched the long planned Xiaguang SparkHub overseas exploration project "Digging Gold Overseas, Facing the Middle East".
This time, Xiaguang Society led more than ten entrepreneurs, entrepreneurs, and renowned scholars who are interested in the Middle East overseas market, spanning core cities in the Middle East region, including Abu Dhabi (UAE), Dubai (UAE), and Riyadh (Saudi Arabia). Visited more than ten companies stationed in the Middle East, covering fields such as venture capital funds, technology industrial parks, new energy enterprises, mobile social networking, logistics services, digital new infrastructure, web3 technology, cross-border payments, etc.
Route Map of Xiaguang SparkHub's Middle East Expedition Project
Through on-site visits and communication, we have gained a deeper and deeper understanding of the business environment and cultural background of Middle Eastern countries; Effectively linking local resources and obtaining more opportunities for business and cooperation.
As an editor of Xiaguang Society who has been paying close attention to the Middle East market for a long time, I have also followed this trip and gained a more specific observation and clearer understanding of the real situation in the Middle East and the opportunities for Chinese enterprises to go overseas. Despite the resurgence of some local wars, development and innovation remain the unchanging themes of the Middle East at present and in the future.
The first stop of the Xiaguang Society Middle East Expedition was in Abu Dhabi, the capital of the United Arab Emirates.
The federal state of the United Arab Emirates, consisting of seven emirates: Abu Dhabi, Dubai, Sharjah, Fuchaila, Umm Qavan, Ajman, and Cape Haima, is undoubtedly a model country in the Middle East. Opinion polls show that Arab youth have ranked the United Arab Emirates as their most desired country to live in and follow for 11 consecutive years, surpassing the United States, Canada, France, and Germany.
It can be said that the success of the United Arab Emirates has opened up a proven development path for the Arab world: while preserving its own cultural traditions and religious values, it achieves its own development by integrating into the global economic and trade system.
I always experience a very mixed feeling in Abu Dhabi and Dubai.
In hotels, office buildings, and even shopping malls, portraits of the founding president, current president, and vice president and Dubai chief of the United Arab Emirates can be seen. The last time I felt the ubiquitous authority of a monarch was in Thailand, during the national mourning period after the passing of the old Thai king Bhumibol Adulyadej. Movies of the Thai king's diligence and love for the people were playing on the subway, and even T-shirts in shopping malls were printed with portraits of the king and queen.
Portraits of the President can be seen everywhere in the United Arab Emirates
These details all convey the fact that the United Arab Emirates is a country that has achieved development under an authoritarian regime and an iron fist of monarchy.
Of course, many Middle Eastern countries also hope that the Dubai model can be replicated in their own countries, as it is a development model that can adapt to their own political and cultural soil.
Abu Dhabi: When the City of Oil is no longer low-key
Abu Dhabi, as the capital of the United Arab Emirates, is not as renowned outside the Arab world as Dubai, but it possesses almost all of the UAE's oil and gas reserves, as well as 87% of its land. In 2009, Dubai was severely hit by the global financial crisis and needed $10 billion in aid from the capital Abu Dhabi. This money also led to the renaming of the world's tallest building, the Khalifa Tower - which was originally named the Dubai Tower and later renamed the Khalifa Tower in memory of Abu Dhabi Sheikh and former UAE President Khalifa (who passed away in 2022).
Harry Potter Tower
According to data released by the Abu Dhabi Bureau of Statistics on May 8th, in 2022, Abu Dhabi's GDP increased by 9.3% compared to 2021, making it the fastest-growing economy in the Middle East and North Africa region. Under the wave of digital economy, Abu Dhabi has also accelerated its efforts to attract innovative enterprises and foreign investment. Its competitors not only include Dubai, which is also the United Arab Emirates, but also Saudi Arabia, which is rapidly developing in the wave of reform and opening up.
In Abu Dhabi, we first visited the China Arab Industrial Park located in the Khalifa Industrial Park Free Trade Zone. The current "look east" diplomatic strategy in the Middle East is integrated with China's "the Belt and Road" construction. The diplomatic honeymoon period has also greatly promoted the industrial cooperation between the two countries.
The focus of China Arab production capacity cooperation is to develop industries such as new energy, machinery manufacturing, metal processing, biopharmaceuticals, fine chemicals, and petroleum equipment.
