With the potential opportunities for tech innvestments in Southeast Asia market starting to become saturated, a number of Chinese investors are increasingly turning towards Mena region. The tech investors are now spreading across the GCC; and Venture Capitalists (VCs) are turning their attention to Middle East. The investors are interested in e-commerce, entertainment, leisure, technology, logistics and fintech, noted a report released as part of the recently concluded World Economic Forum (WEF) Middle East and North Africa, in Jordan.
With total internet penetration surpassing 60 percent in the Middle East, representing more than 150 million users, Chinese venture capitalists (VC) and angel investors are starting to take notice of the region. Unlike some other central parts of the Belt and Road Initiative (BRI) regions, such as sub-Saharan Africa, the Mena region has relatively stable digital and physical infrastructure, the WEF report noted.
According to predictions, the Middle Eastern e-commerce market will be worth $49bn by 2021. In North Africa, Chinese e-commerce company JollyChic has managed to become one of the largest e-commerce sites in the region, focusing on cross-border trade only. While it is unlikely that other Chinese companies will be able to establish their own operations, this still shows the huge potential for imported products from China as well as partnership opportunities for cross-border innovation and technology. For example, unlike China, cash on arrival still accounts for 76 percent of e-commerce orders in the Mena region, which makes the payments sector ripe for disruption, the report said.
Considering the growth numbers of Chinese tourists visiting the Mena region, it is unsurprising that tourism and associated industries are also ripe for Chinese-Mena collaboration. Even within Africa, it is the North African countries that have the most number of Chinese tourists,, such as Morocco and Egypt. In addition to the growth of traditional industries such as retail and hospitality, increased traveler numbers open the potential for fintech and online bookings. Alipay and WeChat Pay have made great strides in shopping hubs across the region for Chinese tourists.
Private sector collaboration between the two regions will depend as much on the focus of government investment as it will on the organic growth of tech hubs in the region. Historically, China’s Middle East trade has focused on the Gulf.
While EU countries tend to dominate trade with North Africa, China is taking a growing interest in countries like Morocco. A prominent factor in China’s interest in North Africa has the pursuit of hydrocarbons from Algeria, Sudan and Libya, as well as Mauritanian iron ore and Moroccan copper, zinc and lead. However, while such traditional trade always comes first, the hope is that such investment will lead to the continued flourishing of technology communities in the area. Most of the technology collaboration has started in GCC countries, but has high potential to grow across the region, as North Africa has shown.
Source from: The Peninsula