CEO-Tipps · Auslandsausdehnungssaison | Wie kann man neue Chancen beim Ausbruch in den Mittleren Osten nutzen?

The Middle East, with its diverse cultures and booming consumer market, has attracted the attention of more and more international brands. In this ever - changing and diverse market, what new opportunities are there? How can businesses adapt to the local market? What logistics and supply - chain challenges need to be faced?

At 7 p.m. on June 25th, "CEO Insights" of 36Kr's Overseas Expansion Season invites Lingxiu, a partner at Roselake Ventures, and Shi Xuandong, the Saudi country manager of iMile, to discuss the most crucial issues for brands expanding into the Middle East.

This live - stream mainly focuses on the following questions:

1. Why do enterprises prefer Dubai when expanding into the Middle East? What are the prominent features of the market?
2. Which sectors and categories in the Middle East market have development potential?
3. How to understand this wave of "Middle East fever"? How can Chinese enterprises seize the opportunities?
4. What are the driving factors for the explosion of e - commerce in the Middle East? What challenges does logistics face?
5. What are the core advantages and localization challenges for Chinese enterprises expanding into the Middle East?
6. How to build local trust in the Middle East? What are the common pitfalls?
7. What key changes will occur in the Middle East in the next three years? How to respond?

The following is a conversation between the two guests and 36Kr. Some content has been sorted and edited:

36Kr: Why do enterprises prefer Dubai when expanding into the Middle East? What are the prominent features of the market?

Lingxiu: First of all, Dubai shares similarities with Shenzhen in terms of development characteristics. As a core city in China's Greater Bay Area, Shenzhen is a gathering place for domestic overseas - expanding enterprises. It is known for its internationalization and inclusiveness, attracting a large number of young people to settle and develop. Dubai is located in the central area of Asia, Africa, and Europe. It is both a trading hub and the financial center of the Middle East. It also has a high degree of internationalization and inclusiveness, and the city has a young population. Secondly, since the local people in the Middle East live in countries rich in oil resources, they have a relatively high per - capita GDP and income level. When choosing products or services, they not only focus on cost - effectiveness but also pay more attention to quality and the emotional value brought by product services. In addition, due to the hot local weather, people mostly stay at home in summer, and entertainment activities are relatively scarce. Therefore, Internet entertainment forms such as voice chats and live - streaming entertainment have thrived in the Middle East, providing local users with a happy experience at home.

Shi Xuandong: First of all, as a city dominated by foreign populations, Dubai is highly inclusive and open, which subverts people's stereotypes of Middle Eastern countries. Its landmark buildings are both beautiful and spectacular. In addition, in the Middle East market, emotional value is indeed a key factor that the service industry must consider. Take the last - mile delivery service as an example. Most of the complaints received during operation are about the behavior of drivers, such as disrespecting customers and failing to provide enough emotional value. Therefore, we invest a lot of energy in driver training and script design to meet the core demand for emotional value in the local market.

36Kr: Which sectors and categories in the Middle East market have development potential?

Lingxiu: First of all, cross - border e - commerce is indeed a promising industry in the Middle East, but popular industries are not necessarily easy to make profits in. For example, the real - estate industry in the UAE has developed rapidly in the past two years. However, due to the rapid increase in land costs, it is difficult for non - local large enterprises to obtain high - quality land plots, and it is quite challenging to engage in real - estate development. At the same time, the supply of apartments and off - plan properties in the market is increasing continuously. For real - estate enterprises, it is difficult to make profits.

Secondly, starting a food and beverage business such as a milk - tea shop or a barbecue restaurant in the local area may seem like a popular entrepreneurial opportunity, but in fact, it has certain risks. Not only is the cost of opening a store three to four times higher than that in China, but there are also requirements for the number of employees and the nationality ratio in places like Saudi Arabia. In addition, the Internet penetration rate is relatively low in the local area, making it difficult to conduct site - selection research and supply - chain procurement, and it is quite difficult to implement the business.

Finally, some relatively low - key industries may have more opportunities, such as China's advantageous manufacturing, food processing, and medical device industries.

Shi Xuandong: First of all, the pet market is a development direction in the Middle East, but there are obvious preference differences. For example, the demand for cat products is strong, while dog - related consumption is relatively restricted. Secondly, Saudi Arabia is a society that attaches great importance to traditions and religions. Saudi employees always wear white or black robes when going out. Therefore, peripheral products that conform to the local culture are worth considering.

In addition, Saudi Arabia is vigorously promoting infrastructure construction in preparation for the World Cup and the "Vision 2030" projects. It is worth noting that popular domestic fields such as the sharing economy and Internet celebrity stores are difficult to develop in Saudi Arabia due to cultural differences. If enterprises blindly enter these fields, it will affect cost - effectiveness.

Finally, when establishing a foothold in the Middle East market, enterprises should retain their domestic grass - roots practical experience but not copy it blindly. They should pay attention to localization in the process of local development, conduct in - depth research on the local market, think more, and combine Chinese experience with local reality.

36Kr: How to understand this wave of "Middle East fever"? How can Chinese enterprises seize the opportunities?

