The Saudi government wisely invested $164 million dollars to promote Saudi Arabia's business interests in China.
I will momentarily digress to draw an analogy between Saudi Arabia's investment in its pavilion and China's $44
billion dollar investment in the 2008 Beijing Olympics (see
http://english.pravda.ru/sports/games/06-0...ing_olympics-0). The same criticism of "wasting money" was leveled at the Chinese government. However, at a deeper level, the Chinese government was demonstrating Chinese technology, organization, competence, and quality to the world. The message is that China is superb at mega-projects and you can trust Chinese workmanship and products. I believe that the Chinese government made a smart investment in China Inc.'s brand.
Similarly, the Saudi Arabian government is taking a long-term view and it wants to showcase to the Chinese people that Saudi Arabia is a rich and powerful country. Why does the Saudi Arabian government care what the Chinese public think about Saudi Arabia? The logic is the same as promoting Saudi Arabia's image to the American public.
Increasingly, Chinese tourists are traveling all over the world. Saudi Arabia wants its share of China's outbound tourism revenue. Spending $164 million dollars to reach 70 million Shanghai Expo Chinese visitors and receiving endless free media coverage in China is a smart and cost-effective manner of promoting Saudi Arabia and Saudi Arabian products to China's 1.3 billion citizens, who have increasing disposable income (e.g. see post in this thread regarding many major Chinese cities that have exceeded $10,000 U.S. dollars per capita income).
U.S. Destinations Vie for Chinese Tourism - ABC News
"
U.S. Destinations Vie for Chinese Tourism
Hawaii is Among Several U.S. Destinations Trying to Lure Chinese Tourists.
The Associated Press
By HERBERT A. SAMPLE Associated Press Writer
HONOLULU November 29, 2009 (AP)
Hawaii, California and Las Vegas are among American tourist destinations vying fiercely for a vast and largely untapped new market segment.
Hong Kong tourist Mike Wong and his wife visit Universal Studios Hollywood in University City, California, in this file photo. (ROBYN BECK/AFP/Getty Images)
Yes, to be a Chinese tourist these days is to be a widely-sought traveler.
Hawaii has beaches and its famed "aloha spirit" as its siren call. Las Vegas offers gambling and its entertainment-oriented attractions. San Francisco can boast high-end shopping and the Golden Gate Bridge.
Beset by one of the worst recessions in decades, the U.S. destinations are spending significant sums on marketing campaigns in China's most populous regions, and are urging U.S. embassy officials and Chinese airlines to ease the logistical burdens of flying to the United States.
The payoff could be substantial particularly in Hawaii, the closest U.S. destination to China but which is, at least for now, harder for the Chinese to reach by air."
Saudi Arabia "already owns a 25% interest in a refinery in China's Fujian province, and is in talks with China Petroleum & Chemical Corp. (NYSE ADR: SNP) to take a stake in a 200,000 bpd plant in Shandong." (See
Global Investing Roundup Saudi Arabian ownership of downstream oil businesses in China is increasing at a significant pace. To avert criticism or concern among Chinese citizens or local governments of Saudi ownership in complex and dangerous oil refineries, Saudi Arabia has performed its own version of the Beijing Olympics. Look! The Saudi pavilion is a demonstration of Saudi "organization, competence, and quality." If Saudi Arabia can flawlessly build a megalithic pavilion then you can have confidence that Saudi Arabian ownership of a refinery in your Chinese city will be safe.
Finally, the purpose of the Saudi pavilion is to attract Chinese investment into Saudi Arabia. It is important to promote Saudi Arabia as a modern nation with a safe investment environment. Saudi Arabia needs to convince Chinese businessmen that Saudi Arabia is an attractive investment destination. Saudi Arabia wants its share of the outbound Chinese foreign direct investment and jobs.
Saudi Arabia pavilion promises to awe_International Participation_Shanghai World Expo
"
Saudi Arabia pavilion promises to awe
Date:11/10/2009
...
The Shanghai World Expo will serve as a platform for the kingdom to have a multi-faceted exchange with all participants in general and China in particular, said Dr Mohammed Alisssan Al-Ghamdi, executive director of Saudi commission to the Shanghai Expo.
The country will promote various investment opportunities in both Saudi Arabia and China for the benefit of the private sector, he said. 'There will be a mutual exchange of experience and know-how of the most effective urban practices.'
http://articles.latimes.com/2008/may/05/bu...fi-chinainvest5
"
To Chinese firms U.S. is a bargain
States aggressively woo manufacturers. Lower electricity and land costs can offset a higher labor tab.
THE WORLD
May 05, 2008|Don Lee, Times Staff Writer
DONGGUAN, CHINA Liu Keli couldn't tell you much about South Carolina, not even where it is in the United States. It's as obscure to him as his home region, Shanxi province, is to most Americans.
But Liu is investing $10 million in the Palmetto State, building a printing-plate factory that will open this fall and hire 120 workers. His main aim is to tap the large American market, but when his finance staff penciled out the costs, he was stunned to learn how they compared with those in China.
...
Liu is part of a growing wave of Chinese entrepreneurs expanding into the U.S. From Spartanburg to Los Angeles they are building factories, buying companies and investing in business and real estate.
Individually, these deals pale next to high-profile investments such as the $5-billion stake China's sovereign wealth fund took in Morgan Stanley last year, or state-owned oil giant CNOOC Ltd.'s $18.5-billion bid to acquire El Segundo-based Unocal Corp. in 2005.
But unlike the suspicion or uproar those moves generated -- CNOOC withdrew its offer amid U.S. political pressure, and the Bush administration and other governments have pushed for a "code of conduct" for sovereign wealth funds --
private Chinese businesses such as Shanxi Yuncheng are being wooed by states hungry for investment and jobs.
Last month, Wyoming's governor toured firms in China's coal-mining country. Georgia's leader brought a team of 40 on a mission to boost trade and attract investment, and Alabama's governor paid a visit too.
"It's like a land grab," quipped James Rice, Tyson Foods' China manager and a board member of the American Chamber of Commerce in Shanghai, who has attended some of these states' functions in China."