|12 February, 2020

Egypt vulnerable to prolonged coronavirus outbreak

China is among the top 10 trade partners for Egypt

Nile river at dusk. Image used for illustrative purpose.

Nile river at dusk. Image used for illustrative purpose.

Getty Images

Egypt’s trade and supply chain links with China could get disrupted if coronavirus outbreak gets prolonged, local trade representatives interviewed by Zawya Projects said.

China is one of the top investors in Egypt with a total investment of $7.2 billion through 1,320 Chinese companies, according to the Egyptian Ministry of Trade and Industry.

The Chairman of China Committee Chairman of Egyptian Businessmen Association (EBA) Ahmed Mounir Ezz El Din said exports of fresh agricultural produce, which accounts for 20 percent of Egypt’s exports to China, have been hit by cancelations and delays by Chinese importers concerned about port closures.

While Ezz El Din didn’t quantify the impact, last month, official news agency Xinhua had reported that Egypt exported fruits worth $140 million to China in 2019, the basket mainly comprising of oranges, grapes, dates and sugar-beet pulp. In the previous month, Xinhua reported that Egyptian oranges had a 40 percent market share in China.

The EBA official pointed out that the outbreak has also disrupted business visits in both directions.

“China cancelled an important visit scheduled for February to sign agreements to facilitate and increase the exports of Egyptian products to China,” he said.

Ezz El Din said trade between Egypt and China grew to $10 billion in the past 10 years, and approximately 300,000 Chinese tourists visit Egypt annually.

Last month, local news portal Egypttoday.com reported that the Association of Egyptian Travel Agencies has banned tourism flights from and to China until further notice.

Mohammed Al-Mohandes, Chairman of the Engineering Industries Chamber of the Federation of Egyptian Industries (FEI), said local manufacturers that depend on China for raw material and components usually stock six- months inventory but local production would suffer if the outbreak prolongs.

Fathy El Tahawy, deputy head of the Household Equipment Division in the Cairo Chamber of Commerce, said Egyptian industries that rely on raw materials and components from China include electrical tools, marble, household appliances, plastic industries, textile and clothing industries, fashion accessories, paper and footwear.

He continued: “Many local companies depend on imports from China, whether they are manufactured products or components. Supply chain disruptions due to coronavirus are likely to cause shortages of products and spare parts and increase prices if the alternatives prove expensive.”

FEI’s Al-Mohandes said industries that rely on imports from China should look at local production or sourcing to reduce their dependence, citing as an example the domestic electrical appliances industry, which has achieved 72 percent localisation. 

He said that an agreement between Chinese investors and FEI members to set up a $50 million factory to make sanitaryware components for domestic and international markets is on hold due to the coronavirus outbreak.

Egypt imported 3 billion pounds ($191 million) worth of sanitaryware from China in 2019, he added.

The value of trade between the two countries stood at $13.8 billion in 2018, according to Ministry of Trade and Industry data. China was Egypt’s biggest source of imports in 2018 accounting for 14.22 percent of total imports and its 9th biggest export destination, World Bank data showed.

(1 US Dollar = 15.69 Egyptian Pounds)

(Reporting by Eman Hamed; Editing by Anoop Menon)

(anoop.menon@refinitiv.com)

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© ZAWYA 2020