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Weak Participation of Egyptian Ready-Made Garments Companies in Global Value Chains

By: Saleh Abdo ( Translation from Arabic: Nobeltex Egypt)

The textiles and ready-made garments industry is the second-largest industrial sector in Egypt. It represents 34% of the industrial output and 11% of the total Egyptian exports, with average annual exports of $ 3 billion during the last 3 years, half of which are ready-made garments.

A 1% increase in participation in global value chains is equivalent to a 1% increase in per capita income, as well as an increase in foreign exports and an increase in attracting foreign investment.

Less than 20% of the companies working in the manufacture of ready-made garments export their products. The top 20 exporting companies represent 50% of exports. This is one of the reasons for the weakness of Egyptian exports, due to the dependence on a small number of exporters, and also for the return of most exports to low value-added products (compared to competitors such as China, Bangladesh and Turkey).

Foreign investments in the ready-made garment sector represent a large proportion of the top 20 exporters of ready-made garments.

Egypt exports about 56% of its exports to the United States market, 35% to the European Union market, about 6% to Turkey, and about 3% to the Gulf Cooperation Council countries.

The average global imports annually are about half a trillion dollars, and the Egyptian market share is about 5 per thousand.

Opportunities will be represented in the direction towards the use of synthetic fibres in the global value chain for clothing, and opportunities for growth, especially in Egypt, in light of the availability of chemicals, natural gas and silica.

It is expected that enhancing sustainability and transparency will improve the competitiveness of the Egyptian exports, as European, American and Japanese markets are looking for sustainable production and operations through the value chain to find opportunities in those markets.

It is also possible for Egypt to diversify its export markets in light of its distinguished geographic location, and it is expected that India, China and Japan together will constitute the largest market for clothing, surpassing the markets of the United States and the European Union.

The integration of the supply chain in Africa for ready-made garment products is currently under the study of the World Trade Center. There are great opportunities for exports of production inputs to North Africa markets, Tunisia and Morocco.

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