Couple of decades ago, there were hardly any Chinese companies in the Gulf, including the UAE.
Today, their number is in the thousands. Hundreds are represented in the UAE.
The increasing awareness of one of the major players in the world's economy in broadening the range of its products has been coupled with its growing interest in the Arab Gulf region, where nearly 40 per cent of the world's oil exports originates.
"We have nearly 2,500 companies working in the UAE, especially Dubai," Ye Hong, Vice-Commercial Consul at the Consulate-General of the People's Republic of China in Dubai, said quoting "incomplete" statistics.
Nearly 1,600 Chinese companies are registered with the Dubai Chamber of Commerce and Industry, 600 companies are in the Jebel Ali Free Zone, and approximately 300 are registered in Sharjah. They are of various sizes and in diverse fields, mainly construction and electro-mechanical, and trade.
"The GCC is a relatively small market with a cumulative GDP similar to that of Netherlands, but it is big enough to make a business representation worthwhile. China is also interested in cultivating relations with the region as it is increasingly dependent on oil imports," Woertz, currently a fellow with Princeton university, told Gulf News.
The Chinese community in Dubai numbers about 150,000 out of 200,000 in all of the UAE, according to Chinese officials.
China-UAE trade has recorded a 37 per cent annual growth rate, reaching $28.2 billion (Dh103.7 billion) in 2008, up from $2.5 billion in 2002. However, it declined in 2009 to $21.2 billion due to the international meltdown.
Incentive factors
Several features in Dubai and the UAE in general are attracting Chinese companies. The incentives, according to officials, include Dubai's free business environment, availability of necessary infrastructure including the biggest regional airport, water, electricity and telecommunications, and above all its unique geographic location which allows the exchange of goods from many countries to many other destinations.
"China follows a strategy of export-led growth and Dubai is a logistics hub for re-exports in the region," said Eckart Woertz, Programme Manager Economics at the Dubai-based research Centre.
Saudi Arabia and the UAE are at the top of China's trade partners in the Arab region, Chinese official figures show. The top five partners include Sudan, Oman and Egypt.
While China relies on imports for 50 per cent of its energy needs, China's investment in Sudan is described as substantial, particularly in the energy sector, some reports noted. More than 60 per cent of Sudanese oil production is purchased by China, accounting for more than 6 per cent of China's imported oil, they added.
Meanwhile, many of the Chinese companies in Dubai are implementing giant construction projects.
China State Construction Engineering Corporation Limited (CSCEC) started its activities in Dubai in 2003, when it was awarded a Dh11.04 billion Palm Jumeirah Garden Villa Project.
Presently, the company, with a management team and a work force estimated at several thousands, focuses on constructing buildings, roads and bridges.
"Currently, there are 14 projects under construction with a total contractual value of Dh3 billion," said Yu Tao, Vice-President of China State Construction Engineering Corp Overseas Operations and Managing Director of CSCEC Middle East.
Main clients
The company's projects under construction are located in Dubai, Abu Dhabi and Ras Al Khaimah, he noted. Its main clients include Dubai's Roads and Transport Authority, Ministry of Public Works of the Federal Government, Tamouh Investment, National Bond and Dubai Properties Group.
Working in the UAE, where a lot of international contractors are operating, involves "fierce competition", some believe. But on the other hand, Chinese products have "distinguished" characteristics that enable Beijing to overcome the competition, others say.
"So far it is still more about price," said Woertz when asked what makes Chinese products different from other goods. "But Chinese companies are increasingly acquiring know-how and will offer more and more high-tech products going ahead."
"More than 50 per cent of Chinese exports are high-tech," Hong noted, adding that "there is a [official] policy to improve the quality of Chinese commodities and make them more competitive."
China's external trade in new and high-tech products has been steadily increasing over the past few years. In 2008 it amounted to $754.8 billion, a growth of 8.6 per cent over the previous years, official figures showed.
China's trade included $339.2 billion in imports, up 3.5 per cent, and $415.6 billion in exports, up 13.1 per cent. Despite the increase, the growth rate came lower than previous years due to the international financial crisis, among other reasons.
China's most important imports were integrated circuit (IC) chips, liquid crystal displays (LCD), aircraft, spare parts for radio telecom equipment and metal processing equipment. Main exports were automatic data processing equipment and parts, cordless phones, IC chips, LCDs, TV sets and video recorders.
Foreign-funded companies constitute a major player in China's foreign trade of new- and high-tech products.
The image of Chinese products has changed in recent years. They stopped carrying the stereotypical image of poor quality and counterfeited goods.
Today, they are becoming better made, more diverse, widely spread and are competing with well-made goods produced in developed countries (however, some Chinese products have created a considerable debate in the past few years after they raised alarms over their safety, such as baby's milk, toothpaste and children toys).
Apart from the traditional goods that are described as "labour intensive", Chinese products, which are seen all over the world, include now construction and electro-mechanical fields.
At the same time, while some Chinese officials say they are "not worried" about the competition from other Asian countries, some economists disagree.
In the field of construction probably Turkey and South Korea compete with China, noted Woertz. "In mass consumer goods China has a very firm stand only rivalled by some other Asian exporters."
Woertz explained that it would be better not to think in terms of countries when it comes to manufactured goods as production chains of companies are becoming more globalised.
"The engineering might be done in Japan, one part manufactured in Thailand another one somewhere else, while the assembly is being done in China and the marketing in the US," he said.
China, which is emerging as one of the globe's major economic powers, is currently the third largest economy after the US and Japan.
The Asian giant is already recording the fastest growth rates. During the period 1990-2004, the Chinese economy has been growing at an average rate of 10 per cent.
The Chinese government is working to smooth the flow of direct foreign investments into the country, which have been climbing.
Official figures
Earlier this month, Chinese official figures showed that foreign direct investment has climbed 12.1 per cent from a year earlier, and rose to $9.4 billion in March.
According to press reports, China's State Council has taken a series of moves to encourage foreign investments in certain categories such as renewable energy, high technology, service industries and central and western China. The government also allowed local authorities to approve foreign investment projects of as much as $300 million, compared with the previous cap of $100 million.
However, for foreign companies to open factories and branches in China, Hong believes they should be "competitive enough" with similar Chinese companies to have a presence in the country. Yet they are more than welcome and they will find many facilitating elements. They include cheap land, labour and low fees for water and electricity.
Cheap labour in some countries, including Asian countries, has already encouraged many giant western companies in the past years to open factories and branches to relocate parts of the production cycle to Asia.
China, Asia's biggest economy, is willing to be part of an alliance of countries of the region, some Asian officials noted.
After all, Hong explained, "I don't think China can develop its own economy without the rest of the world."
