Egypt - Oriental Weavers announced on Wednesday that it intends to withdraw its investments in China after the company’s Board of Directors approved the liquidation of its assets in the country after a study was conducted.
Yasmine Al-Gohary —Investor Relations Manager at Oriental Weavers — told Daily News Egypt that the cost of running the operation in China became high, especially after the breakout of the coronavirus pandemic in 2020, due to the frequent closures of factories and the reduction of working hours, which affected the company’s operations, explaining that the company’s assets in China represented 0.3% of the total assets.
She added that the company intends to invest $10m in 2022 in the company’s expansion operations to increase production capacity and keep pace with demand.
Earlier, the company said that its subsidiary, OW China — which is operating in the Tianjin Industrial Zone — contributes only 1% of its revenue, and that China is a major competitor to it in several export markets, especially in the field of printed and non-woven carpets, which represents about 20% of sales.
Al-Gohary also pointed out that the proportion of raw materials that the company imports from China amounts to 5% of its total imported raw materials.
Oriental Weavers owns a giant factory network that includes 31 industrial facilities distributed across Egypt, China, and the US, with Egypt accounting for 95% of the production operations.
Mubasher Securities Research said that Oriental Weavers is currently building a new production facility called ‘Nefertari’ that includes 22 looms and a carpet finishing area at a total investment cost of $50m.
The research added that the project will be implemented in three phases, with the first including the installation of eight looms, the second comprising another eight, and the final involving six.
The management’s strategy is to increase the number of showrooms all over Egypt within the next three years in order to maintain the company’s market share. It also intends to expand online sales through the Carpets Online platform and by increasing its presence on social media.
She emphasised that the company’s strategy for the second quarter (2Q) of 2022 is to shift the focus towards wholesale as a distribution channel to bridge the gap caused by the import restriction environment.
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