Saudi a good bet for building material firms

China's building materials companies should cash in on the opportunities being presented in Saudi Arabia's booming capital construction market, a trade official said on Friday.

Xie Zhongmei, director of the Department of West Asian and African Affairs at the Ministry of Commerce, said there is huge demand for building materials in the largest economy in the Middle East, which is expected to push forward $100 billion worth of infrastructure projects by 2016.

As an economy dominated by the oil industry, most of the building materials being used in Saudi Arabia, apart from concrete, are imported.

For example, 40 percent of the 12 million metric tons of steel used in 2011 in the kingdom were produced and imported from overseas.

"China's building products have notable comparative advantages on the global market," added Chen Feng, chairman of China Chamber of Commerce of Metals Minerals & Chemicals Importers and Exporters.

The ministry and the chamber will be actively promoting the country's building materials and other construction-related goods in December at the 3rd China Commodities Expo-Saudi Arabia in the capital Riyadh.

"The fair will help promote brand recognition for made-in-China products and hopefully help us build a future platform for suppliers and buyers," Chen said, adding that he expects more than 3,000 professional buyers to attend the event.

He said Chinese products attracted great interest among local customers during previous trade fairs in the country, and there has been considerable interest from some to invest in setting up factories in Saudi Arabia.

The country has been China's largest trade partner in Middle East for 11 consecutive years, while China is also the second-largest source of imports to Saudi Arabia.

Trade between the two countries grew nearly 30 percent year-on-year to $38 billion in the first half this year, said Xie, and she is confident the annual amount should reach $70 billion this year, with the annual growth rate continuing at 30 to 40 percent.

China has set its overall export growth target at 10 percent this year.

Shi Shiwei, a professor with the University of International Business and Economics in Beijing, said a lot of Chinese companies are expanding their export horizons from solely developed economies to more diversified targets including Latin America, Africa and the Middle East.

"The emerging industrial countries in these regions are enjoying faster economic growth and purchasing power, and Chinese products are more suitable for them because of the high performance-price ratio," Shi said.

As an example of such an emerging economy, Xie said: "Saudi Arabia has a stable political situation, and the government is carrying out positive fiscal policies relying on its strong financial position benefiting from surging oil prices."

The International Monetary Fund has projected economic growth of 6 percent for Saudi Arabia in 2012, and because of its fast-growing population the country will need 2 million new houses to be built over the next 10 years, creating a potential market worth $210 billion.

Meanwhile, nearly $3 billion will be invested in highway and road projects this year.

To improve their chances of further business in the region, Xie suggested Chinese companies should focus more on high-end products.

He advised that they also consider building production plants in Saudi Arabia, to better meet local demand, and possibly satisfy further orders from other nearby countries with expanding economies, such as the United Arab Emirates and Qatar.

There has been around $800 million of Chinese investment in Saudi Arabia so far, but investment in the other direction is estimated at more than $6 billion, if third-party investment is taken into account, Xie said.

weitian@chinadaily.com.cn