Chinese companies are increasingly moving beyond using the UAE as a trade and distribution hub, choosing instead to build factories and establish long-term manufacturing operations, according to Gulf Economist.
The shift comes as China-UAE non-oil trade reached $111.5B in 2025, making China the UAE’s largest trading partner. The relationship is also becoming more focused on production and investment, rather than the movement of finished goods.
Several factors are driving the change. UAE and Gulf buyers increasingly favour suppliers with local manufacturing capabilities, particularly for public-sector and large private contracts. Producing in the UAE can also reduce exposure to tariffs and meet stricter rules-of-origin requirements, provided companies create genuine local production rather than simply relabel imported goods.
The UAE’s investment environment is another pull factor. The country attracted $48.24B in foreign direct investment in 2025, ranking ninth globally and first in the wider Middle East, according to the source.
Ras Al Khaimah has emerged as a key location. Ras Al Khaimah Economic Zone supports nearly 400 Chinese companies across sectors including recycling, LED lighting, engineering and packaging. The existing Chinese business community offers new entrants access to suppliers, networks and operational experience.
The “Made in UAE” designation now requires a registered facility in a certified industrial zone and at least 40% local value added through manufacturing or assembly. For Chinese manufacturers, that requirement can provide access to contracts and markets that distribution alone cannot reach.
Source: Gulf Economist
