26 October 2016
The conclusion of the seven-party agreement this summer has opened the gateway for western companies to enter the Iranian market. Photo: Reuters
The conclusion of the seven-party agreement this summer has opened the gateway for western companies to enter the Iranian market. Photo: Reuters

Iran on its way to becoming a super BRICS country

When it comes to BRICS, many people think of five countries: Brazil, Russia, India, China and South Africa. Or they may also think of the new BRICS such as Kazakhstan and Turkey.

However, if you ask any expert in international relations, they may tell you that Iran is now widely tipped as the next super BRICS.

Despite continued opposition from Israel and Saudi Arabia and some prominent US conservatives such as former State Secretaries Henry Kissinger and George Shultz, the United States, along with Russia, China, Britain, France and Germany, reached an agreement with Iran in July, under which western economic sanctions against Tehran would be lifted in exchange for the reduction of its stockpile of low-enriched uranium by 98 percent and the abandonment of its nuclear program.

The Iranian people celebrated when the agreement was concluded because their country can now ride the tide of globalization and develop its economy at full throttle.

Western companies, too, are excited because they have been eyeing the Iranian market for a long time, and are all geared up for the enormous business opportunities that lie ahead.

As Reuters put it, “Iran is the largest country to rejoin the global economic system in the post-communist era since 1990.”

Martin Sorrel, chief executive of the WPP Group, a global advertising giant, even referred to Iran as the “biggest unexplored market in existence apart from the moon and Mars”.

Such optimism could be well-founded, as Iran is among the most advanced countries in the Middle East, with a well-educated population, a mature middle class and highly developed infrastructure.

Even though China has already replaced Germany as Iran’s largest trading partner, many observers believe Tehran is about to fully open up its market to the West, and this may lead to a downward trend in the economic ties between China and Iran in the long run.

As Mohsen Safaei Farahani, the former Undersecretary for Economic Affairs of Iran, put it, there is a huge demand for cheap Chinese products in Iran, but Chinese businessmen are anything but popular among Iranians because they are not only good at driving a hard bargain but also notorious for breaching agreements. 

Iranians would definitely prefer high-quality western products to poorly made Chinese goods if they had a choice, Farahani said.

He predicted that as western companies start entering Iran in full swing, the trade volume between China and Iran is likely to fall from 2017 onwards, and it would just be a matter of time before big Chinese companies get crowded out of the Iranian market by their western competitors.

However, given that Iran is a strategically important component of China’s One Belt, One Road blueprint, it is unlikely that Beijing would give up the Iranian market without putting up a good fight in the face of the western challenge.

This article appeared in the Hong Kong Economic Journal on Nov. 25.

Translation by Alan Lee

[Chinese version 中文版]

– Contact us at [email protected]


Associate professor and director of Global Studies Programme, Faculty of Social Science, at the Chinese University of Hong Kong; Lead Writer (Global) at the Hong Kong Economic Journal

EJI Weekly Newsletter