On August 8, 2025, at the Abu Dhabi Capital Group headquarters, He Wanyu, founder of Shenzhen Xiaoku Technology Co., Ltd. (hereinafter referred to as "Xiaoku Technology," an architectural AI company established in 2016), signed an agreement with Abu Bakr Al-Kouri, CEO of Abu Dhabi Capital Group, officially establishing ADCX Holdings. This marks the first deep cooperation between a Chinese AI company and a leading capital group in Abu Dhabi.
From SenseTime's announcement in 2019 to establish an Abu Dhabi R&D center, to Abu Dhabi's sovereign fund investing in NIO in 2023, and now Xiaoku Technology breaking into royal capital circles, behind this agreement lies years of Chinese AI companies pioneering in Middle Eastern markets.
Two thousand kilometers away on the streets of Riyadh, WeRide's Robotaxi carries Saudi passengers past the magnificent Kingdom Tower. In Q2 2025, the company's autonomous driving business revenue soared 836.7% year-over-year, with the Middle Eastern market contributing over 30% of total revenue.
Meanwhile, Huixin Intelligence's disinfection robots navigate through Dubai hospital corridors, with ultraviolet beams precisely eliminating pathogens - these Chinese AI products are becoming the "new standard" for Middle Eastern smart hospitals.
As domestic AI companies struggle with computing power limitations and market saturation, a technological migration to the Middle East has gained momentum. Saudi Arabia's "Vision 2030" explicitly lists artificial intelligence as a pillar of national transformation, while the UAE plans to increase AI's contribution to GDP to 14% within ten years. This land of surging oil capital is becoming an important pivot for Chinese AI globalization.
Saudi's sovereign fund PIF announced a $72 billion investment in artificial intelligence infrastructure over the next five years; the UAE plans to increase AI's GDP contribution to 14% within ten years; Qatar launched a $5 billion special fund to attract global AI companies.
Policies are also opening "green lights" for Chinese AI companies going global. From January to August 2025, multiple departments including the National Development and Reform Commission, Ministry of Industry and Information Technology, and State-owned Assets Supervision and Administration Commission have intensively issued new policies regarding the development of Chinese AI companies.
**Technology Overseas Expansion**
In the summer of 2025, the Middle East became a popular destination for Chinese tech leaders. In February, Robin Li appeared at Dubai's "World Government Summit," quietly launching Baidu Intelligent Cloud's Middle Eastern layout; Tencent Cloud announced a $150 million investment in data center construction at Saudi's tech event LEAP 2025; after Alibaba Cloud's Thailand node launched, the team immediately headed to Abu Dhabi to discuss smart city projects.
Standing at the floor-to-ceiling windows of Dubai Future Foundation's AI center, SenseTime's Middle East director displayed a sandbox model: "Within three years, Chinese AI application scenarios will be replicated here." More than ten modules including medical imaging diagnosis, building energy optimization, and retail behavior analysis are undergoing localization adaptation.
Xiaoku Technology's founder He Wanyu broke into Abu Dhabi's royal capital gates, becoming the first Chinese AI company in the future living field to cooperate with local leading capital groups. Based on existing cooperation projects, Xiaoku Technology will further establish joint venture platform companies with Abu Dhabi Capital Group, promoting deep industrial cooperation across multiple vertical fields in the UAE and Middle East regions in AI+ digitalization, green sustainability, future living, and smart cities.
He Wanyu's breakthrough began with an "unequal" meeting. Retracing to June 2023, the Xiaoku Technology team entered Dubai Future Foundation, competing alongside over thirty global top tech companies selected from over 600 enterprises worldwide by Dubai Future Foundation.
He Wanyu recalled: "Their first interview question was: How do you prove that AI can empower the industry and successfully land in such complex urban development and construction processes?"
The team responded with detailed technical demonstrations and rapid technical migration, adapting technology originally designed for Chinese real estate characteristics to comply with UAE architectural standards, ultimately becoming the only mainland Chinese AI company to qualify.
