In the gold rush in the Middle East, the narrative of opportunities and imagination everywhere is fascinating. A country with a population of less than 40 million has more than 20,000 royal family members. Because of different blood relationships, the distribution of power and resources is also different. Knowing royal family members has also become the capital for many opportunists to make connections, but it is difficult to distinguish the true from the false. Undoubtedly, the current Middle East is no longer a paradise for small players going overseas.
In the mysterious regional culture and Westernized elite management, photovoltaic giants have accelerated their expansion to the Middle East since last year. There are successful beachheads, adventurers, and frustrated people, but there is still a lot of homework to be improved on this route.
01
A small-scale closed-door meeting
One day in March 2023, the Saudi Arabian Chinese Enterprises Association held a small-scale closed-door meeting on new energy. The meeting was small in scale, but of high standards. The participants were heads of 14 Chinese enterprises in Saudi Arabia, including state-owned enterprises and central enterprises.
The purpose of the closed-door meeting was very clear, which was to popularize the experience of investing in Saudi Arabia to some newly arrived companies in the rush of Saudi gold rush. The heads of state-owned enterprises that have already undertaken photovoltaic projects in Saudi Arabia also shared their experiences internally. Some of the sharers came from the East China Design Institute, which had just undertaken a photovoltaic project, and some came from China Energy Construction Group, the largest Chinese photovoltaic contractor in Saudi Arabia.
People from Chinese companies in Saudi Arabia told “Eye of the Storm” that the essence of this meeting was to cool down Saudi Arabia’s overheated photovoltaic projects. According to the materials shared on site, these companies that have been deeply rooted in the local area for many years did not promote the huge opportunities emerging from the “Saudi Arabia Vision 2030”. While sharing their successful experiences, they specifically mentioned the rising costs behind the “desertification rate”, the dilution of profits behind the harsh contract conditions, and the continuous independent optimization of design capabilities. They want to tell the state-owned enterprises coming to Saudi Arabia a fact: Although the future picture drawn by Saudi Arabia is beautiful, many problems after the actual implementation often exceed expectations. This requires enterprises coming to China not to be brave alone, but to do sufficient research and preparation.
This sends a signal that the gold rush in Saudi Arabia has come. Faced with the booming opportunities, more and more players are coveting the cake. How to quickly seize the opportunity when the wind comes and how to avoid risks. Four months after the closed-door meeting, King Khalid International Airport, 35 kilometers north of the Saudi capital, ushered in a big change. The operator of the airport, Riyadh Airport Company, obtained the “Welcome Chinese” certificate. This also means that the airport can set up Chinese signs in prominent positions in the hall, as well as payment options when shopping in duty-free shops, so that Chinese tourists can have a “respected” experience.
The wave of going overseas originated from the 2030 vision launched by Saudi Crown Prince Salman in 2016. “Vision 2030” as a fixed phrase also appears almost in the streets and alleys of Riyadh and all documents for foreign investment and fundraising. It is a 20,000-word programmatic document (note: calculated based on the characters translated into Chinese), which declares Saudi Arabia’s ambition to become the center of the Arab world, a global investment powerhouse, and an international hub connecting three continents. Behind this is a series of specific projects to be implemented. According to this vision, local photovoltaic installed capacity will increase to 40GW by 2030, by which time Saudi Arabia will be among the top five photovoltaic markets in the world.
The opportunities emerging in Saudi Arabia are endless, and there is another side hidden behind the grand narrative. Qu Shuang, who has worked in Saudi Arabia for eight years, said that “everything seems to happen” here, but he is more determined to tell the other side of the fantasy adventure of the Arabian folk tale collection “One Thousand and One Nights” – cruelty and ferocity.
This contradiction is also reflected in the short videos he posted on social platforms – he used drones to shoot the modern and experimental side of Saudi Arabia: the brightly lit King’s Tower in Riyadh at night, the night sky cut by the spotlights on the different national pavilions in the “Global Village”, a series of footprints on the endless Gobi Desert, and a private planting base of a royal family member – neatly arranged date palm trees, and circles of green grass that suddenly appeared on the desolate Gobi Desert like a compass.
