One belt one Route (OBOR) Initiative: Objectives, …...Collaboration for growth: A cultural...

One belt one Route (OBOR) Initiative: Objectives, progress and future outlook

Marcus Meissner

Managing Partner

Agenda

1 CAMELOT – Who we are?

2 Setting Stage for OBOR

3 Current Status of OBOR

4 Impacts on the Region

5 Future Outlook

Collaboration for growth: A cultural transformation

Camelot Management Consultants is an expert in end to end value chain consulting including digitalization for petrochemicals and logistics businesses

out of the

Fortune 500companies

65%

have created new business value

through our customer-centric value chain innovations.

making us the globally recognized

thought leader in value chain management.

More than 20 years of consulting experience

Network of 450+ value chain consultantsand 1,700 associates

leveraging industry expertise, connecting

people, processes and technology into business transformation capabilities.

Digital Return on Investment

“Results in less than 4 weeks“

Agenda





5 Future Outlook


Due to major changes in the world and the region, new mega trends are making an impact on the Middle East

1

2

3

6

4

5

Rise of Special Economic Cities

Economic Diversification by GCC Governments due to oil price

instability

Cost optimization becomes a key driver for

projects

China‘s involvement as investor in the region

One Belt One Route Initiative

Africa as a rising emerging market,leaving BRICS behind

Digital Disruption and Internet of Things in

Logistics

Saudi Arabia Qatar

UAE

Oman

Kuwait

Bahrain

Industry Impacts

Retail

Healthcare

Logistics

Chemicals

Construction

Education

Manufacturing

Utilities

Oil & Gas

Mining

Global Trends Regional Trends

Source: Camelot

Knowledge Centre


Investments in Smart Cities will double by 2021, making them powerhouses that will drive national economies and innovation in the future

IndustriesFinancialServices

CommercialResidential

Logistics Services

Economic City Economic City Elements Smart City

Hospitality

Research & Development Leisure

Education Healthcare

Key Pillars of Smart Cities

SustainabilityTechnology-

drivenHyper-

connectivity

Citizen-centricEfficient public

servicesHighly secure

Generation of jobs

Relaxed regulations

World-class infrastructure

Key Pillars of Economic Cities

Improvedlifestyle

Innovation

Focused on driving FDI

Source: Camelot

Knowledge Centre


Digitalization poses many opportunities for businesses and it’s importance over the next years will grow and expand to all business departments

29%

27%

20%

16%

11%

14%

3%

63%

70%

63%

55%

58%

53%

47%

0% 20% 40% 60% 80% 100%

Supply Chain & Logistics

Sales

Production

Marketing

R&D

Finance & Administration

HR

Critical to success fundamental

Source: Camelot

Knowledge Centre

What importance will digitalization have for chemicals industry within

different function in the coming 3 years?

Imp

acts

Digitalization Landscape

Agenda





5 Future Outlook


Launched in 2013 by China’s president Xi Jinping, the One Belt One Route (OBOR) Initiative will connect major Asian and European economies through trade, infrastructure and investment

• Creation of economic growth in China‘s western regions

• Landlocked cities can benefit from export earnings and investments

• Increases its influence politically and economically in the regions

• Eased trade between the regions

• Secures the trade route that reduces implications of South Chinese sea

dispute

• Creation of new markets and growth of GDP

• China’s three key goals:

1. Regional development through enhanced integration with neighbor countries

2. Enhance China’s industry and sell Chinese industry expertise

3. Addressing and eliminating China’s issue of excess capacity

The “One Belt One Road” (OBOR) initiative will bind different regions

together - Illustrative

OB

OR

In

itia

tive

in N

um

be

rs

Connect 65 countries across

Asia, the Middle East, Africa

and Europe

31% of the global GDP will be

accounted by the involved

countries

60% of the world’s population

(4.5 Bn. People) will be connected

through OBOR

4-8 Tr.$ will need to be invested in

OBOR

Source: Camelot

Knowledge Centre


The first One Belt One Road (OBOR) summit in Beijing was attended by 30 world leaders and 70 high ranked ministers

