'Made in China' Now 'Made in Egypt'
I got a bit of flak for my last global sourcing post on how Some Companies Will Move To China but Others Will Move Closer To Home despite the fact that before the China revolution, Mexican manufacturing was all the rage -- and the fact that Mexico still has capability and lots of capacity. While my antagonists may be right in that some verticals will stay in China due to the significant investments that have been made in China in those verticals, not all verticals have made the same level of investment as the high-tech vertical, for example. Also, as per this recent article in Industry Week, even China is adopting near-sourcing!
According to the article, so far, around 950 Chinese companies have set up operations in Egyptian free zones, which represents a total investment of about $300 Million. The breakdown is about 55% (manufacturing) industry, 33% (service), and 12% other (agricultural, tourism, etc.). This is because Egypt is now offering cheap labor (as salaries compete with those in China), investment incentives, and unrestricted exports. Furthermore, given that China is already quite comfortable with Africa (where it invested 7.8B in 2008, up from $0.5B in 2003), this is just the beginning.
Categories: Manufacturing, China
Tags: China Free Trade Zone Outsourcing Egypt
Egypt is nearshore to China? That's certainly a flexible definition. It's Cairo is about as close to Beijing as Bucharest is to New York. There may be plenty of reasons for China to invest and buy in Egypt but being nearby isn't one of them.
"Nearshore" to China would be Vietnam or India or Mongolia
Here's a handy tool to judge proximity..or lack of it:
http://gc.kls2.com/
It's a loose definition of near-shore for sure, but not all that stretched. You know as well as I that China is big. Really big. 9,671,018 sq. km or 3,704,427 sq. miles, which makes it the world's third largest country by area. The distance from Harbin, Upper Right on the image, to Haikou, lower right, is 1736 miles or 2734 km. The distance from Harbin to Lhasa, middle, is 2215 miles or 3565 km. In comparison, the distance from Urumqi, China to Cairo, Egypt is only 3191 miles or 5135 km. This is not much longer than a land-route inside China from Harbin to Urumqi. Plus, with the exception of the Suez Canal (which China can clearly afford to build a brand spanking new bridge over if they were to broker a deal with Egypt), it's a pure land-route.