But privately, after staying in Saudi Arabia for a long time, “it is very desolate, and what you see is the side I want to present.” He told “Eye of the Storm”. Sometimes he would wait for many days to shoot Riyadh with the sunset glowing red in the sky. Seeing that there are more and more Chinese in Saudi Arabia, entrepreneurs, opportunists, and tourists flocking in, he feels obligated to let people know about the traps and problems.
Arab men wearing white robes and red plaid headscarves, speaking orders worth hundreds of millions or even billions of dollars, this labeling expression of “rich and free” once dominated Chinese social media. But in fact, it is a completely different story in the real business world.
In the luxuriously decorated conference room, the long table was filled with documents. Saudi Arabians wearing white robes and beards and Chinese in suits and ties negotiated for more than ten hours. From the polite restraint at the beginning to the red-faced and tense later, it seemed that someone might jump up from the chair at any time.
As a Chinese staff member, Qu Shuang often chats with colleagues in the project department in the office. There are too many “fierce disputes” on the negotiation table like this.
Many Chinese who have dealt with government officials in Arab countries seem to sigh that they are really smart. For example, the Saudi Public Investment Fund PIF, which is the core of the realization of the 2030 Vision, is in the hands of the royal family headed by Crown Prince Salman, but it is operated by professional managers. Most of these professional managers have received Western education and are very proficient in law, economy, trade, etc. In order to attract global attention, their professional managers have people from all over the world, including Europeans, Americans, Chinese, Indians, etc. This sovereign fund currently manages nearly one trillion US dollars in assets, and claims that it is expected to reach an asset size of 2 trillion US dollars in 2030, becoming the world’s largest sovereign fund.
For commercial interests, the managers of these sovereign funds and their related departments are very dedicated. Qu Shuang recalled that once the two sides launched a round-robin battle for the specific terms and conditions of the contract, and everyone had been arguing about how to draft the specific terms. In such a high-intensity confrontation, any slackness on either side will become an opportunity for the other side to “dig pits and lay mines” and counterattack. In order to eliminate fatigue, Arabs drink coffee crazily, while Chinese personnel drink cups of strong tea to refresh themselves, as if the main theme is “see who can outlast who”.
With such careful consideration of words, just because of one carelessness, you may step into the “pit” hidden in the contract, resulting in the evaporation of millions of profits.
Qu Shuang remembers that once it was difficult to negotiate a contract of more than one billion US dollars, but the project slowed down during the epidemic, affecting the normal delivery rhythm. Saudi Arabia, as the first party, did not turn around at all and kept dragging the final payment. At that time, the project was already in the final stage. More than 10,000 people were evacuated, and there were still 1,000 or 2,000 people on site. The air tickets and epidemic prevention costs for these 1,000 or 2,000 people increased several times. When there was still a few tens of percent of the payment unpaid, the Saudi Party A began to calculate the “desertification rate”.
“Sandification rate” is a localization requirement for foreign companies to build factories in Saudi Arabia, that is, the proportion of localization in the production of construction materials and recruitment of employees. If the localization score or desertification rate is reduced, the company may face a high fine.
Although the desertification rate will be clearly constrained in the specific contract – for example, 13%, in actual operation, the specific proportion is difficult to grasp. Because choosing different suppliers has a great impact on costs. In every negotiation, the biggest disagreement is which supplier to choose. If in the details of the contract, when choosing a supplier, the balance tilts a little towards the other party, it means that the benefits are divided.
Qu Shuang gave an example, “For example, solar photovoltaic panels may cost 300 yuan per square meter if purchased locally in Saudi Arabia, but only 200 yuan per square meter if purchased from China. Obviously, importing from China can increase profit margins.” However, once the company fails to pay attention to the restrictions on the “sandification rate” or fails to control the ratio in practice, it may face huge fines.
The above-mentioned project was originally expected to make 200 million yuan, but in the end it only barely broke even, Qu Shuang said. And there was also a project before that, which was only 1 percentage point away from the 13% sandification rate requirement. For this, the company was fined 300 to 400 million yuan. Basically, the profits in hand “flew away”, which was equivalent to working in vain.
