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Newsletter: Why should Chinese textile enterprises choose Egypt to develop the African market?

Newsletter: Why should Chinese textile enterprises choose Egypt to develop the African market?

In the context of the sluggish domestic demand in China's textile and apparel market, Chinese textile enterprises have turned their attention to the African market, which has great market potential, weak local industrial foundation, and low textile and apparel production capacity. Egypt has become the first place for many Chinese textile enterprises to explore the African market. stand.

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Why should Chinese textile enterprises choose Egypt to develop the African market?

The General Administration of Customs of China pointed out that China's textile and garment exports mainly face four major pain points:

1) Continued sluggish internal demand;

2) The business scene continues to deteriorate;

3) Rapid decline in export costs;

4) The development of independent brands lags behind.

In the first half of 2015, more than 10,000 textile and garment enterprises opened in China, but most of them were unlicensed, OEM or fixed-label export enterprises. However, when such enterprises turn to the international market after export setbacks, they face various difficulties such as no brand, no domestic sales experience, and no distribution channels.

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

1. Good policy environment

Egypt's import and export trade is mainly based on imports and has a certain dependence on the international market. In order to promote the development of foreign trade, Egypt has adopted a series of measures to further liberalize trade, reduce tariffs, reduce operating costs, enhance the transparency of foreign trade management, adopt incentives, and improve port services, customs procedures, quality control and product standards. These have provided a good market environment for foreign companies 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 huge demand for high, medium and low-grade textiles. The average clothing consumption of Egyptian men is US$550 per year, and that of women is more than US$900, which is in contrast to Egypt's limited production capacity. There are less than 1,000 local factories in Egypt, and a large amount of yarn and finished fabrics need to be imported from other countries. For Chinese enterprises, there are huge business opportunities in terms of trade and investment.

3. Favorable geographical location

Egypt is connected to the Eurasian continent, which is not only the only way to enter Europe and America, but also the gateway for Africa to face the world. It also has sea, air and land transportation networks connected with European, Asian and African countries, and connected with African countries. The transportation is convenient. Therefore, in addition to its large demand, Egypt is also a distribution center for textile import and export trade.

For Chinese enterprises, investing in the establishment of textile enterprises in Egypt means that in addition to entering the Egyptian domestic market, they also face 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, the Common Market for Eastern and Southern Africa (COMESA) and Arab countries, as well as the Qualified Industrial Zone (QIZ) agreements signed with Israel and the United States, under the benefits of these agreements, can Effectively circumvent trade barriers, more actively produce clothing and textiles, and export to EU countries and the United States.

4. The political advantages of China and Egypt

In addition to the above-mentioned advantages of the Egyptian market, Chinese enterprises also have political advantages in developing the Egyptian textile and garment market. Among African countries, Egypt is the first country to establish diplomatic relations with China. The economic and trade cooperation between China and Egypt has maintained a rapid and healthy development momentum in recent years and has become a highlight of China-Africa cooperation. The Egyptian government also expressed through various channels that Egypt's economic recovery plan hopes to attract the attention of Chinese companies. This is very good news for Chinese companies.

According to the China-Africa Trade Research Center, the reason why Egypt has become the first choice for many Chinese textile enterprises to explore the African market is not only the temptation of the Egyptian market itself, but also the long-standing political and economic cooperation between China and Egypt. partnership. In the period when Chinese textile enterprises can only get rid of the current downturn in the industry by "going out", Egypt and even the entire African market will undoubtedly become new hopes for the transformation and upgrading of China's textile and garment industry.