Although the categories of industries in the Middle East are not comprehensive and there is no supporting advantage in developing manufacturing, there are no tariffs and value-added taxes within the free trade zone, and it can effectively respond to anti-dumping and countervailing investigation restrictions in the United States. There are also advantages in water, electricity, and labor costs. As more and more Chinese enterprises gather here, industrial supporting services will become more sound, which is also one of the cases where China's supply chain network overflows to emerging markets and reaches global markets.
Thanks to this foundation, Chinese technology companies have also seen opportunities for industrial upgrading in Abu Dhabi. In March of this year, Chinese autonomous driving technology company Wenyuan Zhixing settled in the China Arab Industrial Park and was granted an autonomous driving road running license in July. This is also the first national level autonomous driving road running license in the Middle East and even the world, and has provided nearly 20000 robot taxi orders to the local area.
Xiaguang Society's Middle East Investigation Mission in Abu Dhabi China Arab Industrial Park
When attending the Abu Dhabi Investment Office, the person in charge introduced that Abu Dhabi's advantage lies in its ability to serve as a regional economic center, driving businesses to cover surrounding GCC countries; Moreover, the United Arab Emirates has a very stable economic environment, where enterprises can hold 100% ownership and transfer funds freely. There are also relevant subsidies and incentives for innovative technology enterprises such as healthcare, smart agriculture, ICT, digital innovation infrastructure, and intelligent manufacturing.
In the past, it was indeed a common practice for companies interested in expanding into the Middle East market to first visit Dubai or Abu Dhabi, and then cover other Gulf countries such as Saudi Arabia. But now, the competition between Saudi Arabia and the United Arab Emirates as economic leaders in the Gulf region is becoming increasingly fierce. In 2021, Saudi Arabia, which is accelerating its reform and opening up, released the "Regional Headquarters" plan, announcing that if companies wish to continue business with the Saudi government or its holding of enterprises, institutions, funds, etc. after 2024, they need to consider establishing a regional headquarters in Saudi Arabia. This policy has attracted more than 80 multinational companies such as Deloitte, PepsiCo, and Becktel to relocate their Middle East regional center to Riyadh.
In order to enhance the competitiveness of foreign enterprises, Abu Dhabi has also introduced some preferential policies. Firstly, Abu Dhabi has established industrial parks that attract different types of enterprises. For example, industrial enterprises are most suitable to settle in the Kizad industrial zone, and financial technology companies are most suitable to settle in the Abu Dhabi Global Market; Secondly, the investment office will provide preferential subsidies based on relevant evaluation indicators such as attracting high-tech talents, contribution rate to local GDP, and whether the enterprise is a regional center. KPI assessments will be conducted on the enterprise every quarter, with a maximum subsidy of up to 45% of the local investment amount. Currently, more than 60 enterprises have received subsidies, including two Chinese enterprises; In addition, compared to the current Islamic Shariah principles implemented in Saudi Arabia, the implementation of English Common Law in the Abu Dhabi Industrial Park will have a relatively neutral arbitration institution to assist the local management system and make enterprises feel more secure.
When visiting the Abu Dhabi Investment Office and local entrepreneurship incubator Hub71, I strongly felt that the United Arab Emirates is indeed a country with a high degree of openness and a strong atmosphere of innovation and entrepreneurship. Here, you can see professionals from various countries and races, as well as entrepreneurs who want to try various emerging fields.
Xiaguang Society's Middle East Investigation Mission Visits Abu Dhabi Entrepreneurship Incubator Hub71
Dubai: Two Hot Races - Metaverse and New Energy
This atmosphere is even stronger in Dubai.
Due to oil scarcity, Dubai was forced to achieve economic diversification decades earlier than other emirates in the United Arab Emirates. Nowadays, this financial capital of the Middle East is filled with towering and towering office buildings, as well as unique and eye-catching postmodern buildings. Here, women covered in black robes are completely invisible - capital logic has replaced traditional concepts.
This is also a city with strict class divisions. Every office building is filled with global citizens who are eye-catching, as well as South Asian laborers who make coffee and clean up in a corner. Among the 10.17 million people in the United Arab Emirates, foreigners account for 88%, with the majority coming from India, Pakistan, and Bangladesh in South Asia.
