"China Textile" Can Search For Space In Egypt

In Egypt, which is located at the border of Eurasia, the cotton textile industry is experiencing rapid development. Its geographical advantages in the Middle East and the Middle East and its more perfect cotton textile industrial chain have attracted more and more overseas investment. Many Chinese enterprises have also focused their attention on it, moving the "made in China" to the Red Sea.

Complete industrial chain

In African countries, Egypt's cotton textile industry ranks at the forefront.

The natural environment suitable for cotton growth and the more mature textile industry that has been formed over the years has made Egypt the largest cotton and textile industrial cluster in Africa.

More importantly, the cotton textile industry chain in Egypt is relatively complete, from cotton cultivation to spinning, weaving and garment manufacturing, enabling Egypt to have strong capabilities in the field of garment manufacturing.

At present, the textile industry has accounted for 3% of Egypt's GDP share, accounting for 22% of the total output value of the manufacturing industry.

In 2017, Egypt's textile exports amounted to about US $2 billion 370 million, accounting for 9.5% of the total exports. The United States and the European Union were the main markets of their products, accounting for 45% and 38% of the total exports of textile products respectively.

Egypt's textile industry has now developed to about 7344 enterprises, of which 90% are small and medium-sized enterprises, attracting about 1 million 500 thousand jobs, accounting for 30% of the total industrial employment population.

According to the International Textile Industry Association, the cost of Egyptian textiles is $0.13 per meter, which is comparable to that of India and China.

The cost of unskilled workers is 0.5 US dollars per hour. Compared with China, the skilled labor cost is US $0.8 / hour, which is not only the 1/3 of China, but also 0.3 US dollars lower than that of India.

At present, 214 enterprises in Egypt enjoy the policy of qualified industrial zones and export duty-free products to the United States.

GAP, Pierre Cardin, Marsha general store and other famous brands also set up factories in Egypt.

In recent years, Chinese textile enterprises have been increasing interest and interest in the Egyptian market. They have come to Egypt to conduct market research and investigation, and some factories have already made clear investment intentions.

At present, Egypt's private textile industry is very active, mainly concentrated in textile and garment manufacturing downstream of the textile industry. With low production costs, excellent geographical location and numerous multilateral and bilateral trade arrangements, it produces international brands of clothing and textiles for the United States, the European Union and Arabia countries.

Obvious location advantage

As more and more countries set quotas on imports of Chinese clothing, Chinese garment manufacturers are looking overseas.

Egypt is located in Alexander, Port Said and other areas of the bonded area, with cheap labor, perfect supporting measures and loose export environment, become the destination of some merchants relocation and pfer production base.

"This can avoid fierce competition in China's domestic market, and at the same time, it can bypass the trade restrictions of the importing countries on the" source of export ", and it can kill two birds with one stone.

A Chinese garment manufacturer owns a factory in the Egyptian Free Trade Zone said to the Global Times reporter.

The businessman told the Global Times reporter that setting up a factory in the Egyptian Free Trade Zone, first of all, takes account of its geographical advantages close to the European Union, the Middle East and Africa. Her products are mainly sold for these markets, and in Egypt there are advantages in pportation costs.

"If the cost of producing a senior garment in China is 100 yuan, I can control it at 40 yuan in Egypt."

The businessman said.

Egypt has always been a promoter and supporter of the establishment of a unified market in Africa.

Secondly, Egypt has special trade arrangements with many other countries.

For example, the EU does not impose restrictions on Egyptian products and enjoys preferential tariffs.

Egypt has similar trade arrangements with countries in the Middle East, North Africa and even the entire African continent.

In addition, Egypt's legal currency, the pound, has fallen from 1:8.8 to about 1:18 since the "free float" of the dollar in 2016. The production cost of wages such as the pound has not fluctuated correspondingly, which is a great benefit to the businessmen who invest in the textile industry.

The businessman told the Global Times reporter that nil garments and Garment Group, located in the Port Said Free Trade Zone, the second largest port city in Egypt, is a Chinese investment enterprise.

Located on the Suez canal river, the factory employs about 600 workers, nearly 10% of which are skilled technicians from mainland China, and the rest are native speakers of Egypt.

"Another advantage of exemption from tariff in the bonded area is that the park management is more stringent and is conducive to avoiding political and social risks," the businessman thought. "But the biggest disadvantage of investment in the bonded area is that products are exempt from customs duties on the premise that products are not allowed to be sold in Egypt, which means that a large market with a population size of nearly one hundred million will be missed, while machinery and equipment entering the bonded area will also generate additional costs."

Business risks remain

In order to solve some problems in the investment of the bonded area, Ningxia man Kai Investment Co., Ltd., which entered the Egyptian market at the beginning of this century, relies on the advantages of China's textile industry, the advantages of the company's textile and clothing market in Egypt (about 35%), and the platform advantages of China and Egypt to build the "one belt and one road" and the Sino Arab exposition. In 2017, it purchased the industrial land with a total planning area of 3.1 square kilometers in the "Sadat" industrial city of Egypt's Mu Fu Province, and built the E Manke Textile Industrial Park.

Ma Yaojin, head of the company, told the Global Times reporter that although the industrial chain of the textile industry is relatively complete, the textile and printing and dyeing links are relatively weak, and the quality of the related products often fails to meet the standards. The solution he provides is "complete upstream and downstream industrial chains, complete supporting industries, and replicating Chinese experience in the industrial park mode".

According to the plan of man Kai, the industrial park will gradually form the industrial pattern of production and trade such as spinning, weaving, printing and dyeing, garment manufacturing, shoes and caps and bags, and related industries such as warehousing, logistics and e-commerce.

Ma Yaojin believes that the biggest advantage of the Egyptian market is "walking on two legs". On the one hand, Egypt itself has a good market capacity, about 90000000 of its population, GDP per capita of around us $4000, the economy is recovering rapidly, and is a big market in Africa and the Middle East.

Compared with other African countries, Egypt's infrastructure has some advantages in supporting foreign investment. "

"Egypt has its own railway network and highway network, including the Mediterranean and red sea ports, and the power supply has been released from the tense situation of political turmoil.

On the other hand, the geographical advantages and preferential policies for the export of bonded areas mentioned by Chinese businessmen mentioned above will exist for a long time.

Ma Yaojin revealed that the company is closely communicating with the relevant Egyptian authorities and strives to achieve similar tariff free treatment in the industrial park with the bonded zone.

As far as risk is concerned, one is that the security situation in the Egyptian region is rather grim. There have been a series of terrorist attacks since the beginning of 2019, which easily cast a shadow on the psychology of investors.

Two, the soft environment for investment, including the legal environment, needs to be improved.

The legal environment in Egypt lacks pparency and stability, and the interpretation of the law is not clear. Different government departments or officials have different interpretations.

Although the high level attaches great importance to foreign investment, some people are not open to specific staff. They believe that foreign investors come to Egypt to earn money in Egypt, so they are not very active in investors' positive attitude.

Three, the administrative efficiency is low.

For example, registration of a new company sometimes takes more than a year.

In addition, Egypt's work visa and residence permit procedures are rather cumbersome.

Working visas in Egypt need to be examined by labor, house and safety departments. Each department has its own regulations, and the censorship of housekeeping and safety is not open to public standards. Some Chinese companies have encountered problems in registration, and even have been denied several times. The reason is that the safety review has not been passed, but the reasons will not be explained in detail.

Finally, Egypt still has some risk of foreign exchange shortage.

Foreign exchange shortages sometimes result in restrictions on imports and restrictions on foreign exchange deposits and remittance by the Egyptian government.

This will directly affect the profit repatriation of Chinese enterprises.