Exploring Uncharted Territories in the Middle East: The Innovators Going Global

Author | Xinran Zheng

In the distant Middle East, there is a land of challenges and opportunities, where deserts and oases intertwine and ancient civilisations collide with modern commerce. On this land, there is a group of people who are not content with the conventional paths of life and work, choosing to write their own legends on this ancient and mysterious land with innovation and courage. They are the pioneers who dare to carve out new worlds in foreign lands, and their stories are filled with adventure, innovation, and bravery, offering new possibilities for the paradigm of going global.

Leo - "I Quit My Big Company Job and Opened the First Chinese Tea Drink Shop in Saudi Arabia"

Leo talks about starting a Chinese tea drink shop, which was sparked by "homesickness."

Like many who first set foot on this land, Leo was an employee sent abroad by Huawei. He thought that instead of enduring the boring life in Saudi Arabia, where he couldn't even get  Chinese tea drink, it would be better to create his own entertainment. Together with a colleague and a "veteran Saudi" who had been in the country for seven or eight years, the three hit it off, and the story of "WHOA TEA" began, making it the first Chinese bakery + Chinese tea drink shop in Saudi Arabia.

Leo stated that none of the three had any experience in the catering industry, but they had clear divisions of labor: he was in charge of operations, his colleague was responsible for technology, and only the "veteran Saudi" spoke Arabic, handling external communications. Leo candidly said, "I left Huawei to start a business; if my income isn't higher than my salary, there's no point in me leaving."

Tea drinks are still a novelty in Saudi Arabia. By applying the mature models from China, they have a path to follow in their entrepreneurship, making it a bit easier. In Saudi dietary culture, there is also bubble tea, but it is heavily spiced with Middle Eastern flavors. In Chinese tea culture, aside from pearl milk tea, the locals have never seen the other beverages. Leo learned the recipes from his friends who franchised  Chinese tea drink, adjusted them to cater to local tastes; he customized small ingredient stations and machines from China, even if the cost doubled; and added Chinese sweet cakes to enrich the product line. "We don't make much profit on cakes; it's purely for attracting customers."

Although  Chinese tea drink has to some extent become a "necessity" in the lives of Chinese people, his initial intention for entrepreneurship was never to cater to the Chinese market, but to focus on the broader local market. The  Chinese tea drink market here is small, and 95% of WHOA TEA's current customer base are Saudis. Saudi Arabia has long held the status of big brother in the Middle East, which has led to a natural sense of "superiority" among its citizens, who have very high expectations for services, products and the environment.

Contrary to the common understanding that going global requires "localization," Leo has not done much to cater to local elements. "I have asked some customers, and they said that if WHOA TEA were like other traditional Saudi coffee shops, they would not be interested in coming. They feel that WHOA TEA is unique." The store adopts a youthful and modern decoration style, not only providing photo spots but also a variety of board games, including Chinese cultural games like chess and Go, English board games, and local Saudi games. Arab culture values chatting and socializing, and WHOA TEA's first store, which is 60 square meters in size, is designed to be a third space for the  Chinese tea drink shop. "Our customers may come for entertainment activities, drinks, or cakes, so our customers have a high level of loyalty and repurchase rate."

Regarding the online popularity of WHOA TEA, Leo stated that they have not engaged in KOL (Key Opinion Leader) promotions, and the existing network publicity is all spontaneous carding by users. "If you search for us on TikTok, there are many videos with a lot of internet traffic, with hundreds of thousands of likes, and we haven't paid for any of them. To invite an influencer to check in, a video with tens of thousands of likes would cost around 5,000 to 10,000 RMB." However, he added, "If we open new stores in the future, we might consider paying for promotions."

The business of WHOA TEA is booming, achieving profitability in the first month, and currently employing over 40 staff members. Recently, as the business celebrated its first anniversary, two new stores are about to open, and everything is thriving.

Mr.Xiao - "Not speaking Arabic, yet making a fortune with Arabs"

Mr.Xiao, who just returned from Saudi Arabia, speaks with enthusiasm about his observations during his visit. But until last month this year, he had never set foot in the Middle East, yet he had already discovered the 'fortune' beneath the desert—metaphorically speaking, he had found a lucrative business opportunity.

