TMTPOST -- The Middle East, once renowned for its oil resources, is now gradually becoming a new hotspot for the digital economy.

Last week, GITEX GLOBAL 2024, one of the world's largest tech exhibitions, wrapped up in Dubai, UAE. This year's GITEX GLOBAL hit a record scale, attracting over 6,500 exhibitors, 1,800 startups, 1,200 investors, and governments from more than 180 countries. The exhibition welcomed 200,000 visitors, and the number of international participants saw a year-over-year surge of nearly 40%. 

Unlike other major world tech exhibitions, such as CES and IFA, which focus more on the integration of consumer electronics and new technologies, GITEX GLOBAL emphasizes the integration of technology with all scenarios. More than half of the participating companies are B2B digital technology firms, and the most eye-catching booths are mostly from foundational digital technology providers not well-known to the public.

"It reflects the unstoppable digital ambitions of many Middle Eastern countries," said Trixie LohMirmand, Executive Vice President of DWTC and organizer of the GITEX Global and Expand North Star exhibitions, in a media interview.

The rise of the digital economy relies on the implementation of digital technology across various industries, bolstered by a robust digital ecosystem. GITEX Global 2024 in Dubai, UAE, highlights the tremendous appeal of global digital technology companies in the context of the Middle East moving towards a diversified industrial structure for digital economy development.

The Allure of the Digital Middle East

Cisco, AWS, Google, Intel, Oracle and SAP and the list can go on. These global tech giants were among the most active exhibitors at GITEX Global.

In this session, Amazon CTO and top cloud computing expert Werner Vogels, who rarely appears at third-party events, attended the summit. As early as April, during an exclusive Emirates World Interview podcast, he acknowledged the market potential of the Middle East in shaping the global AI landscape. During the exhibition, AWS also signed a $1 billion agreement with UAE telecom company e& to support local digital transformation and cloud-driven innovation.

The Middle East has clearly become a huge "treasure trove" of growth in the eyes of global tech giants.

A report by UBS predicts that the digital economy in the Middle East will grow from $180 billion in 2022 to $780 billion in 2030, with an average annual compound growth rate of 20%. The share of the digital economy in the region's GDP is expected to rise from 4.1% in 2022 to 13.4% in 2030.

This brings clearer market expectations for the Middle East cloud service market, which serves as the foundation of the digital economy. A McKinsey study this year indicates that by 2030, cloud services will contribute up to $180 billion in economic value to the region.

Considering the potential value, AWS invested in the first cloud data center in the Middle East in 2019, and Microsoft also entered the UAE cloud service market in the same year.

Beyond the strong potential of the local digital economy, the Middle East is also an important hub for the global digital economy. 

Historically, the region connects the continents of Europe, Asia, and Africa, and was a trade hub during the pre-industrial revolution. With the development of the oil economy, the Middle East has taken on an essential role in global energy supply, with its capital being allocated to assets around the world. 

In the era of digital economy, Middle Eastern countries, particularly the UAE, aspire to become a global digital economy hub. GITEX Global further enhances the vision of driving the global AI market to reach $2.7 trillion.

This vast market has attracted numerous global tech companies.

At the Expand North Star tech exhibition, held concurrently with GITEX Global 2024 at Dubai Harbour, many SaaS innovation companies from China, India, and South Korea entered the Middle East market for the first time.

South Korean cloud service provider Grumatic and AI video application company Dobstudio are venturing abroad for the first time, choosing the Middle East as the first stop of their overseas venture.

According to Ella, the Business Strategy Director at Dobstudio, the global tech company market competition is very fierce. In comparison, the Middle East market is still a blue ocean incremental market.

Eric, CEO of Grumatic, told AsianFin that by participating in the GITEX exhibition, they hope to conduct an on-site investigation to assess the market potential.

Indian tech companies AEROAEGIS and CardByteAI, after gaining market experience and feedback in the US market, are now shifting to the Middle East to expand their overseas business footprint.

According to Reddy, CEO of AEROAEGIS, the US SaaS market is mature, allowing for rapid validation of technology and products. Deploying validated technology and products in the Middle East market could allow them to capture a share of this vast market. 

Zhang Jiabo, founder of Shanghai Yuanmang Digital, is also entering the Middle East for the first time with products focused on retail industry SAAS and AI solutions. With some business presences already established in domestic retail stores, the company recognizes the potential and demand for smart retail in the Middle East.

The transforming Middle East region is continuously generating new market demands, attracting global digital tech companies. This year's entire Expand North Star attracted over 1,200 global investors managing more than $1 trillion in assets.

Many Chinese companies are also jumping on the bandwagon. H.E. Mohammad Lootah, President and CEO of the Dubai Chamber, told AsianFin that between 2022 and 2023, the number of Chinese companies registered as active members of the Dubai Chamber increased by 41%. As of the end of August, the total number was 5,480, with over 1,000 registering in the first eight months of this year alone. 

