Gaoxiu International attended the Kitchen and Bathroom Summit Forum and delivered a keynote speech on "Chinese Kitchen and Bathroom Going Global in the Middle East".

In the golden autumn season, by the coast of the East China Sea. On September 29th, the 18th Kitchen and Bathroom Industry Summit Forum was successfully held at Xiamen International Conference & Exhibition Center in Fujian, organized by Kitchen and Bathroom Information, guided by China Industrial Cooperation Association and China Consumer Product Quality and Safety Promotion Association, co-organized by Fujian Plumbing Sanitary Ware Valve Industry Association and Xiamen Kitchen and Bathroom Industry Association with support from Ceramic Information and Tao Wei Net.

Co-founder and CEO of UAE Gaoxiu International Investment Group, Xiao Chunhua, delivered a keynote speech on "Chinese Kitchen and Bathroom Going Global in the Middle East." She conducted a comprehensive analysis of the Middle Eastern market, reasons for choosing the Middle East, and practical advice on the process of going global. She pointed out that the Middle Eastern kitchen and bathroom market heavily relies on imports, with huge market potential. China, Italy, Germany, Poland, Turkey, Malaysia, and Vietnam are major importing countries providing many opportunities for Chinese companies.

Geographically speaking, the Middle East region led by the UAE is strategically located as a gateway with world-class airports, ports, and free trade zones making it convenient to reach Europe, Asia,and Africa; serving as an important hub for global trade and commerce. Additionally,Dubai boasts being the largest port in the Middle East with significant advantages in goods transportation where goods entering into trade zones do not require customs clearance. Furthermore,the UAE has signed free trade agreements with Gulf countries and regions allowing goods circulation between them without special taxes.

Ms. Xiao Chunhua also emphasized that as demand for high-end kitchen and bathroom products continues to grow in the Middle East market,C hinese companies should further enhance brand design attributes based on on strong manufacturing capabilities to cater to consumers' pursuit of high-end luxury,intelligence,and environmental experience intheMiddleEast.

Outline of the content:

1. Analysis of the Middle East Market

1.1 Strong market growth trend

1.2 Driving factors

1.3 Market preferences

1.4 UAE kitchen and bathroom market is highly fragmented and easy to enter

2. Why expand into the Middle East (Advantages)

2.1 Trade hub

2.2 Gulf Free Trade Agreement (GFTA)

2.3 Free trade zone advantages

2.4 Tax benefits

2.5 High net worth individuals, strong consumer power

3.Chinese Business Opportunities

3 . 1 China-Arab Economic Cooperation: Bilateral trade + Belt and Road Initiative

3 . 2 The Middle Eastern kitchen and bathroom furniture market relies on imports (vs labor costs in Europe and America, transportation costs in Southeast Asia)

4.Expanding into the Middle East, practical landing suggestions

4 . 1 Pain points for companies going global

4 . 2 Establishing local factories, "Made in UAE" label

4 . 3 Channel construction

4 . 4 Brand building

- Under the guarantee of strong manufacturing capacity, Chinese brands need to enhance design attributes (case study)

- High-end experience with luxury design elements

- - Integration, intelligence, green environmental protection elements

- Culturally adaptive design

5.Legal compliance with laws and policies

1.Middle East Kitchen & Bathroom Market Analysis

Market Growth Trend

According to Motor Intelligence data, the estimated revenue of the UAE kitchen furniture market in 2024 will be $450 million USD with an expected annual growth rate (CAGR) of 5% over the next five years.

According to Statista data, the estimated revenue of the UAE sanitary ware hardware market in 2024 will be $350 million USD.

The market is expected to grow at a compound annual growth rate (CAGR) of 2.71% over the next five years.

As consumers seek to enhance their bathroom experience through high-end accessories and fittings,

the demand for luxury sanitary ware hardware in UAE is continuously increasing.

According to Statista data, the revenue of the kitchen furniture market in the Gulf Cooperation Council (GCC) region is expected to reach $1.42 billion in 2024. It is projected that this market will grow at a compound annual growth rate (CAGR) of 1.24% over the next five years. The demand for modern and space-saving kitchen and dining room furniture in the GCC region is rapidly increasing.

In the GCC, the bathroom hardware market is expected to generate $1.4 billion in revenue by 2024. It is anticipated that this market will grow at a CAGR of 3.09% over the next five years.

▍Driving Factors:

Increased construction activities in residential and commercial real estate: Rapid development in real estate markets such as Dubai and Abu Dhabi has driven demand for new home renovations and upgrades. With reduced fiscal deficits, increased non-oil production, and recovery in oil prices, UAE's construction market is poised for further growth.