Wu Di, chairman of Juhe New Energy, which specializes in new energy overseas investment services, has organized photovoltaic inspection teams to Saudi Arabia and Qatar many times in the past two years. He told “Eye of the Storm” that although the Middle Eastern countries started photovoltaics late, they have strong “intelligence” capabilities. Sometimes, for a project, they will participate in competitive bidding negotiations with more than 40 companies around the world. After communicating with many companies, they can get a very clear understanding of this industry and the price system. Once, a project needed to purchase upstream products. Wu Di quoted a quotation for upstream products, and the Arabs said that they would have a lower price. As a result, they used the supplier recommended by the other party and found that it was the same company. “This shows that they have strong project management capabilities and have even visited the suppliers on site,” Wu Di said.
It is difficult to win bids for Middle Eastern projects. Even after winning the bid, the subsequent contract implementation will be difficult.
Wu Di has participated in many contract negotiations. His feeling is that when drafting the details of the contract, Arab investors often do not give you enough time to consider the details. The other party will force Chinese companies to quickly read more than 300 pages of contract terms within 4 hours and give an annotated version of the reply. For Chinese companies, many details must go through domestic approval, lawyers’ advice, etc., and there is no time at all. Once the time is up, they have to make a decision. “YES OR NO?” Wu Di said that at this time, the leaders in charge of the negotiations on site will be under great pressure. Once the decision is made, the risks in the specific contract terms will have to be borne by themselves.
The key issues in the contract may be very vague in the end, hiding huge risks. He gave an example, such as the specific financing details. Usually when signing a contract in China, it will be required who is responsible and how to exempt the responsibility if the financing is not in place within a certain period of time. However, when signing the terms with the Gulf countries in the Middle East, it may be vague to a sentence, “Both parties should work hard to facilitate the financing closure of the project.” You have no room for negotiation at all.
“Arab investors are very strong,” Wu Di said. After all, 10 Chinese companies can do a project, and investors will have more say. This is all normal business game. In the case of oversupply, Chinese companies may also kill each other and continuously reduce the profit of the contract.
Because of the differences in geographical environment and business environment, many Chinese companies have suffered a lot and paid a lot of tuition fees. Many people have mentioned that many companies investing in the Middle East have increased costs, delayed projects, and declined profits in project execution. But this is also the price Chinese companies must pay for going overseas. After dealing with the Chinese party once, the next time they sign a contract, the Chinese party will have more experience in judging which clauses are the most critical and must be firmly determined and not compromised, and which clauses can be negotiated. Wu Di said that the Chinese party will be more experienced and confident.
03
Giants rush to Saudi Arabia
It is not new for photovoltaic giants to export components to the Middle East, but most of them act as product suppliers under the EPC contracting model of local Chinese state-owned enterprises and central enterprises. But soon, transparent prices and industry involution also greatly compressed overseas profits. Some more forward-looking private giants began to explore new strategies for going overseas.
A few months after the above-mentioned closed-door meeting, in the second half of 2023, a group of Chinese people – the overseas troops of GCL Technology – arrived at the airport in Riyadh, the capital of Saudi Arabia.
GCL, a giant focusing on upstream silicon materials for photovoltaics, is going to build a granular silicon plant in Saudi Arabia. At that time, foreign media reported that the volume was as high as 120,000 tons. This is a rare heavy technology and capital output in the great wave of Chinese companies going overseas. This move once surprised people in the industry, who thought that GCL’s move was too risky. However, if it can be successfully implemented, GCL may also drive the photovoltaic industry chain to form a new pattern in the Middle East and even the world.
GCL’s 2023 annual report once disclosed that “after two years of careful planning, the company’s polysilicon project in the Middle East will be centered on lower-carbon, lower-cost, and higher-quality granular silicon technology, leading and promoting China’s photovoltaic manufacturing industry to climb to the high end of the value chain overseas.”
