Chi­nese com­pa­nies boost op­er­a­tions in Egypt

The Pak Banker - - BUSINESS -

More Chi­nese com­pa­nies are set­ting up shop in Egypt or ex­pand­ing ex­ist­ing op­er­a­tions there to take ad­van­tage of op­por­tu­ni­ties pre­sented by the Belt and Road Ini­tia­tive, as well as the na­tion's prime lo­ca­tion and rich re­sources, ex­ec­u­tives said.

While such a move helps Chi­nese firms cut costs, due in part to pref­er­en­tial trade poli­cies of­fered to Egypt in Europe, the Middle East and sub-Sa­ha­ran Africa, it also con­trib­utes to Egypt's in­dus­tri­al­iza­tion and creates jobs. Jushi Group, a Chi­nese fiber­glass man­u­fac­turer, set up a lo­cal sub­sidiary, Jushi Egypt, in Jan­uary 2012. Lo­cated in the China-Egypt Suez Eco­nomic and Trade Co­op­er­a­tion Zone, the com­pany has an an­nual out­put ca­pac­ity of 80,000 met­ric tons. The plant cost $223 mil­lion. Ac­cord­ing to Yang Jixiang, deputy gen­eral man­ager, the sub­sidiary ex­ported 95 per­cent of its prod­ucts?val­ued at about $84 mil­lion?in 2015 and paid about 135 mil­lion Egyp­tian pounds ($17.1 mil­lion) in lo­cal taxes.

He said the op­er­a­tion has driven the de­vel­op­ment of down­stream and up­stream in­dus­tries in Egyp­tian fiber­glass. "Two Chi­nese com­pa­nies have started busi­nesses in the eco­nomic zone to sup­ply us with ma­te­ri­als, while an Egyp­tian fac­tory has up­graded its tech­nol­ogy and in­creased the num­ber of mills it op­er­ates from one to four to meet our need for kaolin pow­der, a raw ma­te­rial in fiber­glass." The com­pany is build­ing a new as­sem­bly line, also with an out­put ca­pac­ity of 80,000 tons, which will go into ser­vice in June. Jushi Egypt em­ploys about 1,100 Egyp­tians, who make up 40 per­cent of its mid-level ex­ec­u­tives, and 60 Chi­nese. Yang said the Chi­nese con­tin­gent will not be in­creased to han­dle the ex­tra ca­pac­ity.

He ex­plained that the com­pany chose to set up a base in Egypt be­cause of the coun­try's lo­ca­tion and the pref­er­en­tial trade poli­cies it en­joys in other mar­kets. "If you ex­port fiber­glass to Europe from China, you have to pay anti-dump­ing and anti-sub­sidy du­ties of 24.8 per­cent, not to men­tion the tar­iff. There is no tar­iff if you ex­port to Europe or the Middle East from Egypt, nor any anti-dump­ing and an­ti­sub­sidy du­ties." Also, it takes at least a month to ship goods from China to Europe, but from Egypt it takes only a week, and a con­tainer could ar­rive in Turkey in just two days, he said.

Egypt is rich in hu­man and nat­u­ral re­sources, too. "En­gi­neers in Egypt are well-ed­u­cated," he added. In early 2013, Muyang Co Ltd, China's largest feed ma­chin­ery man­u­fac­turer in terms of rev­enue, also teamed up with the Chi­naAfrica De­vel­op­ment Fund to es­tab­lish Muyang Egypt in the China-Egypt Suez Eco­nomic and Trade Co­op­er­a­tion Zone. To­gether, they made an in­vest­ment of $74 mil­lion. The first phase of the pro­ject went into op­er­a­tion in De­cem­ber. An­nu­ally, Muyang Egypt aims to pro­duce 5 mil­lion tons of silo stor­age units, 6,000 tons of steel struc­tures and 50 units of feed ma­chines, a com­bined sales value of $150 mil­lion.

Li Xiang­dong, man­ager of Muyang Egypt, said the fac­tory is in an­swer to the Belt and Road Ini­tia­tive, which is an am­bi­tious strat­egy aimed at bet­ter con­nect­ing Asia, Europe, the Middle East and Africa through in­fra­struc­ture projects.

"The Chi­nese govern­ment's pref­er­en­tial poli­cies have pro­vided us with a very good in­vest­ment en­vi­ron­ment," he said, adding that the Egyp­tian sub­sidiary's prod­ucts can eas­ily be shipped to mar­kets in the Middle East and Africa via the Gulf of Suez, while cheap la­bor costs had re­duced over­heads. Muyang Egypt will ini­tially con­cen­trate on mak­ing si­los that re­duce the risk of food wastage dur­ing stor­age and trans­porta­tion, a com­mon prob­lem in Africa, Li said.

In ad­di­tion to pro­duc­ing stor­age units for African gov­ern­ments, the com­pany will also make si­los that can hold up to 100 tons for African farm­ers to se­curely store their har­vests. Bril­liance Auto Group, a Chi­nese car­maker, has an­nounced plans to restart its as­sem­bly line in Egypt this year. The fa­cil­ity ran from 2006 un­til it was sus­pended in 2009. The move is part of ef­forts to ex­pand into other North African mar­kets and fur­ther south.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.