Haier Egypt: Deepening local content to become a regional export hub

Zawya

3 days ago

Arab Finance: Egypt's home appliances market is a rapidly expanding market, attracting significant investment from both local and international players. Valued at an estimated $7 billion in 2025, the market is projected to grow at a compound annual growth rate (CAGR) of nearly 9% over the next five years, according to market research from Mordor Intelligence. This robust growth is fueled by a large and youthful population, rising urbanization, and increasing consumer purchasing power. It positions Egypt as a strategic hub for major manufacturing and export operations.
In an exclusive interview with Arab Finance, Ahmed ElGendi, General Manager of Haier Egypt, discusses the company's ambitious plans to scale up its industrial complex and boost investment. ElGendi provides a detailed look into Haier's strategy to deepen local manufacturing, navigate market challenges, and capitalize on Egypt's potential to become a regional export hub.
1-Can you tell us about Haier Egypt's future plans for production volume and investment?
Our industrial complex in 10th of Ramadan City spans 200,000 square meters and is being developed in two phases. The first phase was inaugurated by President Abdel Fattah El-Sisi on May 2nd, 2024, during Labor Day celebrations.
At that time, we pledged to increase our investments in Egypt and to establish a factory for VRF central air conditioning systems, following the support we received and the granting of a Golden License. We are the first company in the home appliances sector in Egypt to receive this Golden License. I was in China last week to discuss the company's future plans in Egypt.
We are committed to commencing actual production in the third quarter (Q3) of 2026, exactly as we promised, completing the second phase of the project within two years after the inauguration.
2-What is the investment volume for the second phase of the Haier project in Egypt?
The second phase will involve a larger investment than the first, as we plan to pump more investments into feeder industry projects in Egypt, increasing the components and parts within them.
Currently, we have around 12 plastic injection molding machines, which will be increased to about 30. Manufacturing refrigerators and freezers is far more complex than manufacturing televisions, air conditioners, or washing machines, as their production lines are highly intricate.
Regarding the refrigerator factory in the second phase, it will produce all types of refrigerators, including models not currently manufactured in Egypt. Local production in Egypt is limited to "top-mount" models.
For the first time in Egypt, we will locally manufacture "T-door" and "four-door" refrigerators. The second phase will also include the manufacturing of vertical freezers, along with horizontal freezers. Additionally, Haier Egypt will begin manufacturing cookers.
Over the next three years, we aim to manufacture new products, such as microwaves, vacuum cleaners, air fryers, and coffee machines. All of these products are new to the company's lineup and were not previously available. These products will be launched after the refrigerator factory is operational, as refrigerators are among the most complex products to manufacture.
3-Are you considering adding other products to the company's portfolio?
Yes, we are considering the addition of other products such as heaters. We already have production lines capable of manufacturing all types, including solar, instantaneous, electric, and gas heaters.
We have spoken with the General Authority for Investment and Free Zones (GAFI), and I met with its Chairman Hossam Heiba last month. The company requested an additional 300,000 square meters of land to add to our current 200,000 square meters, which would bring the total project area to 500,000 square meters.
We also requested that the new land be adjacent to the current project to facilitate the integration of feeder industries.
4-What is the current volume of the company's investments in Egypt, and what is the target for the next phase?
Haier Egypt's current investments stand at $185 million, which has been effectively channeled into working capital. Our goal is to increase this amount to $260 million over the coming year.
In our last meeting with Prime Minister Mostafa Madbouly and officials from the Haier global group, we committed to increasing investments in Egypt to $500 million within five years. This target, of course, represents a significant challenge for us.
5- What percentage of your products' components are locally-sourced versus imported?
We are currently focused on raising the share of local components. We are studying the establishment of a factory and production lines for printed circuit boards (PCBs), which are used in most of our products, including televisions, air conditioners, refrigerators, and washing machines.
