The United Arab Emirates is positioning itself as China’s gateway to the Middle East and Africa (MEA). The action is focused on Dubai, where there are an estimated 200,000 Chinese residents.
The Dubai International Finance Center (DIFC) has been trying to market itself as a hub for Chinese corporations — public and private alike — to base their MEA headquarters in the emirate, and it has had moderate success. “Dubai is two-thirds of the way to Africa from China, so given Dubai’s stability and that many Chinese firms’ international expansion is in its early days, it makes sense for most Chinese banks to bank for Africa out of Dubai,” said Ben Simpfendorfer, managing director of Hong Kong-based consultancy firm Silk Road Associates.
The DIFC has attracted a handful of financial institutions — ICBC, Bank of China, Agricultural Bank of China and the China Construction Bank — that essentially operate as trade facilitators. The DIFC is however working to address this shortcoming through its “New Silk Road” conferences, held since 2010, aimed at bolstering investment and financial ties between the two regions. But there is a long way to go.
“Talking to people at DIFC, that area remains weak, as it is confined to state-related entities. An area with potential growth there,” said Ghanem Nuseibeh, founder of Cornerstone Global Associates. “Chinese banks’ presence is growing, and certainly from what I hear with those dealing with the banks, the staff and operations are growing, but primarily servicing Chinese firms.”
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Away from finance, Chinese are flocking to Dubai. The year 2012 saw a 28 percent increase in tourists, and retail outlets hired Mandarin speakers to tap into demand for luxury products that are more expensive in mainland China. “The number of Chinese flying through Dubai is growing. It is a popular place for a vacation, and up to a third of the sales staff at Dubai International Airport are Chinese speakers,” said Simpfendorfer.
China’s mercantile side is largely confined to Dragon Mart, the largest concentration of retailers of Chinese products outside of China with just under 1,200 stores. The mall, with has an exterior shaped like a Chinese dragon, is considered a model of sorts that could be replicated elsewhere as an outlet for Chinese goods and traders. However, while the management claims up to 99 percent of retail is space is Chinese, a $272 million expansion currently under way that will double the mall’s size to 335,000 square meters is to be evenly split between international and Chinese retailers. And curiously, it is not a Chinese state linked firm behind Dragon Mart but Nakheel Properties, and the contractors — Kele and United Engineering Construction — are all Emirates based.