In order to facilitate the successful implementation, GCL sent a group of young people with good English and registered a company in Saudi Arabia.
Qu Shuang had contact with some young people, and they left him with the impression that they were not internationally minded and lacked knowledge of local culture and customs. Therefore, when negotiating cooperation between various departments in Saudi Arabia, they would run into obstacles everywhere.
The collision and conflict behind the mysterious regional culture is undoubtedly one of the prices paid by companies going overseas for the first time. GCL’s senior management attaches great importance to this overseas trip, and Zhu Gongshan, chairman of the board of directors of GCL, who leads the “reformists” in the technical route, also wants to plan a big picture for GCL’s future. However, according to Qu Shuang, Zhu Gongshan and his subordinate executives came during the formal negotiations around October. But the talks soon collapsed.
The specific reasons for the breakdown of the talks may be more complicated than imagined. Two people who have contacted GCL mentioned the funding issues and power supply difficulties in the implementation of the cooperation. One of the people close to GCL told “Eye of the Storm” that silicon material production capacity is the most complex and technically difficult link in the photovoltaic industry chain. The construction period of a silicon material plant is usually 2-3 years, and the construction period in Saudi Arabia may take 3-4 years, which also leads to a long return period.
“GCL’s investment requires at least 9 billion yuan, and GCL’s plan is to hope that Saudi Arabian funds or bank consortiums can contribute a larger proportion.” The above-mentioned person said. Qu Shuang also said that the partners failed to reach an agreement due to financing issues. Moreover, the silicon material plant that GCL wants to build requires a lot of electricity and water, and the Saudi local government needs to mobilize more resources and support.
However, the above-mentioned person close to GCL said that the most critical reason is that granular silicon technology has not yet been widely popularized due to purity issues. Although the purification technology and market share have been greatly improved, it has not yet occupied a mainstream position in the domestic market, and the difficulty of promotion is also greater.
GCL is as firm as ever in granular silicon technology. At the end of last year, after completely shutting down the last rod-shaped silicon plant, GCL began to go all in on granular silicon. A relevant person in charge of GCL Technology told Eye of the Storm that experts in Saudi Arabia had conducted reasonable due diligence on granular silicon technology during the inspection. Granular silicon has quickly achieved a 20% market share in China.
However, there has been controversy among several major silicon material giants in China as to which of the granular silicon and rod-shaped silicon material technology routes will become the mainstream in the future.
Talking about the reason why GCL was defeated in Saudi Arabia, a person related to GCL told Eye of the Storm that GCL did not progress smoothly when cooperating with the Saudi sovereign fund, but it was not because of the problem of “the 9 billion investment was not negotiated”. “Any project requires investment, and the investment risks are undeniable. In addition, geopolitical risks, security risks, the economy, culture, religion, and policies of the Middle East are also inevitable multiple challenges.”
GCL’s defeat in Saudi Arabia, on the other hand, Saudi Arabia also has more choices, and many giants of Chinese photovoltaic companies are offering olive branches. In October 2023, TCl Zhonghuan, which focuses on silicon material processing and production, disclosed that it had established a joint venture with Saudi Vision Industries to build a silicon wafer factory.
However, unlike the overseas expansion of silicon wafer factories, the overseas expansion of upstream granular silicon factories still faces more complex problems. In June 2024, GCL announced that it would implement a granular silicon factory plan in another Middle Eastern country, the United Arab Emirates, which is facing carbon reduction pressure. Zhu Gongshan said, “In the future, GCL is willing to work with the leading companies in the global photovoltaic industry to settle in the UAE and make positive contributions to the UAE’s new energy industry chain supplementation, strengthening and extension.”
However, “Eye of the Storm” has learned from many sources that at present, this plan is still uncertain and has not been finalized. GCL may face new competition in the layout of granular silicon factories in the Middle East. United Solar, which has Chinese capital background, announced in March 2024 that the silicon material factory established in Oman has officially started construction.
