Dubai, a city that connects the East and West, has long been an attractive global retail destination. And with the help of e-commerce, the city now offers more advantages for international retailers.

"Dubai is gaining momentum as more consumers in this part of the world turn to digital platforms to buy products and services - a trend that is reflected in the emirate's transformation to one of the world's smartest cities," Hamad Buamim, president and CEO of Dubai Chamber of Commerce and Industry, said in a recent interview with Global Times. 

"China is a market of strategic importance to Dubai, Dubai Chamber and the Middle East in general," he added. 

In 2018, e-commerce in Dubai accounted for 5.5 billion dirhams ($1.50 billion) in sales - growth of 19 percent compared to 2017. E-commerce is expected to record compound annual growth of around 12 percent to reach 9.7 billion dirhams in 2023, according to a note Dubai Chamber sent to the Global Times.  

Dubai Chamber forecast a 12-percent compound annual growth rate for its e-commerce sales over the next five years, reaching an estimated value of $2.6 billion by 2023. 

Chinese retailers and consumers have been drawn to Dubai for years.

Dubai is home to a very large Chinese community, so the familiarity factor is already there. China remains Dubai's top trading partner and Chinese companies are very active in a variety of economic sectors in Dubai, including retail, manufacturing and construction, Dubai Chamber said. 

Take Dragon Mart trading market in Dubai for example. The unwavering popularity of Dragon Mart prompted a Dragon Mart 2 to open next door in 2015. It's now the biggest Chinese trading hub outside China, with 120,000 visitors a day, a 500-percent increase from the 20,000 per day it welcomed in 2010, the chamber added.

The retail industry in the Middle East and North Africa is on the verge of a pivotal shift. E-commerce is becoming a reality, reinventing consumers' path to purchases, creating new customer experiences, disrupting business models, and creating growth opportunities for large and small retailers as well as for a new generation of e-commerce players, a report released by Bain & Company showed in February. 

In July 2018, China and the United Arab Emirates (UAE), pledged to boost bilateral cooperation under the framework of the Belt and Road Initiative as they agreed to lift bilateral relations to a comprehensive strategic partnership. It is widely believed that the initiative provides plenty of new opportunities for e-commerce businesses. 

Booming market

The biggest news to hit the e-commerce industry in Dubai in recent years was when Amazon expanded its footprint in the Middle East by acquiring Souq.com in 2017, a leading e-commerce platform based in Dubai. 

This move was followed by the launch of Noon.com, another major regional e-commerce giant that is looking to capitalize on growing consumer demand for online shopping in the region.

However, there are more Chinese players in the game.

The Bain & Company report said that in the Kingdom of Saudi Arabia, the number of Google Search queries for Chinese e-commerce players such as Jollychic and Shein have seen 60-percent annual growth over the past three years, making them among the most popular e-commerce destinations in the market.

In May last year, Zhejiang-based Jollychic, a mobile e-commerce platform targeting the Middle East market, received a series of C-round funding amounting to "hundreds of millions of dollars" from Sequoia Capital, putting the online store in the spotlight. 

Founded in 2012, the company now has 35 million users, offering a wide range of products, including consumer goods, apparel, electronics, home goods, shoes and bags, baby products and others in the Middle East. 

"We have confidence in this market, and we will have long-term investment and hope to be partners with local government and associations," Dennis Du, vice president of Jollychic, told the Global Times recently. 

Du attributed the development to the highly accepted digital economy in the Gulf, which has strong social media and internet penetration and connectivity.

Dubai Chamber said most of these sales will be carried out by young people. 

About 64 percent of the country's population is under 31, and over 70 percent of online purchases are made by this group, it added.

Buamim said that over the past 10 years, e-commerce trade has increased by a whopping 1,500 percent across the Middle East. But the leader in e-commerce growth will be the UAE - the country is expected to generate 50 percent of e-commerce sales in the region. Only 4 percent of the potential has been tapped.

Long term

"Our sound regulations, coupled with a stable investment environment and the hugely untapped potential for e-commerce should be a magnet for Chinese companies to set up shop here," Buamim said. 

He said that, for example, new e-commerce regulations from the Dubai Free Zones Council were made to promote more foreign direct investment into the e-commerce sector in Dubai and help make the emirate more attractive for e-commerce companies. 

The city also boasts neighborhoods such as CommerCity, which is a $735 million project dedicated to e-commerce located right next to the Dubai airport. 

This is in addition to Dubai Internet City, a technology park and free economic zone set to be expanded soon.

Meanwhile, government departments have also been promoting public-private partnerships to encourage businesses to use online services. 

In February 2019, Dubai South announced the launch of a new 920,000 square-meter purpose-built e-commerce zone within Dubai South's Logistics District.

"I think all the initiatives put in place by Dubai should be an incentive for Chinese companies to explore Dubai as a base," Buamim said. 

In terms of the e-commerce development, from the second half of last year, Jollychic has taken measures to increase quality control and logistics speeds in a bid to better service the local market. 

"We have the industry chain support from China, and with the support of big data, we will try to make ourselves a company with a global competitive edge," Du said. 


Newspaper headline: Chinese e-commerce giants grab Gulf market