The Egyptian industry will have to rely to a large degree on negotiating a favourable free trade agreement with the US before the end of 2004, to avoid being outbid by competitors in major clothing buying centres, visitors to the fair agreed. .
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The Egyptian textile and garment sector performance, particularly during the 1990s, was not overly impressive – taking into account the comparative advantages that the industry enjoys. .
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According to statistics from the United Nations Industrial Development Organization (UNIDO), Egypt share of the value-added end of the global textile industry (excluding China), decreased from 2.2% in 1990 to 1.9% in 2000. .
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Since 2000, things have improved in a seemingly dramatic manner. The Sahara consulting group estimates total Egyptian textile and garment exports in 2003 at more than US$1.2 billion. .
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Garment exports have increased at a much swifter pace (possibly up 40% since 2000) than those of fabrics, for which sector growth is estimated at 15% over the same period, while cotton yarn sales grew by 10%. .
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But even with a happier outlook in statistical terms, experts believe the Egyptian clothing and textile sector is ill-prepared to perform well in the quota-free global scenario come 2005. .
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Public and private efforts to improve the balance between the industry strengths and its weaknesses may have been undertaken too little and too late, commentators said. .
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That viewpoint persists despite the fact that the Egyptian industry has some enviable advantages. .
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For its lustre and length of fibre, Egyptian cotton is considered the best in the world. Some 68% of website visitors participating in a 2002 survey by US textile company Westpoint Stevens responded by saying that they preferred bed sheets made of Egyptian cotton. .
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According to Kiran Panchal, who recently advised the Egyptian government in matters of restructuring the textile industry, US and EU buyers happily pay a 10% premium for Egyptian cotton yarn.Labour costs are comparatively low in Egypt, partly due to the 42% devaluation of the Egyptian Pound in 2003. .
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Glass Co, a successful exporter of woven bottoms, is paying its staff US$250 to US$350 monthly and its workers US$70 to US$100 per month. .
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In 2003, British producers Derek and Lorraine Marsden set up their company, Coral Sun & Swimwear, in Egypt to produce licensed designer swim wear for the local tourist market. .
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The pair believe that a combination of low labour costs (their best workers are paid only US$100 per month each), good geographical position and the duty free zone system could allow Egypt to develop into a booming swimming and beach wear production centre. .
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German market leader Solar offered the British team a CMT-contract requiring a consignment of 900,000 swimming costumes and intend to also approach other swim wear contractors. .
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However, average productivity in the Egyptian textile and garment industry is reputedly low, especially in the public sector. .
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According to Ahmed Semida of the Egyptian Federation of Textile Manufacturers, local industrialists still account for 90% of spinning, 60% of weaving, 40% of knitting operations in the country. .
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Egypt key exports of clothing consist of underwear, shirts, T-shirts and polo-shirts as well as woven bottoms. The country also has substantial export trades of towels, bed sheets and carpets. .
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Egyptian cotton is used for most products exported to Europe, but US-bound goods tend to be based on imported raw textile materials. .
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Egypt is importing around 40,000 tons of cotton yarn as well as 40,000 tons of acrylic and 250,000 tons of polyester yarn per year. Fabrics for woven apparel are mainly sourced from China, India and Pakistan. .
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Two Chinese exporters, who exhibited at Egytex 2004, were bullish about export opportunities. Wen Songnan, owner of Longma, the world largest producer of chenille yarn and fancy yarns – manufacturing some 30,000 tons annually – compared his prices favourably with those of competitors. .
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Wen quoted a cost of US$3.5 per kg, while Turkish competitors offered US$5 per kg. .
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Wilson Ye, manager of the large Jiangsu Qingyin Group, said the cotton fabrics he offered Egyptian buyers were 20% cheaper than those of competitors.Though 87% of Egyptian clothing exports are MFA-restricted articles, exporters seem not to be troubled by quota problems. They are, however, worrying about 2005 and the elimination of quota. .
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Some feel that, after the lifting of quota in January 2005, Egyptian woven apparel exports to the US will dramatically decrease, unless Egypt manages to negotiate a free trade agreement with the US before the end of 2004, with terms similar to the FTAs the US recently signed with Jordan and Moroccom. .
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This agreement is expected to require that between 8% to 13% of material used will be sourced from Israel, which in the past was unacceptable to the Egyptian government. .
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Equally pressing is the technical deficiencies of the industry in Egypt, where the garment industry is said to lack both design and marketing skills. .
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Several fashion schools have emerged in the last few years, and some garment companies like Samakhia Brothers, with its Emperor brand, tend to create their own designs. .
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However self-brands are still rare. Even the leading A-Arafa group, an important supplier to the UK Marks & Spencer, seems to rely more on foreign designs from the likes of Pierre Cardin and Guy Laroche, rather than on its own design team. .
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Many Egyptian exporters are glad of their orders to Hong Kong Li & Fung, which represents some 30 major US and EU brands and has offices in Cairo, Dubai and Istanbul. .
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Egyptian companies that cater to the domestic market of 70 million consumers, operate in an atmosphere in which liberalisation has been promised but where locally-owned industries are still well protected. .
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A promising sign is that the ban on imports of clothing were removed in 2002. Import duties were reduced in January 2004 but remain high: 12% for yarns, 22% for fabrics, 35% for home textiles and 40% for apparel. .
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The 12 million population of Cairo is well served with locally produced foreign brands and Egyptian-made clothing. However, according to local sources, the majority of the garments sold in the street markets originate from China. .
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The textile and clothing industry is of vital importance to the Egyptian economy, providing at least a million jobs. Several cities, such as Mahalla El Kubra and the 10th of Ramadan, are very dependent on textile employment. .
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Misr Spinning & Weaving, one of the 140 textile companies in Mahalla, is the largest enterprise of its kind in Africa and the Middle East, employing 23,000 workers. .
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Not surprisingly, the government supports several programmes to prepare the textile industry for 2005 and beyond, Egyptian experts at Egytex said. .
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The Egyptian Textile & Clothing Technology Center (TCTC), founded in 2002 by the international consultants Werner International and the Egyptian Ministry of Industry, enjoys EU support. That support has so far amounted to a two-year, Euros 5 million programme, and TCTC intends to beef up the technological level and marketing capabilities of 100 textile and garment companies.
Date:6/2/2004
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