Business ties between China and Saudia Arabia have a relatively short history. In recent years, the two countries have increased their bilateral economic activities, leading to China becoming Saudi Arabia's biggest trade partner as of 2013. As the "chuhai" – expanding abroad - strategy of Chinese firms continues and the geopolitical environment restricts Chinese businesses' global activities, Saudi Arabia seems like an ideal location. But how much is known about Saudi Arabia as a destination for global expansion, besides its ample oil and gas reserves and sandy deserts? I spoke to a few of our alumni from various industries who had visited Saudi Arabia in recent months and were considering expanding their business.
As a person born in the Middle East, I have been following Middle Eastern countries' socio-political and economic developments for a long time. Now seems like an ideal opportunity to share some thoughts about the country and provide suggestions for Chinese enterprises expanding their business there.
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China and Saudi Arabia
Among Middle Eastern countries, Saudi Arabia was the last to establish a diplomatic relationship with China, in 1990. The first decade of the relationship was characterised by a slow pace and a minimal bilateral relationship. In the early 2000s, the relationship between the two sides picked up speed. Amidst increasing demand for oil and gas, Saudi Arabia became China's biggest trade partner in the Middle East in 2001. By 2013, China had also become Saudi Arabia's biggest trade partner. In 2023, while bilateral trade declined by a total of 7.1% compared to 2022, China remained Saudi Arabia's biggest trade partner both in terms of imports (USD 64.37 billion) and exports (USD 42.85 billion).
China's Belt and Road Initiative (BRI) and Saudi's Vision 2030 demonstrate numerous compatible areas that could allow the two countries to expand their bilateral relationships through governmental and private sector cooperation. Vision 2030, an ambitious blueprint for transforming the country into a diversified economy, strives to diversify Saudi Arabia's economy away from oil and gas to become more sustainable. China's BRI, which Saudi Arabia is a member of, facilitates Chinese companies' foreign investment in infrastructure and technologies such as renewable energy, both also included in Vision 2030. The governments of the two nations maintain this relationship with open dialogue at the highest level. For instance, King Salman visited China in 2018, and the Crown Prince, Muhammad Bin Salman, visited China in 2019. In return, Chinese President Xi Jinping visited Saudi Arabia in 2022. During each of these visits, numerous collaboration, cooperation, and trade agreements were signed, each valued at tens of billions of US dollars. Based on these agreements, the Saudi side would sell various oil and gas products to China and help the latter to build or refurbish their refineries and petrochemical facilities to use Saudi crude oil. In return, China would help the Saudis build infrastructure and facilities to develop the latter's aerospace, cloud services, telecommunications, information technology, renewable and green energy, tourism, and transportation, among others.
These efforts are also supported by reciprocation between Saudi and Chinese companies. Recent investment projects include Saudi investment in petrochemical and renewable energy in China, and from the other direction, investment from Chinese giants like Huawei, BYD and Alibaba Cloud in sustainable transport (e.g., EV and rail infrastructure and production), green energy, and infrastructure for 5G networks, could computing, and data storage. The specific values for each project are unknown, but as an example, since the beginning of its work in Saudi Arabia in 2007, CRCC has worked on more than 150 projects and signed contracts totalling approximately USD 7 billion, out of which 11 projects valued at USD 3 billion had been completed by the end of 2024.
These notable investments and agreements between the two nations have paved the way for many more opportunities for Chinese firms to consider for their global expansion plans. Below, I highlight some of the areas in which Chinese small- and medium-size firms and large enterprises alike can benefit.
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Potential Opportunities in Saudi Arabia
The most obvious opportunities for Chinese firms are in the sectors and industries highlighted in Saudi Vision 2030 in which China has an absolute or comparative advantage. However, some of them may be suitable for Saudi companies and some are not. First will evaluate some of these obvious opportunities and then evaluate some less apparent ones.
Sustainable Transportation
Chinese firms are some of the most advanced in the world when it comes to building sustainable transportation infrastructure and equipment. China has the longest network of railroads in the world, connecting remote areas of the country with high-speed rail. China is also among the countries with the highest density of subway networks in medium to large cities. Beijing and Shanghai boast some of the highest number of subway stops globally and the most extensive networks in the world. Accordingly, Chinese companies have also built high-speed rail and subway networks in many countries.
However, unlike in cities and regions with higher population density, neither high-speed rail nor subway systems are feasible in Saudi Arabia, unless for symbolic reasons.