• OBOR Summit was attended by 30 world leaders, representatives from

another 70 countries as well as the heads of the United Nations,

International Monetary Fund and World Bank

• Russia’s president Vladimir Putin, Pakistan’s Prime Minister

Muhammad Nawaz Sharif were of the notable attendees of the summit

• KSA’s Minister of Energy, Industry, and Mineral Resources Khalid Al-

Falih attended the summit

• Dr. Sultan Ahmed Al Jaber, Minister of State and Group CEO of ADNOC

from UAE attended the summit

• OBOR connects 60 percent of world’s population, 33 percent of world’s

GDP, and a quarter of world’s trade

• US$ 5 trillion will be spent on OBOR connectivity

• 68 countries appear interested in jointly developing their infrastructure on

the new Silk Road trade links between China, Asia, Africa and Europe

• Next summit is planned to be held in 2019

1st One Belt One Route Summit: May 2017

Source: Camelot

Knowledge Centre


China‘s successful investments strategy is to focus on the OBOR countries – in order to guarantee an impeccable development of a superior infrastructure system

China‘s Global Investment & Construction Contracts 2005-2017

630

304.5

164.5 154.9

93.7 77.7 66.741.4 38 23.7 21 38.5

0

100

200

300

400

500

600

700Investment & Construction Contracts per Sector (Bn. $US) 2005-2017

• China seems to follow a „two birds, one stone“ strategy when investing

abroad in developing regions, creating demand, facilitating trade and

securing natural resources

• China is considered one of the leading global investors next to Europe and

the United States in Africa

• Chinese annual foreign investments and construction grew between 2005 and

2015 by 8.3% (annual average

• Total investments and construction reaching USD 1.65 trillion between

2005 and mid-2017

• China has gained new allies, improved its trade and secured natural

resources as a part of this journey

• China will follow this strategy as well as most of the countries along OBOR

are developing countries

Chinese investments in global context

Source: Camelot

Knowledge Centre


Latest developments and announcements influence the OBOR Initiative’s progress and are part of the shaping progress

Agenda





5 Future Outlook


Chinese Investments in the Middle East and GCC are expected to create several opportunities but also challenges in the region

China OBOR 4 phase strategy Overview

Mining Infrastructure Trade Industry

Ph

as

eR

ea

so

n

Knowledge of

domestic

market &

business

processes

Facilitation of

future

collaboration

areas

Cultural exchange & adoption

Knowledge transfer & integration

GCC Opportunities and Challenges presented by OBOR

Opportunities Challenges

Technology Transfer

Knowledge Transfer

Increased Supplier Base

Increased Local & International Customer

Base

Introduction of New Business

Opportunities

Increased Competition

High Chinese Investment Power

Increased Export Market Competitiveness

due to Establishment of Economic Zones

Language & Culture Barrier

Different Business Culture & Working

Cultures

GCC is expected to attract more Chinese investment due its strategic location along the OBOR routes

Source: Camelot

Knowledge Centre


OBOR is regarded as the „project of the century“ , the China Development Bank has already envisaged 900 projects worth US$ 890 Bn. along the OBOR Route

Railway Projects - Extract

• China-Europe Railway Express – connecting 27 Chinese and 28 European

cities through overall 51 links; freight forwarding times are shorter than via sea

• China-Laos Route – first overseas route with a total length of 418km; longest

and fastest South-East-Asian railway route

• China-Thailand Route – linkage between China and Thailand ports, boosting

China’s Yunnan province to trading hub

• Nairobi-Mombasa Route – 471 km route for passengers and freight with an

estimated amount of 25Mn. tons forwarded cargo per year

Sea Port Projects - Extract

• Kumport (3rd largest port in Turkey) has been bought by Chinese state-owned

companies in order to become an important hub between Asia and Europe

• Trade route between Pakistanian Gwadar port and Kashgar in China

• New international port in Gwadar, Pakistan

• 487km road to link China and the Middle East via a land route

Industrial Park Projects – Extract

• Kuantan Industrial Park in Malaysia for metals and palm oil processing

• China-Belarus Industrial Park for high-tech industries, Minsk

One Belt One Road Projects run all around the Middle East

Source: Straits Times

OBOR Projects in Middle East - Extract

• US$ 20Bn. Investment in infrastructure projects in Egypt

• COSCO partnership with Abu Dhabi Port

• Economic and trade deals between China and KSA, overall worth US$ 65

Bn.


