Saudi Arabia’s 2030 Vision and Analysis of Market Opportunities for Chinese IT Companies

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Saudi Arabia’s 2030 Vision and Analysis of Market Opportunities for Chinese IT Companies

Foreword: Recently, the first issue of the "Open Source Old DJ, Take You to Saudi Arabia" column has been broadcast and has received a good response. See COPU official website for review. ( https://mp.weixin.qq.com/s/3B0jNVhybxTF1xPiy2VOJA ) Some viewers want more detailed information, so I wrote this article to analyze why Saudi Arabia is a good opportunity for Chinese IT companies. And how to catch it.

Table of contents:

Saudi Arabia Overview
Brief introduction to Saudi Vision 2030
Background for the launch of Saudi Vision 2030
Saudi Vision 2030 Goals
Saudi Vision 2030 now progressing
Saudi Vision 2030 and IT related parts
Saudi Vision 2030’s Opportunities for Chinese IT
How should Chinese IT companies seize these opportunities?

text:

1. Overview of Saudi Arabia

Saudi Arabia (Saudi Arabic) is located at the junction of three continents: Asia, Europe, and Africa. With a population of more than 36 million (2022 data), it is the largest economy in the Middle East and the core country of the Islamic world. It has two Islamic holy sites, Mecca. With Medina . Saudi Arabia is the world's largest oil exporter and the leader of the Petroleum Exporting Countries (OPEC). Below are GDP-related numbers.

GDP

2022: US$1.1 trillion (according to International Monetary Fund data), one of the world's 20 largest economies, with a GDP growth rate of 8.7%.

population

2022: 36.031 million (according to World Bank data), Saudi Arabia’s population structure is very young, more than 50% are under 25 years old, and about 60% are under 30 years old.

GDP per capita

2022: US$30,000 (according to IMF data)

2. Introduction to Saudi Vision 2030

Saudi Vision 2030 is an economic reform plan announced by the Saudi Arabian government in 2016, hoping to transform Saudi Arabia into a more diversified, sustainable and prosperous country. The plan is led by the Saudi Crown Prince and Chairman of the Economic and Development Affairs Committee, MOHAMMAD BIN SALMAN (some people also refer to him as MBS).

The background to the launch of Saudi Vision 2030

The introduction of Saudi Vision 2030 is a major strategic decision made by the Kingdom of Saudi Arabia focusing on the long-term development of the country and conforming to the trend of the times. Its introduction mainly has the following background.

The Troubles of Oil Dependence

The oil industry is Saudi Arabia's pillar industry, but the continued downturn in international oil in recent years has had a huge impact on the Saudi economy. The Saudi government recognizes that over-reliance on oil revenue is very dangerous and must accelerate economic transformation and achieve economic diversification.

Social transformation and people’s livelihood demands

With the development of Saudi society, people's needs for education, medical care, employment and other aspects are growing day by day. At the same time, Saudi Arabia’s population is getting younger, which also brings new social challenges. The Saudi government needs to adopt reforms to meet the demands of the people and maintain social stability.

geopolitical pressure

In recent years, the situation in the Middle East has been turbulent, and Saudi Arabia has faced pressure from outside. The Saudi government hopes to enhance the country's comprehensive strength and safeguard national security and interests through the implementation of Saudi Vision 2030.

Lessons from international experience

Some countries have achieved success through economic transformation and reform, such as the United Arab Emirates. The Saudi government hopes to learn from the experiences of these countries and find a transformation and development path suitable for its own characteristics. Similar projects include China’s Five-Year Plan, Pakistan Vision 2025, ASEAN Vision 2025, Iran Vision 2025, etc.

3. Saudi Vision 2030 Goals

Saudi Vision 2030 first defines Saudi Arabia’s long-term vision and three pillars:

Become the heart of the Arab and Islamic world : Saudi Arabia will strive to become the cultural and spiritual center of the Arab and Islamic world and strengthen ties with other Muslim countries.
Become a global investment power : Saudi Arabia will vigorously develop non-oil industries, attract foreign investment, and build a global investment center.
Become a world hub connecting the three continents of Asia, Europe and Africa : Saudi Arabia will use its unique geographical location to develop the transportation and logistics industry and become an important trade and transportation center connecting the three continents of Asia, Europe and Africa.