I think of David Harvey's description of Paris, which also applies to Dubai: each district of Paris has its own pattern, which can reveal who you are, your job, your family background, and the goals you pursue; The tangible distance used to distinguish classes is understood as a moral distance that has been concretized and sanctified, and it is precisely this moral distance that separates classes.
Dubai Street View
The Middle East region, represented by Dubai, has shown strong interest and enthusiasm for new concepts such as the metaverse and blockchain in this wave of digital economy.
In 2019, the Dubai government released the "Dubai Blockchain Strategy 2020", aiming to apply blockchain technology to various industries, including finance, real estate, supply chain, and government services; In 2022, Dubai issued the Virtual Asset Law and established the Virtual Asset Management Authority, becoming the first government agency to enter the metaverse; In the same year, Dubai launched the Metaverse Five Year Strategy, aiming to create a "Capital of Metaverse" and become one of the top ten XR and Metaverse markets in the world.
In order to achieve this goal, Dubai is increasing the research and development of technology related to the metauniverse, cultivating talents related to the metauniverse, and attracting global technology companies, including AR/VR/MR/XR, Digital Twin, 5G, edge computing and other technology companies. The goal is to create 40000 jobs related to the metauniverse within five years, and bring about an annual economic growth of $4 billion.
Even, Dubai has launched a "digital vagrant visa program" for remote workers and entrepreneurs, allowing foreign citizens with a certain monthly income to work and live in Dubai for one to two years.
Digital entertainment applications such as games, social media, and live streaming are leveraging the concept of the metaverse to penetrate the Middle East, with comprehensive localization from capital, research and development to operations. Snapchat's reliance on AR technology and the privacy of burning after reading has emerged, and many cryptocurrency companies have also moved to Dubai to avoid policy risks.
Snapchat is a popular social app in the Middle East
From the perspective of overseas mode, the Middle East is a market with extremely high requirements for localization. The success of "Middle East Little Tencent" Yalla stems from its localized and customized products from the beginning, completing talent deployment for target markets, and transplanting the original intangible cultural heritage of the Arab region - Majis, an offline gathering culture, to the online. From "globalization at sea" to "localization of models, and then globalization", Chinese enterprises that have grown up in the digital economy era are also undergoing iteration of globalization models.
Another hot track in the United Arab Emirates is renewable energy. Perhaps due to the crisis of relying on oil economy, Middle Eastern countries are actively undergoing an energy transformation. The United Arab Emirates will host this year's Global Climate Summit (COP28), hoping to play a dual role as an oil exporting country and a green energy powerhouse. Chinese new energy vehicle companies, relying on their technological and product advantages, have also accelerated their entry into the Middle East market. In June this year, NIO signed a share subscription agreement with Abu Dhabi Investment Institution; The consortium of the United Arab Emirates, Benazir, has also announced its cooperation with Mitsubishi Power and BAIC Blue Valley.
Next time you see a Middle Eastern consortium investing in Chinese car companies, don't be surprised.
Xiaguang Society's Middle East Investigation Mission in Abu Dhabi Investment Office
Indeed, the UAE is open and active enough with a mature business environment, but its inherent constraint is that the market size is too small. Out of over 10 million people, only over 1 million domestic citizens have sufficient purchasing power. The neighboring Saudi Arabia is attempting to replicate the rise of Dubai's model, and the Saudi capital Riyadh is vying with Dubai for its position as a regional international business and talent center.
And does Saudi Arabia have enough strength to compete with the United Arab Emirates? On the the fourth day of the trip, the Middle East delegation of Xiaguang News Agency flew from Dubai to Riyadh to see what has happened in this country.
Before traveling, I applied for a Saudi entry visa in advance on the official website. I just submitted my application the previous second, and when I refresh the page, it will show that the visa has been granted.
This really shocked me. It should be noted that until September 2019, Saudi Arabia remained a secretive country in the world. For a long time, Saudi Arabia's visas have only been open to foreign workers, business people, and pilgrims visiting holy places such as Mecca, with a complex approval process and a lengthy process. Starting from September 28, 2019, Saudi Arabia officially opened tourist visa applications to citizens of 49 countries, including China, and proposed a grand vision of "attracting 100 million tourists by 2030, with the tourism industry accounting for 10% of its GDP".
The second batch of visas demonstrates the sincerity and determination of this country, which has been isolated from the world for many years, to showcase its true face to the world.
