China's Tencent Cloud, which recently announced its first Middle East cloud region in Saudi Arabia, expects gaming and its super app-as-a-service offering to drive its business growth in the region, a senior executive said.
The company – the cloud business unit of technology major Tencent – plans to invest $150 million in the kingdom and expects the Saudi cloud data centre business to be up and running by the end of this year.
The new cloud operation will “better serve the region's requirement”, Dan Hu, vice president, Tencent Cloud International, Middle East and North Africa, told The National in an interview on the sidelines of the FinTech Forward event in Bahrain.
“Tencent, as our own ecosystem, we have been in the market for years … we are the largest mobile game developer and publisher. Our flagship game PUBG mobile is ranking number one in the kingdom, in the region and also in [other] international markets.”
Even before the launch of the Saudi cloud data centre, the company deployed some edge nodes – computing devices of servers which serve as gateways to local networks – providing services such as video streaming, live streaming and real-time communication, he said.
The gaming and esports industry is a key element of Saudi Arabia's Vision 2030, which seeks to diversify the kingdom's economy from oil into new economy sectors. The national gaming and esports strategy aims to position Saudi Arabia as a global hub for the industry.
The country hosted the Esports World Cup in Riyadh in August and is expected to stage the first Olympic Esports Games in 2027.
Games by Tencent and its partner studios, including PUBG Mobile, League of Legends, Honour of Kings and Valorant, are popular in Saudi Arabia and elsewhere in the Middle East, Mr Hu said.
Gamers' needs are distinct so being close to them is key for the company, he added.
“The latency is so important, for example, for some of our game customers, especially for some highly interactive customers, they may demand 50 to 70 milliseconds, that is 0.05 to 0.07 seconds. So, if we are not local, we cannot provide that kind of user experience and they will feel some lagging,” he said.
Beyond gaming, the adoption of cloud services has grown consistently in the Middle East amid an expanding young consumer base as well as continuing government efforts to boost technology offerings and develop the future economy.
Growth potential
Global cloud providers are keen to capitalise on growth opportunities offered by the broader region. Tech majors Oracle, Microsoft, Amazon, IBM and Alibaba Cloud have all opened cloud and data centres in the Middle East.
On Tuesday, China's Alibaba Cloud announced the launch of its second data centre in Dubai in response to growing demand for cloud computing and AI services from local businesses.
The move follows the company's first data centre in 2016, and is part of its $53 billion global investment plan in AI and cloud infrastructure over the next three years, the company said.
In the boarder UAE market, data centre capacity will grow 165 per cent to 950 megawatts by 2028, led by Khazna and major projects such as G42-Stargate, Emirates NBD said in research note on Tuesday.
The Emirates ranks among the top global AI and digital infrastructure hubs, powered by 188,000 AI chips and 6.4 gigawatt computing capacity. The scale of investment is equally vast, with $46.1 billion going into data centre and $28 billion being allocated to power an energy pipeline that will drive expansion through 2030, the report says.
“In addition to the online gaming and entertainment, we also want to work with the local enterprises and with local government in terms of their cloud and AI requirements,” Mr Hu said.
The company has also recently introduced a solution called Super App as a Service, which runs on the Tencent Cloud. Those buying the solution can build a super app with their own marketplace, bring third-party merchants or developers on board and offer users a “seamless” experience.
“It's plug and play, and we already have some customers [in places like Dubai],” he said.
Partnerships
The company on Wednesday also announced a partnership at Gitex with UAE-based Tawasal Information Technology, to create gaming and cloud services. The collaboration will integrate localised mini games to the Tawasal SuperApp, which currently offers video and voice calls, messaging with chats, channels and media sharing, video conferencing, AI integration and other lifestyle services.
Tencent Cloud also announced a partnership at Gitex with Klickl, a UAE-based regulated Web3 financial infrastructure platform. Under the pact, Klickl aims to boost its digital finance capabilities with mini-app system solutions from Tencent Cloud to support digital wallets and cross-border payment functionalities.
In March, Tencent Cloud teamed up with Smiles, the loyalty programme of e&, for the super app offering. The integration allows partner brands to integrate as “mini apps” within Smiles, mirroring the WeChat model that Tencent runs in China.
"I think we offer you another alternative. Instead of building everything by yourself, competing with all the market in each and every sector, you share the business, the business benefit," Mr Hu said.
"You don't have to compete, build this obsolete, heavy stack. You can work with others, and make your app more inclusive ... everybody is talking about partnerships, this is one of the best ways."
Visit Abu Dhabi culinary team's top Emirati restaurants in Abu Dhabi
Yadoo’s House Restaurant & Cafe
For the karak and Yoodo's house platter with includes eggs, balaleet, khamir and chebab bread.
Golden Dallah
For the cappuccino, luqaimat and aseeda.
Al Mrzab Restaurant
For the shrimp murabian and Kuwaiti options including Kuwaiti machboos with kebab and spicy sauce.
Al Derwaza
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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