Egypt is attracting interest from Chinese automotive suppliers as a possible production location from which to supply Europe.
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A delegation of Chinese automotive suppliers is travelling to Cairo to meet with Egyptian industry and development officials from 3-8 March.
Potential investors currently produce commodities such as door handles, glove box, intake manifolds, batteries, switches, pressed parts, plastics, safety glass, dies, and seating or provide logistics services.
The Egyptian government has been working with GM and Mercedes-Benz, which have CKD kit assembly plants in Egypt, to attract suppliers to the country. Chinese companies have been particularly interested in investing in Egypt because of its low costs. The opportunity to build a relationship with two global OEMs is an added advantage.
GM and Mercedes-Benz have been working with suppliers to help them set and meet quality standards. This is part of a quality improvement program funded by the Egyptian government.
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By GlobalDataRecent promotional measures include the preparation of a two million square metre site near the GM and Mercedes-Benz plants for suppliers who want to set up an export operation. A government package supports training and offers financial rewards for exports achieved in the first few years in operation.
Chinese companies are under pressure to globalise and export. According to Shah Firoozi, of the PAC Group, consultants supporting the Egyptian government to attract automotive foreign investment, China’s current five-year plan calls for companies to become international by looking for opportunities to expand overseas.
The programme is also supported by the German government. In April 2006 the German chancellor and Egyptian president made a joint commitment to support the growth of the automotive industry in Egypt.
Once companies are able to meet OEM targets in Egypt they will be added to global purchasing lists. For German companies, sourcing from Egypt is better than sourcing directly from China. Tier ones, too, are guiding suppliers who are shipping long-distance to consider Egypt as a solution, said Firoozi.
BMW and Hyundai also have assembly plants in Egypt.
The Chinese delegation follows a visit by a Japanese delegation last year.
The Egyptian supplier industry currently consists of around 300 plants, with exports of around $US105m in 2005.
