Recent years have witnessed a tremendous transformation of Saudi Arabia into a global economic powerhouse. The Kingdom is undergoing an exceptional evolution under giant projects like Vision 2030, and it is creating vast opportunities for investors from within the country and abroad. Saudi Arabia provides a lucrative market for Asian countries due to its geographic location, access to the Middle East market, forward-looking policies, resources, etc. As the gateway between West and East, the geographic location of Saudi Arabia is pivotal as it connects Asia to Europe and Africa. Now let’s look in detail at what attracts the Asian countries to this Arab kingdom, and what makes it a top choice to do business among the Asian economic giants.
So let’s dive in!
1. China
China, being an economic tycoon, has been the largest trading partner of Saudi Arabia, since 2001. The bilateral trade between China and Saudi has reached a value of $107.23 billion. This has significantly boosted bilateral collaboration between the countries from both ends and has catalysed growth in sectors like construction. China State Construction Engineering Corporation (CSCEC), recently won a contract worth over $2 billion to construct a new mixed-use district north of the Diriyah Gate Giga project worth $62.2 billion.
The financial sector of both countries has the share of mutually rewarding partnerships. Saudi Arabia has signed six Memoranda of Understanding (MoUs) worth $50 billion, with one of the leading Chinese financial institutions. This would surely boost the two-way new financial flows between the countries and support Saudi Vision 2030.
2. Japan
Along with Chinese companies, companies from Japan are also expanding to Saudi Arabia. According to recent market reports, around 110 Japanese companies already function in the Kingdom of Saudi Arabia. This figure is expected to multiply due to the Saudi-Japan 2030 business forum held which ended up with the signing of more than 30 MOUs which cover industries like manufacturing, energy, etc.
Also, the joint projects executed by the companies from both ends have raised from 30 to 100, building a significant phase of great industrial expansion and enhanced synergies. The net-zero transition would be a great catalyst for driving up the businesses in both countries. Due to this, there is a rise in the flow of green investment to Saudi Arabia, which is in alignment with the aim of the country to reach carbon neutrality by 2060 and become a world leader in promoting clean hydrogen technology and its adoption as a source of clean energy. Maurebeni, which recently secured a deal with the Saudi Power Procurement Company (SPPC) has established 2 significant wind energy projects in the Kingdom of Saudi Arabia.
The financial sector of both countries has the share of mutually rewarding partnerships. Saudi Arabia has signed six Memoranda of Understanding (MoUs) worth $50 billion, with one of the leading Chinese financial institutions. This would surely boost the two-way new financial flows between the countries and support Saudi Vision 2030.
3. Singapore
Saudi Arabia is the main trading partner of Singapore in the Middle East and this is clearly visible from the rise of trade volume to the Kingdom by 50% in 2022 compared to that of 2021. There has been an important partnership between both the countries, in strategic sectors like aviation. The recently signed agreement between Riyadh Airlines and Singapore Airlines to explore interline connectivity of each other’s services is an example of this.
Collaboration like this would be a key step to enable Riyadh Airlines to connect Saudi Arabia to 100 global locations, during the first year of collaboration.
Saudi Arabia-Singapore Business Council is another notable proof of the enhanced business bond between the two countries. Many Singaporean companies are expanding and making their presence in this Arab Kingdom, especially in sectors like Fintech.
This is clear from the case of Payermax, which is the first Asian fintech that has reaped benefit from the Regional Headquarters (RHQ) program, and it plays a significant role in moulding the fintech businesses in the country.
Within fintech companies, the global leader offers customised payment solutions for gamers and provides various services like game webshop top-ups, in-app purchases, and micro incentives. The value proposition is clear from the e-sports World Cup that happened in Riyadh.
Payermax is one among the various Singaporean companies looking to establish their business in the vast market of Saudi Arabia and is looking for great market opportunities in various sectors like transportation, logistics, green energy, and food security, etc.
4. South Korea
The recent visit of South Korean President Yoon Suk-yeol to Riyadh ended with signing the 51 deals and MOUs, which account for around $15.6 billion.
The most important among them is PIF’s cooperation agreement with Hyundai Motor Company to invest $400 million and the main aim of this is to construct an assembly plant in Saudi Arabia.
To promote clean energy transition, an agreement is signed between the Korea Electric Power Corp., POSCO Holdings, and Lotte Chemical with Saudi Arabia’s Aramco to produce blue ammonia at a total cost of $15.5 billion.
The other Saudi sector that is of interest to the Korean companies is the construction industry of the country. More than 330 Korean companies have already signed contracts with more than 1860 Saudi projects worth $166 billion.
This amounts to 17.2% of global construction projects undertaken by South Korean companies. The major projects like giga and mega projects are also providing a great platform for South Korean companies to the construction sector of the country.
The main among these is the Samsung C&T Corp., which is a construction and trading arm of South Korea’s Samsung Group, and it works to build modular homes in the $500 billion giga project, NEOM.
5. Hong Kong
Saudi Arabia and Hong Kong have maintained a fruitful relationship for many years. They have been collaborating in various sectors like tourism and financial services.
Saudi Arabia has been a major target market for various business sectors in Hong Kong like financial institutions, and leading tech companies such as Animoca brands. The metaverse and gaming venture capital firm company of Hong Kong has a huge market position in the Saudi market by collaborating with top institutions like King Abdulaziz City for Science and Technology (KACST) and NEOM which is aimed to boost the advancement of the Saudi Web3 space.
The tourism sector of Saudi Arabia is also boosted by the rapid expansion of Hong Kong hotel business companies like Regal Hotels Group and Cosmopolitan International Group, which are major chains of hotel businesses in Hong Kong, and they aim to construct around 30 hotels in the Kingdom. Saudi Arabia has also made investment in Hong Kong, as PIF has made an investment of $500 million in the Chaoshang Group of Hong Kong.
6. India
India and Saudi Arabia hold a good and strategic bond in bilateral trade. India is the second largest trading partner of the Kingdom, while Saudi Arabia is the fourth largest trading partner of India. The value of bilateral trade between both countries accounts for around $52.75 billion in the fiscal year 2022-2023.
There has been a surge in the number of Indian companies operating in Saudi Arabia from 400 in 2019 to 2900 in 2023. The main Indian tech giants like L&T, Wipro, TCS, TCIL, TATA, Lenskart, etc. have already made their business expansion to the Kingdom. The notable among them is Lenskart, a global company with Indian roots, has made entry to the country and is shining in the e-commerce sector of the country.
Indian companies have also set footprints in the critical sectors of the Kingdom like tourism, housing, renewable energy, health, entertainment, etc.
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Conclusion
Saudi Arabia is a land of opportunities. Businesses from various parts of the world find it as a fertile ground for their business expansion. Recent efforts of the kingdom to elevate itself as a world economic power have been a catalyst to the projection of the country as fertile land. And the Asian companies are no exception to this. A large number of Asian companies are focusing on their business setup in Saudi Arabia due to the immense opportunities it offers. Are you an Asian company planning for company formation in Saudi Arabia?
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