Rapid population growth and urbanization processes, especially an increase in high-net-worth individuals, are driving demand for high-end kitchen and bathroom products. Residents of Middle Eastern countries like UAE are spending more on home renovations such as living rooms and kitchens, showing a preference for investing in in high-quality products.

Limited housing space, sedentary lifestyles becoming common, along with rising disposable incomes are also key factors propelling market growth.

UAE has a large expatriate population with diverse interests in furniture design. In cities like Abu Dhabi and Dubai where residents from over 170 countries live together create potential markets for various types of furniture.

▍Market Preferences:

Features: Durable & easy to clean; modular; environmentally friendly (COP28); diverse; modern.

High durability: Due to hot climate conditions with low humidity levels prevalent across Middle East markets require durable kitchen/bathroom products resistant against corrosion or wear-and-tear materials like stainless steel or brass ensuring long-lasting shine even after prolonged use.

Easy-to-clean designs: Cleaning plays an essential role within Middle Eastern culture hence anti-stain/anti-limescale features highly sought-after among consumers who prefer smooth surfaces with fewer seams reducing dirt accumulation facilitating daily cleaning/maintenance efforts.

Modularization: The UAE supports housing projects for citizens, and the construction industry is booming. Many standardized residential buildings have been built, leading to an increased demand for modular kitchens and bathrooms. Many new properties also include modular design as a standard feature.

Environmental protection: Driven by COP28, the UAE's "Green Building" initiative, and the UAE's goal of achieving net zero carbon emissions by 2050. As the host country of COP28, the UAE actively promotes sustainable development and encourages the use of environmentally friendly materials and energy-saving equipment in construction and interior decoration.

Diversified modernization: The UAE has an open economic framework that attracts people from around the world, especially residents from countries such as the Philippines, Iran, Germany, and Egypt. Additionally, an increasing number of expatriates in the UAE show a strong interest in luxury kitchen and bathroom furniture designed in Italy and Germany. As a result, diversified and modern kitchen designs are becoming popular in the market.

New trends: Combining practicality with ambiance; efficiency and space optimization

When high-end customers purchase luxury villas, they often want their kitchens to match the overall style of their homes to suit their lifestyle. This has led Dubai to introduce new kitchen renovation concepts that gradually combine practicality with ambiance in kitchen design. Designers and decorators now focus not only on aesthetic appeal brought by colors and textures but also on efficiency and space optimization.

The UAE's kitchenware market is highly fragmented yet easy to enter

The UAE market is is dominated by international brands with a highly fragmented landscape characterized by diverse development patterns including international giants alongside local/regional brands as well as numerous small-to-medium enterprises. Diverse market demands coupled with preferences for high-end smart eco-friendly products provide different brands with competitive spaces for growth. Currently speaking barriers to entry into this market are relatively low due to an open economy making it easier for other competitors to enter.

Some key players in the UAE's kitchen furniture market include Space 3 LLC, Pottery Barn, SieMatic Ikea Scavolini among other renowned companies.

In terms of sanitary hardware markets within bathrooms across Emirates International renowned brands hold significant shares like European Brands such as Hansgrohe Duravit Kohler Roca etc

2. Why go to the Middle East by sea?

Trade Hub:The Middle East region, especially the United Arab Emirates, located at the crossroads of Asia, Africa, and Europe, has become an important hub for global trade and commerce with unique geographical advantages and well-developed infrastructure.

Gateway to radiate: As a commercial center in the Middle East, the UAE serves as a gateway to radiate into the Middle East, North Africa (MENA), and global markets. With its efficient logistics network, businesses can easily export goods to neighboring countries such as Saudi Arabia, Egypt, Qatar etc., further expanding to global markets in Europe, Asia, Africa etc., enhancing their brand's international influence.

Airport advantage: The UAE boasts world-class airports like Dubai International Airport and Abu Dhabi International Airport. These airports play a crucial role on global routes with just an 8-hour flight time from two-thirds of the world's population making travel exceptionally convenient.

Port advantage: The UAE's ports (such as Jebel Ali Port and Khalifa Port) are also among the largest in the Middle East connecting major global shipping routes. These ports not only offer advanced freight and logistics services but also have free trade zones reducing tariff costs providing efficient maritime channels for outbound enterprises.

▍Gulf Cooperation Council Free Trade Agreement (GCC FTA).

The UAE has signed free trade agreements with multiple countries and regions (such as the Gulf Cooperation Council GCC internal trade agreement), for example, trade agreements between the UAE and neighboring countries like Saudi Arabia, Egypt, etc., have further simplified the flow of goods between enterprises, making it easier for products to enter these markets.