We are studying this in cooperation with our third-party manufacturer in China, which produces our electronic boards. This step, along with expanding the number of plastic and metal-forming machines, would raise the percentage of local components in all our products. This will lead to a rise in locally manufactured parts. We have pledged to President El-Sisi that we will increase the local component in all our products to up to 70% within two years.
Currently, our local content is 63% for air conditioners, 46% for washing machines, and 40% for televisions. The largest component of a television is the screen or panel, which is manufactured only in China, Korea, Japan, and Taiwan, and all factories worldwide purchase them from these countries.
Our focus will be on manufacturing the remaining components, such as remote controls, boards, and metal and plastic parts. As new land plots are in the process of being acquired, we are studying the manufacturing of these components in Egypt. We have already localized the manufacturing of certain components like foam and cardboard.
6-What is new regarding the launch of the company's central air conditioning factory in Egypt?
During the inauguration of the first phase of the industrial complex, President El-Sisi requested that we establish a factory for VRF central air conditioners. There is currently no such factory in either Egypt or the Middle East.
Haier has a central air conditioning factory in China that supplies these units to the entire world. This week, I visited the central air conditioning factory in 10th of Ramadan City in Egypt to start the VRF air conditioning production line. The VRF model is one of the most complex air conditioners to manufacture, both in terms of production and technology.
We have allocated a space to manufacture this type of air conditioner with a production capacity of 3,000 central air conditioning units per month, totaling 36,000 units annually.
We have signed a contract with the New Administrative Capital Company to execute the largest VRF central air conditioning project in the world. It will be implemented in the new Garden City area of the new capital, supplying it with 22,000 VRF central air conditioning units. This project was awarded to Haier Egypt through a successful bid.
The project will be implemented over two years and is a very large undertaking. This encouraged us to immediately start up the VRF central air conditioning factory this week.
We aim to expand the central air conditioning factory upon acquiring the company's new land, and we have also received support from Minister of Industry and Transport Kamel El-Wazir.
7-How many central air conditioners does Egypt import annually?
Egypt requires between 100,000 and 120,000 central air conditioners annually, all are currently imported. At Haier, we have a plan over the next two years to completely cover Egypt's needs for VRF central air conditioners. We will execute this plan on the new land we acquire.
This factory's establishment will, of course, help save foreign currency for the country, which was previously used to import these units. Egypt imports approximately $180 million worth of central air conditioners annually. This initiative will also contribute to localizing the industry in Egypt, and we are moving quickly and decisively to implement this project.
8- What does the private sector in Egypt want from the government?
The private sector has many requests from the government. However, I believe that the Minister of Investment and Foreign Trade Hassan Elkhatib has made a great effort to facilitate procedures for investors and attract foreign direct investment (FDI).
Furthermore, both President El-Sisi and Prime Minister Mostafa Madbouly have a strong interest in increasing investments, securing foreign currency, and encouraging further FDI.
Elkhatib is currently working to reduce customs clearance time for goods, raw materials, and production inputs from two weeks to one, a move that saved time and helped boost production.
Also, the exchange rate of the US dollar against the Egyptian pound is currently stable. We are now seeing the dollar fall against the Egyptian pound for the first time in a year and a half. This positive trend should help reduce production costs and, consequently, lower prices for the consumer. This price reduction is expected within two months. Therefore, currency stability affects costs and product prices and sends positive signals to investors, especially with no shortage of foreign currency.
Another positive measure from the government is the move towards using BRICS currencies. Haier Egypt is considering dealing with China using the Chinese Yuan. This will reduce pressure on and demand for the US dollar, as approximately 80% of the components Egypt imports are from China. Haier Egypt is also in talks with the banks it deals with on how to transition from using the US dollar to the Chinese Yuan.
9- What are Haier Egypt's target export markets?
We currently export to countries such as Kenya, Seychelles, Jordan, and Algeria. Our goal for the coming year is to expand and increase our export volumes. Currently, exports account for about 30% of our total production, with the remainder going to the Egyptian market.
Having a professional team responsible for foreign exports, Haier Egypt is in talks with Libya, Morocco, Tunisia, and other African countries like Senegal to export there.