EVs and their related industries may, however, have opportunities to enter the Saudi market. EVs are predominantly used for inner-city transportation and are purchased individually. However, this task is also not without challenges. Saudis often prefer high-end automobiles with outstanding performance, particularly in desert environments and off-road conditions. Only EV makers with high-performing cars, therefore, should consider the Saudia market as a serious option. Such enterprises will also need to help the country build the necessary infrastructure both between and within cities. BYD has already started doing both of these, entering the market with its more high-end products and signing contracts to build infrastructure.
Renewable Energy
China's development in renewable energy infrastructure and equipment has already reached the top of the line. China, along with other likeminded countries, has reduced the price of manufacturing solar panels and relevant equipment to a record low. This advancement has improved the capacity to produce renewable energy more cost-efficiently than possible using fossil fuels. Saudi Arabia's plan to produce 50% of its energy from renewable sources by 2030 and reach net-zero emissions by 2060 poses an excellent opportunity for Chinese companies in these sectors. Saudi Arabia has vast non-arable land and deserts suitable for building giant wind farms and solar power plants. Chinese companies can provide consultancy, manufacturing, and infrastructure services to facilitate Saudi authorities' plans to implement clean energy solutions, including all areas of power production, storage, and transmission.
Aerospace
China has made great strides toward becoming an aerospace powerhouse. The country's capacity to build mid-range planes, satellites, and spacecrafts is well-known. COMAC C919 is already delivering passengers across China, making China the fourth country/region in the world to produce large passenger planes suitable for mid-range flights. With over 800 satellites in the Earth orbit as of January 2025, China is third globally after the United States and the Commonwealth of Independent States (former USSR). China is also among the few nations that have built a space exploration presence with missions to outer space, the moon, and Mars. Saudi Arabia has been investing in this area extensively and wishes to expand their space programme. The US and other players in this industry are unwilling to help other nations compete in these sensitive industries; they are particularly cautious regarding Saudi Arabia because, although an ally, the Kingdom is not always aligned with their ideology or politics. While in China most of these industries are dominated by SOEs and government agencies who would need to take the initiative to work with Saudi Arabia, they could consider taking advantage of this by moving their supply chain in the future to help the country build up its home-grown industries.
IT, AI, Cloud Computing and Other Technologies
Saudi Arabia has plans to position itself as a tech hub in the Middle East. Its population has 100% mobile ownership and a very young tech-savvy population willing to adopt new technologies. Given their advances in both software and hardware, Chinese companies have what it takes to win suitable projects in Saudi Arabia. After the US blocked China from offering 5G and other advanced telecommunication services to its consumers and implemented sanctions on China for high-end chips, Chinese scientists and companies were able to make incredible advances. For example, Chinese scientists developed DeepSeek, a home-grown large language model (LLM) with comparable, or even better, quality and less reliance on high-end chips. Likewise, Huawei was able to build mobile phones with domestically made chips that performed approximately similar to restricted chips. Big players such as Huawei and Alibaba have established a presence in Saudi Arabia already. Huawei has offered Saudi Arabia and many other countries affordable and no-strings-attached 5G solutions, and has also moved its regional headquarters to the country to win a contract to build a cloud services centre essentially for government use, as well as corporate and individual users. Alibaba has followed suit. Chinese firms can use this opportunity to tap into their expertise and build data centres, cloud computing, and similar services and infrastructure for Saudis and other countries. In the long run, they would be building markets whose aggregation will be greater than those that are restricted to them.
Tourism and Hospitality
Diversifying the nation's economy into the tourism sector is one of Saudi Arabia's major plans in Vision 2030. Saudi Arabia's tourism industry generally relies on Muslims' pilgrimage to holy cities. In 2023, Saudi Arabia welcomed more than 27.4 million tourists from around the world, mainly visiting the Kingdom's holy cities and participating in various religious events, providing the country with over USD 27 billion. It is a reality that Saudi Arabia's harsh climate, with its average 41-degree Celsius temperature, is not very tourist-friendly. However, the neighbouring United Arab Emirates, with similar climate conditions but no holy sites and less than 4% of Saudi Arabia's land area, was able to host 14.4 million tourists and generate USD 21 billion in revenue from them in the same year. This means that there is scope for growth, and that Saudi Arabia can offer Chinese businesses massive opportunities in this area. Chinese firms have been able to develop tourism infrastructure in China and improve China's domestic and international tourism (both inbound and outbound) into a massive industry. Chinese firms can consult on building Saudi Arabia's tourism infrastructure and find areas of interest for Chinese and international tourists. Chinese architecture and construction companies can build hotels and theme parks. Tourism services industry firms can help with hotel management and guide services, or act as intermediaries directing Chinese and foreign tourists to travel there or work on developing or managing events and entertainment for the tourists.
