Chinese textile city to harm Egypt’s domestic industry

Setting up of a Chinese textile city in Egypt will severely harm the debt-ridden domestic apparel manufacturing industry that operates with antiquated equipment and machinery, feel domestic producers and textile industry experts. The Mankai Textile Industrial Park will have 592 factories, making it one of the largest specialised industrial zones.

Pilot operations of the Chinese industrial city’s first-phase factories will start in May, a report in an Egyptian newspaper quoted minister of commerce and industry Amr Nassar as saying.

All phases of the project in Sadat City, 90 km north of Cairo, are expected to be completed within four years. The value of the total annual production of the project, once it becomes fully operational, will be about $9 billion.

Mufrih el-Beltagy, president of Misr Ameriya Spinning & Weaving Company, said new textile and clothing city spells the end of the Egyptian textile industry, especially because the project’s output is meant for the domestic market instead of export.

The Egyptian ministry of business sector allocated $1.5 billion to update state-owned spinning and weaving companies but the process has been reportedly difficult.

Of the 32 companies of the state-run Cotton & Textile Industries Holding Company, 22 are operating at losses totalling nearly $152 million.

Egypt’s domestic textile industry is facing economic reform measures, especially the lifting of energy subsidies, implemented by the government more than two years ago. The industry had grown with governmental support and protection since its inception.

The Chinese units will rely on digital automation, greatly reducing labour costs and making matters more complicated for domestic manufacturers. In Egyptian textile factories, and especially the state-owned ones, about 74 per cent of revenues go to wages, compared to 13 per cent in global companies.

Mohamed el-Morshedi, head of the Textile Industries Chamber of the Federation of Egyptian Industries, said the new park should focus on foreign markets.

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