Lingxiu: First of all, the development of local enterprises in the Middle East is related to the rise of the global mobile Internet. From 2009 - 2010, local technology - based enterprises in the Middle East mostly copied European and American models. For example, the Middle Eastern Internet enterprise Careem emulated Uber's business model and was later acquired by Uber; the Middle Eastern e - commerce platform Souq also copied the European and American models and was later acquired by Amazon. From 2021 - 2023, affected by the global dollar interest - rate cuts, VC financing in the Middle East was in full swing, and there was a concentrated explosion of fintech, e - commerce, and technology - enabled projects. In 2022, the financing amount in the Middle East reached 3.6 billion US dollars. However, from 2023 - 2025, the US dollar entered an interest - rate hike cycle and maintained a high - interest - rate environment. A large amount of capital was withdrawn from the Middle East market, which had a significant impact on enterprises relying on financing.

In addition, in recent years, local enterprises in the Middle East and Chinese overseas - expanding enterprises have been transforming towards high - tech and AI fields. Incubators such as Hub 71 and special zones like DIFC and ADGM have been established in Dubai, Abu Dhabi, Saudi Arabia, etc., to support the development of technology and innovative enterprises, especially in the fields of hard technology and AI. This is in line with China's trend of shifting from "model innovation" to "technological innovation", attracting enterprises in the fields of new energy, intelligent driving, and intelligent hardware to land in the Middle East market. On the other hand, the threshold for Chinese enterprises to land in the Middle East is continuously decreasing. For example, it is very convenient to register a company in the UAE. Countries such as Qatar and Kuwait are also actively attracting Chinese enterprises, but attention should be paid to the policy requirements of countries like Saudi Arabia regarding employees, nationality, and local content.

Finally, although most of the work of Saudi Arabia's "Vision 2030" has achieved phased progress, the depth and quality of implementation have not yet reached the expected goals, and it still needs five more years of in - depth promotion. Chinese enterprises have deeply participated in this process in multiple fields such as infrastructure, new energy, the digital economy, and finance. The entry of leading enterprises has also driven small and medium - sized enterprises in the upstream and downstream of the industrial chain to expand overseas, forming a pattern of coordinated development.

Shi Xuandong: First of all, the "Middle East fever" has led to a rapid increase in the population. From 2021 - 2024, the traffic flow during peak hours in Saudi Arabia has increased from about 5 vehicles to 100 vehicles. At the same time, the number of Chinese people in Saudi Arabia has increased, and supporting living facilities have been established accordingly. For example, a Wenzhou supermarket opened in Saudi Arabia at the beginning of this year. Secondly, judging from the local acceptance of capital and population, the Saudi government is promoting openness through multiple measures. For example, it has held international - scale music festivals and opened wineries in the embassy area of Riyadh. According to statistics, Saudi Arabia has sent 1 million overseas students in the past decade, promoting international communication and optimizing the business environment. It is worth noting that most government officials have overseas - study backgrounds, are generally young, and have English - communication abilities. Public schools in Saudi Arabia have made Chinese courses compulsory from the third grade, and the social friendliness towards China has significantly increased.

In addition, the survival rate of Chinese - funded enterprises in Saudi Arabia has shown a significant upward trend. According to government statistics, the survival rate was 38% in 2021 and has increased to 67% in 2023. The core reason for the increase in the survival rate is the continuous improvement of the supporting ecosystem for Chinese enterprises expanding into the Middle East. With the collective establishment of supporting institutions such as logistics and warehousing, catering, information, and human resources, the ecological soil for Chinese enterprises to expand into the Middle East has been continuously consolidated. Compared with the past, the threshold for Chinese enterprises to land in Saudi Arabia has been lowered, but how to achieve long - term survival in the competition still requires formulating refined strategies based on market characteristics.

Finally, Saudi Arabia's "Vision 2030" aims to get rid of oil dependence through three paths: policy opening, infrastructure construction, and technology - driven development. At the policy - opening level, phased results have been achieved. At the infrastructure - construction level, Saudi Arabia is committed to building a logistics hub in the Middle East and even the world. For example, it is building a skyscraper taller than the Burj Khalifa in Jeddah and establishing the world's largest park in the center of Riyadh. At the citizen - employment level, more and more Saudi people are shifting from relying on government subsidies to participating in market - oriented work, which has enhanced employment vitality and improved the citizen - employment structure.

36Kr: What are the driving factors for the explosion of e - commerce in the Middle East? What challenges does logistics face?

Shi Xuandong: First of all, the explosion of e - commerce in the Middle East is due to the young population structure, the rise of female power, and the improvement of infrastructure. Local families in Saudi Arabia are large, and the foreign labor force is mainly young and middle - aged. The young group has a strong consumption willingness and high consumption frequency. The improvement of social openness has enabled more women to participate in the workplace and e - commerce entrepreneurship, which has promoted the development of e - commerce both as consumers and entrepreneurs. Compared with the past, the infrastructure in Saudi Arabia has been continuously improved, and warehousing and logistics have been significantly upgraded. Although the warehousing cost has increased by 20% annually due to market demand, the available warehouse resources are becoming more abundant, and the service quality of partners has been significantly improved, laying a foundation for the development of e - commerce in the Middle East.