Riyadh Street View
The great change in Saudi Arabia had already been promised 8 years ago. From 2014 to 2016, global oil prices showed a continuous downward trend, coupled with the trend of global energy transformation, forcing Saudi Arabia to make changes. In April 2016, Saudi Arabia issued the "Saudi Vision 2030", which set development goals for the next 15 years with three main themes: "a vibrant society," "a prosperous economy," and "an ambitious country." This groundbreaking change is seen as the Saudi version of "reform and opening up".
One of the Great Changes: Improving Women's Rights and Releasing New Economic Vitality
When I truly landed in Riyadh, although I was mentally prepared, when I saw the female customs staff covered in black robes with only one gap left in their eyes, I was still quite affected by cultural shock.
Women in black robes in Riyadh
Wrapped tightly in a black robe from head to toe, it is a dress code requirement of Islamic fundamentalism for women. As early as 1928, Nazira Zayn al Din, a Lebanese Muslim female scholar, boldly pointed out in her book "Taking Off the Gown" that taking off the Gown does not hinder women's loyalty to their faith. In her book, she states that there are four layers of "burqas" over the land of Lebanon: one covering the body of Lebanese women, one covering wisdom, one covering upright conscience, and one covering the spirit of progress.
For Saudi Arabia, which has spared no effort in promoting social change, secularization is an important reform goal for this monarchical country that integrates politics and religion. The continuous loosening of women's rights is an important measure to promote the secularization process of Saudi society. In March 2018, the Crown Prince of Salman, who led Saudi Arabia's reform and opening up, publicly stated that there was no legal requirement for Islamic women to wear burqas and masks; In the same year, Saudi Arabia allowed women to drive and enter sports stadiums to watch football matches; In August 2019, Saudi Arabia issued a new cabinet decree, which allowed adult women to travel and apply for passports without the consent of their male guardians; In addition, the law also grants women the right to register matters such as marriage, divorce, and child birth.
In the "2030 Vision" of Saudi Arabia's reform and opening up agenda, it is explicitly proposed to increase the participation rate of women in work, and to increase the proportion of women in the workforce from 22% in 2017 to 30% by 2030. This goal has been rapidly achieved, with Saudi women's employment rate reaching 31% in the first quarter of this year.
The relaxation of women is also the relaxation of the vitality of the entire country.
Women Working at the Saudi Games Exhibition
Although most local women still wear ankle long black burqas on the streets and alleys of Riyadh, they can be seen increasingly participating in public life in various places. In shopping centers and hotels, female shopping guides and receptionists are everywhere; At the local game exhibition Ignite in Saudi Arabia, female game designers are qualified to share their understanding and vision of the global market with a group of men; In the ancient city of Drayemen, which is now a popular tourist destination in Saudi Arabia, you can see a group of girlfriends laughing and laughing all the way without their husbands accompanying them.
There are more magical scenes that make me feel quite magical: women dressed in black are playing esports games, experiencing various games in indoor amusement parks, and trying VR/AR wearable devices. These scenes most concretely indicate that Saudi Arabia's conservative ideology is transforming into a more resilient and inclusive moderate Islamic ideology.
As more and more women with economic autonomy emerge, new growth opportunities are bound to emerge in games, social media, e-commerce and other tracks in the Middle East. According to data released by the Saudi Ministry of Communications and Information Technology, 48% of game players in the country are women. With the support of a series of government policies, Saudi Arabia has also held some competitive competitions specifically targeting female players, aiming to empower them and create more job opportunities. At the Saudi Game Show, I also saw some facelift games like "Miracle Warmth" appear, which is undoubtedly an opportunity for Chinese game manufacturers to enter.
A Saudi woman is experiencing VR devices
Cataclysm 2: "Saudi tycoons" also "rolled up"
Another measure of Saudi Arabia's secularization transformation is to promote employment for its citizens. Before the reform and opening up, Saudi Arabia had long been in a "food profit country" model, and its national finances were highly dependent on rental income mainly from the oil industry. Externally, exporting oil to the United States in exchange for political and military asylum; Internally, the rental profits obtained from the sale of oil are distributed to the public as welfare expenditures, and there is an implicit contract between citizens and the state not to participate in politics in exchange for welfare, to ensure the long-term rule of the current Saudi monarch, the Ibn Saud family.
In the past, Saudis rarely worked. Saudi national customs