More and more enterprises are flocking to Dubai and the UAE. Firstly, the Middle East is continuously increasing its investment in digital infrastructure, providing a vast market and cooperation opportunities for Chinese enterprises; secondly, the region connects the three continents of Asia, Europe, and Africa, making it an important hub along the "Belt and Road Initiative." The UAE, with its sound legal system, comprehensive financial services, and unique geopolitical advantages, serves as the ideal gateway for Chinese enterprises to enter the international market.

GITEX and Its Global Digital Ecosystem

"This is a scenario where you can efficiently meet potential customers and partners. There are many professional attendees, and many of our business opportunities are converted through such interactions," said Hu Dan, Vice President of Tencent Cloud International for the Middle East and Africa region. 

This year marks Hu's 14th times to participate in GITEX since 2011. In his view, GITEX originated in Dubai and gradually extended its influence to the Middle East, Africa, Central Asia, Turkey, Central and Eastern Europe, and Southeast Asia. Th exhibition’s coverage has evolved from a specialized telecommunications IT event to include AI, cloud computing, big data, IT, cybersecurity, and tech startups, among other modules. GITEX boasts significant influence and the ability to mobilize global digital economy demand and supply, which is one of its primary attractions.

The Middle East has always been a center for commerce and trade, with business cooperation as its goal. GITEX has inherited this legacy, aiming to drive global digital ecosystem cooperation through the exhibition. 

"What we are doing is not just a simple exhibition; we aim to create a digital economy ecosystem. It is the important responsibility of the GITEX team to help customers find the right audience through various operational methods," Trixie LohMirmand, Executive Vice President of DWTC and organizer of GITEX Global and Expand North Star exhibitions, told AsianFin.

If CES is an opportunity to showcase technologies and communicated them to the public, GITEX is a great opportunity for technology to negotiate with industry partners and customers. 

AsianFin noticed that "Ecosystem" was the most frequently mentioned word during GITEX.

At the exhibition, leading technology service providers, corporate decision-makers, financial investors, and government officials from various countries formed a full-chain participant network in the development of the digital economy, from policy formulation, educational support, capital support, technology supply, to technology purchase, creating a unique global digital economy ecosystem closed loop. 

For example, UAE telecom e&, which was the most popular exhibitor at this year's GITEX, set up a themed area for "Smart Mobility Solutions and Smart City Innovative Applications". As a UAE state-owned enterprise controlled by the royal family, e& specifically invited leading representatives from different Chinese mobility technology fields, such as XPeng AeroHT, NIO ET8, and BYD Yangwang U8, making it one of the most popular booths at the exhibition, attracting several sheikhs.

As early as 2003, e& (then known as Etisalat) began collaborating with Chinese company Huawei in building the local 3G communication network.

With the evolution of global technology and national development demands, e& has transformed from a telecom company to a technology company, focusing more on creating a digital ecosystem. The company's chairman of the board, H.E. Jassem Alzaabi (who also serves as the Vice Chairman of the UAE Central Bank, Minister of Finance of Abu Dhabi, and Secretary-General of the Abu Dhabi Artificial Intelligence and Frontier Technology Committee, among other positions), publicly stated, "To transform into a technology company, we need to bring in strategic partners to drive the company's growth and transformation."

At this year's GITEX, e& also signed cooperation agreements with Ericsson, HTC VIVE, and AWS, continuing to build its ecosystem industry chain from 5G communications to cloud computing and the metaverse.

Similarly, G42, which made a high-profile appearance at GITEX, is a leading AI company and digital transformation service provider in the UAE and the Middle East, showcasing the UAE's connectivity capabilities in the global digital ecosystem. G42's business covers artificial intelligence, healthcare, geospatial intelligence, data center services, and more. In August 2023, G42's AI team developed Jais, the first Arabic AI language model.

The lineup of AI partners for G42 is indeed impressive, including major Western companies such as NVIDIA, Microsoft, OpenAI, Qualcomm, and Mercedes. In this May, G42, in collaboration with Microsoft, invested $1 billion in a geothermal power data center in Kenya, marking the largest investment in Kenya's digital economy sector.

During GITEX, G42's AI company Core42 signed a strategic cooperation agreement with the well-known semiconductor company AMD, adding another member to G42's ecosystem partners.

There are many similar ecosystem leaders like e& and G42. Decision-makers from digital departments of various government sectors such as Dubai's Water and Electricity Authority, Health Authority, and Transport Authority participated in the GITEX exhibition schedule. 

Xu Ying, co-founder of the Super Bridge Council, the organizer of the Super Bridge Summit, a summit partner of GITEX Global, told AsianFin: "The UAE is not only the country with the highest inflow of high-net-worth individuals globally but also a hub for dollar capital. It is friendly and open to global talent and serves as a bridge between the East and the West. These foundational elements enable GITEX to gather CEOs of large global enterprises and policy decision-makers."

The vast demand market and high concentration of demand decision-makers constitute the rich ecosystem of the Middle East's digital economy, which is the core attraction for global tech companies.

