According to the Saudi firm’s CEO, “the next level” of strategic collaboration between the two countries is represented by just a days-old agreement between a major Saudi company and one of China’s largest enterprises.
An agreement was signed on Thursday with Chinese state-owned Sinopec Group for new joint projects by Saudi Basic Industries Corporation (SABIC), a manufacturing company involved in chemicals and more. There are also chances of potentially increased investment in an existing joint venture.
SABIC CEO Yousef Abdullah Al-Benyan explained that deal while speaking to the media at the China Development Forum in Beijing.
“I think it does not really represent a shift (in how Saudi businesses approach China), but it brings it to the next level of strategic collaborations between — you know Saudi Arabia and China — and specifically SABIC and Sinopec,” he said.
A keen desire to expand the two firms’ technological and innovative collaborations is one of the key components of the deal, he explained.
Because of Chinese politicians’ desire to “move from low product productions to mid- and high-end through technology innovations”, Benyan called that dimension “very important” .
“I think we would like to capture that to be part of this growth in China,” he said. “And at the same time, Sinopec has also found SABIC is a very good gateway to go into the Kingdom of Saudi Arabia in terms of investment and opportunity.”
Because of his government’s “Saudi Vision 2030” plan to diversify its economy, now is a good time for Chinese companies to be looking at investing in Saudi Arabia, Benyan said.
“They have been very clear that they want to improve the business environments in Saudi Arabia. They want to open up for serious business to come, they are changing their regulations, they are bringing more incentive programs, they have been more strong on governance and transparency,” he said. “And I think this will attract a lot of people to take an opportunity, to take this really 2030 vision and really grow with it as well.”
In fact, if Chinese investors became involved in other Saudi businesses, he “would not be surprised”, Benyan said. He explained that Chinese participation could also be seen in the construction or health-care sectors, even though such investments could also be in energy firms like oil giant Saudi Aramco.
“I think there are so many opportunities that I would not be surprised seeing more Chinese companies coming to the kingdom.”
Price stability is key, Benyan said, while talking about oil, a major input for SABIC’s business.
“Of course the higher is better for us, but we need to have a stable crude oil price because — not only for us in terms of input for cost — but also for the output and for our customers,” he said.
Benyan said he sees 2017 as “very positive in terms of really stabilizing” crude prices, and that he could see barrel prices roughly between $50 or $60
(Adapted from CNBC)