Starting from Dubai Future Foundation, Xiaoku Technology's Middle Eastern business finally took root in the UAE. To date, Xiaoku Technology has launched several tens-of-millions-level cooperation projects locally and established relevant joint venture platforms.
**Access Codes**
While Xiaoku Technology broke ground in the construction field, Huixin Intelligence founder Zhang Kai entered Middle Eastern medical AI. In early 2024, the team visited Dubai Health Authority (DHA) with hospital delivery robot solutions but faced rejection due to insufficient cultural adaptation.
Zhang Kai realized his mistake: "When robots handed medicine bottles with palms facing up, it was considered blasphemous. Technical advantages must be wrapped in cultural respect."
The team immediately launched a "cultural embedding plan": hiring consultants from Dubai's Mohammed Cultural Research Center, integrating Quranic audio into the system; adding hijab recognition functionality for robots; strengthening cleaning algorithms for prayer mats in disinfection modules.
These changes won DHA's trust, leading to a smart hospital AI robot manufacturing agreement signed in 2025. Currently, Huixin Intelligence has achieved a commercial closed loop of "clinical scenario collection, AI model optimization, effect verification": establishing joint laboratories with Dubai Health Services Company; reducing costs by 30% through localized production; each robot replacing three nursing staff daily on average.
WeRide also found its access code. When launching Robotaxi services in Abu Dhabi, the team discovered local female passengers had significant concerns. The solution was developing "Hijab mode": windows using electrochromic glass allowing passengers to adjust transparency via APP; rear seats with independent air conditioning zones; voice assistant defaulting to female narration.
These details helped secure Saudi's first autonomous driving license, with Q2 2025 Middle Eastern business revenue soaring to 45.9 million yuan.
Wanda Information's breakthrough began with a "data sovereignty battle." In March 2025, the company established the "Corpus Terminal Innovation Consortium" with Kupasi Technology, transplanting its medical data governance experience to Middle Eastern construction fields.
In a Riyadh smart hospital project, Wanda Information developed distributed corpus processing tools: patient privacy data stored on local servers, with only anonymized treatment process data used for AI training; algorithms passing dual certification from Saudi DSG and UAE GCC.
Wanda Information's Middle East director stated: "Data compliance costs account for over 25% of project budgets in the Middle East, but skipping it means certain failure."
Their developed multimodal encryption system successfully reduced data breach risks by 90%, currently deployed in 12 Saudi hospitals, driving 170% growth in the company's Middle Eastern orders for the first half of the year.
In April 2025, 33 Chengdu companies traveled to Saudi Arabia in a group. At the Riyadh Industrial Cooperation Matching Conference, Zhang Xiaoya, international trade manager at Silicone Technology, opened opportunities through a "market encounter" - when she showed shop owners cases of products used in Beijing Daxing Airport, they immediately video-called their son purchasing in China. Three days later, this Saudi youth appeared at the Canton Fair Silicone booth, signing the first $2 million sealant order.
**Expedition Setbacks**
Not all expeditions have perfect endings. At the end of 2024, a Chinese AI security company suffered setbacks in Saudi Arabia. The company, known for facial recognition technology, won a smart community project contract worth over $20 million but faced contract termination due to critical errors, including loss of data localization control - failing to store all resident biometric data on local servers as required by Saudi's Personal Data Protection Law (PDPL), with some data flowing back to Chinese data centers.
The former technical director said: "Compliance costs devoured profits, accounting for 28% of the total budget, far exceeding estimates."
To meet Saudi data localization requirements, the team was forced to purchase expensive servers, compressing project profit margins from 35% to 7%. Subsequently, this Chinese AI security company permanently lost Saudi market access qualifications.
This situation is not isolated. A 2025 survey by China Academy of Information and Communications Technology showed AI companies expanding to the Middle East repeatedly faced penalties due to data compliance issues.