Sport and Esport
Related to tourism and the development of Saudia Arabia as a technological hub are major events in the realms of sports and esports. These events diversify the country's economy while also putting Saudi Arabia on the map as a major tourist or investment destination. This is akin to what the Asian Games and Olympic Games did for Beijing and China. At the same time, esports can fit well with attracting game developers and equipment manufacturers to Saudi Arabia, while engaging the young generation of Saudis in building their economy.
To pursue these plans, Saudi Arabia has made major investments in sports locally and internationally. For instance, the Saudi Public Investment Fund (SPIF) effectively owns Newcastle United, and a royal family member owns Sheffield United, both famous United Kingdom football clubs. The SPIF also owns a significant share of the LIV Golf tour in the United States, facilitating its merger with PGA tour, another important golf tournament in the US. The Kingdom famously spent large sums of money to host the Dakar Rally, Formula E, and Grand Prix. In 2025, Saudis are also scheduled to host the Dakar Rally, Spanish Super Cup, Red Sea – Jeddah Marathon, Grand Prix, and WWE Crown Jewel. Saudis are also interested in cricket, basketball, and even ice hockey. After much effort, the Saudis were also awarded the hosting of the 2034 FIFA World Cup.
In esports, SPIF has acquired major stakes in gaming companies such as EA, Take-Two Interactive, Blizzard, and Activision. Through a national Gaming and Esports Strategy, Saudis have hosted the GSA (Gateway Science Academy), Insomnia Saudi, and PUBG Mobile Star Challenge World Cup. Most recently, Riyadh hosted the Esports World Cup, featuring 23 different events across 22 video game titles with the largest prize pool in esport history. Not surprisingly, many Chinese teams participated in this event, winning top prizes. In 2025, the Kingdom will go on to host the Esport World Cup 2025 and the Olympic Esports Games.
Saudi Arabia's focus on sports and esports provides many opportunities for Chinese firms. Chinese sports and esports clubs can look for generous investments from Saudis. Many tournaments and clubs can also consider establishing franchises there. For instance, Tencent, a game developer, and AG Global, an esport club, are considering investments or at least establishing a presence in Saudi Arabia. Other gaming companies could think of developing customised games for Saudi players. Tourism companies can also get involved in moving tourist spectators to Saudi Arabia to watch their favourite games. Sports equipment manufacturers, whether for traditional sports or esports, can also plan for partnership or sponsorship.
Healthcare and Pharma
Healthcare and social services are some of the necessary areas within Saudi's Vision 2030. The Kingdom wishes to build a better and healthier society for its citizens and extend them to all residents. Chinese firms can also seek opportunities in these areas. China has improved its domestic healthcare services dramatically and moved to become one of the world's largest pharmaceutical powerhouses. Chinese firms have made significant progress in AI-powered healthcare, including diagnosis, treatment, and patient care. In late 2024, with the help of the Chinese embassy in Saudi, a group of pharma companies, including many CEIBS alumni companies, visited Saudi Arabia. They were welcomed to invest in the healthcare and pharmaceutical industries there. Saudi Arabia possesses large financial resources and is willing to partner with Chinese drug research and development firms. Chinese firms can help the Saudi healthcare system to use the power of AI in various stages and scenarios.
Apart from the above areas, there are many other things Chinese firms can do in Saudi Arabia. In a broader perspective, we can name anything related to hard and software development for AI, Smart Cities, IoT, cybersecurity, and other issues that may require data or computing services. Chinese companies can also think about anything that can improve general sustainability related to the environment, society, or governance (ESG). Saudi Arabia also needs talent and labourers in all areas. According to some estimates, over 40% of Saudi's 32 million people population are foreign nationals working there. While key positions and sensitive industries are more likely to be filled with Saudi citizens, foreign talent and workers are needed to fill all other positions.
Apart from businesses that are thinking of products and services meant for outbound toward Saudi Arabia, Chinese firms can also consider inbound products and services from Saudi Arabia. The most important area is related to Saudi Arabia's oil and gas reserves and their expertise in refinery and processing. Saudis also have extensive cash reserves that can fuel research and development and venture financing in China, and many wish to expand their horizon toward the East and Far East. Many tertiary education institutions can attract Saudi students to study in China and learn about the Chinese language and culture while being trained in any discipline.
