In 2024, the country that people who go to sea have to talk about is probably Saudi Arabia.
However, it is not new for Chinese companies to look for opportunities overseas, whether it is Southeast Asia, the former hot spot of e-commerce, or the European and American markets that high-end brands are collectively targeting, or the Middle East, which has focused more and more attention in the past year or two......
What is so special about Saudi Arabia compared to other countries and regions? What industries can find opportunities in Saudi Arabia? Perhaps on the way to Saudi Arabia, we need to understand these issues first.
The same Middle East, different scenes
Almost all people who go overseas are concerned about TikTok, even if their business has nothing to do with TikTok, not only because TikTok is a benchmark for going overseas, but also because there are many variables in going overseas now.
In 2024, the ecology of going to sea seems to be becoming more and more complex. The latest U.S. resolution on TikTok has generated a lot of attention. At around 10 p.m. local time on April 23, 2024, the U.S. Senate passed a series of military aid and sanctions bills with 79 votes in favor and 18 votes against, and restricting TikTok content was also packaged into the bill.
TikTok (including its e-commerce business) has always been regarded as a bellwether for going overseas, and follow-up events will continue to ferment. At this point in time, it is necessary to pay attention to the import and export policies of different countries.
It is true that the business environment in Middle Eastern countries is more friendly. It is young, dynamic, capital, policy support, and strong consumption power, and Saudi Arabia is the 27th largest e-commerce market in the world and the largest in the Middle East. The superposition of various advantages has made more and more people who go to sea aim at the hot land of Saudi Arabia.
In the Middle East, investors are looking at the project also has some new trends, the current industry's hottest investment projects, technology companies still occupy a very important position, in the recent overseas ecology, many high-end manufacturing flows to the Middle East, even including some traditional manufacturing.
However, it should also be noted that the United Arab Emirates, Dubai, Saudi Arabia and other countries are all Middle Eastern countries, but different markets have different preferences for absorbing foreign products.
In the biomedical industry, for example, medical innovators are setting their sights on the Middle East. Unlike a large number of state-owned enterprises with infrastructure and real estate rooted in the Middle East, domestic biopharmaceutical companies have also begun to pay attention to the Middle East market around 2021, but in the entire Middle East, the preferences and policies for the import and export of biopharmaceuticals are different.
According to IQVIA's analysis, Saudi Arabia's high spending power and cultural preference for expensive foreign brands have led to 85% of the country's pharmaceutical products being imported brand drugs. But like Egypt, 90% of the drugs are domestic generics. Since imports are currently greater than exports in the region, government policies encourage local production of drugs. With the increase in noncommunicable diseases and the rising cost of healthcare, it is likely to attract more foreign investment into the continent and further develop domestic manufacturing capacity.
Therefore, although they are all Middle Eastern countries, there are still differences between the demand for industry absorption and the local situation. Just like Saudi Arabia, its import trend is actually in line with the country's demand for upgrading the medical industry in recent years.
Citing information from Arterial Network, which focuses on biomedicine: Since 2016, the Saudi Ministry of Health has launched a number of public-private partnership programs, since 2017, Saudi Arabia's healthcare sector has been liberalized to foreign investors, seeking to expand and improve medical and health conditions through domestic and foreign private investment, and in 2020, after the outbreak of the epidemic, Saudi Arabia's budget allocated about 44.5 billion US dollars to privatize nearly 300 hospitals by 2030 and improve medical education and digital transformation.
The Middle East is becoming a new blue ocean for domestic biopharmaceutical companies to go overseas. The digital transformation of the medical industry is also a major trend in the upgrading of the entire medical industry in China in recent years. At the beginning of 2023, Middle East sovereign funds will set up offices in China one after another, which also provides a window for more medical companies to enter the Middle East.
According to IQVIA data, the global pharmaceutical market (by ex-factory price) is expected to grow at a compound annual growth rate of 3%-6% to about $1.9 trillion by 2027. However, growth is slowing significantly in developed markets, while spending growth is expected to range from 35 to 55 percent over the next five years in high-volume markets such as Latin America, Asia-Pacific, and the Middle East and Africa.