▍Advantages of Free Trade Zones

In the UAE's free trade zones, businesses can enjoy benefits such as zero tariffs, 100% foreign ownership, no foreign exchange controls, etc., avoiding restrictions on foreign investment and currency flows in other countries.

▍Tax Advantages (VAT 5%, CT 9%, Duty 5%)

The value-added tax (VAT) in the UAE is only 5%, much lower than the average VAT rate of around 20% in EU countries (e.g. Germany at 19%, France at 20%). While North America has relatively low VAT rates, corporate income tax in the US can be as high as 21%-28%, whereas corporate tax in the UAE is only 9%. Regular goods in the UAE are subject to a mere 5% duty with some items being exempt from duties.

▍High Net Worth Individuals and Strong Consumer Power

The residents of the UAE are mainly expatriates with foreigners accounting for up to 80%. Many of these expatriates belong to high-income groups with strong purchasing power especially when it comes to high-end luxury home furnishings and building materials. The middle-to-high-income group in the UAE shows a strong preference for high-end intelligent and environmentally friendly products which provides quality market opportunities for Chinese companies.

The Middle East heat is not only seen by Chinese companies. As the only incremental market in the world, major international companies have set their sights on this piece of cake. Why can Chinese companies stand out in market competition, and where are the opportunities and advantages?

3.Opportunities for Chinese Enterprises

Sino-Arab Economic Cooperation: Bilateral Trade and the Belt and Road Initiative

The bilateral trade relationship between China and the UAE is good, with China being one of the UAE's important trading partners. Just on May 30th this year, the President of the UAE visited China to further deepen the relationship between the two countries. Following their meeting, both leaders witnessed the signing of multiple bilateral cooperation agreements in areas such as investment, jointly building the Belt and Road Initiative, technology, education, culture, tourism, etc., leading to a continuous warming of relations between the two countries. Companies can leverage strategic partnerships between China and Arab countries as well as initiatives like "Belt and Road" to take advantage of tariff reductions and preferential policies in bilateral agreements.

Dependence on Imports in Middle Eastern Kitchen & Bath Furniture Market

Most kitchen furniture demand in the UAE comes from imports with major importing countries including China, Italy, Germany, Poland, Turkey,Malaysia,and Vietnam. Additionally,the country also engages in re-exporting kitchen furniture with main export destinations being Iraq,Saudi Arabia,Iran,Oman,and Kuwait.

Advantages of Made-in-China Products: Low cost high quality products offer great value for money which can effectively tap into markets like UAE,S,Saudi Arabia,and other Middle Eastern regions.Compared to European or American companies that have high labor costs due to frequent strikes.And compared to Southeast Asian companies that are farther away from Middle Eastern markets like UAEand Saudi Arabia resultingin higher transportation costs.Chinese companies clearly have advantages making it a rare opportunity.

4.Practical advice for landing in the East of the sea

Pain Points of Enterprises Going Global

▍Local factory,"Made in UAE" label

By setting up factories in United Arab Emirates and using the "Made in UAE" label, companies can avoid anti-dumping duties or high tariffs when exporting. Especially when exporting to European and American markets, products produced using the "Made in UAE" label enjoy high credibility and acceptance in the international market, which provides strong support for brands to increase their premium capabilities.

▍Channel development

(1) Collaborate with local distributors and real estate developers.

(2) Participate in important industry exhibitions (Big 5, Cityscape, Index Dubai).

（3）Focus on building online platforms such as e-commerce:

Statista data shows that the furniture and home furnishings e-commerce market in the UAE is expected to reach $249.6 million by 2024, accounting for 3.7% of the total e-commerce market in the UAE, and is expected to continue growing in the coming years. The compound annual growth rate for the next four years (2024-2028) is projected to be 1.7%, with the market size expected to reach $266.7 million by 2028.

Establish a virtual exhibition hall to showcase products, provide multilingual support (Chinese, Arabic, English), meet local market demands, and integrate with logistics and payment systems to ensure a smooth shopping experience.

Brand Building

Under the guarantee of strong manufacturing capacity, Chinese brands need to enhance their design attributes (case study).

(1) German home brand: Gaggenau EB 333 oven

Although the EB 333 oven has maintained its classic appearance and stainless steel door panel for over 30 years, Gaggenau continuously upgrades the interior with new materials and technologies. The modern version introduces more durable materials, more efficient insulation materials, and the latest baking technology, such as adding digital control panels and a uniform heat circulation system to meet the needs of today's consumers.

