Hongbin Cong, managing director, Invest Dubai, explains why boosting mutual understanding between the business communities in Dubai and China is the key to realising true bilateral trade and investment potential
Vision: Is investment from China into Dubai on the rise and what is driving that growth?
Hongbin Cong: In the past two years, we have seen a number of big investments from China into Dubai. Two examples of this were in the real estate sector. A Chinese private loan company invested in building 3,000 villas in Dubai and another investment of $1bn was made by China State Construction Engineering Company to build hotels, serviced apartments and commercial facilities at the Palm Jumeirah, Dubai. We also learned recently that Chinese individuals have bought $350m worth of villas and homes in Dubai.
These current levels of investment are, however, disproportionate to the levels of trade volume and links between the two locations. In 2012, investment from China to Dubai was $110m. You can see that investment activity is definitely increasing, but if we could address the issue of better mutual understanding between the two countries, we would probably see much higher activity in terms of investment.
Infrastructure is definitely one sector where China can play a much bigger investment role.
What can be done to strengthen mutual understanding between China and the UAE and boost investment levels in the coming months and years?
We are bringing events, such as the Boao Forum for Asia’s Financial Cooperation Conference in November, to Dubai. On top of that, Invest Dubai created gatherings for the Indian, Chinese and Arab business communities. We would like to merge these three forums and create a Dubai business community gathering – a platform to bring together people who have made a considerable contribution to Dubai’s economy, so they can mingle with each other and forge better understanding between them.
Which business sectors have the most potential for increased investment between the two countries?
Infrastructure is definitely one sector where China can play a much bigger investment role. Chinese companies have become among the first tier in the world in high-speed rail, roads, bridges, ports, construction and renewable energy. China also obviously has very strong liquidity and capital assets. So the combined infrastructure building capability and financing capacity makes the Chinese offer very attractive. The second area is logistics. Dubai has very strong logistics sector and the Chinese logistics sector is always based on trade, so there is a natural linkage there.
Finally, tourism and hospitality is a key growth area. In 2013, we saw 275,000 Chinese travellers come to Dubai. That represents 18 per cent growth on the same period the previous year. Moreover, the type of tourists travelling to Dubai is changing. In previous years, Chinese tourists came to Dubai for purely leisure reasons. Starting from the second half of last year, we have seen more and more business people coming to Dubai – yes they come for leisure, but in the back of their mind they are searching for new growth opportunities. I think that is a very positive sign.
What will underpin this burgeoning and mutually beneficial relationship between China and Dubai and the UAE?
Firstly, the Chinese economy keeps on growing and the traditional markets for Chinese exports – the US and Europe – have become weakened since 2008. So obviously with such large capacity in China, you need to find a new market and it is very natural to see trade between China and the UAE, and Dubai, increasing.
Then there is the demand side. Dubai has more and more people arriving from neighbouring countries due to instability across the Middle East and North Africa (MENA) region, so that boosts demand as well. This region, for which Dubai is a gateway, has a population of 350 million people so it is a natural market for Chinese manufacturing. Some manufacturing, particularly low-value manufacturing, has shifted to other Asian countries, but China still accounts for a considerable portion of manufactured goods.