Chinese Builders Find Middle East Boom Fraught With High Risks and Low Margins
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Chinese construction companies are flocking to the Middle East’s booming infrastructure construction market, only to find the gold rush is tarnished by fierce competition, harsh contractual terms and thin profit margins.
Lured by a massive infrastructure upgrade push in countries like Saudi Arabia and the United Arab Emirates, Chinese contractors are seeking new outlets for capacity left idle by a domestic economic and property slowdown. “Saudi Arabia now is like China 30 years ago,” one Shenzhen-based contractor told Caixin on a recent flight to Riyadh, remarking on the sheer number of construction sites.
The demand is immense. In 2024, Chinese contractors signed new contracts worth $32.6 billion in Saudi Arabia, the largest for any single country, according to a report by the China International Contractors Association.
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- Chinese construction firms are expanding in the Middle East due to high demand, signing $32.6 billion in new contracts in Saudi Arabia in 2024.
- They face intense competition, strict localization rules, harsh contractual terms, high operational costs, and ESG standards.
- Profit margins are thin and risks are significant, especially for smaller firms, due to tough local requirements and contract obligations.
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