To this end, Saudi Vision 2030 identifies three main goals that Saudi Arabia will achieve in 2030:

A Vibrant Society (a vibrant society)
A thriving Economy
An ambitious Nation

The first goal: A vibrant society is broken down into many subdivided goals, including:

Increase the average life expectancy from 74 to 80 years;
Increase the number of pilgrims: Increase the number of annual pilgrims from 8 million to 30 million by 2030;
Increase the proportion of national entertainment consumption in total consumption from 2.9% to 6%;
The proportion of citizens who exercise once a week increased from 13% to 40%;
etc.

The second goal: A thriving Economy (an extremely prosperous economy) is very related to the economy, including increasing employment, stimulating entrepreneurship, increasing the proportion of non-oil GDP, etc., and is also broken down into many quantitative indicators, such as:

Reduce the unemployment rate: Reduce the unemployment rate from 11.6% to 7%.
Increase the contribution of small and medium-sized enterprises to GDP: Increase the contribution of small and medium-sized enterprises (SMEs) to GDP from 20% to 35%.
Increase female employment rate: Increase the employment rate of Saudi women from 12% to 40%.
Increase the share of non-oil exports in non-oil GDP: Increase the share of non-oil exports in non-oil GDP from 16% to 50%.
Increase the private sector's contribution to GDP: Increase the private sector's contribution to GDP from 40% to 65%.
Increase the value of assets under management of the Public Investment Fund: Increase the value of assets managed by the Public Investment Fund from SAR 600 billion to over SAR 7 trillion.
etc.

In addition to social and economic goals, the third goal is An ambitious Nation, broken down into indicators as follows:

The government efficiency index ranking improved from 80th to 20th;
The e-government survey index ranking has improved from the current 36th to the top 5 in the world;
Organize 1 million volunteers every year;
etc.

4. What is the current progress of Saudi Vision 2030?

2016年提出，距离今年2024年已经过去7年了，目前取得了显著进展，但是仍然面临一些挑战：

Major developments:

Economic diversification has achieved initial results:
The tourism and entertainment industries are growing rapidly, and the logistics industry is growing very rapidly and has become a transportation hub on three continents;
Infrastructure construction is accelerating: A large number of infrastructure projects are advancing, including Neom.
The successful listing of Saudi Aramco, Saudi Arabia's largest company, is an important step in Saudi Arabia's opening up and attracting foreign investment.
The average life expectancy of Saudi citizens increased from 74.8 years in 2016 to 75.6 years in 2020
etc.

Of course, there are also big challenges: economic transformation has a long way to go, resistance to social reform still exists, and the complex global economic environment has brought some risks to Saudi Arabia's transformation.

What is more impressive is that from 2016 to 2023, the average annual growth rate of GDP is 3.4%, the average annual growth rate of population is 1.1%, and the average annual growth rate of GDP is 1.5%.

5.Saudi Vision 2030 and IT related parts

Saudi Vision 2030 identifies information technology (IT) as one of the key drivers to achieve economic diversification, social development and sustainable growth. According to the plan, Saudi Arabia will be committed to building a world-leading IT center and promoting the widespread application of the IT industry in various fields.

Specifically, the IT goals in Saudi Vision 2030 mainly include the following aspects:

Develop the digital economy: Promote the application of digital technology in all walks of life and promote the development of the digital economy. For example, the development of e-commerce, digital finance, smart cities, etc.
Build digital infrastructure: Increase investment in information infrastructure, including 5G networks, IDC, etc.
Cultivate IT talents: Strengthen the training of IT talents, improve the IT skill level of the workforce, and meet the demand for talents in the development of the digital economy.
Develop digital government and use IT technology to improve government governance.
etc.

6. Opportunities of Saudi Vision 2030 for Chinese IT

Saudi Vision 2030 provides huge development opportunities for Chinese IT companies. Its market size is huge and its development potential is huge. It is the only overseas region outside of China that has both massive funds and massive user potential. And it has a long-term, stable and friendly relationship with China. Since 1995 , Saudi Arabia has been China's largest trading partner in the Middle East. China is Saudi Arabia's largest trading partner.

It is expected that by 2030, the size of the Saudi IT market will reach 1 trillion RMB, with a compound annual growth rate of approximately 10%. The size of the market segments is as follows.

Digital infrastructure : It is expected that the Saudi digital infrastructure market will reach US$30 billion by 2030, with a CAGR of approximately 12%.
Cloud computing : It is expected that the Saudi cloud computing market will reach US$20 billion by 2030, with a CAGR of approximately 15%.
Big data : It is expected that the Saudi big data market will reach US$15 billion by 2030, with a CAGR of approximately 18%.
Artificial intelligence : It is expected that the Saudi artificial intelligence market will reach US$10 billion by 2030, with a CAGR of approximately 20%.
Digital security : It is expected that the Saudi digital security market will reach US$5 billion by 2030, with a CAGR of approximately 10%.