Mr.Xiao is the founder of a Middle Eastern self-media company. He first entered the domestic Douyin market in 2016, accumulating a wealth of operational experience. As the competition for live-streaming e-commerce in China entered a fiercely competitive phase, he decided to pivot to focus on going global. After extensive research on regions like Europe, America, Japan, Korea, Southeast Asia, and others, Laos Xiao saw endless business opportunities on the land of the Middle East.

Mr.Xiao is a man who dares to think and act, "Where the threshold is low, the competition is bound to be fierce. The threshold in the Middle East is high enough, and I am very interested in such a challenging and difficult market; every time I solve a problem, I feel like I have climbed another level in the pyramid." By chance, he teamed up with Ahmed, a Middle Eastern student at Xiamen University, and they began working on TikTok.

Before their collaboration, Ahmed's account focused on introducing Chinese culture and cuisine, accumulating a certain number of followers, but was unable to monetize. Firstly, the Middle East does not have as diverse and well-established monetization paths as domestic Douyin influencers. Secondly, there are not as many merchants and supply chain resources in the Middle East as there are in China. This results in a consumption market in the Middle East without a strong supply chain, which complements the situation in China. Mr.Xiao thought about using influencers to build a bridge between Chinese supply chain resources and the Middle Eastern market. Therefore, after taking over, in line with the situation in the Middle East, Mr.Xiao explored a new path - "influencers exploring factories," promoting excellent Chinese brands and supply chains to the Middle East through TikTok.

When asked if Mr.Xiao speaks Arabic, he laughed and said he does not, "I don't, I've left all the Arabic matters to my partner." Partner Ahmed's Middle Eastern face is the key to Mr.Xiao's business, and his persona is that of a Middle Eastern boss in China.

First left: Ahmed, first right: Lao Xiao

Arabs have an innate trust in their fellow countrymen, and the influencer's status also makes many clients happy to cooperate with him. "Some clients brag to their friends that they are working with an influencer, and they feel very prestigious. On this trip to Riyadh, fans would ask to take photos with us." A large number of Middle Eastern business clients consult hoping for help in finding Chinese sources. As domestic factories are expanding overseas to find new ways out, Mr.Xiao uses his account as a medium for communication between the two countries. By having influencers shoot factory exploration videos, Middle Eastern bosses can see the source factories, understand the production process and the internal situation of the factories, and have a direct understanding of production capacity, products, and factory owners. This model greatly reduces communication costs and provides many details that are difficult to express in business communication, allowing Middle Eastern clients to feel as if they are on the spot. Mr.Xiao will find the corresponding factories according to the needs of Middle Eastern clients and will also help domestic factories with publicity and promotion.

In addition, this method also saves the cost of enterprises expanding into the Middle East market. "In the past, when companies sent people to the Middle East for inspection and to participate in exhibitions, the cost of airfare, hotel, booth fees, staff salaries, materials, and so on, added up to hundreds of thousands, and the results were not guaranteed; whereas we can greatly save costs for companies by shooting a factory exploration video in China, and can accurately target the audience."

Dealing with the Saudis, the differences in habits let the Mr.Xiao encountered a lot of trouble, the Saudis are extremely inefficient and unpunctual, "such as our coffee shop about 8 o'clock to talk about things, 9 o'clock has not yet arrived, 9:30 to send a message to change to 11 o'clock, and finally 1 o'clock to come.” Mr.Xiao also met a cliff-style disappearance of odd customers, a customer looking for a fixed two containers of goods, suddenly and inexplicably disappeared, the phone does not pick up, the message is not back, we are even worried about this customer is not an accident, "but last week he suddenly contacted us, asked the goods ready or not." Mr.Xiao said helplessly.

Having dealt with a large number of clients, Mr.Xiao has summarized a set of experiences. "Clients are categorized into one to five stars. Those who simply inquire are one-star clients, and so on. Clients with clear and detailed needs, willing to pay deposits, order samples, and have a healthy company background are our five-star clients, and we will fully commit to following up and providing services." This year, Mr.Xiao initiated the "Desert Voyager" alliance, where every year, influencers take members of the domestic alliance to Saudi Arabia to revisit these five-star clients. "To do business with Arabs, you must first become friends with Arabs. Once a foundation of trust is established, business can be conducted for 5 or 10 years."