 According to GITEX Global's official data, in 2024, there will be over 65,000 enterprise decision-makers at the director and CXO level attending. These buyers and on-site technology providers form a global digital economy ecosystem at the Dubai World Trade Centre.

According to incomplete statistics from AsianFin, during the GITEX Global 2024 exhibition, at least over 40 memorandums of understanding (MOUs) and strategic contracts were signed, involving numerous digital scenarios and representative enterprises within this digital economy ecosystem.

Digital Experience and Services: Two Secret Weapons for Chinese Enterprises Competing Against European and American Giants 

The Middle East market represents a digital blue ocean, but it doesn't mean it's a smooth path. Most Chinese enterprises are still in the early exploratory stages of their operational layout in the Middle East. 

"The blue ocean market only provides a head start, not guaranteed success," Hu told AsianFin. 

Comparing the three major tech exhibitions CES, IFA, and GITEX, the number of Chinese enterprises is the least at GITEX.

In 2024, Chinese exhibitors account for 26% at CES and a whopping 67% at IFA. However, according to the booth statistics on the official GITEX application platform GITEX PLUS, there are only over 260 Chinese exhibitors, and although the number of participating Chinese enterprises has been on the rise year over year, they still account for less than 10% of the total 6,500 exhibitors.

It is evident that compared to the consumer electronics and its upstream and downstream industries, which have been venturing abroad for over 30 years and deeply penetrating the global industrial ecosystem, Chinese digital technology service companies are still in the early stages of expansion in overseas markets.

At the GITEX exhibition, the main players are still leading European and American digital technology companies like Microsoft, IBM, AWS, Oracle, and Intel, followed by UAE local enterprises leveraging their advantages as the local leading players, accounting for over 25% of the participants.

Outside the venue, we learned that the UAE's tech developers are primarily Indian programmers, and the "huddled together" Indian engineers leave limited job opportunities for programmers from other countries. 

This somewhat reflects the status quo of Chinese digital technology enterprises expanding into global markets, such as the Middle East region. The Middle East, with its hierarchical incremental market, has the most intense global market competition.

Take the field of network security as an example; most security architectures in the Middle East are inherited from Europe and America, with security services mostly provided by companies like Cisco. Meanwhile, local digital service enterprises in the Middle East often rely on local family funds.

Under the dual pressure of internal and external competition, Chinese tech companies need to possess more differentiated capabilities to get a piece of action in the blue ocean market.

China boasts the richest digital innovation scenarios and practical experience in digital transformation across various industries, which is the source of differentiated services for Chinese tech companies in the Middle East. The invitation from e& for several Chinese tech companies to participate in the exhibition is precisely because of the leading demonstration effect these tech companies have in their respective application scenarios. 

Fully understanding local needs and establishing core differentiation advantages are key factors for securing a foothold in a blue ocean market. 

Huawei Cloud has fully leveraged the group's early and in-depth involvement in the UAE and Middle East's telecommunications infrastructure industry. This time, Huawei Cloud, together with Huawei, participated in the exhibition, releasing solutions for five major industries: digital government, media entertainment, Web3, e-commerce retail, and telecom operators. These solutions, combined with Huawei's ten industry solutions, are jointly promoted and empower each other.

At the GITEX exhibition, Tencent Cloud showcased several product technologies, including audio and video media solutions, SuperAPP, and AI digital humans. These technical solutions, which fully inherit the advantages of the Tencent Group, are Tencent Cloud's differentiated entry points for breakthroughs in the Middle East and Africa region.

For example, the collaboration with the Abu Dhabi Emirate Government Support Department on TAMM, which is based on Tencent Cloud's mini-program platform, allows for the maximum aggregation of digital service capabilities from various ministries with minimal intervention. It has currently gathered dozens of ministries and over 800 convenient services, becoming the largest super public service application in the Middle East.

Leveraging ecosystem partners with more local user perspectives and experience is one way to amplify differentiation capabilities in an efficient way.

Tencent Cloud has partnered with local well-known integrator Zaintech to help regional manufacturing and parks build visual digital solutions based on Tencent Cloud's digital twin platform. It has also collaborated with the local well-known e-wallet Balance, using Tencent Cloud's mini-program platform and AI technology to help it transform into a one-stop lifestyle platform.

In Hu's view, the breakthrough from zero to one in the globalization of To B business requires a team with genuine insights into the local market, extracting the differentiated competitive advantages of existing products and ecosystems in the local market, and integrating into the local ecosystem.“Exhibitions can help gain business opportunities, but ultimately, it still requires independent thinking, the courage to experiment and make mistakes, taking small and fast steps, and continuous investment,” said Hu, adding that everyone must find their own path to globalization.

For Chinese enterprises, how to capture the Middle East market, a digital economy hub leading to the global $2.7 trillion AI market, and carve out their own path to globalization remains a thought-provoking and challenging proposition.‌