Since its launch in Egypt, Haier has exported 25,000 televisions and 10,000 air conditioners, with our export volume doubling annually.
10-What is Haier's current ranking in the Egyptian market compared to other companies?
Our target is to be among the top three home appliance companies in Egypt within three years and to lead the entire electrical appliance sector within five years. Currently, we are ranked third among producers in this field.
Our retail presence consists of eight dedicated direct-sales stores for home appliances, seven specialized stores for air conditioners, and the first-of-its-kind showroom in Egypt for central air conditioners. These are located across various governorates, alongside our maintenance centers. We aim to expand our retail footprint by 1.5 times next year.
Furthermore, we have a direct after-sales service center, the largest training and qualification center, a fleet of consumer-facing service vehicles, and a large network of 64 authorized service centers nationwide. In 2026, we will open four direct service centers in Giza, the Delta region, Upper Egypt, and Alexandria.
11-What measures has Haier Egypt taken to train the Egyptian workforce?
At the beginning of the project, we trained the Egyptian workforce with the help of Chinese experts. Currently, the factory's operations are fully run by Egyptians, with support from the Chinese side in senior management.
Each of Haier's factories has an Egyptian manager, and Chinese experts visit Egypt every three months to evaluate the situation and identify new training opportunities that can be provided to the Egyptian employees.
12-What challenges do you see Haier facing in Egypt?
The biggest challenge we currently face is the economic situation in Egypt, especially with the surrounding regional conflicts and tensions. This has created a sense of uncertainty about the future, leading to a state of instability in consumer decision-making and purchasing.
The market is not at its best right now, which poses a challenge. However, the Egyptian market is resilient, it may face setbacks, but it never falters. We are a large nation of about 110 million people, with around 60% being youth, who we consider our future consumers.
At Haier, we have great confidence in the Egyptian market and its economy. We believe it will recover and become a regional industrial hub for the Middle East and Africa. That is why we chose to establish the Haier project in Egypt over other surrounding countries.
Egypt's geographical location is unique and strategic; it is a major station on China's Belt and Road Initiative. Furthermore, China is currently converting its debts to Egypt into direct investments, as is Russia. This is due to these countries' belief that Egypt must rise and assume its rightful position.
The second challenge for Haier Egypt is the intense competition. Numerous investments are directed to Egypt's home appliance sector. The Prime Minister announced that Egypt is targeted to become a regional hub for home appliance manufacturing.
Most global companies are currently present in Egypt, and some are restructuring their investments and renewing their production lines. This has created a great deal of competition and led to an increase in the supply of products.
While sales are not at their best, this ultimately benefits the consumer, as the increased supply leads to lower prices. As a result, companies are constantly offering promotional deals, such as installment plans and other offers.
13- Finally, what opportunities do you see for Egypt in the home appliance industry?
A significant amount of FDI is flowing into Egypt's home appliance sector, with most companies focused on exporting from Egypt to other countries. We are consistently collaborating with the Industrial Modernization Center (IMC) to deepen the local component in manufacturing.
This can be achieved by establishing factories that produce these components. China is economically advanced and globally competitive because of its progress in feeder industries and intense competitiveness resulting from numerous factories operating in this field.
Applying all these factors in Egypt would increase supply, lower costs, and foster greater competition. For example, locally manufacturing compressors, essential for refrigerators and air conditioners, would boost local content and save up to 30% of the cost of components. Ultimately, this will lead to localizing the industry and deepening the local component, saving foreign currency, and stimulating other related sectors.
Egypt has the ability to attract technology and localize it, ensuring high-quality manufacturing. Feeder industries, such as remote controls that are currently imported but could be manufactured locally, can also attract foreign currency. Providing facilities to global companies to invest in Egypt would create numerous job opportunities, as these industries are labor-intensive.
This would also save a lot of production and customs clearance time. For example, Morocco has become a regional automotive industry hub, along with many other feeder industries. I believe that the Egyptian economy will see a major leap if the government adopts specific, well-studied feeder industries.
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