With China's new energy vehicle billboards shining under the Burj Khalifa in Dubai, and photovoltaic panels spreading in the Saudi desert, an industrial revolution is reshaping the Middle East's economic landscape. With the ‘new trio’ of photovoltaic, energy storage and electric vehicles, Chinese enterprises are moving from traditional energy to new energy, and from manufacturing to digital economy, opening a ‘desert gold rush’ journey.

The Golden Circuit under Geopolitical Changes: The Middle East's Economic Transformation and China's Opportunities

The Middle East is undergoing an unprecedented economic transformation. Once highly dependent on oil and gas, the Gulf States are now attempting to diversify their economies through ambitious national strategies. Saudi Arabia's ‘Vision 2030’ plan and the United Arab Emirates' “2071 Centennial Plan” have opened a door of opportunity for global companies to access the $2.3 trillion market. In this transformation, the ‘three new things’ made in China - photovoltaic, energy storage and electric vehicles - have become the key drivers.

CATL and Saudi Aramco reached a $6 billion new energy cooperation, BYD won an order for 2,000 electric buses in the United Arab Emirates, and LONGi Green Energy's photovoltaic power plants are spreading across the Gulf countries, etc. These projects show the upgrading of China's manufacturing industry, and transform the Middle East from a traditional distribution centre for commodities to a testing ground for high-tech industries.

A Tale of Two Cities: The Strategic Game of Dubai and Riyadh

On the shores of the Persian Gulf, the twin-city rivalry between Dubai and Riyadh is a microcosmic mirror image of the Middle East's economic transformation. Dubai is known for having one of the most open business environments in the world, while Riyadh has risen to prominence with strong government support and resources. The two cities each offer different strategic options for Chinese companies.

1. Dubai, the Pearl of the Desert: the world's most open business hub

0 tariff policy: has attracted over 7,500 Chinese companies to set up shop.Jebel Ali Port: As one of the largest ports in the Middle East, handling 40% of the region's containerised freight, Dubai's prime location enables it to reach a market of 3 billion people via a 3-hour voyage.

Dragon City Mall: Witnessing the evolutionary history of Chinese manufacturing in the Middle East, from the original Yiwu Commodities to the current Azure Experience Store, Dragon City is not only a distribution centre for trade, but also a window for Chinese brands to the Middle East.

The Chinese community: about 100,000 Chinese people have built up a huge business network, and 400 Chinese restaurants have added a unique colour of the ‘Eastern Silk Road’ to the city.

2. Saudi Newcomer Riyadh: Emerging Power Backed by Trillion Dollar Sovereign Fund

Strong economic power: Riyadh has risen rapidly to become an important economic centre in the Middle East thanks to Saudi Arabia's strong economic power and government support.

Trillion-dollar sovereign fund: provides strong financial backing for the government procurement market, with $500bn planned for the NEOM New City project.

Localisation policy: The ‘Make in Saudi Arabia’ boom has been fuelled by the fact that industrial land is one-third of the price in Dubai, significantly reducing costs for manufacturing companies.

Labour Advantage: The monthly salary of Saudi employees is about 30% lower than that of the UAE, providing companies with more cost-effective labour resources.

Overseas 3.0: From ‘Selling the World’ to ‘Building the Middle East’

The Middle East strategy of Chinese companies has undergone three important evolutions:

1.0 Trade Era (2000-2015): the rise of Dubai's Dragon City, where annual trade in traditional commodities exceeded $60 billion, with more than 70 per cent of companies in the business services category. During this period, the main role of Chinese companies in the Middle East was that of commodity suppliers.

2.0 Infrastructure Era (2015-2020):Chinese companies are emerging in the infrastructure sector in the Middle East. Infrastructure giants such as China Construction, China Railway Construction and others undertook more than $100 billion of projects, and the proportion of investment in the engineering contracting category jumped to 45%.

3.0 Industrial Era (2020-present): New energy, electric vehicles and digital economy have become new growth poles. Saudi Arabia's Red Sea New City energy storage project set a new record for the world's largest off-grid energy storage, and the proportion of investment in high-tech industries exceeded 60%. During this period, Chinese enterprises not only sold their products in the Middle East market, but also started to invest and build factories there, realising the transformation from ‘selling the world’ to ‘building the Middle East’.

Breaking the ice: Strategic options for Chinese companies

In the complex Middle East market environment, successful companies are constructing three-dimensional strategies to address different challenges and opportunities.

Spatial Layout: Twin Cities

Chinese companies have chosen to set up their R&D centres in Dubai Media City through the ‘twin-city’ strategy, taking advantage of Dubai's international environment and talents to develop cutting-edge technologies. At the same time, the production base is located in the Saudi Industrial City, taking advantage of the land, labour and policy support in Saudi Arabia to achieve localised production. The regional headquarters is stationed in Dubai International Financial Centre, and the localised team is deeply engaged in Riyadh. Through this layout, the company is able to better integrate resources and cover the entire Middle East market.

Industrial synergy: ecological co-construction

In terms of industrial synergy, Chinese enterprises focus on ecological co-construction. Photovoltaic companies have joined hands with energy storage companies to create a new energy closed loop, ensuring the coverage of the whole process from power generation to energy storage. Electric vehicle companies cooperate with local consortiums to build charging networks and solve the pain points of electric vehicles. Cross-border e-commerce companies marry fintech to build payment ecosystems and improve transaction efficiency.

Cultural Integration: Localisation 2.0

Cultural integration is the key to the success of Chinese enterprises in the Middle East. The China-Saudi Jeddah Industrial Park implements the ‘technology transfer + local training’ model, combining Chinese technology with Saudi talents. Haier's Middle East Industrial Park has 75% Saudi employees, realising truly localised operations. ByteDance has formed an Arabic content creation centre to better integrate into local culture through localised content creation.

Future Outlook: New Opportunities on the Digital Silk Road

With the explosive growth of the digital economy in the Middle East, new blue oceans are emerging. It is expected that by 2025, the size of the Middle East digital economy market will reach $100 billion. Chinese companies have already shown strong competitiveness in this field: the number of users of cross-border e-commerce SHEIN in the Middle East is growing by 300% per year, and the downloads of TEMU are among the top three in the Middle East; in terms of fintech, Alipay has opened up the payment chain with the local Saudi Mada card, and the efficiency of cross-border settlement has been increased by five times.

Conclusion

When Middle Eastern princes drive Chinese electric cars through the streets of Dubai, and when the photovoltaic matrix in the Saudi desert lights up the Arabian Nights, this industrial resonance across civilisations is rewriting the rules of global business. In this ancient and vibrant land, the real challenge for Chinese enterprises is not the scorching heat of the desert, but how to build a sustainable business ecology in the dialogue of civilizations.