Changan sees boom in demand as Saudis fall in love with Chinese car brands

Saudi Arabia is emerging as one of the most attractive markets overseas for Chinese car brands as they grab the attention of dealers and drivers in the Kingdom. (Shutterstock)
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Updated 28 July 2021

Changan sees boom in demand as Saudis fall in love with Chinese car brands

  • ‘Prices and technology are among the factors behind rise in popularity’

DUBAI, RIYADH, JEDDAH: A decade ago, if you would have asked a Saudi whether he would consider buying a Chinese car, the answer most likely would have been no, but this has now changed.

Saudi Arabia is emerging as one of the most attractive markets overseas for Chinese car brands as they grab the attention of dealers and drivers in the Kingdom.

Car sales in China, the world’s biggest market, were down 3 percent year-on-year to 2.13 million in May, ending a streak of 13 months of growth, mainly due to a global chip shortage and increased raw material prices. Last year, despite the coronavirus disease (COVID-10) pandemic, the data showed that sales continued to surge, and at the end of 2020, Changan’s share of the market had risen to 4.3 percent, moving it two places up in the annual car brand rankings to eighth most popular.

Mohammed Ramady, an independent economist and former professor of finance and economics at King Fahd University of Petroleum and Minerals, believes Chinese cars are proving popular because they appeal to medium- and lower-income families. He said the data showed that last year, around one in 10 Chinese cars were shipped to Saudi Arabia. A clear example of the growing popularity of Chinese cars in the Kingdom is the experience of the Changan brand. According to sales data compiled by Bestsellingcarsblog.com, the carmaker, which is owned by the Chinese state, captured 2.3 percent of the Saudi market in 2019, making it the 10th most popular car brand in the Kingdom just a few years after it was introduced to Saudi drivers.

Similarly, data from Google showed that searches for the term Changan increased nearly 50 percent year-on-year in the first half of 2021, peaking in January when the brand opened its service center in Riyadh. 

Dammam-based Wafi Al-Ghanim, marketing communication manager at Almajdouie Changan, the official distributor of the brand in Saudi Arabia, told Arab News there are three reasons the brand has quickly proved so successful: “Prices, quality, and warranty periods.”

“When you think about quality and specifications compared to the price in the car sector, you will definitely find that Chinese cars are far ahead of their counterparts in general, Japanese and Korean cars in particular,” Al-Ghanim said.

Looking to the future, he believes that Chinese cars across the board will continue to see strong growth and by 2022 will have captured 15 percent of the Saudi market, which “in a huge regional market is very good.”

One of the ways to boost sales is physical visibility. In January, Almajdouie built a 2,640-square-meter service center in Riyadh.

“We have had to raise the level of our services to match the high level of Changan cars, as well as to enhance the growing demand for Changan cars in the local market,” Yousef bin Ali Almajdouie, president of Almajdouie Group, said in a press statement at the time.

A report by the China Daily newspaper estimated that around 55,000 Changan cars have been sold in Saudi Arabia up to May this year, but it is not the only Chinese brand that has captured the attention of drivers in the Kingdom.

FASTFACTS

• Last year, despite the coronavirus disease (COVID-10) pandemic, the data showed that sales continued to surge, and at the end of 2020, Changan’s share of the market had risen to 4.3 percent, moving it two places up in the annual car brand rankings to eighth most popular.

• According to data, the carmaker, which is owned by the Chinese state, captured 2.3 percent of the Saudi market in 2019, making it the 10th most popular car brand in the Kingdom just a few years after it was introduced to Saudi drivers.

• An example of the growing popularity of Chinese cars in the Kingdom is the experience of the Changan brand.

Hongqi, one of China’s oldest luxury car brands, this month opened its first sales center in Riyadh, with plans to expand the network to Jeddah and Dammam.