In addition, the uniqueness of the cash - on - delivery market in the Middle East lies in the direct interaction between the delivery link and consumers. Different from other regions where parcels can be delivered to the door or convenience stores, deliverymen in the Middle East must hand over the parcels to the recipients in person, which requires accurate location sending during the delivery process. Previously, due to the imperfect address system, there were often vague addresses such as "opposite KFC". However, with the adaptation between the delivery end and consumers, this pressure has gradually decreased. At the same time, the government is vigorously promoting the eight - digit national address and guiding residents to use standardized addresses through policies. This measure imposes mandatory requirements on last - mile delivery enterprises. If consumers provide the national address but drivers fail to use it correctly, they will face a fine of 5,000 Saudi riyals for a single complaint. Although there are still challenges in the current implementation, the standardization process of last - mile delivery in the Middle East will continue to advance in the future with the popularization of the system.

In addition, in the logistics field in the Middle East, the timeliness requirements for local and cross - border logistics show different characteristics. In the local market, the same - day delivery model of "order today, deliver today" is emerging in urban - area delivery, and there is a high demand for instant delivery within 2 or 4 hours, which has given rise to mini - fulfillment warehouses with a coverage radius of about 10 kilometers. In cross - city transportation, for example, for the more than 1,000 - kilometer journey from Riyadh to Jeddah, users expect next - day delivery through more than 20 hours of road transportation. In the cross - border market, the expected delivery time is 7 - 10 days. Finally, in terms of automated delivery, some enterprises are exploring air delivery. For example, enterprises such as Aramex and DHL are carrying out pilot projects with the local government. From a practical application perspective, due to the current traffic congestion and chaotic order in the Middle East, the large - scale implementation of this model still requires some time.

Lingxiu: First of all, the development of e - commerce in the Middle East is highly related to streaming media. The iteration from traditional media to streaming media has led to the fragmentation of information dissemination. The rise of short - video and graphic platforms such as TikTok and Instagram has promoted young people to form online consumption habits. They are more likely to be stimulated to consume when browsing short - videos, influencer recommendations, and interesting graphics. Moreover, the mobile - phone penetration rate in the Middle East has reached 90%. Users are exposed to KOL's shopping recommendations through mobile devices frequently, which is then converted into online ordering behavior, further promoting the development of e - commerce. In addition, in the development opportunities in the Middle East market, if start - ups or single enterprises want to enter relevant fields, they need to establish binding cooperation with leading enterprises.

36Kr: What are the core advantages and localization challenges for Chinese enterprises expanding into the Middle East?

Lingxiu: First of all, the Middle East market is extensive. Centered around the UAE and Saudi Arabia, including seven Gulf countries such as Qatar and Kuwait, these countries are economically developed, with a relatively high per - capita GDP, strong consumption ability, high requirements for product quality and comprehensive services, and a strong interest in high - tech products and innovative technologies. On the other hand, North African countries including Egypt, Morocco, and Algeria have a much larger population than the Gulf countries, but their economic development level is relatively backward, and the per - capita income is relatively low. These countries are gradually becoming a gathering place for China's manufacturing industry to expand overseas. In terms of industries, the automotive and parts, electric vehicle, and battery industries are developing rapidly locally. Taking Morocco as an example, many well - known enterprises have pre - arranged factories in advance, supplying not only the European and American markets but also radiating to other wealthy countries in the Middle East.

Secondly, local financial risks are worthy of attention. For example, an MCN company mainly engaged in TikTok - related business, due to cross - border payment restrictions, had the local team leader collect salaries on behalf of others and then distribute them to other employees. However, the leader embezzled all the salaries and disappeared, and also transferred the funds in the company's account for TikTok platform recharge, resulting in the inability to pay other employees' salaries normally. These non - standard operations adopted to save costs are likely to cause problems when the team size is small, which is worthy of everyone's attention.

Shi Xuandong: First of all, let's look at the basic situation of several countries. As the core country in the Middle East, Saudi Arabia has a large land area and a large population, and its local people generally earn income through employment. The consumption level in the Kuwait region far exceeds that in Saudi Arabia, the transaction amount of cash - on - delivery is large, and the consumption potential continues. The country of Qatar is small in scale, but the wealth of local residents is highly concentrated, and the degree of affluence is prominent. The UAE region takes technological innovation as its core competitiveness to maintain its leading position in the Middle East economy. In addition, when operating in Saudi Arabia, enterprises must strictly abide by the Saudization rate policy. The Saudi government strictly controls the Saudization rate of the enterprise's human - resource structure, and enterprises need to upload the information of all employees through the system. For example, logistics enterprises are required to maintain a Saudization rate between 20% - 40%, and 100% of HR, customer - service, and administrative positions should be filled by Saudis, 30% of financial positions, and 50% of procurement positions. Warehouse security guards, supervisors, receptionists, and human - resource positions must also be held by Saudis. Once the Saudization rate fails to meet the standard, the system will automatically alarm.

36Kr: How to build local trust in the Middle East? What are the common pitfalls?

Shi Xuandong: First