Chinese companies expand in Egypt
More Chinese companies are setting up shop in Egypt or expanding existing operations thereto 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, inJanuary 2012. Located in the China-Egypt Suez Economic and Trade Cooperation Zone, thecompany 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 itsproducts－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 inEgyptian fiberglass. “Two Chinese companies have started businesses in the economic zoneto supply us with materials, while an Egyptian factory has upgraded its technology andincreased 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-levelexecutives, and 60 Chinese. Yang said the Chinese contingent will not be increased to handlethe extra capacity.
He explained that the company chose to set up a base in Egypt because of the country’slocation and the preferential trade policies it enjoys in other markets. “If you export fiberglassto 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 fromEgypt, nor any anti-dumping and anti-subsidy duties.”
Also, it takes at least a month to ship goods from China to Europe, but from Egypt it takesonly 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,” headded.
In early 2013, Muyang Co Ltd, China’s largest feed machinery manufacturer in terms ofrevenue, also teamed up with the China-Africa Development Fund to establish Muyang Egyptin the China-Egypt Suez Economic and Trade Cooperation Zone. Together, they made aninvestment of $74 million.
The first phase of the project went into operation in December. Annually, Muyang Egypt aimsto produce 5 million tons of silo storage units, 6,000 tons of steel structures and 50 units offeed machines, a combined sales value of $150 million.
Li Xiangdong, manager of Muyang Egypt, said the factory is in answer to the Belt and RoadInitiative, which is an ambitious strategy aimed at better connecting Asia, Europe, the MiddleEast and Africa through infrastructure projects.
“The Chinese government’s preferential policies have provided us with a very goodinvestment environment,” he said, adding that the Egyptian subsidiary’s products can easilybe shipped to markets in the Middle East and Africa via the Gulf of Suez, while cheap laborcosts had reduced overheads.
Muyang Egypt will initially concentrate on making silos that reduce the risk of food wastageduring storage and transportation, a common problem in Africa, Li said.
In addition to producing storage units for African governments, the company will also makesilos 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 linein Egypt this year. The facility ran from 2006 until it was suspended in 2009.