“The market in the Middle East is key for Hongqi. And the Saudi market is crucial in the region,” Ma Zhenduo, general manager of Hongqi’s Middle East division, told Xinhua, the Chinese state news agency. “The sales have exceeded all our expectations across all the models,” said Mohammed Abduljawad, chairman of Universal Motors Agencies, Hongqi’s local partner in Saudi Arabia.

Hatem Khattab, the first marketing manager for FAW Bestune in Saudi Arabia, which sells the Chinese brands FAW, Bestune and Hongqi, told Arab News that the secret to the success of Chinese brands was the combination of price and technology.

“The manufacturers are very good at incorporating the latest technology in their cars. These are economic cars with state-of-the-art technology,” Khattab said. “The reason behind their popularity is their features, and now that they are seen more commonly on the streets, it has had a domino effect. Seeing the cars makes people think they are more reliable. They are affordable as well; we recently had a customer who bought 10 cars just for his family,” he added.

In addition to increased visibility on the roads, Khattab pointed out that Chinese brands also offer more options in terms of the range of models on offer.

“The competition in the automotive market here is huge, and I feel like the Chinese brands stepped up their game to meet the requirement of this cut-throat market. Currently, in Saudi Arabia, we have almost 20-25 Chinese brands as compared to brands of other countries that offer up to 10,” he said. Ramady said engine size was another big catalyst. Western, American, Japanese and South Korean models in the 2,500 to 3,000 cc engine sector still dominate the market, Chinese brands have positioned themselves in the 1,000 to 2,000 cc engine range, which is a growing segment in Saudi Arabia. He believes these models appeal “to a low to middle-income Saudi consumer market, especially during the ongoing COVID-19 pandemic and economic uncertainties, as well as a new niche market for Saudi female drivers owning their first cars.”

The statistics also back this up, according to Motory.com, one of the largest specialized car websites in Saudi Arabia. “Over the last few years, we have seen Chinese cars become increasingly popular with consumers, especially in Saudi Arabia. Online searches for Chinese cars on our Motory.com website have increased by around 400 percent between 2018 and 2020,” a spokesperson told Arab News.

Chinese carmakers saw exports increase by 103 percent year-on-year in the first five months of this year, according to a report by the South China Morning Post, citing data from the China Passenger Car Association. The way trends are going, many will find their way into Saudi garages and carparks, as the Kingdom continues to be a dominant source market. Fahad Al-Arjani, a member of the Saudi Chinese Business Council, echoed the view that technology was at the key factor, as Chinese brands have been “injecting investments in clean energy cars supported by the smartest technologies.” He pointed to the partnership between technology giant Huawei and the state-owned Beijing Automotive Industry Holding Co., Ltd. (BAIC) as an example.

“In addition to developing a highly efficient battery system, as well as emerging technologies, Huawei and BAIC’s first car will offer level three autonomous driving and will include 5G connectivity, which isn’t necessarily surprising given the Chinese company is a leader when it comes to the rollout of this new standard, which will make Chinese cars highly likely to lead the future of this sector for ages,” he told Arab News.


France’s OVHCloud takes first step toward IPO and hopes to raise around $470m

Updated 41 min 4 sec ago

France’s OVHCloud takes first step toward IPO and hopes to raise around $470m

  • OVHCloud hopes the IPO will “accelerate its growth trajectory and consolidate its European leadership position while continuing to expand in North America and Asia”

PARIS: French cloud computing services provider OVHcloud said it was hoping to raise 400 million euros ($468.64 million) via the issuance of new shares as part of a planned initial public offering (IPO) on the Paris stock market.
OVHCloud hopes the IPO will “accelerate its growth trajectory and consolidate its European leadership position while continuing to expand in North America and Asia,” the company said, as it released its IPO registration document.
The family-owned company added on Monday that it was targeting a revenue growth of 10-15 percent for 2022 and an organic revenue growth rate in the mid-twenties by 2025.
These growth targets would be achieved while maintaining an adjusted EBITDA (earnings before interest, tax, depreciation and amortization) margin in line with the fiscal 2020 level.
No dividend payments were anticipated in the mid-term with cash-flows expected to be re-invested in line with the company’s accelerating growth trajectory, it added.
Following the IPO, the Klaba family will retain a substantial majority stake in OVHcloud.
The company had initially announced its IPO plans in March, two days before a major blaze destroyed one of its data centers in eastern France — a disaster that had raised concerns about its capacity to go public.
In June, OVHCloud re-committed to an IPO but provided no timetable.


