Saudi Arabia All Set to Sell
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Saudi Arabia All Set to Sell Assets Worth $11 Billion

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After multiple decades of dependence on oil, Saudi Arabia is finally all set to diversify its economy. As decided earlier, after a delay of almost a year, Saudi Arabia is now all set to sell assets worth of $11 billion.

The Arabian Government aims for this money by 2020 through its privatization program that includes the sale of stakes in utilities, soccer clubs, flour mills, and medical facilities. The selling of stock will be done to detach the Arabian Economy from the high influence of oil only. But, the plans of stock sale have been delayed for multiple reasons, especially the introduction of IPO of oil giant Aramco.

According to the National Center for Privatization and PPP that deal with privatization said with the current status of initiatives and the progress made by the Privatisation Supervisory committees, the target seems attainable. And except a few big things, all the projects are on schedule.

As per NCP’s statement, Saudi Arabia will complete the sale of four flour milling companies and Saudia Medical Services facilities by the end of this year.

Jean-Paul Pigat, head of research at Dubai-based Lighthouse Research said privatization is one of the major parts in the large reform process Saudi Arabia has planned. But, it has been missing its target dates, and in comparison with the last year, the macroeconomic conditions may not be conducive for acceleration in privatization this year also.

Here are the details of the Companies, Saudi is aiming to privatize-

Saudi Aramco-

Crown Prince Mohammed bin Salman declared the sale of shares in 2016. And announcing the IPO, he said he meant only business by the sale of the shares. And, experts believed it to be the largest IPO in the world. Later, the target year was pushed from 2018 to late 2020 and finally to 2021 so that it can buy a $70 billion stake in the kingdom’s biggest petrochemical company Sabic.

Stock Exchange-

Tadawul, the Middle East’s largest stock exchange, released plans for a public offering in 2014. It also had appointed HSBC Holding Plc. as the financial advisor. It was also scheduled to be done by 2018 but later dragged to the end of 2019. It is expected that inclusion of Saudi stocks in indexes compiled by FTSE Russell and MSCI Inc. may boost the company’s value, ultimately giving larger amount after the sale.

Riyadh Airport-

The stake of King Khalid International Airport was also scheduled to be sold in September. But, it was put on hold. The Saudi Civil Aviation Holding Co. is said to have asked local and international investment banks to act as financial advisor to the deal.

Flour Mills-

There was a plan to sell four flour mills by the Saudi Grains Organisation in 2016. It was also delayed by three years. Potential buyers have filled their application for bidding. HSBC Saudi Arabia is the advisor for this deal.

Ras Al Khair Power Plant-

Ras Al Khair power plant on the east coast was scheduled to be sold at $7.2 billion by 2020. BNP Paribas was hired to advise on this sale. The sale of this plan is a part of the larger plan of privatizing Saline Water Conversion Co. by selling a part of its assets and developing plants.

Soccer Clubs-

The plans to privatize the Soccer Clubs were first formulated in 2016. And the sale was scheduled to be ended by 2020. Turki Al Alshikh, former head of the Saudi Sports Authority, predicted to raise money in the range of $800 million to $1.5 billion from this sale. The NCP said that the last year was spent on deciding the legal and commercial framework to cover the use of advertising, sponsorship deals and broadcast rights to be used after the sale.

The NCP also added that along with these big deals, there are also some deals in the pipeline which will be open to the public for holding stakes. They include municipal assets related to commercial-land for development, renewable energy PPP projects in solar and wind, parking centers; a second cargo license station at King Khalid International Airport, the establishment of an agriculture company and independent schools in PPP mode, as well as school buildings on a build-maintain-transfer basis.

In the health sector as well, the NCP will open tenders in PPP mode in radiology, laboratories, hospital commissioning and housing for health facilities staff. It is aiming to get around $7.5 billion from the sale in health care.

The NCP replied when asked about the delay, that they were finalizing on the legal and commercial framework for the sale to happen. They want the best-in-class operators across the globe to participate in the PPP sale. And for investments, they plan to attract long term and reliable investors to Saudi Arabia.