(2) German home brand: Gaggenau EB 333 oven

The design of the Icona series faucet has always retained its minimalist, streamlined characteristics with a distinct Italian style. However, Fantini has introduced various new materials for this series at different times, including various metal coatings, corrosion-resistant materials, and more environmentally friendly alloys. In recent versions, Fantini has introduced more advanced surface treatment technologies. With its simple and elegant design and Fantini's relentless pursuit of materials and craftsmanship excellence in luxury bathroom market maintains a high premium. Consumers are willing to pay higher prices for this classic design, outstanding quality, and customized choices.

2

High-end experience and luxury design elements

High-end market demand: High-end consumers in the Middle East, especially in regions such as the UAE and Saudi Arabia, have a strong preference for luxury design elements. For example, materials like gold-plated decorations, natural stone, imported wood are widely used in high-end residential and hotel projects.

Design elements: Kitchen and bathroom brands can attract these high-end customer groups by using gold-plated decorations, natural stone, custom designs, etc. For instance, bathrooms and kitchens in luxury residential projects in the UAE often incorporate luxurious elements such as marble and gold faucets to enhance overall decor quality while providing brands with a competitive edge through differentiation.

Case study: In Dubai's renowned luxury development project Palm Jumeirah, kitchen and bathroom spaces in luxury villas and apartments feature kitchen and bathroom equipment from well-known European brands like Germany and Italy. Elements include gold-plated faucets, customized kitchenware, imported marble countertops/walls among other high-end features that perfectly combine high quality with luxurious experiences making it a sought-after residential area for global ultra-high net worth individuals.

3

Supply exceeds demand, intensifying industry competition (internal competition), and compressing profit margins.

Integration:

Integrated products are becoming increasingly popular in the Middle East market, such as integrated stoves, built-in ovens, microwaves, and dishwashers, which can be seamlessly embedded into kitchen cabinets to maximize space utilization. Integrated toilets combine cleaning, drying, seat heating, and deodorizing functions in one unit to provide users with a more comfortable and convenient experience.

Smartization:

The smart home appliance market in the Middle East and North Africa was valued at $22.217 billion in 2022 and is expected to grow at a strong compound annual growth rate of approximately 28.8% during the forecast period (2023-2030). In recent years, the smart home appliance market in the Middle East and North Africa (MENA) region has experienced significant growth.

Green Environmental Protection:

The Middle East kitchen and bathroom furniture market is showing a trend towards green environmental protection, driven by COP28, the UAE's "green building" plan, and the UAE's 2050 net zero carbon emissions target. As the host country of COP28, the UAE actively promotes sustainable development and encourages the use of environmentally friendly materials and energy-saving equipment in construction and interior decoration. Emphasizing the environmental friendliness and efficient use of resources in kitchen and bathroom furniture, guiding the market towards renewable materials, water-saving devices, and energy-efficient appliances to reduce carbon footprint and achieve green transformation in the industry.

Case study: Products such as IKEA (KUNGSBACKA) environmentally friendly material cabinets, Hansgrohe EcoSmart series water-saving faucets, Bosch Home Connect smart temperature-controlled ovens for cooking.

4

Culturally Adaptive Design

Incorporating culturally adaptive design into brand building enhances brand acceptance (religious and cultural attributes, as well as considering local material selection, cleanliness habits, spatial layout, and style preferences). For example, Muslim consumers pay special attention to cleanliness and waterproofing when choosing kitchen and bathroom products. When designing products, companies must consider these cultural factors to enhance the brand's acceptance in the local market. By using easy-to-clean materials, waterproof designs, and functional designs that align with religious practices, brands can better meet local needs.

Legal and Policy Compliance

Environmental Standards:

Under the "Green Building Program," the UAE requires products to have energy-saving and environmentally friendly characteristics. Environmentally friendly materials, water-saving equipment, and low-energy kitchen and bathroom appliances enjoy priority approval for importation and sale.

SASO Certification: SASO (Saudi Standards, Metrology and Quality Organization) is Saudi Arabia's standardization, metrology, and quality organization. SASO covers quality, safety, and environmental requirements for products. Kitchen and bathroom products such as faucets, smart bathroom equipment, appliances need to pass SASO certification in order to be legally sold.

CE certification (for the European market) and UL certification (for the North American market): These two certifications are crucial for enterprises planning to export to Europe and North America, especially in terms of safety standards for electrical appliances and equipment.

GCC certification: This certification is applicable to all Gulf Cooperation Council (GCC) countries, covering product quality, safety, and environmental standards including the UAE, Saudi Arabia, Qatar, among others. With GCC certification, companies can more easily enter markets in multiple Middle Eastern countries.