ACWA Power bets big on Uzbekistan growth

Updated 19 September 2021

ACWA Power bets big on Uzbekistan growth

  • ACWA has invested about $1.2 billion in Uzbekistan thus far
  • ACWA plans to contribute to $100 million Uzbekistan fund

MOSCOW/RIYADH: In the crowded corridors of the Hilton Tashkent City, ACWA Power Chairman Mohammad Abunayyan talks quietly with key delegates of the Islamic Development Bank’s annual meeting in Uzbekistan, who approach him one after another.

Abunayyan, a lean, middle-aged, intelligent-looking man is celebrating with the bank's officials the launch of the $100 million Economic Empowerment Fund for Uzbekistan earlier this month. 

ACWA Power is planning on becoming one of the Saudi investors that will make up 45 percent of the fund, which is also being financed with money from the Islamic Development Bank and the Uzbek government.

ACWA’s contribution would be the latest in a long line of investments in the Central Asian nation, where the utility now has assets worth $4.6 billion having invested about $1.2 billion, according to the prospectus for its initial public offering that was launched earlier this month.

Although that is less than one tenth of the SR248 billion ($66 billion) of assets ACWA has accumulated globally since it was established in 2004 with what Abunayaan describes as a small equity investment. Abunayaan joined the board in 2008.



Beyond its home market in Saudi Arabia, ACWA also owns assets in Oman, UAE, Bahrain and Jordan.

Still, Uzbekistan is an important market for ACWA Power.

In 2020, the company was awarded three projects: Sirdarya Combined-Cycle Gas Turbine (CCGT) independent power producer (IPP) with 1,500 MW of gross contracted power capacity; the 500 MW Bash Wind IPP; and the 500 MW Dzhankeldy Wind IPP.

The company’s fourth and largest Uzbek asset in Uzbekistan is the Karakalpakstan 1,500 MW Wind IPP project, valued at $2 billion. The Karakalpakstan, Bash and Dzhankeldy projects are at advanced stages of development and Sirdarya IPP is under construction.



ACWA Power’s investments in Uzbekistan represent a sizeable chunk of total foreign direct investment (FDI) that the country has received in recent years.

“Uzbekistan attracted $2 billion in FDI in 2020 and targets another $5 billion this year,” Atabek Nazirov, director general of the Direct Investment Fund of Uzbekistan, told Arab News on the sidelines of the IDB’s two-day conference on Sept. 3.

Such investments mean a long-term relationship between ACWA Power and Uzbekistan.

“[In our projects] we need to lay the foundation for a long-term partnership, this is a relationship that lasts for 20, 25, 30 years,” Tom Teerlynck, executive vice president of ACWA Power, said during a panel discussion organized by the Islamic Corporation for Insurance of Investments and Export Credits.

“The early years go very smoothly because everybody is happy — agreements signed, infrastructure is being built, the services being provided,” he said. “But problems come in later when people in ministries or private companies change. So, it’s very important to lay very robust foundations.”

Uzbekistan officials are confident that ongoing reforms will propel economic growth, despite the global shock caused by COVID-19.

“In 2020, Uzbekistan was the only economy in the Central Asia region that did not have a negative gross domestic product [GDP],” said Direct Investment Fund of Uzbekistan’s Nazirov. “We were able to achieve just above 1 percent growth.”

The government is forecasting economic growth of 6.5 percent this year although that is a conservative scenario and it is hoping for closer to 7 percent, Ilhom Norkulov, Uzbekistan’s deputy minister of economic development and poverty reduction, told Arab News at the IDB meeting.