It is indeed an important step by the Saudi Arabia Government to diversify their economy. Oil has been the vital component of their market, and with the reforms, they have in the pipeline, it is expected to have fewer shocks globally in the Oil market if they become successful in diversifying.

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Retailers Slash iPhone Prices in China Owing to Demand

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After being the bestselling smartphone in China, the premium iPhones are now losing market share in the largest smartphone market in the world. To retain the customers, retailers in China are offering huge discounts as the sale of these iPhones is struggling throughout the country.

As per the customers and experts, the phones are really expensive than it should be and it also lacks innovative features like its competitor Huawei is offering. The technology giant also admitted having predicted lower sales of iPhones for the next year owing to slash in demand and the ongoing trade war between the U.S. and China. And the lowering demand in China would definitely result in a bad revenue set up for the coming quarters for Apple.

Chinese biggest iPhone retailer Suning changed the price of the 128GB version of the iPhone XR from 6,999 yuan ($1,036) to 5,799 yuan ($858) — a 1,200 yuan ($178) discount. Other third-party sellers are even offering cheaper iPhones by flash sales. One seller was selling a 256GB version of the iPhone XS Max, Apple’s most premium device, for 9,699 yuan ($1,436), way below the U.S. firm’s official selling price of 10,999 yuan ($1,628) for that smartphone.

Yet, the selling prices of these phones are way above than the selling price of iPhones in the U.S. This particular iPhone XS is sold at $1249 in the American market.

An Apple reseller, Sunion, was advertising 700 yuan off for both the 128GB and 256GB versions of the iPhone XR. Pinduoduo, an e-commerce site is selling these phones through third-party sellers after a huge discount.

The issue with Apple products in China has two answers as per the consumers. First, it has bad pricing. The iPhones are too expensive with respect to its features, and it is not bringing innovative features to the phones as some local brands are doing. Now, as per statistics, much market share of Apple has been lost to other competitors in China.

Pricing Issue-

The price of the iPhones across all the models in not only China but also in any Asian market is way above than the price in the United States. For example, Apple’s 512GB iPhone XS Max, the most expensive of the new models, costs $1,499 in the U.S. But in Asia’s largest economy, the un-discounted price is 12,799 yuan, or nearly $1,900 — this about 26 percent premium on a single phone. And the same way iPhone XR, which was expected to be the cheapest of all iPhones, is also sold at a 28 percent premium in the Chinese market.

But, Apple has blamed the rising trade war between the two largest economies for this slump in demand in China. But, experts say the trade war is just an eye-wash, but the real issue in the Chinese market is its pricing.

It is time for Apple to identify the real issue and declare competitive pricing for the phones. But, as of now, Apple has no plans to slash the price anymore in the Chinese market. It also said that the company’s offer to upgrade iPhone 7 Plus with iPhone XR is also not very successful in China as customers feel that the new phone lacks any new thing or any new inventions.

Huawei-

Though the brand has been on the news for wrong in the international market, the business of Huawei is growing like anything. This has now become the second largest smartphone seller in the world replacing Apple. It is next to only Samsung, the Korean giant.

As per the Chinese consumers, Huawei is offering the newest of features, and they feel a certain sense of connectedness in buying smartphones of the local brand. Huawei phones are cost effective and offer popular features like triple lens camera and on-screen fingerprint scanner. The brand’s flagship phone P20 Pro has taken much interest of the buyers not only in the Chinese market but also in the international market.

The upgrade-

Apple also has not been very prompt to bring upgrades to its phones. Huawei and Samsung have announced that they would bring 5G technology by the end of 2019, but Apple does not seem to bring the high-speed internet technology by late 2020. Major Chinese telecom providers like China Mobile and China Telecom are planning to roll out 5G technology by the end of 2019.

There are lot many dimensions to the poor sales of the iPhones in China. Though the pricing is a major issue, the trade war also seems to be a big factor in this. For the betterment of the global trade, the trade imbroglio should end at the earliest. After all, it is the globalization which has made the best of the many western countries, and the same opportunity should be given to other Asian countries now.