China is the largest foreign investor and major contractor in the Middle East and North Africa with a total investment volume of +150 Bn. USD from 2005 until 2017

Volatile Oil Price will be a key trigger for Chinese investments

COSCO China Shipping Group

• CSP Terminal at Khalifa Port

China State Construction

Engineering Company

• 16 projects in Dubai, mainly residential sector

• 136Mn. USD for Ajman shopping center

Government of China

• 2Bn. USD for diverse projects in Oman

• Focus on power generation, telecommunication

& oil & gas

Chinese Investments in Middle East

Key highlights

Source: China Global Investment Tracker &

Camelot Analysis

Vision 2030 has

been announced

0

5

10

15

20

25

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Chinese Investments & Contracts in Middle East ($ Bn.)

High Oil Price

Period Low Oil Price

Period

Low Oil Price

Period

OBOR has been

announced 1st OBOR

Summit


Next to the areas in which China already invested, the Middle East and GCC offer various areas of collaborations in order to take advantage of new and existing facilities and their location

Are

as

of

Co

lla

bo

rati

on

s

Infrastructure

Manufacturing

Energy

Railway Ports Industrial Cities

Chemicals Automotive Rail

Power Plants Solar Nuclear

Saudi Landbridge

Project (7Bn. USD)

Jazan Economic

City Sea Port

Yanbu Industrial

City (+12Bn. USD)NEOM

OTC Yanbu

Barakah Nuclear

Power Plant

World’s largest solar

plant (200Bn. USD)

Hassyan Coal Power

Plant (3.4Bn.USD)

GCC Railway

Project

Source: Camelot

Knowledge Centre

Holding Company for

Maritime & Land Transport

agreement


The OBOR Initiative boosts Middle East’s and Africa’s role in the global Chemical industry and pushes it to further growth

0

500

1000

1500

2000

2500

Saudi Arabia Sudan Jordan Ethiopia Uganda Congo

Chinese Investments in Chemical Industry (in Mn. USD)

2005-2007 2008-2010 2011-2013 2014-2017

• Middle East is one of the most popular regions for Chinese

chemical outbound investments

• Market for primary petrochemicals & plastics in ME to grow

by 5.1% and to reach $ 72bn. USD by 2020 – which will be

majorly supported by inter country shift of Chinese

manufacturing

• Cheapest feedstock & growing domestic markets make

region attractive for investment for Chinese investors

• SABIC & Sinopec signed strategic agreement to develop

chemical projects in China and KSA to support both Vision

2030 & OBOR

• Africa is expected to grow its demand in fertilizer due to

increasing food shortage and growing population

Source: American

Enterprise Institute

Middle East Sub-Sahara-Africa

The Chemical Industry in Middle East received +2.5 Bn. USD Chinese Investments from 2005-2017

Chemical Industry in Middle East

Agenda





5 Future Outlook


Future Outlook

0

5

10

15

20

25

30

35

2018 2019 2020 2021 2022

Future Outlook of Chinese Investments (Bn.USD)

More Chinese companies will setup / invest in chemicals manufacturing in the Middle East.

Commodity rich regions like Saudi Arabia and Bahrain will be on high priority by Chinese

investors.

China‘s influence and interest will grow in the Middle East‘s logistics infrastructure in order

to tap growing demand in Africa.

Overall Contracts worth $ 100 Bn. + are expected to be signed during coming 5 years time

frame between MENA region and China.

OBOR investments will see a show peak in 2018 as we get close to the date of next OBOR

meeting in 2019

1

2

3

4

5

6 China will be securing secures trade routes by investments in MLTs and Special Economic

Cities.

Source: Camelot

Knowledge Centre

Thank you!

One belt one Route (OBOR) Initiative: Objectives, …...Collaboration for growth: A cultural...

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