After providing a detailed introduction of the business model, when asked if there should be any reservations about disclosing it to the outside, Mr.Xiao is very confident. "Our model cannot be replicated by others."

Yali - "Targeting market gaps, finding new blue oceans in the red ocean."

Yali, when discussing why she chose to open an interior design company in Dubai, mentioned that it was largely a coincidence. "I first arrived in Dubai in 2018, initially as a real estate and business investor, scouting the local market to manage my own assets. After living there for half a year, I found the real estate market in Dubai to be very hot, which led me to establish several companies, but only the interior design firm made it to the end."

Yali believes that one can only earn their first pot of gold in a blue ocean market, and for her, Dubai was a good choice. According to Yali's judgment, Dubai's real estate market is in an upward cycle, influenced by the US dollar, with the Dirham pegged to the dollar. Additionally, the Sino-American trade friction has brought about exchange rate fluctuations. This has made Dubai real estate a popular choice for US dollar allocation: "Dubai real estate is equivalent to an investment in US dollars, and according to Blackstone's prediction, this market will continue to grow before 2027," Yali analyzed.

The surge in front-end real estate has further stimulated the downstream interior design and decoration businesses. Contrary to the traditional notion of "making a fortune by targeting wealthy Middle Eastern clients," Yali has targeted a gap in market demand—focusing on the mid-to-low-end market and serving cost-effective customers.

According to Yali's observations, in recent years, the trend of Chinese companies going global has become popular, with many expatriate workers flooding into Dubai. These employees all want to improve their living conditions, but most do not intend to settle long-term and are reluctant to spend much on renovations. There are also many Chinese residents who have been in Dubai for years, and this group also has the need for self-improvement in their living conditions, but their budgets are also limited, focusing more on cost-effectiveness. In addition, Dubai's real estate has attracted many investors who have even lower budgets and requirements for renovations. "My customer base consists of these two types of people, investors and owner-occupiers. The advantage is to maximize cost-effectiveness in a quick and efficient manner."

The pain point in the local industry is that customers generally have high demands for timeliness, but there are certain risks with after-sales services from small design companies. In response to this phenomenon, "our company's solution is to adopt process management to shorten cycles, with soft decoration projects taking as little as 10 days, and comprehensive renovations taking 45 days." Yali's AH Design Firm, referring to the domestic full-house customization model, adopts a business strategy of low unit prices and high turnover rates, cooperating with suppliers to ensure that goods are readily available in local warehouses, with the upstream supply mainly coming from China. Currently, the company's business is still expanding, and the future customer base will radiate from Chinese residents to local inhabitants.

Yali's project case

In the execution of interior design and decoration, a significant labor force is required. In the United Arab Emirates, the cost of directly managing employees is relatively high. Taking Dubai as an example, employees' transportation largely depends on company-provided vehicles. Additionally, due to the hot climate in the Middle East, there are risks of heatstroke and work-related injuries for workers on projects, and for large-scale projects, solving workers' accommodation and transportation accounts for a significant portion of the costs. Therefore, to reduce costs, local companies generally opt for labor dispatch for their basic labor force, with these workers mostly coming from India, Pakistan, Bangladesh, and African countries.

Like most, Yali chooses to hire external employees, which greatly reduces risks and lowers costs. The wages of these workers are generally around 2-3 thousand Dirhams, with specialized dispatch companies managing the workers' visas, clothing, food, housing, and other details. Yali has few concerns about labor, "Our focus should be more on the projects themselves; the level of project management is reflected in the capabilities of the managers, not the workers." Typically, experienced project managers directly manage the laborers, providing clear work instructions and supervision, as well as feedback. The firm's social media account once posted a video introducing the daily work life of a project manager with a million-dirham salary.

It is worth mentioning that as a female entrepreneur, Yali feels she has experienced a great deal of freedom and respect in the Middle Eastern business environment. When starting her business in China, she faced a lot of skepticism and discrimination, a common challenge for many female entrepreneurs. "The UAE is mainly dominated by the European cultural system, with many legal mechanisms learned from there, and overall, it is very female-friendly."

For young people, Yali frankly states that going global to the UAE is a good opportunity. "Whether it's young people in their twenties coming to study or professionals in their thirties and forties going abroad to strive, spending the second or third decade of their lives in the UAE will be an invaluable and unique experience."