White Goods
THE EGYPTIAN WHITE goods industry dates to the 1960s, when large state-owned companies dominated the domestic production of household appliances. As the economy began to liberalize in the mid-1970s, several privately owned companies started to appear on the manufacturing scene.
Decades later, the picture has totally changed: The public sector manufacturers of yesteryear have been replaced by a new breed of high-tech manufacturers that have not only taken the local market by storm, but are also developing export markets and positioning themselves for regional expansion.
There are presently 246 companies active on the Egyptian manufacturing scene producing everything from air conditioning units, fans and heaters to refrigerators, dishwashers, washing machines, electric water heaters and gas cookers (ovens and stove-top ranges).
Between 2001 and 2007, output of the Egyptian household appliance industry increased by EGP 33.6 billion, an increase of 54%. The industry currently employs some 45,000 workers.
Air conditioners account for 45% of national white goods production, followed by household refrigerators at 26.5%. The private sector now dominates the production of both household and commercial appliances in Egypt, accounting for 97% of total domestic production.
Household and commercial refrigerators and air conditioning units are the most important sub-sectors within the Egyptian white goods industry. Egyptian exports of air conditioning units have increased dramatically from 77,000 in 1996/97 to more than 1 million units in 2003/04. Exports of refrigerators and electric heaters also saw significant increases during the same period.
The industry's increase in output has been supported by surging domestic demand, which has been growing at an annual rate of 6% on average. The nation's large population works the industry's advantage in two ways, providing both a large domestic market and a significant pool of competitively priced, trainable workers.
Exports
Household appliances are one of Egypt's promising export sectors. The many comparative advantages that manufacturers in this sector enjoy have helped to significantly boost exports in recent years: In 2006/07, exports of household appliances including air conditioners, household refrigerators, televisions, telephones and radio sets rose 130.2% to US$ 307.6 million, compared to US$ 133.6 million in 2004/05. Air conditioning units account for the bulk of Egyptian appliance exports at 43%, followed by stoves and refrigerators.
In a study published by the Egyptian Cabinet Information and Decision Support Center, Egypt's white goods industry has a revealed comparative advantage (RCA) of 1.52, which compares favorably to the 1.55 scored by Italy — one of the world's most competitive manufacturers of white goods. When exceeding 1, an RCA indicates that a country enjoys export competitiveness in a particular product or sector.
With a web of free-trade agreements that includes the European Union, COMES A and the Arab world — and close physical proximity to these key markets — Egypt is uniquely positioned to help white goods manufacturers gain access to larger consumer markets and thus realize significant economies of scale.
Key Players
Market leader Olympic Group (OG), a publicly listed company that also owns a 90% stake in the white-goods giant IDEAL, has a number of key international partners, suppliers and licensors including Electrolux (Zanussi), Daewoo, leading Dutch manufacturer Philips, Turkish conglomerate KOC Group and Merloni International Group (ARISTON and Indesit).
These strategic partnerships have allowed OG to expand regionally. The company has nine factories. 32 distribution centers and 45 service centers in Egypt as well as corporate and retail outlets in Saudi Arabia and Dubai. OG's annual sales amount to 300,000 washing machines, 600,000 refrigerators, 750,000 electric water heaters and 600,000 ovens.
OG has recently entered into a partnership with Swedish-based home appliance manufacturer Electrolux. The new alliance is a win-win situation for both OG, which will further expand its production facilities, and Electrolux, which will gradually shift its production base away from Europe, lower its manufacturing costs and gain access to new markets in the Middle East and African.
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