At present, going to sea has reached a state of being more adaptable, more meticulous and cautious.
There are opportunities everywhere, and challenges everywhere
If you have an understanding of the ecology of going to sea, in 2023, the capital of the consumption circle will be cold, the number of active overseas projects will be greatly reduced, and the recession of the consumer industry will have an impact on the entire overseas ecology. However, since the beginning of 2024, the AI track has become a super investment track comparable to that year's new energy and chips with high-frequency financing, and the venture capital circle has also become hot again. Among them, many projects have landed in the Middle East, including Saudi Arabia.
However, unlike what we traditionally think of finding a good project, going overseas in Saudi Arabia is more like a long-term strategic plan, and not only technology, but the transformation from the top level has penetrated into all aspects, energy, technology, finance, and even tourism, culture, and life...... Everything is moving in a more open and secular direction.
According to the latest Saudi official statistics for 2023, non-oil GDP already accounts for 50% of the country's GDP.
Transformation is the main theme of Middle Eastern countries, and technology is an opportunity that everyone wants to seize. However, the author thinks that it may be more difficult to penetrate into the consumption habits of local countries and local people than the big melody of science and technology.
For the matter of going to sea, only by understanding the local life can you find the market.
With the crown prince focusing on improving the social status of women in the local area, there is no need to separate the movement of men and women in Saudi shopping malls, and the number and style of women's clothing stores are not much different from other countries. One of the main goals of Saudi Vision 2030 is to "increase the proportion of women in the workforce to 30%". In 2018, women made up only 15% of Saudi Arabia's workforce, well below the global average of 39%.
More women in the workforce mean that women have more say in the economy and have more spending power. It is reported that in addition to the traditional black robe, Saudi women have begun to choose to wear burqas with different colors, styles, fabrics and patterns, and a considerable part of these burqas come from Chinese manufacturers, which is the most important import market for Saudi Arabia's fashion products.
According to statistics from foreign agencies, in 2021, Saudi Arabia imported $2.6 billion of fashion goods from China, ahead of imports from India ($807 million) and the United Arab Emirates ($618 million).
It is expected that in the future, the sales of casual clothes such as jeans, long-sleeved tops and floor-length skirts may also open up the market in Saudi Arabia and even wider in the Middle East.
In addition to clothing going overseas, more jewelry, jewelry, and women's preferred nail business have also crossed the ocean from China to this market. In this round of Middle East going overseas, these are more hidden but more suitable for the needs of daily life, and they are more micro opportunities outside of investment, technology, logistics and other industries, and they also have potential.
Taking advantage of the differences in the development stages of different countries to carry out repeated arbitrage of technology and experience is the logic behind going overseas. But all the places that can make money are opportunities and risks, and I believe that the recent TikTok turmoil has sounded the alarm for many people who go to sea.
In fact, from any level, TikTok is a global enterprise, TikTok has also said that it is not an agent of any country, TikTok owner ByteDance, international investors own 60% of ByteDance's shares, including large American investment companies. According to public information, three of ByteDance's five board members in 2023 are Americans. Quoting three overseas analysts excerpted by Sanlian Life Weekly, TikTok is much more transparent than its American counterparts in terms of data security, management and use. Contrary to TikTok's trend, Tesla's "safety and compliance" in China is the opposite.
Perhaps Saudi Arabia is full of gold, and religious barriers, cultural barriers, differences in business environment, and differences in workplace concepts are still thorny problems faced by many people who go to sea after arriving in Saudi Arabia.
Although industrial globalization is an unstoppable trend, how to balance the possible conflicts between overseas enterprises and local industrial development is a question worth pondering. Perhaps in the future, going to sea may face more risks, these risks seem to be random events, but behind them may be a deeper game of interests, which requires people to have a more sensitive sense of smell of the situation.
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