Summary of Key Points
The US-Iran war has shattered the certainty of the Middle East as a “promising land” for Chinese companies seeking overseas expansion, presenting local Chinese food entrepreneurs with challenges such as disrupted supply chains, withdrawal of investments, and fluctuations in customer traffic. However, most of these entrepreneurs have chosen to stay, focusing on tapping into the local market, integrating into the community, and building long-term relationships in order to find opportunities for survival and growth amidst the turmoil. They have demonstrated resilience in their entrepreneurial endeavors, no longer acting as “passengers from afar” but as “local operators” who resonate with the local culture.
I. The War Popped the Bubble of Certainty in Middle East Expansion
Why were Chinese companies attracted to the Middle East before? Saudi Arabia’s “Vision 2030” aimed to reduce its dependence on oil and pursue digitalization, infrastructure development, and consumer upgrades, offering a stable political environment and strong demand—a rare source of stability amidst Sino-US tensions. But with the outbreak of war, everything has changed:
- Logistics Disruption: The blockade of the Strait of Hormuz led to cargo delays of up to nine months and a four-fold increase in shipping costs (from $2,000 to $8,000 per shipment). Coconut milk became unavailable for a year, forcing barbecue restaurants to rely on employees to transport ingredients by hand.
- Capital Flight: Domestic investors withdrew, leaving奶茶 businesses to seek local funding.
- Population Mobility: Three direct flight routes between Saudi Arabia and China were discontinued, and more Chinese people left the region, leading to the sale of Chinese restaurants.
- Economic Confidence: Although air and maritime routes may eventually recover, rebuilding consumer and investor trust will take time—and this is far more valuable than gold.
II. The Reason They Stayed: Customers Are No Longer “Compatriots,” but “Locals”
The key reason they decided not to withdraw lies in the change in their customer base: they no longer rely solely on Chinese customers but target the local population:
- WHOA TEA Milk Tea Shop: 80% of its customers are Saudi women aged 13–35; since locals are unlikely to be affected by the war, daily sales have remained stable.
- Northeastern Barbecue Restaurant: The restaurant serves both locals and Chinese guests. Although Chinese customer traffic has decreased during the war, local residents continue to dine there.
- Baghdad Sichuan Restaurant: Although business was impacted due to fewer Chinese customers, the steel plant targets the local market (where manufacturing is scarce, offering significant profit potential).
Their strategy: Chinese customers are transient, while locals form the foundation of their business.
III. The Challenges of Localization: Overseas Expansion Is Not About “Copy-Pasting”
To succeed, companies must overcome various localization challenges:
- Compliance Issues: Saudi warehouses require government-installed cameras and product labels indicating calorie content and allergens; failing to meet local employment requirements (e.g., a 18,000 SAR fine for not having a Saudi cashier) can be costly.
- Cultural Adaptations: Popular Chinese brands like Luckin Coffee are unpopular in Saudi Arabia, so businesses must adjust their offerings (e.g., replacing offal with beef in barbecue dishes and adapting Sichuan cuisine to halal requirements).
- Efficiency Gaps: What takes a day in China may take a month in Iraq; the steel plant’s construction was delayed for a year.
- Building Trust: Establishing trust with local partners requires personal interactions (visits to China and home visits), which can take two years.
IV. Moving Beyond Business: From “Making Money” to “Integration”
These entrepreneurs have gone beyond simply making profits; they have become an integral part of local life:
- WHOA TEA Milk Tea Shop: Organizes workshops on female leadership, helping Saudi women develop their confidence (as they have limited social opportunities). Customers use the shop’s packaging for crafting gifts, and its tea is used in weddings.
- Barbecue Restaurant: Has become a gathering spot for overseas entrepreneurs, with regular visits from local customers who introduce new friends, forming a network of connections.
- Sichuan Restaurant Owner: Locals are friendly to Chinese people, greeting them warmly and offering discounts (because China has never mistreated them or helped in their recovery).
These interactions are not just marketing efforts but genuine attempts to integrate into local culture.
V. The Real Nature of Overseas Expansion: It’s About Long-Term Commitment, Not Quick Profit
Their approach is not about taking a chance but about adopting a long-term strategy:
- WHOA TEA Milk Tea Shop: Plans to first dominate the Gulf countries before expanding into the broader Arab market (with a population of 500 million).
- Barbecue Restaurant: Focusing on building a strong customer base and network.
- Sichuan Restaurant Owner: Recognizes that domestic opportunities are limited, so investing in local partners and supply chains is essential for sustainable success.
Their belief: Success requires sustained effort; giving up after initial challenges will only lead to failure.
VI. Overseas Expansion Is About Symbiosis, Not Short-Term Profit Seeking
Their decisions reflect a commitment to long-term growth rather than quick gains:
- WHOA TEA Milk Tea Shop: Aims to establish a strong presence in Gulf countries before expanding into the broader Arab market.
- Barbecue Restaurant: Prioritizes building a solid customer base and network.
- Sichuan Restaurant Owner: Views local partners and supply chains as investments that require time to nurture.
Conclusion: Overseas Expansion Is About Genuine Engagement, Not Temporary Ventures
The stories of these entrepreneurs show that expanding overseas is about becoming an integral part of another culture, embracing its strengths and overcoming challenges together. The war has tested their resolve; those who stayed believe in the potential for improvement and are willing to contribute to positive change. This is the true essence of overseas expansion: not about making quick money but about sharing in the rise and fall of a country’s development.