Tensions in the Middle East have entered their fourth day as of March 3. The escalating conflict has severely impacted international trade and logistics operations in the region.
Peng Yun, who operates import-export businesses involving construction materials and medical equipment in Israel, the UAE, and Saudi Arabia, has seen several clients cancel orders due to flight disruptions, resulting in significant financial losses. "There's no other option—many routes are suspended, making it impossible to deliver goods or fulfill contracts. While this is due to external factors beyond our control, we have to accept the losses," he remarked.
Cross-border e-commerce entrepreneur Li Haoyang expressed greater urgency. "Major ports like Jebel Ali and Dammam have halted operations, and most large shipping companies have suspended routes to the Middle East. Freight rates and insurance premiums are bound to rise. The bigger issue is that goods are stuck in warehouses with no way to ship them out," he explained.
For businesses operating in the Middle East, waiting and observing are among the few options available amid the conflict. Time has become a critical factor—if stability returns within weeks and shipping routes resume, short-term losses may be manageable. However, prolonged turmoil could lead to incalculable damage for companies with operations in the region.
Many Chinese companies with a presence in the Middle East have shifted to remote work. Some have even suspended regional operations. On Monday, March 2, S.F. Holding Co.,Ltd. announced the suspension of international express and e-commerce services to and from multiple Middle Eastern countries due to the deteriorating security situation.
When contacted, a representative from S.F. Holding stated, "Our international operations remain focused on Southeast Asia. The suspension of Middle Eastern services is expected to have limited impact. The duration of the suspension is still being confirmed with our regional teams."
The Middle East, particularly Gulf countries like the UAE, Saudi Arabia, and Qatar, has become a key testing ground for autonomous driving technology due to their open regulatory environments. However, the current crisis has forced companies like Baidu's autonomous ride-hailing service,萝卜快跑, to pause testing and commercial operations. Another autonomous vehicle firm, WeRide, has also suspended its Robotaxi services in Dubai, though operations in Abu Dhabi and Riyadh continue normally.
WeRide indicated that while its Dubai fleet is paused, the team continues data training and optimization efforts. Vehicles are stored safely in indoor parking, and local employees are working from home as a precaution.
In the manufacturing sector, Midea Group, which derives over 40% of its revenue overseas, considers the Middle East an important market. A company representative noted that operations in Saudi Arabia, the UAE, and Qatar continue normally, with most staff working remotely. "Short-term military conflict is unlikely to affect performance, as major client orders are pre-stocked locally, and our warehouses maintain sufficient inventory," the representative added.
While daily life in Gulf countries remains relatively calm, the disruption to logistics and currency fluctuations has already impacted international traders. The closure of the Strait of Hormuz has effectively severed access to key ports like Jebel Ali and Dammam, leaving goods stranded. Some workarounds exist, such as rerouting through Oman or using limited air cargo options, but these come at significantly higher costs.
Li Haoyang shared that one of his shipments to Iraq was canceled mid-transit due to the sharp depreciation of the Iraqi dinar, making it impossible for the client to pay in U.S. dollars. Exchange rate volatility has become an additional challenge for businesses.
The conflict also raises questions about the Gulf region’s reputation as a safe haven for capital and expatriates. Jim Krane, a researcher at Rice University's Baker Institute, noted, "The longer the conflict persists, the more doubt it casts on destinations like Dubai as a safe harbor for international businesses and capital."
Despite the challenges, many companies remain optimistic about the Middle East's long-term prospects. Peng Yun, for instance, plans to return as soon as flights resume and stability is restored. However, the sudden outbreak of conflict may prompt Chinese companies to reconsider their overseas expansion strategies, emphasizing the importance of diversifying across multiple markets rather than concentrating resources in one region.
As Cai Shixuan, founder of Invest MENA, advised, "Companies should diversify their international presence rather than focusing heavily on one or two countries. An all-in strategy in a single market carries significant risks."
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