04
Copy China’s “World Factory” Model
Although the overseas export of Chinese photovoltaic giants’ technology and industrial chain has its own capacity consumption needs, it also caters to the new narrative of Saudi Arabia and other Middle Eastern countries – the industrial chain landed in Saudi Arabia, copied China’s “world factory” model, and changed the passive situation of “manufacturing blank”. The Middle East is no longer a paradise for small players.
Wu Di, who has been in the game for many years, soon found that the “appetite” of the Saudi Arabian investment promotion department was getting more and more picky. They were not satisfied with simple assembly business processing, they wanted to build an industrial link in the long photovoltaic chain in the desert.
Last year, Wu Di and his friends originally planned to rent a warehouse in Saudi Arabia to do some simple frame processing business.
But when communicating with the local investment promotion department, the other party believed that this investment method had too low added value and it was difficult to help solve the local employment problem. They hoped that Wu Di and his friends could extend two upstream of the industrial chain, such as the packaging business of photovoltaic cells and the manufacturing of silicon wafers.
This requirement exceeded the initial expectations of Wu Di and his friends, and the investment chain was very heavy. Wu Di’s side suggested, “Once there is a market, we can expand upstream.” But it was rejected and the negotiations soon came to a standstill.
However, three months later, the other party suddenly came back. They made a request, “You can do simple assembly first, but you must promise to build more industrial chains upstream in the future.” At that time, there were many competitors, including a Taiwanese company. The other party finally found him again. Wu Di explained, “This is because we have our own supply chain in China, the technology is also mature, and we have our own financial services, and we can quickly realize the factory landing. Compared with other companies, we have more advantages.”
Then the progress was very smooth, and the other party also gave them an information database. In Wu Di’s view, this is a heavyweight information package with very rich content, including the address and specific planning of the photovoltaic plant, as well as the planning of infrastructure construction such as port construction and real estate construction.
Even more surprisingly, the Saudi side also promised that if they came to build a photovoltaic industrial park, they would be regarded as “the most important VIP.” Wu Di told Eye of the Storm, “You can feel that their needs are very clear, that is, they no longer want pure product sales and simple assembly business, they hope to copy the successful model of Chinese business” and have business in the upstream and downstream of photovoltaic industry chains.
Saudi Arabia is indeed accelerating its manufacturing layout. In March 2021, Saudi Arabia announced the “Made in Saudi Arabia” initiative and the Saudi Partnership Plan to the outside world. They hope to learn from the manufacturing experience of existing countries, rapidly develop their own industrialization, and build local national brands.
In the past, although the Gulf countries in the Middle East are very wealthy and rich in oil resources, and the local per capita GDP is even as high as more than 40,000 US dollars, ordinary daily consumer goods, including small commodities such as toothbrushes, do not have a complete industrial chain in the local area, and many are made in China. “Made in Saudi Arabia” and “Made in U.A.E” have become the first choice for all walks of life in the Middle East when attracting investment.
Abandoning low-end factories with large volumes is becoming more and more a trend in the crowded gold rush. An old photovoltaic company that focuses on the downstream photovoltaic business once looked for opportunities in Oman on the southeast coast of the Arabian Peninsula. The local area has planned a large piece of desert land for photovoltaic construction and the production of green hydrogen, and the conditions are good. However, it requires a lot of investment and self-built transformers and other infrastructure to solve the water and electricity problems, which makes them feel quite stressed. “These are not our advantages. It is more suitable for energy leading companies to invest deeply.” Lin Kesong, the relevant person in charge of the company, told “Eye of the Storm”.
Lin Kesong’s company finally chose a more stable and lighter way of cooperation: signing an agreement with overseas agents, providing design solutions and technical services, and cultivating some overseas local installers to export photovoltaic mature models to them.
The mainstream narrative in the Middle East is that except for large companies that can get sovereign funds or syndicated funds from Middle Eastern countries, most companies come to the Middle East to invest on their own. For many Chinese companies that are eager to transfer production capacity, it is difficult to really land.