Chinese IT companies can make efforts in the following key areas:

Digital infrastructure construction: including 5G network, fiber optic broadband, data center, etc. At present, Huawei, Alibaba, and Tencent have all made relevant cooperation progress.
Digital government construction: Chinese IT companies can provide e-government, smart city and other solutions. Currently, SenseTime is relatively active here.
Digital transformation of small and medium-sized enterprises: There is a strong demand for digital transformation of small and medium-sized enterprises in Saudi Arabia. Chinese IT companies can provide corresponding technologies to help small and medium-sized enterprises improve their efficiency and competitiveness.
Digital economy development: Saudi Arabia is developing digital economy, e-commerce, digital finance and other fields. Chinese IT companies can participate in the construction of Saudi digital economy and provide technologies and solutions.

7． How should Chinese IT companies seize this opportunity?

Although the Saudi IT market is estimated to be worth 100 billion U.S. dollars each year, the market competition pattern is also very complex. World-renowned IT giants have taken root here for many years. For example, the Saudi IT market is currently dominated by the four international IT giants Microsoft, Oracle, SAP, and IBM. Share, Amazon, Google, etc. are also entering one after another.

Although China is regarded as the "Brother Country" in Saudi Arabia, its previous long-term investment has been focused on infrastructure construction such as high-speed rail and expressway. Chinese IT companies have low brand awareness in the Saudi market, and cultural differences and language differences have led to slow progress in communication. , there is also a very shortage of talents, and there is a lack of two-way talents who understand both Chinese IT companies and the Saudi market.

It is recommended that Chinese IT companies adopt the following strategies to succeed in the Saudi market:

Strengthen cooperation: Chinese IT companies can cooperate with local Saudi companies to complement each other's advantages and jointly develop markets;
Localized operations: Chinese IT companies should establish localized teams to understand the needs of the Saudi market and provide products and services that meet local needs.
Differentiated competition: Chinese IT companies can choose market segments for differentiated competition based on their own advantages.
Focus on talent training: Chinese IT companies should strengthen the training of local Saudi talents and improve their technical level and service capabilities.

Of course, the opportunities and methods are obvious, but to seize them, you must "get involved", take various effective activities, understand the Saudi market and policies, establish contact with relevant Saudi institutions, and then formulate flexible solutions according to the situation. strategy, strive to expand new markets, and combine Saudi Arabia’s local interests to achieve a win-win situation.

postscript:

COPU (China Open Source Promotion Alliance), as the oldest and most respected open source organization in China, has been committed to promoting and developing China's open source IT industry. Now it has discovered this opportunity and hopes to be committed to promoting the cooperation between Chinese and Saudi Arabian IT companies. The cooperation of the organization will help realize the development of Chinese IT companies and at the same time help the realization of Saudi Arabia’s 2030 vision. To this end, COPU Executive Deputy Secretary-General Tan Zhongyi has traveled to Saudi Arabia many times recently to meet with relevant Saudi government agencies, business organizations, and developers. As the first Chinese person to deliver a keynote speech at the famous Saudi Open Source Summit, he has interacted with very local Saudi Arabians. The influential developer organization Saudi Developers Association PARMG signed a strategic cooperation agreement, creating a new chapter in open source cooperation between China and Saudi Arabia (see https://mp.weixin.qq.com/s/tziisV72HoZ-1Y2mQKP2Zg for details ). At the same time, he also led Chinese IT companies to visit Riyadh, the capital of Saudi Arabia, many times, communicating with the Saudi Ministry of Information Technology, Ministry of Commerce, Ministry of Investment, King Saud University of Science and Technology and other institutions, with industry organizations PARMG, Chinese Chamber of Commerce, etc., and with well-known local companies such as ajlan, slnee, tamkeen, etc. exchanges and cooperation, and facilitated the signing of a strategic cooperation between a domestic company and a Saudi company.

In addition, COPU and OpenTekr will organize a new group of companies to go to Saudi Arabia for in-depth inspections from May 18th to May 23rd. For the specific inspection content, please see "[Invitation Letter] 2024 China-Saudi Arabia IT Cooperation and Exchange Inspection Group (Second Phase) Registration is open for a limited time!" ( https://mp.weixin.qq.com/s/vBnNOZtlgQSaA-dpkqoLGA ) Companies wishing to participate Welcome to contact COPU Teacher Tan 13718272827.