(Yicai Global) March 17 -- Chinese home appliance giants, including Haier Group and Midea Group, are increasing their investments in Egypt to increase their exports to the Middle East and North Africa.
Haier recently broke ground on the Haier Egypt Ecological Park in a city called the 10th of Ramadan to make Haier-branded white goods to be sold in Egypt and exported to other countries in Africa, the Middle East, and Europe, Yicai Global learned from the Qingdao-based firm.
Egypt is becoming a hot spot for Chinese firms to improve their global supply chains due to its location and links to other members of the League of Arab States.
Haier's 200,000-square-meter project requires a total investment of USD160 million. First, the plant will make air conditioners, washing machines, and television sets. Later, it will also produce refrigerators and freezers. The planned total capacity will be over one million units.
The park is set to provide over 2,000 local jobs. Haier will actively advance the construction of home appliance industry clusters to help made-in-Egypt products go abroad, according to Li Huagang, chairperson of Haier Smart Home.
Midea, Vanward Join the Club
Other Chinese firms have taken note of the region's potential. Egypt's Prime Miniter Mostafa Madbouly visited Midea's dishwashing machine plant yesterday, the Foshan-based company said in a statement on its WeChat account.
The 60,000-sqm factory cost over USD25 million to build and it has a maximum annual capacity of 1.5 million units. As much as four-fifths of the products will be exported to other parts of Africa, the Middle East, and Europe.
Midea will increase its investments in the plant to localize research, development, production, and talents, said Chen Weiwei, who is in charge of the facility. Moreover, the Chinese firm has another factory in an Egyptian city called the 6th of October, and 60 percent of the parts of the water heaters it makes there are locally produced.
Vanward New Electric, another Chinese white goods manufacturer, intends to set up a base in Egypt to make water heaters and parts, Chairman Lu Yucong told Yicai Global last month. The Guangdong province-based company is investing abroad to avert trade risks due to geopolitical and economic uncertainties.
Made-in-China to Become Made-in-Egypt
People are buying more Chinese products so firms have confidence in localizing production.
Last year, the Asian country exported USD7.8 billion worth of home appliances to more than 20 Arab League members, including Saudi Arabia and the United Arab Emirates, up by 11 percent from 2021 as the Covid-19 pandemic eased and the spending power of oil-rich countries increased amid the European energy crisis. Among them, shipments of AC units jumped by 26 percent and those of gas shower heaters surged by 64 perfect year-over-year.
Egypt is close to the Middle East and other Northern African countries so it has geographical advantages, according to Zhou Nanxiang, secretary-general of the home appliance arm of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products. Establishing plants in Egypt helps Chinese firms add a strategic point for their global supply chains so they can expand in the Arab League markets, Zhou added.
Editors: Zhang Yushuo, Emmi Laine, Xiao Yi