Chinese imports prove costly to Egypt
Al Khankah - The only sound heard outside the al-Naquib clothes factory came from stray dogs roaming the area north of the Egyptian capital. Two of the factory’s three gates were firmly closed and a bodyguard had little to do other than remember the good old days when the area was so busy he had little time to rest.
Inside the factory, in Al-Khankah, a city in Qalyubia province about 35 km north of Cairo, scores of sewing machines sat unused.
This was a factory that used to thunder with industry. From the time it opened almost 13 years ago, its sewing machines produced thousands of brightly coloured clothes that were very popular in the local market.
The sewing machines remain but almost two-thirds of the workers are no longer present.
“There isn’t demand in the market any more for these machines to run,” said Mohamed Ahmed, the factory finance manager. “We also have to continually slash our work to be able to pay the few workers who remain.”
Thousands of factories are closing in Egypt, not because of a lack of market demand, raw materials or trained workers. The closures are because of the introduction of cheap, low-quality imported goods, mainly from countries such as China.
China is exporting huge amounts of manufactured goods, including clothes, radios, mobile phones, kitchen tools, computers and even cars. The competition is wiping out local industries, forcing the closure of factories and causing hundreds of thousands of workers to lose their jobs.
The cheap Chinese imports are giving poor Egyptians access to products they could not previously afford. The flood of imports makes the wallets of local importers swell but local manufacturers, who find it impossible to compete, go bankrupt. Economist Rashad Abdo said he expects Chinese imports to wipe out national industries in the near future.
“Chinese goods can be found wherever you go in our country,” said Abdo, the head of local think-tank Egyptian Forum for Economic Studies, “but this destroys the national economy.”
Egypt imported $1.9 billion worth of Chinese goods in the first quarter of 2015, a 42% increase from the same period of 2014, according to Egypt’s Chamber of Commerce. In 2014, Egypt imported $8.5 billion of China-produced goods, the chamber said, noting that, in 2013, Chinese goods brought in legally were worth $6.6 billion.
Almost double or even triple that amount of goods, economists say, enters Egypt illegally, hampering the national economy and devastating local industries.
About 5,000 shoe factories and workshops have closed because of the presence of cheap Chinese shoes in the Egyptian market, according to Gamal al-Samaluti, the head of the Leather Industries Section at the Industries Federation, a guild of Egyptian manufacturers.
Egypt’s national tobacco maker, Eastern Company, has incurred millions of dollars in losses because of more than 122 cheap Chinese cigarette brands smuggled into Egypt every year, according to Abdo’s forum.
More dangerous, the Chinese are also invading Egypt’s small crafts market, which employs millions of Egyptians.
A friend called Abdo recently and told him he could send a female Chinese hairdresser who would charge him 5 Egyptian pounds (63 US cents) to cut his hair at his home. A local hairdresser would charge him at least 20 pounds (around $2.50) for the same service.
Egypt used to export raw materials and import manufactured goods, but Egyptian raw materials, including the country’s long-time staple cotton, are losing market share to cotton grown in India and Pakistan.
In the al-Naquib factory, there are no winners. The factory used to operate 24/7 providing garments for a thriving market. Now, the factory is in production eight hours a day and sometimes shuts its doors because owner Mohamed al-Naquib is unable to pay the wages.
“We are losing everything,” Naquib said. “The situation in all other factories is not better either.”
Downstairs, in the factory’s warehouse, rolls holding thousands of metres of coloured fabrics lie unused on the floor.
The warehouse keeper looked in pain at the cloth rolls and expressed hope something could change the realities.
“Something must be done,” Osama said. “There were better times.”