During technology transfer, another Chinese tech company encountered "market exchange dilemmas." In 2023, to enter Saudi's NEOM New City project, this tech company accepted harsh terms from Saudi sovereign fund PIF: joint venture bundling with Saudi Artificial Intelligence Company (SCAI), with Saudi holding 49% shares; technology transfer requiring training 300 Saudi engineers to master facial recognition algorithm core modules; performance agreements requiring share buyback if not listed or finding buyers within 7 years.
A tech company executive involved in negotiations said: "Trading technology for market access is drinking poison to quench thirst."
Subsequently, Saudi engineers frequently requested code permissions and even demanded access to cloud platform management backends. In 2025, after NEOM project Phase I delivery, SCAI unilaterally announced "mastering autonomous AI capabilities," excluding the Chinese tech company from Phase II bidding.
These setback cases are catalyzing industry early warning mechanisms. The China Academy of Information and Communications Technology's 2025 "Middle East AI Compliance Guide" established three red lines: absolute localization of core data through independent data centers in UAE; dual algorithm certification passing both Chinese DSG and Middle Eastern GCC certification; cultural adaptation testing with religious customs and gender segregation embedded in system design.
On the evening of August 13, Riyadh time, the aforementioned tech company's data center operations team was still debugging backup servers. A newly printed slogan on the company's glass door read: "Here, compliance is more important than algorithms."
**Risks and Opportunities**
Although Chinese companies including Xiaoku Technology have found commercial coordinates in the Middle East, the corporate migration still faces harsh market realities.
According to IT Orange (domestic investment data platform) statistics, domestic AI track financing fell sharply from $8.2 billion in Q1 2023 to $3.7 billion in the same period of 2025, with startup valuations generally shrinking 40%.
In stark contrast, Middle Eastern sovereign funds are making large investments in technology - Abu Dhabi's ADQ fund committed $15 billion over five years to support AI development.
A company representative advancing solar power plant projects in Riyadh said: "Saudi government project tenders explicitly require AI solutions to account for no less than 30%."
This representative has spent the past week studying the latest "Saudi AI Application White Paper" on his phone: "From NEOM New City to Red Sea tourism zones, Chinese companies with AI technology can get entry tickets."
More market data confirms the rationality of this migration. According to Frost & Sullivan reports, the Middle Eastern smart medical equipment market reached $4.5 billion in 2024, with hospital AI robot penetration below 5% and compound annual growth rate reaching 43%.
Additionally, Saudi's autonomous driving market is expected to exceed $1.2 billion by 2028, with policies allowing fully unmanned commercial operations, while UAE construction technology investment grows annually over 25%, with government mandating BIM technology for new projects.
Facing Middle Eastern market opportunities and challenges, Professor Tang Xiaoyang from Tsinghua University's Institute of International Relations pointed out: "Saudi's Power Distance Index (PDI) reaches 95, far higher than China's 80. Companies must understand 'top-down' decision chains; technical solutions without royal endorsement struggle to achieve real implementation."
He suggests newcomers adopt "dual-track strategies": engaging both technical procurement departments and royal advisor channels.
McKinsey's Middle East technology advisor warns of data compliance risks: "In 2025, Saudi Arabia lists foreign data localization as mandatory, while UAE fines for medical data cross-border transmission can reach 6% of global revenue."
He observes successful companies commonly establish three-tier defense systems: localized data middle platforms (annual investment about 8 million yuan) + blockchain evidence systems (2 million yuan) + emergency legal funds (0.5% of reserved revenue).
For AI medical company Kantuo Technology preparing Middle Eastern entry, Roland Berger partner Jiang Hao offers practical advice to start from satellite markets like Oman and Bahrain. These countries have more relaxed data regulations and stronger cultural tolerance, suitable as springboards to Saudi Arabia. He cites Huixin Intelligence's path: choosing Dubai Healthcare City as the first pilot, validating the model before proposing to Abu Dhabi royalty.
Disclaimer: The views in this article represent only the author's opinions and are for reference and discussion purposes only, not constituting any advice.
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