“For the next five years our target is to increase GDP to $100 billion so we are working to create conditions for the economy to grow 6-7 percent a year,” he said.

However, Uzbekistan’s economy is facing tailwinds in the form of a high inflation rate – expected at 10-11 percent this year – unemployment of 10.5 percent in 2020 (up from 5.8 percent in 2017) and a decline in average monthly wages to a low of $226 in the fourth quarter of 2018 from a peak of $415 in 2016, but back to $280 in the second quarter 2021, according to official data.

Government officials say they are fully aware of the issues, and maintaining economic reforms and income growth should ease the employment and wage conditions over the long run.


Lebanon’s soaring inflation led by 250 percent jump in fuel costs amid currency slump

Updated 18 September 2021

Lebanon’s soaring inflation led by 250 percent jump in fuel costs amid currency slump

  • Lebanese CPI jumped 123 percent in the year to July 2021
  • Food and non-alcoholic beverages prices rose 248 percent

DUBAI: Lebanese residents were forced to pay more than double for consumer goods in July compared with a year earlier as prices soared amid a partial lifting of fuel subsidies and a record plunge in the local currency.

The latest data from Lebanon’s Central Administration of Statistics shows the consumer price index leaped 123 percent year-on-year last month as officials struggled to contain an economic meltdown the likes of which have not been seen since the end of the country’s 1975-1990 civil war.

The biggest contributor to surging prices has been the cost of transportation, which soared by 253 percent from July 2020, reflecting the rise in fuel costs after the previous government priced gasoline at the exchange rate of 3,900 pounds to the dollar in June. Two months later, the central bank began providing fuel importers with dollars at an exchange rate of 8,000 pounds to the dollar.

The Lebanese pound has been officially pegged at 1,507.5 pounds to the dollar since 1997, but is worth a lot less on the black market. Following the resignation of former Prime Minister-Designate Saad Hariri in July, it plummeted to a record 24,000 per dollar.

This pushed prices of food and non-alcoholic beverages up by 248 percent in the year to July 2021, while health care services rose by 178 percent. Prices at restaurants and hotels grew 246 percent and clothing and footwear prices almost doubled.

The formation of Najib Mikati’s government last week, following a 13-month political vacuum, provided Lebanese with slight reprieve.

The pound stabilized at around 14,000 to the dollar on Thursday amid the new government’s pledges for reforms and a resumption of talks with the International Monetary Fund (IMF) which had hit a dead-end following bickering over the size of the banking sector’s losses.

Reforms demanded by the international community include a forensic audit of the central bank’s accounts and a restructuring of the banking sector.

On Thursday, a meeting took place at the Economy Ministry with the president of the syndicate of supermarket owners and the president of the syndicate of food importers to discuss lowering the prices of goods.

The meeting touched on a new pricing mechanism for goods in the wake of the Lebanese pound’s surge, with new economy minister Amine Salam saying that ” both unions have committed to start reducing the prices of commodities.”

“The ministry will not tolerate this issue and will be strict in monitoring price,” he said.


Saudi mining law will attract ‘incredible’ private investment to $1.3 trillion sector: Golden Compass CEO

Updated 19 September 2021

Saudi mining law will attract ‘incredible’ private investment to $1.3 trillion sector: Golden Compass CEO

  • The Saudi Industrial Development Fund is also offering 60 percent loans to investors in a bid to attract global players into the Kingdom
  • Alcoa Group, The Mosaic Co. and Barrick Gold have invested in the Kingdom's mining sector

RIYADH: Saudi Arabia’s new mining law will attract private investment from home and abroad as the Kingdom looks to exploit an estimated $1.3 trillion of potential value in the sector, according to Meshary Al-Ali, founder and CEO of mining consultancy Golden Compass.

In January, the Kingdom moved to capitalize on the vast wealth hidden below ground in Saudi Arabia with the establishment of a mining fund and support for geological surveys and exploration program activities.