03
A Few Cautionary Notes
While there are many opportunities in Saudi Arabia, Chinese firms have to be careful about the nuance of going abroad there. Below, I list a few of the most important points that Chinese firms should be mindful of - but the true list is much longer. Chinese firms expanding abroad must observe and readjust their strategy continuously.
Supply Chain, Logistics and Market
Many sectors are relatively new to Saudi Arabia. Any businesses expanding into the country must be ready to build the market and establish their supply chain and logistic networks. In fact, in a recent study of Chinese businesses in Saudi Arabia, most businesses complained about the lack of a reliable or suitable supply chain or logistics network; some even complained about a complete absence of them. If Chinese enterprises want to build these in Saudi Arabia, they should be aware of the learning curve for the local partners and do not assume an overnight operation. For instance, in the renewable energy, AI, cloud computing, and IT sectors, finding reliable supply chain or logistics partners may prove challenging.
While some of these sectors and issues may be new to Saudi Arabia, they could be in a mature stage in neighbouring countries, which presents both an opportunity and a threat. It is an opportunity if Chinese businesses can take advantage of them to build their presence in Saudi Arabia. However, they could be a threat as they mean competition. For instance, while tourism mainly relies on religious pilgrimage in Saudi Arabia, the UAE already has a developed competing hospitality industry.
Furthermore, laws and regulations around all these sectors may also not have caught up with other countries. For instance, data protection, privacy, and cybersecurity regulations may require reassessment and readjustment for foreign firms until the legal system can catch up. Similar to tax laws that are changing (and need special attention by Chinese enterprises), navigating the bureaucracy there could be very complex and difficult to understand for newcomers. Saudi Arabia is working hard to codify regulations to streamline them for foreign investors and businesses, but this may take some time.
Quality and Branding
To be able to sell their products, Chinese manufacturers must overcome the liability presented by their "newness". Quality and prestige are very important for Saudi consumers. They need to be respected and valued. They are also well-educated, aware of many products and what defines their quality standards. For example, the average Saudi auto-buyer is still not fully onboard with the concept of EVs. Chinese EVs themselves are also relatively unknown in the Saudi market, and if consumers do possess any knowledge of Chinese auto brands, it will likely be based on the lower ranked, lesser quality brands that have been sold in less developed nations in the region for the past 40 years (e.g., in Syria and Iran). These "newness" disadvantages, coupled with the general "cheap" image of Chinese products that has been conferred to anything made in China for decades, can give the "China Brand" a bad reputation in Saudi Arabia. Chinese EV makers not only need to enter the market with their best-performing brands and build infrastructure; they also need to begin with carefully crafted and customised marketing campaigns and brand-building to transform average buyers' perceptions. They must also maintain their quality and service to secure a foothold in the long term. Any potential negative event must be dealt with and resolved carefully to build this reputation. This philosophy should be extended to all areas, such as green energy, construction, aerospace, hard/software, and other services and products, and kept for as long as Chinese firms wish to do business there.
Workforce
In terms of both talent and labour, Saudi Arabia has a shortage. With over 40% of the population, or approximately 13.4 million people, in Saudi Arabia, of foreign origin and not considered Saudis, any effort by Chinese companies requires careful consideration of the need for talent or a labour force. According to some estimates, an entry level labourer at the lowest pay grade could cost between USD 270 to USD 900 per month (though this may vary according to industry and location). Foreign workers would be earning lower wages, and Saudi workers are expected to be paid this as a minimum. These amounts for experienced workers in some industries could increase to upward of USD 600 per month.
Furthermore, Saudi Arabia is at times accused of violating workers' rights and even abusing them. This situation is not the same for skilled talent who may enjoy many more perks and higher salaries; regardless, foreign nationals, whether labourers, skilled workers, or talent, cannot become citizens, even if some can hold special status that allows them to stay in the Kingdom longer, which can mean that many workers may find the situation too unfavourable and simply leave, if they can. This may make building manufacturing facilities, construction, or any work that requires labourers in Saudi Arabia less feasible. The country is, however, working toward building laws that can protect its foreign and domestic labour force and attract more people to work there.
