Review | Trends in Outbound Product Categories in Middle Eastern Retail

Consumer Staples Author: Xiaoguang Zhang Jul 09, 2023 02:30 PM (GMT+8)

What are the trends for the Middle East market in retail areas? EqualOcean makes a review for you to learn.


Since the beginning of 2023, the Middle East has witnessed a "reconciliation wave," marked by the Saudi-Iran reconciliation, which has significantly stabilized the political landscape in the region. The traditional oil-based economy has accumulated substantial wealth for countries in the Middle East. In 2022, the global GDP grew by 4.05%, with Saudi Arabia and the United Arab Emirates experiencing GDP growth rates of 8.7% and 7.6%, respectively, far surpassing the world average. With the introduction of initiatives like "Saudi Vision 2030," other countries such as the United Arab Emirates with "UAE Vision 2030" and Kuwait with "Kuwait Vision 2035" are also striving to break free from the oil economy and achieve economic transformation. Additionally, the Middle East, including Turkey, has a population of approximately 600 million people, with a young demographic structure and a high proportion of individuals aged 15 to 25. This young population possesses strong purchasing power, making the Middle East an attractive "blue ocean" market.

Previously, EqualOcean analyzed the background and opportunities brought about by the "reconciliation wave" in the Middle East. Through interviews with individuals involved in Middle East trade, EqualOcean found that with the end of the COVID-19 pandemic, there has been a rapid decline in demand for cleaning and sanitation products, and China's popular retail categories for exports to the Middle East have maintained their advantages. While online sales will continue to grow in the foreseeable future, they are unable to replace the significance of offline sales in the short term.

Consumer Electronics (3C Products)

Whether on international platforms like Amazon or local platforms like Noon, consumer electronics (3C products) are the hottest category in cross-border retail. According to data from Hugo Cross-border, in 2022, the market share of 3C electronics products in the Middle East reached 26%, the largest among all categories. In recent years, as the reform process in the Middle East has accelerated, gaming and internet socialization have gained popularity in the region, leading to an increased demand for corresponding 3C electronic products.

Sources familiar with Middle East e-commerce informed EqualOcean that China's exports of 3C products to the Middle East mainly consist of accessories such as power banks, charging cables, Bluetooth headphones, and speakers. Traditional major brands like Apple and Samsung hold higher popularity in the Middle East market for smartphones and computers, and Chinese products do not enjoy a competitive advantage. The primary reason lies in the focus of Chinese electronic products on cost-effectiveness, as their brand reputation still falls short compared to traditional smartphone brands.


Household Appliances

Wu Gang, the director of investment and financing at Freedom Sell, informed EqualOcean that the development in the Middle East is characterized by a simultaneous presence of "new and old." The home appliance industry reflects this trend. With the advancement of infrastructure construction and real estate development in various Middle Eastern countries, the demand for home appliances continues to rise. Yang Gongmin, the founder of Micrant Technology, stated that China has significant advantages in the manufacturing of home appliances, not only in terms of product quality but also in the supply chain. Due to issues such as water scarcity and long-term dependence on the oil economy, the Middle East lacks a strong manufacturing base.

As reported by Yicai, as early as 2010, Midea Group became the second-largest shareholder of the Egyptian listed company Miraco, which dominates the Egyptian air conditioning market. In addition, Midea Group has also established production bases for refrigerators, washing machines, and water heaters in Egypt. Another well-known Chinese brand, Gree Electric Appliances, also holds a leading position in the Middle Eastern home air conditioning market.

Meanwhile, in addition to traditional "white goods," emerging smart home appliance brands are also gaining popularity in the Middle East. Smart home appliances for daily use, such as automatic dishwashers, high-speed hairdryers, and cleaning robots, have entered the Middle East market. According to Middle East cross-border e-commerce reports, microwave ovens have gradually become essential household items with the popularity of smart small appliances. The Middle Eastern population's love for coffee has made Chinese coffee machines highly sought after. However, steam irons have low sales volume in the Middle East market.

Fashion Products

Fashion is a major category in China's cross-border retail industry, and the success of renowned brands like Shein in the Middle East market confirms this. The Middle East has a relatively young population, resulting in a significant demand for fashion products. Taking the United Arab Emirates as an example, Statista data estimates that fashion sales in 2023 will reach USD 3.1 billion. It is worth noting that the fashion category includes not only shoes and clothing but also potential-filled fashion items such as bags, sunglasses, and small accessories. China has been known as the "world's factory" in fashion manufacturing, with Guangzhou accumulating extensive experience in the footwear and apparel industry, while Yiwu possesses advantages in sectors like bags and small accessories. Some luxury brand factories are also located in China, giving Chinese-manufactured fashion products an absolute advantage in the Middle East.

Maternity and Baby Products

The popularity of maternity and baby products in the Middle East is closely related to the region's high birth rate. This category has its uniqueness, as users pay special attention to product quality when selecting maternity and baby supplies. Insiders familiar with the Middle Eastern market informed EqualOcean that e-commerce penetration in the region is approximately 5%, making it especially crucial for maternity and baby products to establish trust. Offline stores not only serve as brand showcases but also allow users to have direct contact with products, thereby building trust through the provision of high-quality products.

The sponsor system in the Middle Eastern market has made many enterprises hesitate to establish offline presence. Sponsors, who hold shares but are not involved in business operations, must be locals. This additional layer of difficulty and risk increases the challenges faced by foreign companies when entering the market, discouraging many from opening physical stores. For instance, the popular Chinese maternity and baby brand Hibobi adopted a strategy of both online and offline channels upon entering the Middle East market. This approach allowed them to establish brand reputation and recognition.

Therefore, while having a significant advantage in products, it is a considerable challenge to navigate local entry regulations and avoid hidden risks. As Middle Eastern companies further open up to the outside world, protectionist policies like the sponsor system are gradually being relaxed in some countries, with the potential for complete elimination throughout the entire Middle East region in the future. Additionally, it is essential to consider local religious and cultural customs in product exports, understand the taboos of Islamic culture, and manage cultural conflicts that may arise behind products.