January 2019

Sourcing Opportunities

in Egypt

Textiles, Apparel and Home

Textiles Export Council of Egypt

Apparel Sector

THERE’S MORE TO

EGYPT THAN THE NILE AND SPHINX!

The clothing of men and women of several social levels of ancient Egypt are depicted in this tomb mural from the Eighteenth Dynasty (15th century BC).

Hedjhotep* in Hieroglyphs

* A minor ancient Egyptian deity, a god of fabrics and clothes and, to a lesser extent, of weaving and the deceased.

Sample of ancient Egyptian linen from Saqqara, dating to 390-343 BC

WHY EGYPT: DEMOGRAPHICS

98 mn 2.88% Average Annual Population Growth (2006- 2018)

Population

A Dynamic Labor Force 29 Million currently in

the labor force 700,000 Enter the Egyptian labor market annually

LARGE CONSUMER MARKET

Egypt has emerged as a consumer market of significant importance in

the region, as witnessed by the arrival of global brands and the sharp

expansion of retail sales in the past years. This is partly due to the

sheer size of Egypt’s population that put it as the most populated country in Africa and the Middle East.

WHY EGYPT: THE ECONOMY

Egypt’s Economy is stable with proven resilience. The Egyptian economy’s ability to post positive real economic growth rates amid the global economic downturn as well as during the political unrest that prevailed in 2011-2013 indicates how resilient economic activity in Egypt is.

5.1%

1.8% 2.2% 2.2%

2.9%

4.4% 4.3% 4.2%

5.3%

0%

1%

2%

3%

4%

5%

6%Annual Real GDP Annual Growth (%)

Diversity is a key strength in the Egyptian economy where growth is driven by many sectors, both conventional and unconventional. This enhances the economy's ability to absorb internal as well as external shocks. It also presents multiple opportunities for investors across many sectors.

Sectoral Growth Rates in Q4 2017/18 (%)

3.8%

-4.1%

0.1%

12.1%

6.8%

16%

9.4%

6.9%

7.2%

3.3%

5.5%

4.6%

11.0%

4.1%

12.5%

8.6%

4.0%

4.0%

-10% -5% 0% 5% 10% 15% 20%

Agriculture

Extractive Industries

Manufacturing

Construction & Building

Transportation & Warehousing

Telecommunications

Suez Canal

Wholesale & Retail Trade

Real Estate

Q4 2017/18 Q4 2016/17

110.0% 44.5%

-40% 10% 60% 110% 160%

Tourism

Sources: Ministry of Planning & Dcode EFC Calculations

1 Mn KM² Land Area

12-Day Shipping

USD 298bn

GDP (2018)

TEXTILE AND APPAREL INDUSTRY FACTS

100 mn Population

Apparel Investments 322.7 M/USD

1,500+ Garment

Factories +1.5 mn worker

USD 3 bn T&C

Output

50% of Garment production exported to

U.S.

Investment/Product diversity

Supportive infrastructure

Established competitive advantage

ATTRACTIVE SOURCING DESTINATION

Vertically Integrated Factories

INVESTMENT DIVERSITY

Cotton Production

Yarn Making

Weaving Dyeing

Ready Made

Garments Spinning

Investments Diversity

INVESTMENT DIVERSITY

All kinds of products (100% Cotton):

Twill

Canvas

Denim

Non-Denim

All kinds of single Jersey fabrics in all weights, starting from 90 grams x sqm until 260 grams (100% cotton or cotton blends):

Single Jersey w/Lycra Pique Pique w/Lycra All kinds of Rib: 1x1; 2x2; 2x1

Yarn dyed stripes Fleece Fleece Lycra

Egyptian Knitted

Products

Egyptian Woven

Products

PRODUCT DIVERSITY

Main Ports

Capacity (mn ton/year)

Alexandria 38

El-Dekheila 27

Damietta 20

East Port Said

13

Port Said 13

Suez 7

El-Sokhna 9

Adabiya 8

Total 135

SUPPORTIVE INFRASTRUCTURE

Airports

20 Railway Network

9,570 Kilometers

Road Network

108,784 Kilometers

In addition to:

Advanced testing labs & technology centers

Egypt’s Air Cargo Airport, located in Cairo, currently has

5 cargo terminals

Commercial river/sea ports

15

Key global markets in Europe, the Middle East, Africa and the Indian Subcontinent are all readily accessible from Egypt. Closer to the European and North American markets than other major exporters including India, China and the Philippines, Egypt is also located on key international logistics routes.