"Gateway to the World"
Many Chinese enterprises may think of Saudi Arabia as a gateway to the wider world. They equate Saudi Arabia with Southeast Asia or Mexico, neutral regions and countries that can host Chinese enterprises and work as a hub for manufacturing or export to the rest of the world. It is true that Saudi Arabia is a strong US ally in the region; however, Saudi Arabia has a turbulent relationship with the US and others, including the rest of the Arab world and other Middle Eastern countries.
As a rich country of high status in the Islamic world, Saudi Arabia has a certain degree of influence in the region and the wider Arab and Muslim communities, and provides foreign aid and relief to many nations inside and outside of the region. However, we cannot view the Arab world or the Middle East as a monolith. The Middle East comprises Arabs, Turks, Persians, Israelis, Kurds, and many more ethnic groups. It also includes diverse religions, including many variations of Islam, Judaism, Christianity, and others. Though predominantly Muslim, within this community there are Sunni and Shi'ite Muslims. The Arab world is a geographically expansive region, extending from the Middle East to Africa. This comprises many distinct cultures, many of which often do not see eye-to-eye. Furthermore, over the past 60 years, Saudis have been in direct or proxy wars with or in Iraq, Iran, Yemen, Israel, Lebanon, and Syria.
This is not to say that Saudi Arabia is a dangerous or hostile country; Saudis tend to try to maintain a good relationship with everyone, and the country is considered a safe place to live and do business in. However, businesses that go to Saudi Arabia should be cognisant that due to the complexities of geopolitics and international relationships, choosing the Kingdom as a base may not be the unambiguous gateway to the world or even the region that it may seem.
Culture and Structural Setup
As previously mentioned, Saudis are culturally similar to their neighbours, yet also distinct in important ways. Chinese businesspeople going to Saudi should be aware of what is expected of them and what should be avoided in working in the Kingdom or doing business with Saudis more generally. While Saudis may not seem approachable from a distance, in reality, they are very friendly. It is very easy to build relationships with them, but just like any relationship, it needs work. Saudis are quick to judge people they meet based on their first impressions, and can quite easily write them off. On establishing a relationship, they value high levels of respect and formal contact. Titles, designations, and credentials are important and must be respected with the correct degree of hierarchy. Once Saudis befriend a person, they confer trust to their partners and their acquaintances. However, any sign of disloyalty may easily break their trust.
The structure of society in the country is family- and Saudi-oriented, which forms the basis of its business environment. This is most clearly visible by looking at the power of the royal family, which stretches to all industries. The royal family or their designated representatives are in the highest decision-making positions in key industries and sectors. Sensitive industries are not only controlled by the royal family and SOEs but are also populated by Saudis in order to maintain this control. For instance, in 2023, over 90% of Saudi Aramco's employees were Saudis themselves. Any business entering the Kingdom must be ready to be able to build a good relationship with the royal family in their industry and be able to work with Saudi SOEs. However, they should also note that Saudi SOEs differ from Chinese SOEs in their management style and the role they play in the local economy.
As Saudis value family and family ties, it can be inferred that nepotism is not a taboo and may even be a sign of loyalty. In their business relationships and negotiations, Saudis can easily involve a family member or friend. Once a relationship is formed, then participants in the relationship can be more informal. Saudia interlocutors often ask about family and do not mind being asked back, as long as it is about general family background and size, and mostly about male members of the family. In continuous partnerships, family members may drop in and out during meetings. Drinking tea and other soft beverages with snacks and sweets can be expected during meetings.
The consumption, possession, and sale of alcohol are strictly forbidden in Saudi Arabia, and severe punishment may be administered to anyone violating this law, particularly if they are Muslim. However, non-Muslims, with proof of identity, can purchase alcohol from designated areas for consumption in private. The show of romantic affection is also strictly forbidden in public, and extra-marital relationships are severely punished. These factors should be considered especially carefully for businesses in the tourism and entertainment sectors. Many foreign tourists, Chinese or otherwise, may not be aware of these rules and laws.
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Conclusion
The evolving relationship between China and Saudi Arabia presents numerous opportunities for Chinese businesses. However, navigating Saudi Arabia's complex legal, economic, and sociopolitical landscape requires strategic planning and risk management. By leveraging their strengths and forming strategic partnerships, Chinese companies can play a pivotal role in Saudi Arabia's Vision 2030 and contribute to the Kingdom's economic diversification and development. At CEIBS, we are ready to help our students and alumni formulate the best tailor-made strategy possible for entering this exciting market and building a long-lasting enterprise.
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