Saudi cements its position in the region’s corporate rivalry by hosting Huawei Headquarters; the latter snubbing Iran and the UAE
The step will see Saudi solidify its role as the technological hub and leader of the region. Ties with Iran are likely to grow as both seek to cooperate and achieve economic peace aided by China.
In January 2023, in a piece for the national interest about the Chinese-Saudi strategic agreement, I argued:
“The Saudi government is also seeking to make Chinese companies base their regional headquarters in the kingdom as part of its steps to ensure its economy dominates the Middle East. This will ensure that Chinese companies approach Iran as a second-priority market, not a strategic one, helping to undermine Iran’s effort to become a regional investment and trade hub for China and others.”
On 9 April 2023, Bloomberg revealed Huawei is finalising steps to move its regional headquarters to Riyadh. Previously, it was reported that Huawei was seeking large investments in Iran, especially in building its 5G network and has evaded Western sanctions to run its business under the radar. This suggests that the Saudi deal with China needed to be supplemented with a deal with Iran so Chinese companies can work in Iran whilst operating out of Saudi, a condition China may have made in pursuit of its regional “economic peace theorem”.
Huawei’s step is a blowback to Iran’s aspirations to be the regional headquarters for Chinese multinational corporations that previously struggled to strategically position themselves in the regional market due to governments’ resistance and restrictions. Furthermore, the UAE, the current host of Huawei’s regional headquarters, stands to lose some grounds as the regional business hub as part of an ongoing rivalry with Saudi.
Huawei is deepening its ties with Saudi as a gateway for further investment and entanglement in the transformation of the region’s digital and knowledge economy. In March 2023, a MoU between Zain and Huawei on cloud computing and building high-tech complexes in Saudi cities (dubbed “5.5G City joint innovation project) was agreed despite US objections over possible security risks in using the Chinese firm's technology. Under the terms of the MoU, both parties will jointly work to promote technological innovation for 5.5G evolution and expand scalable offerings to individual, enterprise, and government customers. The two companies said they aim to build a pioneering network, which would pave the way to fulfil the national digitalisation goals in the Saudi 2030 Vision. Both parties will also work together to develop new use cases for the Internet of Things (IoT).
Business implications
Saudi is solidifying its position as a regional headquarters destination for global brands and going beyond Western ones to include Asian ones such as Huawei. This will contribute to the country’s economic diversification plan and create a vibrant business environment. The step will also see Saudi improving its digital economy and making it more advanced and resilient cementing its role as the technological hub and leader of the region. Ties with Iran are likely to grow as a result, as both seek to find new ways to cooperate and achieve economic peace aided partly by Chinese economic interest.