Winning with China Inc.
Reading the hearts and minds of Chinese multinationals operating in the Middle East
The Chinese bring capital, human resources as well as a different set of ways of doing business. So, are we ready to do business with the Chinese multinationals?
Bilateral trade between China and the Middle East has been long established, but it is only in recent years that China has become the dominant commodities customer for the region’s energy resources, and that cross-border trade and investments have blossomed. China’s insatiable demand for oil is said to be the driving factor keeping crude oil prices in triple-digit US dollar figures for years, which in turn has added an estimate US$1 trillion to the GDP of the GCC countries over a 10-year period (2003-2013)1. This surge in wealth has led to growth opportunities across a broad range of sectors such as real estate, transportation, telecommunication and financial services, for both Chinese companies and their Middle Eastern counterparts.
The aftermath of global financial crisis, uncertainties in some parts of the region, and in particular, the recent unexpected sharp dip in oil price have added a new dimension to the increasingly interconnected bilateral relationship between two of the most important emerging markets. Governments across the Middle East now have a stronger incentive than ever before, to leverage new sources of investments in achieving social development and economic diversification of their respective countries. Whereas China, armed with US$3.3 trillion in reserves and sluggish growth at home, is eager to turn its reserves into productive assets overseas.
The growing number of Chinese multinationals setting up shop across the Middle East is a key aspect of this story. The Chinese bring capital, human resources as well as a different set of ways of doing business. So, are we ready to do business with the Chinese multinationals? Do we know what motivates them, how to engage them, when to negotiate with them and why they choose one partner over another?