Daily Management Review

Compared To Google And Facebook, China's Tech Giants Are Better Suited To Saudi Arabia


10/28/2017




Compared To Google And Facebook, China's Tech Giants Are Better Suited To Saudi Arabia
Saudi Arabia offers fertile ground for foreign expenditure because of an economy that is keen to diversify away from oil dependence and because it has a population where two-thirds are now under 30.
 
But the race to capture this lucrative market will be technology behemoths from China, and not the U.S., according to one investment bank chief executive who was spoken to by the media.
 
"China's large tech companies like Alibaba and Tencent have a conglomerate structure and are pursuing more businesses than their U.S. counterparts like Google or Facebook," said Fan Bao, CEO of China Renaissance.
 
And key for emerging markets in which workers with the right knowledge base can be difficult to source is "housing a diversity of businesses under one roof" is useful for "attracting top engineering talent," Bao explained. 
 
In addition, Bao added that "a critical aspect of the Chinese business model is the ability to work with the government." Feeling comfortable when operating in close contact with the state "can be particularly effective in countries like Saudi Arabia and the Middle East, where the government has a large role to play in economic growth and development."
 
Positives can also be brought about through business with a relative lack of autonomy from the government. "The Saudi government, with its large holdings of assets, can provide sovereign guarantees that lessen the risk factor for a given investment—particularly at a time of low oil prices", said Mohamed Abdelmeguid, Middle East and Africa analyst at the Economist Intelligence Unit.
When moving into early-stage markets, Chinese companies are more comfortable than their U.S. counterparts, Abdelmeguid agreed with Bao regardless of these assurances. And an umbrella term for the Middle Kingdom's push beyond its borders in the world's largest foreign investment project, Beijing's Belt and Road initiative, exemplifies this concept.
He saw "significant opportunity in the region" with "so much change going on here." Cheng added that JD.com was "looking for partners in the international market," said Winston Cheng, president of international for Chinese e-commerce firm JD.com, to the media on Wednesday at the Future Investment Initiative conference in Riyadh, Saudi Arabia.
 
Not least as the largest buyer of its oil, China's connection to the Saudi Arabian market was strong, Abdelmeguid said.
 
But the relationship has a useful symbiosis. "While Saudi Arabia is looking for new sources of funding for its economic diversification plans, China is keen to secure lucrative investment opportunities in the Kingdom—such as the forthcoming initial public offering of a stake in the national oil company, Saudi Aramco," he said.
 
(Source:www.cnbc.com) 






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