Haixin hopes to keep Egypt, and its neighbors, cool

More please. I found this article today and it illustrates a trend I’m hoping will develop further. The article talks of a Chinese home electronics company, Haixin, which has built a factory making air-conditioners in a suburb near Cairo. It’s targeting markets in East Africa, North Africa, the Middle East, and Europe. Haixin says it’s trying to take advantage of Egypt’s low-costs and its customs union agreements with neighboring countries.

I’m expecting a growing number of low-cost Chinese manufacturers to follow Haixin abroad to places like Egypt. Why? In part, because rising manufacturing costs are gradually eroding the country’s competitiveness for certain low-cost goods. But, and most importantly, also to escape growing trade protectionism. Chinese manufacturers have captured market share rapidly in most emerging markets over the past few years. It’s unsustainable, and there are growing complaints from New Delhi to Sao Paulo.

I’m not suggesting that all low-cost Chinese manufacturers will move abroad. Far from it. There’s still compelling reasons to stay at home. But it only takes a few to make a difference in a country like Egypt. China’s exports to Europe were worth $240 billion in 2009. That’s more than Egypt’s annual economic output of $160 billion. Egypt just needs to capture a small share of that trade to have a useful impact on growth. Here’s hoping.