Egypt enjoys the existence of the Suez Canal, which is considered to be the

shortest link between the east and the west due to its unique geographic location. Approximately 8% of the world’s maritime shipping passes through the Suez Canal each year.

Vessels transiting through the canal from east to west or from west to east

make significant savings in distance, time and operating costs. Moreover, the maritime transport is the cheapest means of transport, with

more than 80 % of world trade volume transported via waterways (seaborne trade).

Egypt has access to large key markets through various multilateral and bilateral trade agreements with the USA, European, Middle Eastern and African countries; which secures benefits to Egyptian-based producers supplying these markets.

PROXIMITY TO GLOBAL MARKETS

CONTRACT TO SHIP DATE – LEAD

TIME

75 Days

Compared to 90 days in Turkey and 120 days in the Far East

COMPLIANCE

One of the competitiveness of the Egyptian Apparel industry for exports is social compliance.

CERTIFICATION

Most of the Egyptian Factories are certified Wrap Most of the Egyptian Factories are certified ISO Some factories are certified OEKO-TEX

BETTER WORK PILOT IN EGYPT

From July to December 2017, Better Work pilot implemented the second phase of its services in approximately 30 factories, primarily in Egypt’s garment export sector, to improve working conditions and boost business competitiveness .

Established at the request of the Government of Egypt, the pilot engaged

the government, manufacturers and their associations, all trade unions, international apparel brands and their suppliers.

Egypt is allowed to manufacture and export its readymade clothes and

furniture to Walt Disney Company based on ILO decision .

Apparel Egyptian Exports From 2011-2018 (M/USD)

Egypt Apparel exports to US market

Egypt Apparel exports to EU market

Apparel Exports Destinations in 2018

UK 7%

108 M/USD

74 M/USD

Italy %5

Belgium 1.5%

25 M/USD

Netherlands 1%

18 M/USD

Spain 9%

143 M/USD

Total Exports to EU

541 M/USD

Accounted for 34%

Germany 6%

93 M/USD

France 3%

53 M/USD

EGYPTIAN APPAREL EXPORTS DESTINATIONS IN 2018

United States 50%

Europe 34%

of which:

Spain 9%

Turkey 8%

UK 7%

Italy 5%

Germany 6%

Rest of the World 12%

France 3.3%

Belgium 1.5% Netherlands 1.1%

TOP 10 EXPORTING COMPANIES TO THE U.S. & EUROPE IN 2018

1-Lotus Garments. 2-Alex Apparels For Readymade Garments 3-Jade-Apparel-Industries 4-Giza Spinning & Weaving Co. 5-T & C GARMENTS 6-Delta Textile Egypt Factor y 7-Embee International Ind 8-Stars Fashion 9-C R S Denim Garments Egypt 10-Kazareen for Textiles 9-

1-Swiss Garment Company 2-Eroglu Egypt 3-Dice Sport And Casual Wear Factory 4-Velocity Apparelz 5-Jade-Apparel-Industries 6-Eurotex for Garments 5-C R S Denim Garments Egypt 8-Espranto Jeans Co. 9-Plaza Ready Made Garments Ind. 10-Iemco Garments Company

To the United States To Europe

APPAREL WORLD FACTOR COSTS COMPARISON IN 2018 Factor cost in Major Apparel Exporting Countries

Egypt has the lowest production cost Electricity ( 7 US cent /kwh)

Monthly Wage rate at (115$)

TRADE AGREEMENTS

Qualified Industrial Zones (QIZ)- with Israel & the Unites States Egypt-EU Association Agreement. Egypt-EFTA Free Trade Agreement. EFTA (Iceland, Liechtenstein, Norway and Switzerland). Agadir Free Trade Agreement. Greater Arab Free Trade Agreement (GAFTA). Pan Arab Free Trade Agreement. Common Market for Eastern and Southern Africa (COMESA). Egypt Turkey Free Trade Agreement. Egypt-MERCOSUR Free Trade Agreement.

QIZ PROTOCOL: KEY FACTS

924 881 820 824 850 691 729 797

2011 2012 2013 2014 2015 2016 2017 2018

Apparel exports under QIZ In M/USD

KEY BUYERS IN THE U.S. AND THE U.K.

