Rising Chinese Factor in the Middle East

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NICHE MARKET

China is now also the world’s second-largest economy and is predicted to overtake the US by 2027. But, although China may be leading in the manufacture of high-end electronics, the global recession is limiting its ability to export other types of manufactured goods to countries such as the UAE.

Despite claims by bodies such as Dragon Mart, a Dubai-based gateway for Chinese products that is owned by Retailcorp Malls that Chinese exports are becoming increasingly appealing to UAE customers, Chinese trade to the UAE is limited by certain economic factors. Some firms in the Emirates are now finding it easier to compete with Chinese manufacturers compared to a few years ago.

Rasha Shehada, from the UAE, was a delegate at last month’s Global Women Vendors Exhibition and Forum (WVEF), held in the city of Chongqing, in south-west China.

Organised by the International Trade Centre, a joint agency of the World Trade Organization and the UN, Shehada attended the forum on behalf of her company, Diamond Line, where she is works as the business development executive. As well as supplying the UAE’s domestic market, the Dubai-based family owned and operated hotel supplies company has operations in 21 countries, including the US.

“Our main challenges are from China and India, where manufacturers have lower overheads,” Ms Shehada says.

“[But] the financial crisis has had a silver lining for companies like ours. In order to have the economies of scale needed to offer low prices, local traders have to invest in importing a whole container ship full of kitchen products from China.

“It is not economical to order a few pallets and a full container is now seen as too risky an investment in the current climate. This means traders in the UAE now rely more on local suppliers like ourselves.”

Although low-cost Chinese manufacturers may have taken the US by storm, some Middle Eastern suppliers such as Diamond Line are discovering that it is still possible to develop a long-term American client base.

“While Chinese manufacturers may win large contracts in the US, we cater for a more niche market composed of smaller hotel companies,” Shehada said.

While China itself is a big exporter of electronics hardware, it also imports many of its components from other Asian countries. In doing so, China’s electronics manufacturers are no different from companies such as Apple, which source many of the components for its hugely successful iPhones and iPads from Shenzhen, the booming Special Economic Zone in the southern province of Guangdong. On the strength of its Apple contracts, Foxconn, a Chinese electronics manufacturer, has become one of the country’s largest private employers with a workforce that is reported to be more than one-million strong.

ESSENTIAL RESPONSE

China, as the world’s second biggest economy and also an emerging economic powerhouse, has kept very close trade ties with the European Union (EU), as the EU is China’s biggest trading partner, while China is the EU’s second largest one. A stable European economy is in the interest of China.

The Chinese government has also said repeatedly that as a long-term investor in European sovereign debts, China will continue to support Europe and the euro.

This will create a win-win situation for China and Europe, as it will not only give firepower to European countries to combat the debt crisis, but diversify China’s foreign exchange reserves and improve their safety.

China’s positive response will also lessen the world’s dependence on the U.S. dollar as the major global reserve currency and facilitate a shift toward a multipolar reserve system.

The upcoming G20 summit really offers a fresh and favorable opportunity for China and Europe to profoundly exchange views and effectively boost their cooperation, particularly in economic fields.

Both sides are looking on ways to seize the chance to act and achieve in the spirit of good partnership.

Sources: Bi-me, Arabianbusiness, WAM, Emirates 24|7, Newzpoint, Thenational, Hauteliving, Xinhuanet

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