Why Should Chinese Textile Enterprises Choose Egypt As The First Choice In Developing African Market?

Under the background of China's textile and clothing market continuing to be depressed, Chinese textile enterprises have turned their eyes to the African market with large market potential, weak local industrial foundation and low textile and garment production capacity. Egypt has become the first stop for many Chinese textile enterprises to explore the African market.

Why do Egyptian textile enterprises choose China as the first choice?

The General Administration of Customs of China pointed out that China's textile and clothing export mainly faces four major pain points:

1) The internal demand continues to be low;

2) The business scene is deteriorating;

3) Export costs are falling rapidly;

4) Independent brand growth lags behind.

In the first half of 2015, there were more than 10000 textile and garment enterprises in China, but most of them were unlicensed, OEM or licensed export enterprises. However, when such enterprises turn to the international market after export setbacks, they are faced with various problems, such as no brand, no domestic sales experience and no distribution channels.

Therefore, the African market with large market potential, weak local industrial foundation and low textile and garment production capacity has become a new arena for Chinese textile enterprises to compete, while Egypt has become the first stop for many Chinese textile enterprises to explore the African market. However, according to the analysis of China Africa Trade Research Center, there are many reasons why Chinese textile enterprises are optimistic about Egypt's textile and clothing market.

1. Good policy environment

Egypt's import and export trade is mainly based on imports and relies on the international market to a certain extent. In order to promote the development of foreign trade, Egypt has taken a series of measures, such as further trade liberalization, reducing tariff, reducing operating costs, enhancing the transparency of foreign trade management, taking incentive measures, improving port services, customs procedures, quality control and product standards. These provide a good market environment for foreign enterprises to enter the Egyptian and Middle East markets.

2. Huge market potential

Egypt's textile and clothing market is the second largest in Africa, second only to South Africa, and has a huge demand for high, medium and low-grade textiles. Egypt's men spend an average of $550 a year on clothing, while women spend more than $900, compared with Egypt's limited production capacity. There are less than 1000 local factories in Egypt, and a large number of yarns and finished fabrics need to be imported from other countries. For Chinese enterprises, there are huge business opportunities in both trade and investment.

3. Favorable geographical location

Egypt's connection with Eurasia is not only the only way to enter Europe and America, but also the gateway of Africa to the world. It also has maritime and air transportation links with European, Asian and African countries, as well as land transportation network connected with African countries. Therefore, in addition to its own large demand, Egypt is also a textile import and export trade distribution center.

For Chinese enterprises, investing in the establishment of textile enterprises in Egypt means that in addition to entering the Egyptian domestic market, they are also facing the Middle East, Africa and major European and American markets.

In addition to significantly reducing transportation costs, Egypt's free trade agreements with the European Union, COMESA and Arab countries, as well as the qualified industrial park (QIZ) agreements signed with Israel and the United States can effectively avoid trade barriers, and more actively produce clothing and textiles for export to EU countries and the United States.

4. Political advantages of China and Egypt

In addition to the above advantages of Egyptian market itself, Chinese enterprises also have political advantages in opening up the Egyptian textile and clothing market. In recent years, China Egypt economic and trade cooperation between China and Egypt has become the first bright spot in the establishment of diplomatic relations between China and Egypt. The Egyptian government has also expressed through various channels that Egypt's economic recovery plan hopes to attract the attention of Chinese enterprises. This is very good news for Chinese enterprises.

According to the analysis of China Africa Trade Research Center, the reason why Egypt has become the preferred entry point for many Chinese textile enterprises to explore the African market is that, in addition to the advantages and temptations of the Egyptian market itself, it also benefits from the long-standing good cooperation relationship between China and Egypt in politics and economy and trade. In the period when Chinese textile enterprises can "go out" to get rid of the current industry downturn, Egypt and even the entire African market undoubtedly become a new hope for the transformation and upgrading of China's textile and clothing industry.