According to a study by the Department of Economic Development, 362 trade licences were granted to Chinese businesses in the Emirate of Dubai alone from the beginning of 2019 to the end of the first half of 2019. This year’s first six months saw the awarding of over 362 company licences, to 696 Chinese entrepreneurs, underscoring the growing interest of Chinese entrepreneurs in establishing their businesses in Dubai and throughout the United Arab Emirates.
In another media source, it is estimated that 10% of the UAE’s population is made up of Chinese nationals, which clearly demonstrates that the country serves as the financial and commercial centre for a number of Chinese businesses.
So, what is it about Dubai that attracts Chinese entrepreneurs to set up shop? And what drives Chinese investors to establish a business in the United Arab Emirates?
Let’s take a look at the enormous demand for and interest in the area among Chinese businesses in general. Despite this, there are a variety of reasons why Chinese investors choose to establish a company in the United Arab Emirates, including:
The United Arab Emirates is expected to play a significant part in China’s Silk Road initiative.
In 2018, China and the United Arab Emirates signed a memorandum of understanding (MoU) for cooperation on the Silk Road Initiative and the 21st Century Maritime Silk Road Initiative, with the goal of boosting investment and commerce in the two countries’ respective regions. China has developed a significant presence at Al Maktoum International Airport for the transportation of products to other areas, and the two countries are now discussing how to expand this effort in the digital realm. According to official statistics, the United Arab Emirates handles 22 percent of all Arab-Chinese commerce, while the UAE handles 30 percent of all Chinese exports to the Arab world. All of these characteristics make the United Arab Emirates a desirable location, and Dubai, as the commercial hub of the UAE, is the site of the greatest number of business creations.
Economic company established by China and the United Arab Emirates as part of the Belt and Road Initiative
In addition, the UAE plays a significant role in the Belt and Road Project, which is a long-term transcontinental investment initiative aiming at infrastructure development and the acceleration of economic integration — connecting Asia, Europe, and Africa – and which is funded by the World Bank.
It is in keeping with the UAE’s goal in generating possibilities for Chinese investors that the two countries are working together to promote the Belt and Road Initiative. The United Arab Emirates (UAE) plays a crucial role in extending China’s cooperation with the Gulf and the Middle East. At the Belt and Road Forum in Beijing in April 2019, the United Arab Emirates signed inbound investment agreements of about 3.4 billion U.S. dollars for Dubai. As part of the Belt and Road Initiative, numerous joint ventures and other commercial agreements involving Chinese and UAE infrastructure, transportation, and logistics firms are being established.
During the second Belt and Road summit in Beijing in April 2019, two agreements were struck between Chinese businesses and the United Arab Emirates. The first is a $2.4 billion investment by Chinese wholesale company Yiwu to construct a 5.5 million square metre logistics station, known as the ‘Traders Market,’ close to the Expo 2020 Dubai site, to store and ship Chinese goods from Jebel Ali port to the rest of the world. The second is a $600 million investment by Chinese wholesale company Yiwu to construct a 5.5 million square metre logistics station, known as the ‘Traders Market,’ close to the Expo 2020 Dubai site. The second deal seeks to build a $1 billion food production and processing factory in Dubai, which will import, process, pack, and export agricultural, marine, and animal goods to countries across the globe. The facility will be known as the “Vegetable Basket.”
The relationship between China and the United Arab Emirates is both commercial and diplomatic in nature.
With non-oil commodities, China is the UAE’s most important trading partner, accounting for 9.7 percent of the country’s overall non-oil trade in 2018, which totaled more than US$43 billion. China’s commerce with Dubai and several other Emirates in the United Arab Emirates continues to expand at a rapid pace year after year. It is expected to reach more than $70 billion (Dh257.46 billion) by the end of the current year.
The United Arab Emirates (UAE) is a worldwide commercial, transportation, and financial centre that provides China with a gateway to important markets. Exports of non-oil items from the UAE to China increased by 22 percent between 2013 and 2017, with commodities such as plastic raw materials and products, chemicals, copper, aluminium, iron, mineral ores, ethylene polymers, and propylene accounting for the majority of this increase. Currently, almost 60% of commerce between China and the UAE is re-exported to Europe and Africa, according to the World Trade Organization.
According to a recent HSBC study, the volume of products traded between the two nations would increase at a rate of about 9-10 percent each year until at least 2030. In 2018, China was the UAE’s most important supplier of commodity imports, accounting for 15 percent of total imports, which totaled more than $38 billion in value. UAE-China bilateral trade was $53.3 billion in 2017, with ambitions to increase this figure to more than $70 billion by 2020.
Chinese people are increasing their investment in the UAE’s real estate sector.
Between 2016 and 2017, Chinese investment in real estate in the United Arab Emirates grew by 64 percent, and it is projected to rise by another 70 percent in 2019. Given the high cost of real estate in China, the real estate market in the United Arab Emirates is more cheap and convenient. Furthermore, the tax benefits, freehold ownership, high rental returns, affordability, and tax-free investment opportunities make real estate an attractive investment choice.
Dubai Land Department statistics show that investors from China made Dh1.7 billion in investments in Dubai during the first nine months of 2018, according to information available from the department (DLD). DLD has also said that it intends to step up efforts in order to attract at least Dh1 billion in inbound property investment from China by the end of this year. DLD has also established two representative offices in China in the last two years, the most recent of which was in Beijing in June, and plans to build a third in the southern industrial city of Shenzhen, as well as in other areas, in order to encourage Chinese investment in the nation.
Visitors from China may benefit from visa exemptions in the UAE.
According to UAE Tourism, the number of Chinese visitors rose by 11 percent in the first six months of 2019. China was the fourth-largest source market for tourists in the emirate, with 501,000 overnight visits from the country in 2017. Following the implementation of reciprocal visa-on-arrival policies by the two countries in 2017 and 2018, Chinese nationals may now get a 30-day visit visa on arrival, which is free of charge and renewable for a comparable duration. In 2018, more than 1.1 million Chinese visitors visited the United Arab Emirates, taking advantage of the reciprocal visa exemption agreement with China. Furthermore, it is predicted that the United Arab Emirates would get 25 million tourists from China by 2020.
If you are a Chinese national who wishes to establish a company in Dubai or anywhere else in the United Arab Emirates, you can schedule a free consultation with one of our specialists.
Generis Global can assist you in understanding the many advantages of establishing a company in the United Arab Emirates. We also identify and analyse the dangers that your company’s operations may face when doing business in Dubai or anywhere else in the United Arab Emirates (UAE). In order for you to establish your UAE business as soon as possible, our UAE company formation consultants and specialists provide you with the most appropriate options.