But in the eyes of opportunists, opportunities are still endless. “Eye of the Storm” contacted Luo Buwan, a Chinese who came to Saudi Arabia at the end of 2023 to explore opportunities. He is not alone, and there is a partner in Saudi Arabia for many years. This partner has a wide network of contacts and has been friends with the Saudi prince for more than ten years. He “almost knows the princes of various departments.” But he avoided answering the specific situation of this mysterious partner.
He and his partner helped the royal family connect with Chinese companies. He does not know English and Arabic, but he claims to have helped connect with projects in multiple fields such as energy storage and new energy vehicles. However, few projects have actually landed in the past six months. He returned to Shenzhen in the second half of this year and still did not stop. He almost had a live broadcast every night. The theme was to promote opportunities in Saudi Arabia and lead the “babies” in the live broadcast room to make money in Saudi Arabia.
With a strong southern accent, he passionately told the narrative that “Saudi Arabia is like Shenzhen 40 years ago.” This analogy suddenly gave him an “epiphany” moment one day: What made the most money in Shenzhen at that time? Real estate. He then turned the track and spent 100 million to buy 5 plots of land in Saudi Arabia. Of course, such a story cannot be distinguished between true and false. In his circle of friends, there are mostly group photos with Saudi locals. The description in one group photo is as follows: Ahmed, a former PIF executive, has a very strong handshake. Everyone is optimistic about the opportunities in Saudi Arabia in the next ten years… The Saudi government provides 80% of the total investment with long-term interest-free loan support.
His understanding of Saudi Arabia is very superficial, as if it is nourished by social media information. In Qu Shuang’s view, after Saudi Arabia became a hot spot, many opportunists emerged. Everyone can say that they know the royal family, but in fact they are all taking advantage of the information gap to “make a quick buck.” In his view, to invest in Saudi Arabia, you can directly go through official channels, such as visiting the commercial counselor’s office of the embassy, and let them take you to visit relevant departments, or even make an appointment directly with the government investment department. These are all free.
Saudi Arabia is a monarchy, and most of its resources are in the hands of the royal family headed by the king. There are many royal family members, and the real power is held by 600 people, namely the direct relatives of the Saudi king, whose English name is HRH (His Royal Highness); there is another type of royal family member, about 20,000 people, who are simply collateral relatives, referred to as “HH” (His Highness) in English.
It is usually difficult to directly contact the core members of the Saudi royal family. Even Wu Di, who knows the core members of the royal family, is far from as easy as Luo Buwan described. When Wu Di led domestic photovoltaic companies to come for inspection, he also started by contacting HH. Before each departure, he would send an email to the royal family members to make it clear what he could provide and what kind of services and support he needed.
“These public-to-public processes must be done, which is a respect for them.” Wu Di told “Eye of the Storm”. If the intention is highly matched, the other party will arrange a formal meeting-a face-to-face interview with HH. Usually, if the conversation goes smoothly, there may be an opportunity to further contact HRH. If the negotiation reaches this stage, the Chinese company basically has to do the project and cannot regret it afterwards. “In Saudi Arabia, the fulfillment cost is very high. Chinese companies must think clearly and not make promises easily. If they make promises, they must fulfill them, otherwise they are likely to be blacklisted.”
Interviews with HH are usually very formal. This is very similar to China. Not only are there meeting minutes, but also group photos. After the negotiation, there will be a series of arrangements, from travel to banquets, all with car pick-up and drop-off, a one-stop full service. If they are familiar friends, they will also arrange a family dinner, but it is generally difficult for new friends to be included in the family dinner invitation list.
One of Wu Di’s feelings about dealing with Saudi Arabia in recent years is that although Saudi Arabia’s “zero-based” photovoltaic industry started late, the Saudi Arabian Investment Promotion Department has been trained by the Chinese to be very similar to the “China Investment Promotion Bureau”, he joked. When Saudi Arabia is soliciting external investment, it expresses very clearly: external investment is very welcome, but if you want to seek their funds, foreign companies have to open their books and let them audit. “If it is a good company, they will invest money in you, and they will also ask for more shares, or even controlling shares.”
