January 31, 2019
Marina Iskandar, Research Officer, Egypt Network for Integrated Development (ENID/ EL Nidaa)
Silk industry and its historic expansion is a good example of the globalization and can easily describe the massive infiltration of the Chinese production in the world market.[1] In fact the Sericulture industry and the cultivation of Mulberry trees are labor intensive activities which create employment opportunities for women and youth in the poorest rural areas.
Egypt Network for Integrated Development (ENID/ El Nidaa) team with a representative from IFPRI Egypt visited China in the last quarter of 2018 to learn from the Chinese experience in rural cluster development. Prof. Xiaobo Zhang, Professor of Economics at Peking University organized a three-day trip to Zhegiang province where the group visited industrial clusters located in Yiwu city and Shengzhou “the silk necktie cluster”. The purpose of the trip was to acquaint the group on the success stories of some of the silk producers along the value chain in light of China’s launching of the economic policy of reform and opening up 40 years ago.
Recently China directed its policies to importing products from the rest of the world after it was limiting its trade to only exporting to other countries. This new strategy opened new opportunities for developing countries like Egypt to introduce their products in the Chinese market for the middle class. Introducing new Chinese foreign direct investments (FDI) in the silk industry in Egypt can be beneficial for the two countries in terms of high-quality products and low labor cost of skilled workers in Egypt, especially in the South. In addition, Chinese FDI can potentially provide a sustainable source of income for rural communities working on the silk industry.
Potentials for Egyptian Silk Industry
The importance of reviving the silk industry has become more necessary recently in light of the devaluation of the Egyptian pound, which increases the export potential of all silk related products. That is why the government began to pay attention to the promotion of this industry as one of the means for achieving sustainable agricultural and rural development. The silk industry contributes to the provision of suitable employment opportunities for rural women and youth to meet the increasing demand domestically as well as internationally.
There is a high demand worldwide, specifically for Egyptian silk carpets (Figure 1). East Europe mainly relies on imports for its total supply of carpets, offering opportunities for Egyptian suppliers. In 2014, carpets from Egypt accounted only for 2.5% of total carpet imports. Eastern European imports of carpets from Egypt increased substantially from 2010 to 2014 by 27% annually.
ENID/ EL Nidaa’s silk project aims to revive this important industry in Upper Egypt via producing quality silk yarns and products to meet the growing needs in the local and foreign markets in addition to providing job opportunities for women in the household. The hand weaving of silk yarn will take place in the villages of Naqada in Qena governorate. On the economic front, the intervention is expected to promote Egyptian exports of highly demanded silk carpets, as well as natural silk apparel. On the environmental level, the intervention is ecologically harmless given that in the project we use solar energy to extract ground water for the cultivation and that it uses organic compost. Also the project is using natural colors for dying the silk threads.
China's Experience
ENID/ EL Nidaa team's trip to China included a visit to Zhejiang province, known as the “province of markets” with a GDP/ capita of $ 12,466 in 2015.[2] In Zhejiang – the only province in China where all the population is above the poverty line – exports mainly consist of mechanical, electronic and high-tech products, while imports include resources and energy products.
Yiwu city
Yiwu city, “The World Largest Small Commodity Whole Sale market”[3] is a successful model of economic transformation with endless trade opportunities. The government of Yiwu attracts local and foreign investors through tax exemption policies.
As innovative project in China, the “Yiwu-Xinjiang-Europe”, a Freight Cargo Train enhances trade between Asia and Europe having its last station reaches Spain after passing through a number of other countries. E-commerce is booming in Yiwu where there are many villages specialized in ecommerce activities known as the Taobao villages[4]. In fact, e-commerce could boost the stagnant rural economy alleviating poverty in rural China and beyond.
The Silk Tie Cluster “Shenghzou”:
The government of China supported the development of Shenghzou to become the neckties cluster in the country (and the largest in the world). However, multinational companies are recently studying the feasibility of outsourcing this business to other countries given the increasing labor and operating cost in China. Egypt can potentially be an alternative option given its quality infrastructure and competitive labor costs.
ENID/ EL Nidaa team explored potential collaboration between the two countries in several industries in which Egypt possesses comparative advantage, especially the silk and garments industries for several reasons including:
- Egypt is the hub/gate for the Silk Road in Africa, having the second most competitive logistics in the region after South Africa
- Abundance of raw materials like pure cotton and leather in Egypt
- Egypt’s free trade status with Europe, the USA as well as most regions and countries in Africa
- Ampleness of skilled and low-cost labor especially women in Upper Egypt.
[1] “Stories of Handloom Silk Weaving in Egypt”, Nawal EL Misseri, publisher El Nidaa Foundation, 2016. [2] 2016 Beautiful Zhejiang, Edited by the Information office, The People’s Government of Zhejiang [3] Labelled by the United Nations and the World Bank [4] Taobao is an online website that facilitates C2C and B2C retail by creating a platform for small businesses and entrepreneurs to open online stores that mainly cater to consumers in Chinese-speaking regions as well as the rest of the world.
