👋 Good morning, Smashi Business Readers!

In today’s edition, we explore the multifaceted landscape shaping the Middle East's economic narrative. McDonald’s faces a significant global sales decline, attributed in part to boycotts in Muslim countries, highlighting the profound impact of regional sentiments on international brands. Meanwhile, TikTok announces its ambitious plans to establish a regional headquarters in Riyadh by early 2025, signaling the Kingdom’s growing importance as a tech hub. Additionally, the Public Investment Fund (PIF) teams up with Google Cloud to launch a new AI hub in Saudi Arabia, projected to boost the nation’s GDP by $71 billion, further solidifying the Kingdom’s commitment to innovation and technology.

Dive in for insights on these pivotal developments!

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Middle East and Muslim-Countries’ Boycotts Contributing to McDonald’s Global Sales Decline

📰 What is it about?

• McDonald’s has reported its largest decline in global sales in four years, with a 1.5% drop in sales between July and September.

• This decline is significantly influenced by a 3.5% drop in its licensed business due to weaker consumer spending in China and the ongoing impact of the war in the Middle East, which has led to boycotts and protests in several Muslim-majority countries.

💡 Why it matters?

• The current economic climate has led to sluggish consumer spending across key markets, including the U.S., Europe, and China, as people seek more affordable meal options amid rising food costs.

• However, the conflict in the Middle East has introduced additional challenges, including a backlash against McDonald’s perceived support for Israel.

• These boycotts, especially in Muslim-majority countries, have further strained sales in licensed restaurants, which are managed by local partners. The geopolitical landscape has created a complex environment for McDonald’s, causing significant sales declines in affected regions.

🔜 What’s next?

• To address these challenges, McDonald’s is implementing promotional strategies aimed at cost-conscious consumers to regain their business.

• CEO Chris Kempczinski has emphasized the need for value-oriented offerings as customer preferences shift.

• However, the company must also navigate the fallout from recent controversies, including a linked E. coli outbreak.

• Looking ahead, McDonald’s will need to carefully manage its global reputation and adapt its strategies to mitigate the impact of boycotts and geopolitical tensions, particularly in the Middle East, while striving to restore consumer confidence and stabilize sales.

📈 Markets

TikTok’s Plans for Riyadh Headquarters in Early 2025

📰 What is it about?

• TikTok has announced plans to establish a regional headquarters in Riyadh by early 2025.

• CEO Shou Zi Chew shared this news during the Future Investment Initiative (FII) conference, highlighting the company's commitment to Saudi Arabia and its potential as a hub for cultural and creative expression on the global stage.

💡 Why it matters?

• Saudi Arabia has become a key market for TikTok in the Arab region. The platform has been actively working with various sectors to enhance marketing opportunities and bolster its role in the digital advertising landscape.

• The Riyadh headquarters aims to promote Saudi culture, heritage, and youth talent to a global audience, reinforcing TikTok’s cultural engagement. This also aligns with Vision 2030’s goals to attract international businesses and showcase Saudi innovation.

• Saudi Arabia’s government now requires foreign companies to have regional headquarters within the Kingdom to secure state contracts. As a result, many global companies are moving operations to Riyadh, with the Ministry of Investment recently surpassing its target of 500 headquarters, reaching a total of 540.

🔜 What’s next?

• TikTok will work on establishing its physical presence in Riyadh while enhancing local partnerships to foster regional growth. The office will likely become a hub for content, advertising, and creative initiatives.

• TikTok’s presence in Riyadh may attract other tech giants to expand their regional operations in the Kingdom, intensifying competition within the MENA region’s digital ecosystem.

• This move will contribute to Saudi Arabia's Vision 2030 objectives of diversifying the economyand positioning Riyadh as a premier business hub, which is expected to drive more foreign investment and innovation across sectors.

💭Quote of the day
“Don’t Let Yesterday Take Up Too Much Of Today.” - Will Rogers

PIF and Google Cloud Launch AI Hub in Saudi Arabia: Projected $71 Billion GDP Boost

📰 What is it about?

• Saudi Arabia’s Public Investment Fund (PIF) and Google Cloud have partnered to launch an AI hub near Dammam in the Eastern Province.

• This AI hub aims to solidify Saudi Arabia’s position as a global AI innovation center and support local and international businesses with advanced AI technology.

💡 Why it matters?

• The AI hub is projected to add $71 billion to Saudi Arabia’s GDP over the next eight years, driven by advances in AI across key sectors like healthcare, retail, and finance.

• A core part of the hub's mission is to train millions of students and professionals in AI skills, aligning with the national vision to grow the ICT sector by 50%.

• By leveraging Google Cloud’s AI technologies, including TPUs, GPUs, and the Vertex AI platform, the hub will foster growth and innovation in AI applications tailored to the Saudi market, particularly for Arabic language models.

🔜 What’s next?

• The hub will integrate Arabic datasets into Google’s generative AI model family, Gemini, boosting Arabic-language AI applications.

• The partnership is pending necessary regulatory approvals, with plans to expand research initiatives and provide faster access to AI-powered applications and data services for businesses and consumers.

• The initiative is set to generate thousands of skilled jobs and open opportunities for Saudi nationals in the AI field, supporting the Kingdom’s ambition to become a leader in digital and technological innovation.

• This collaboration is a strategic step toward positioning Saudi Arabia as an AI and cloud technology hub, advancing Vision 2030’s goals for economic diversification and digital transformation

🔍In other news…

1. Al-Ittihad Football Club has signed a three-year sponsorship deal with Riyadh-based Berain Water.

2. Abu Dhabi-based G42, led by H.H. Sheikh Tahnoun bin Zayed Al Nahyan, has established a strategic partnership with BlackRock, marking a significant step forward in scaling global AI infrastructure.

3. People are Ecstatic as F1 Star Lewis Hamilton Partners with UAE’s e&.

4. Farewell to Colm McLoughlin: The Architect of Dubai Duty Free’s Global Success

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