This will create a certain information gap for some large domestic companies and their investors. Wu Di explained that the Middle Eastern countries have a strong sense of controlling rights for high-quality companies. “Some listed companies that come to the Middle East to invest are controlled by Chinese listed companies on the surface, but in fact, they have the same shares but different rights. China Eastern controls them and will enjoy more benefits in distribution.”
Some photovoltaic giants have begun to look overseas with funds and technology, announcing that China’s photovoltaic industry has entered the 2.0 era of “made in China and sold globally” from the 1.0 era of “made globally and sold globally”. However, as trade protectionism continues to spread around the world, Chinese companies are also facing severe challenges in going overseas.
In a recent public event, Lv Jinbiao, joint secretary-general of the China Photovoltaic Standardization Committee of the International Semiconductor Industry Association (SEMI), once provided pertinent advice to overseas companies: the most important thing for companies to make overseas investment decisions is to identify political risks and invest prudently. “A simple way to avoid political risks is to be asset-light, that is, don’t take the lead or invest solely, and try to find local capital, especially some local sovereign funds. The Middle East has this condition.”
In addition to the investment risks brought by the above-mentioned external environment, the risks after the actual landing are more specific and complex. For example, the incomplete infrastructure in the Middle East, the increased communication costs caused by cultural conflicts, the difficulties of international talent formation, project management capabilities, and capital structure design are all challenges for companies going overseas.
Peng Xianghui, a Chinese who has worked in the Middle East for 17 years, has come into contact with many Chinese photovoltaic companies because he is responsible for attracting investment in the UAE development zone. One of his feelings is that these companies do not understand the local electricity and water shortages in the Middle East. Many photovoltaic companies were directly persuaded to withdraw when they heard that they needed to solve the water and electricity problems themselves. Many companies have not landed overseas for two or three years, and finally found him again.
He feels that many companies have unclear goals and underestimate the actual local situation. For example, Arabs are not the “stupid and rich” image reported on social media. On the contrary, “they are traditional businessmen who are very price-sensitive and have very strict cost control.”
KPMG China recently released a report titled “New Energy Enterprises’ Going Overseas Series: Heading to the Middle East”, which pointed out that Chinese companies are still facing many challenges from setting sail to taking root, such as unclear destination selection, difficulty in choosing overseas investment entry modes, inadequate control of action plan time nodes, lack of coordination and connection in on-site operations, lack of overall perspective in supply chain planning, increasingly complex and diversified compliance risks, and untimely warning of digital management risks.
The difficulties after going overseas are beyond imagination. An eternal topic is how to balance the short-term and long-term profits of enterprises. A large number of Chinese companies have flocked to overseas, which can be regarded as a large-scale experimental field of crossing the river by feeling the stones. Many people have mentioned similar cases. Due to insufficient management capabilities in investment, the company suffered hundreds of millions of losses in undertaking Saudi projects, and finally the entire team was laid off.
Due to lack of experience, the loss of short-term profits is undoubtedly a common problem that Chinese companies may encounter in the early stage of going overseas. Whether it is building a factory overseas or undertaking a project, compared with simply exporting components overseas, the current overseas situation has higher requirements for the overseas management capabilities of enterprises, such as through what channels to purchase and how to deliver quickly. Overseas enterprises are also constantly learning and accumulating experience in various pitfalls.
Lin Kesong has a more positive and optimistic view of the current new energy export. He pointed out that when going overseas, some individual photovoltaic companies may still fight price wars overseas for short-term interests. All this has caused the overseas market supply chain to become chaotic and needs to be regulated and guided.
He has also recently organized some friendly companies in the industry to form a team alliance to discuss an overseas strategy that will make everyone “profitable”. Let the companies in the photovoltaic industry chain form a group to provide some guidance in terms of policies, business models, etc., and jointly promote the implementation of some projects.
Lin Kesong is still optimistic about the overseas export of photovoltaics. He said, “Compared with the previous product export, now there are still many gaps in the business model of photovoltaic projects in the overseas market. I believe that as long as Chinese companies go out with a full set of solutions, it will be a dimensionality reduction attack.” But the premise is to survive the pain period when going overseas.