The Saudi Industrial Development Fund is also offering 60 percent loans to investors in a bid to attract global players into the Kingdom, while the Ministry of Industry and Mineral Resources is investing $3.7 billion in the sector.

The deputy minister of Industry and Mineral Resources Khaled Al-Mudaifer talked up the potential riches beneath the Kingdom’s soil last month, telling CNBC that studies have estimated $1.3 trillion in reserves of phosphates, gold, copper, zinc, nickel, rare earth metals and other minerals.

Speaking to Arab News, Al-Ali was confident the Kingdom’s enthusiasm for the sector would attract worldwide attention.

FASTFACTS

Studies have estimated $1.3 trillion in reserves of phosphates, gold, copper, zinc, nickel, rare earth metals and other minerals in Saudi Arabia.

The Saudi Geological Survey has announced 54 locations for exploration, with more to be revealed soon.

The Kingdom has already attracted major international investors.

“It’s a very flexible and very transparent system, and it’s one of the most powerful in mining around the world,” Al-Ali said. “The system is new and it can encourage investors to come to Saudi Arabia.”

Under Vision 2030, mining is the third pillar of Saudi Arabia’s economic development, after energy and petrochemicals, as it aims to diversify the country’s economy away from dependency on oil.

The Saudi Geological Survey has announced 54 locations for exploration, with more to be revealed in the coming months that will be auctioned to investors.

The National Geological Database is being created to allow investors to find the locations of mineral deposits in a bid to increase the transparency and competitiveness of the sector in Saudi Arabia.

The Kingdom has already attracted major international investors, including US firm Alcoa Corp., which has a 25.1 percent stake in Ma’aden Bauxite and Alumina Co., and Ma’aden Aluminium Co., as part of $10.8 billion joint venture with Saudi miner Ma’aden, located in Ras Al-Khair Industrial City in the eastern province.

Fertilizer producer The Mosaic Co., another US company, has a 25 percent stake in the $8 billion Ma’aden Wa’ad Al-Shamal Fertilizer Production Complex located in Wa’ad Al-Shamal Minerals Industrial City in the northern province of Saud Arabia.

Canada’s Barrick Gold Corp. has a 50 percent stake with Ma’aden in the Jabal Sayid underground copper mine and plant.

“The private sector contribution will be incredible within the next couple of years,” said Al-Ali.

The mining sector is expected to create thousands of jobs in the Kingdom in the coming years with the goal of 256,000 geologists, engineers and others by 2030, he said.

“The ambitions will be reflected in a doubling of the sector’s contribution to GDP,” said Al-Ali.

“The income for the mining sector was above SR96 billion ($26 billion) in 2020 and we are targeting SR176 billion by 2030.”


Saudi military industry delegation meets investors in London defense show

Updated 17 September 2021

Saudi military industry delegation meets investors in London defense show

  • Officials from Saudi Arabia’s General Authority for Military Industries (GAMI) and Saudi Arabian Military Industries (SAMI) met with a number of major international investors in the fields of defense and military security

RIYADH: Saudi Arabia’s military industry delegation concluded on Friday its participation in the four-day Defense and Security Equipment International (DSEI) trade fair held at the ExCel Center in London with meetings with investors.

Officials from Saudi Arabia’s General Authority for Military Industries (GAMI) and Saudi Arabian Military Industries (SAMI) met with a number of major international investors in the fields of defense and military security from the United Kingdom and European countries, as well as a number of people from other countries interested in the defense and security military industries sector, GAMI said in a statement.

These meetings were attended GAMI Governor Eng. Ahmed bin Abdulaziz Al-Ohali, GAMI’s partners in the sector, as well as Saudi and British officials and stakeholders from the industry and investment sectors.

The UK Minister of defense Ben Wallace and a number of official delegations at the regional and international levels also inspected the Saudi pavilion, learning about the key targets of the military industry sector in the Kingdom, its promising investment opportunities and the pursuit of GAMI to reflect the ambitious vision of the wise leadership aiming at the Saudization of more than 50 percent of spending on military equipment and services by 2030.

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