WHY SOURCE FROM EGYPT?

Commercial Ports (16)

Quality Control

Experienced Managers

Competitive Power Cost

12- Day Lead Time

ACCREDITATION

Egyptian Apparel Exporters are complied with Global quality, health, safety and environmental standards .

TEXTILE SECTOR STRATEGY VISION 2025 Egypt to become the leading exporting MENA country in the Textiles industry, focusing on high and medium value added products catering to the world’s largest retailers and manufacturers with reliable and agile delivery.

STRATEGIC OBJECTIVES

Creation of 1 Million New Job Opportunity

Train 750,000 Workers, Supervisors and Managers

Increase exports to achieve USD 10 Billion

Attract local and Foreign Investments of USD 13.5 Billion

Increase the Value-Added to 70% of locally manufactured raw materials

STRATEGIC FOCUS

Expanding the Industrial Base through Developing and Enhancing the Competitiveness of local industry

Backward Vertical Integration of Industry, promoting investments into primary textiles and fiber production

Foster Export’s growth and market entry

Focus on Human Capital Development

Reform of Government policy

Upstream Downstream

INCREASED UPSTREAM & DOWNSTREAM

INVESTMENTS

Yarn

Fabrics

Apparel

Dyeing

&

Finishing

Home

Textile

Accesso-

ries

CORPORATE SOCIAL RESPONSIBILITY

”Your Job Next Door Initiative “

Contributing to the development of Upper Egypt through introduction of apparel production unites in small villages, The idea is creating small production unites in rural areas and areas where the unemployment rate is high, each unit will be adapted and supported by the big manufacturers in terms of quality, management, know-how and training as well as orders will be given to these unites to ensure their sustainability for 2 years, the main aim is creating a level of youth entrepreneurs and new job opportunities

The first phase of the project succeeded to establish 12 production units in Qalyoubia

Governorate, providing 1,000 direct jobs and 4,000 indirect ones. The production capacity of these units is between 60 - 70 thousand pieces per month per unit.

On the other hand, the council signed protocol with the Governor of Kafr El-Sheikh to

create another pilot of the initiative which aims at establishing 8 production units. Each factory includes about 70 to 80 machines according to the capacity of the factory to provide job opportunities from 200 to 300 workers.

INITIATIVES

“AECE and Textile Export Council Signed Memorandum of understanding with L ’Union des Industries Textiles UIT – France”

On the 12th of November 2017, AECE & Textile export council signed MOU with UIT to enhance and promote bilateral trade and industrial cooperation in the textile & fashion sector.

“AECE Export Council Signed a cooperation protocol with Confederation of Tunisian Citizen Enterprises CONECT– Tunisia”

On the 20th of December 2017, AECE export council signed cooperation protocol with Confederation of Tunisian Citizen Enterprises “CONECT “in Tunisia to enhance and promote bilateral cooperation in the field of foreign exhibitions and exchange of technological expertise in the apparel and fashion sector.

INITIATIVES- CONTD.

Supporting Small & Medium Enterprises “Joint Cooperation with upcoming USAID project TO”

Apparel Export council organized a meeting between number of SMEs companies and Chemonics Int. (one of the largest USAID consultants and project executors) to gain insights into the technical assistance or other needs to grow their exports.

Destination Africa 3rd Edition November 2018

Following the success of the Pan-African B2B textiles sourcing event in 2017, Destination Africa 2018 in its 3rd Edition Succeeded to attract 52 Egyptian and African manufacturers, 250international buyers from Top international Brands like Guess - Koton – Hugo Boss - Croccodillo - Perry Ellis – LPP - Li & Fung - Jerry Leigh - Cricket & Co – Pimkie - Haggar - Spring Near – VF – PVH – KIK - G Star with anticipated sales of $50 M.

Textiles, Apparel and Home Textiles Export Council of Egypt – Apparel Sector

Contact us at Address: 166 El Choueifat St.,Off El Tesaeen road,Fifth Settlement, New Cairo Tel/Fax: (+202)25656036 Mobile: (+202) 01000756728 Email: info@aecegy.com

Website: www.rmgec-egypt.com Facebook : https://www.facebook.com/ApparelExportCouncil