GDToday Report: Closer ties stimulate Chinese enterprises' investment in Arab countries
GUANGZHOU, China, Dec. 15, 2022 /PRNewswire/ -- "We have a stereotype that there are only sand, oil, and camels in Arab countries. But having settled in Saudi Arabia, we found that there are huge opportunities here for downstream industrial development. It will be of mutual benefit if China and Arab countries further cooperate," said Li Zhe, CEO & Board Director of Saudi Silk Road Industrial Service (SSRIS).
Five priority areas were highlighted for cooperation in the next three to five years at the first China-Gulf Cooperation Council (GCC) Summit on December 9, that is, energy, finance and investment, innovation and new technologies, aerospace, as well as language and culture. In the meantime, SSRIS held an investment conference, during which 7 cooperative projects were signed in Riyadh, Saudi Arabia with a total investment of more than 1 billion USD.
Joint platform connects Chinese manufacturers with Arabian raw material providers
Li introduced that the SSRIS is a joint company invested by a state-owned company of the Guangzhou Development District. Established in 2019, the company has been dedicated to pushing forward business cooperation between China and Arab countries.
"The company is registered in Riyadh, the capital of Saudi Arabia, under the support of the Chinese and Saudi governments. The Chinese party holds a 60 percent equity interest, and each Saudi party holds a 20 percent equity interest, which enables us to connect with the local enterprises and provide companies with investment services," Li elaborated.
Shengong Saudi Project is one of the 7 projects signed at the SSRIS conference. It promotes further cooperation between Shengong New Materials (Guangzhou), a Guangzhou Development District-based enterprise, and Saudi Aramco Development Company.
Gui Feng, Chairman of Shengong New Materials (Guangzhou) and Director of Shengong Saudi Project introduced that Shengong set up new material modification and LED Lighting manufacturing factories in Saudi and produced new materials for China market, taking advantage of the abundant petrochemical resources in Saudi and advanced manufacture technology from China's Guangdong.
"We ship products back to China, some of which are for sale while others are for further processing into auto parts, LED lighting products, and waterproof construction materials in our factory in Guangzhou. We sell the finished products in the Middle East and Europe," said Gui.
"Our project has received positive market feedback and currently we are still devoted to expanding the production and improving product quality thanks to the services of SSRIS and the support of Guangzhou Development District."
China-Arab cooperation upgrades industrial chains of two sides
The successful implementation of the first and second phrase of the Shengong Saudi Project gave Gui confidence for further investment. The company signed new contracts to expand its business scope on Dec 5.
According to Gui, the total investment of the Shengong Saudi Project is about 892 million USD, and the annual output value after completion is about 2.209 billion USD, which is expected to create 10 thousand jobs.
In addition to the Shengong Saudi Project, a total of 7 China-Saudi Arabia cooperative projects were signed on Dec 5 in Riyadh, covering automobile manufacturing, new materials, intelligent equipment, and food, with a total investment of over 1 billion USD.
Xiao Yingyue, Chief Economist of the Development and Reform Bureau of Guangzhou Development District, said that these projects can facilitate the upgrade of local industries in Saudi Arabia, promote economic interaction and employment, and present a good model of win-win cooperation.
Xiao highlighted that Arab countries have had a very large market demand for electric vehicles, renewable energy, smart devices, and household appliances in recent years. "More and more Chinese enterprises have shown interest in investing business in Arab countries."
"The Arab countries have well-developed energy industries covering petrochemical, mining, steel, and construction materials. However, they lack development of such industries as household appliances, high-end intelligent equipment, and automobile which have achieved significant breakthroughs in China," said Li.
According to the Administrative Committee of the Guangzhou Development District, they have established a cooperative platform to connect with Saudi Arabia during the Covid-19 pandemic, which provides enterprises with partner matching, project negotiation as well as policy consultation services.
"Now that China has adjusted its COVID-19 response to facilitate the orderly recovery of normal life and production, some of my Arabian business partners plan to visit China and seek more cooperation opportunities in the near future. I'm confident that our business with Arab countries will see further development," said Gui.
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