Factories manufacturing Chinese goods are relocating to Egypt during the trade war, shedding light on the shift in global production hubs.
Ina quiet corner of Cairo, Jiahao's humble guest house was previously a brief stop for Chinese tourists to catch a glimpse of the famous Egyptian pyramids. But this spring, the scene changed drastically, drawing a new breed of guests.
Jiahao, the 26-year-old hostel owner, started welcoming weary businesspeople from China and Southeast Asia - seasoned entrepreneurs who were in Egypt for a fight - a fight for survival.
"Nowadays, I'm booking extended stays for these folks," Jiahao explained. "I escort them to meet local officials, help with translations, and even sit in on investment negotiations."
These meetups are part of a transformative wave in global supply chains, as a flood of Chinese manufacturers set up Egyptian factories. They're on a mission to find sanctuary in Egypt, a sanctuary from sky-high US tariffs.
Since Chinese exporters started feeling the sting of US tariffs during Donald Trump's first term, they've been frantically moving production processes to other countries. Southeast Asia was their first choice, but with those areas becoming targets of steep US duties, many manufacturers have set their sights on Egypt.
Egypt offers enticing advantages for Chinese manufacturers:- Its strategic trade agreements, encompassing the US, Europe, the Middle East, and Africa, can help Chinese businesses skirt tariffs by exporting from Egypt instead of China.- Egypt boasts a cost-effective labor market and offers government incentives to foreign investors, making it a tempting destination for labor-intensive manufacturing.- Egypt's strategic geopolitical position, situated between Africa, Europe, and the Middle East, enhances logistics and distribution channels for both local and export-oriented production.- Lastly, Chinese companies aim to localize production, transfer technology, and expand their presence in the region, rather than purely aiming to avoid tariffs.
This trend illustrates a broader shift in global manufacturing, where companies search for new bases to compete amidst restrictive trade policies in traditional markets. The ever-growing Chinese investment in Egypt, now surpassing $8 billion from 2,800 companies, reveals these strategic considerations and the deepening economic bond between Egypt and China.
The businesspeople Jiahao hosts are seasoned entrepreneurs seeking sanctuary for their manufacturing industries in Egypt, as they aim to evade sky-high US tariffs on Chinese exports. The increased investment from China in Egypt, surpassing $8 billion from 2,800 companies, reflects a broader shift in global manufacturing, where companies competitively seek new bases, like Egypt, to circumvent restrictive trade policies in traditional markets.
