Will an ambitious pilot project really boost Egypt's furniture exports fivefold? Speaking to the project's initiators and beneficiaries, Niveen Wahish finds out "Egypt, where it all began" was the slogan of the International Furniture and Furnishing Trade Fair (Furnex), which closed in Cairo this week. The slogan is inscribed beneath a picture of the 4,500-year-old gilded wood armchair of Hetepheres, King Cheops's mother. According to Amr Abdel-Latif, executive director of the Egyptian Exporters' Association (Expolink), which organised the exhibition, that particular chair has inspired furniture designers through history -- a fact on which Expolink was eager to capitalise, to spread the message about the local furniture industry. Featuring some 115 exhibitors showing a range of styles from classic French to Arab and contemporary, this year's Furnex was different in that it offered exhibitors a two-week course on market negotiation and client management -- indispensable in the light of the need to cater to 400 buyers from all over the world -- as part of the drive to turn Egypt into the hub of the regional furniture trade. One aspect of this involves "influencing the direction in which trade moves", diverting the course towards Egypt -- the main purpose of yet another pilot project launched by the Ministry of Foreign Trade: "Furnex is one of the activities intended to achieve that goal." By bringing together ministry officials, Egyptian furniture manufacturers and international investors, the project attempts to improve the environment surrounding the furniture industry, enabling it to boost exports from $200 million to $1 billion in the next three years. "We are creating an environment that will encourage more players to export." Thus, for his part, Adham Nadim, chairman of the Nadim Company, vice-chairman of the Chamber of Woodworking Industries at the Federation of Chambers of Commerce and one of the administrators involved in implementing this public- and private-sector partnership in which, while businessmen set the priorities, the government helps them achieve them; the project will also be used as a model for promoting exportation in other local industries. A $1 billion target may seem overambitious, but, in common with all parties involved, Nadim believes it is well within the scope of the industry: "At the moment we are practically non-existent on the map of furniture exporters," with Egypt's $200 million contribution making up but 0.08 per cent of the total volume of furniture trade ($252 billion in 2003). "Huge demand combined with what we have to offer means plenty of space in which to grow." With some $2 billion worth of investments, some 200,000 production units and a one-million strong work force in and servicing the furniture industry, however, only 50 per cent of the industry's capacity is fully utilised; and most of that is geared towards the local market, which consumes four times the amount exported. That there are practically no tariff or other barriers preventing furniture from crossing borders, besides, is but one of many factors contributing to the industry growth. Chinese exports to the US (about $15 million), Nadim elaborates, are at present subject to anti-dumping duties ranging from six to 170 per cent; importers, as a result, are seeking alternatives as they realise how vulnerable it makes them to work with a single exporter: "Capturing even one per cent of China's market share in the US would make a huge difference to us." Egypt has competitive advantages on which it could capitalise. According to Ahmed Helmi, the third-generation general manager of Meuble Al-Chark, a family business, Egypt has highly skilled craftsmen, too: "It's 25 per cent more expensive to get comparable craftsmanship in Europe, which is what makes it cheaper to manufacture outside." Egypt has a geographical advantage, Nadim added, in its proximity to Europe -- particularly important in the follow-up process: "Importers could do two follow-up trips to Egypt every week, which would be impossible if they were dealing with China." One Furnex visitor, Patrik Bonnevier, logistic manager of the library furnishings company Eurobib, hopes to transfer its manufacture centre from China to Egypt at the heart of the Middle East -- a principal market for its products. Egypt also has manufacturers of all sizes. In the Far East, Nadim explains, factories are invariably huge. "If a supplier has a small order, nobody will be interested." Not so in Egypt. To achieve the target of $1 billion, however, it is eliminating hindrances to growth that presents the main challenge. Pilot project administrators have identified six core areas: policy advocacy, technical assistance, marketing expertise, human resources, financing and design. "It is not enough to take part in international trade fairs," Nadim indicates. "Nor is it an option for everyone, considering the cost of shipping and exhibition space rent." Part of the importance of Furnex is that it brings the buyer to the manufacturer. Klas Bergling, a Swedish agent for Egyptian products, testifies to the Swedish market being "totally unaware" of Egyptian furniture -- a problem he hopes to address by arranging with manufacturers to send samples for display. The sector is, moreover, largely self-financed, and according to Nadim, this is a potentially huge handicap: "To multiply exports, manufacturers need to invest more." A tailor-made package has been put together by the Ministry of Trade in collaboration with several banks to suit the furniture industry. To develop human resources with a view to contending with global competition, he adds, "the concept of operation must be developed -- from workshop to factory". Technology, best practises transfer, quality systems, finishing and design are all considerations to be taken into account, too: "If they do not compete globally, Egyptian companies will be unable to compete locally." Already, despite a hefty 40 per cent tariff, foreign competition is alive and kicking. Technology centres (the first of which, in 10th of Ramadan city, will be offering accreditation) are, in the meantime, bridging the gap separating Egypt from Europe. According to Helmi, "to export, we need to provide the kind of quality demanded by the market, and the technology centre means we no longer have to send test samples abroad". Established with a $3 million budget, to be replicated in governorates across the country, the centre will also offer training on the quality and finishing required by each market. With policy reform, on the other hand, as a Ministry of Foreign Trade and Industry official, who preferred to remain anonymous, involved in the pilot project, put it, "a revision of the relationship between furniture producers and the government becomes possible"; reform could, in this sense, result in huge savings, enhancing competition. If it is made easy for furniture exporters to receive a refund on duties paid for the inputs required to produce items for export -- and Nadim expects it soon will be -- this will cut costs, and thus increase competitiveness, by six per cent. Cheaper prices would thus become possible, attracting more importers. Tihitina Legesse, an Ethiopian visitor to Furnex who was examining the kitchenware on offer, said that, while similar in quality, Malaysian wares were much cheaper. As the six core problems are summarily tackled, the pilot project will be dealing with Egypt's 12 largest furniture companies, representing all types of furniture makers from across the country. Dubbed "the Furniture National Team", as Nadim says, this sample "represents all that Egypt has to offer. If it works for this team it works for Egypt". The US and EU markets (43 and 33 per cent of Egyptian exports, respectively) are at the top of the pilot project's priority list. "Certain destinations, if properly targeted," Nadim says, "will make a huge difference". The focus will become narrower as particular states and countries are targeted, as the official goes on to say. Within Europe, he says, Germany and France alone consume $18 billion worth of furniture annually; not to mention the UK, another target market. In the US the project will focus on Texas, Florida and California; the latter alone consumes an amount equal to all Arab countries put together. According to Nadim, in contrast to those of the local market, in which furniture is regarded as a durable commodity, consumption patterns abroad imply a far greater turnover for furniture, since individuals move more frequently, leaving items behind; they are more liable to change their furniture simply to keep up with the latest fashions; and they start homes at an earlier age. Yet Nadim is concerned that, "if we have taken the decision to export, we have to produce what the market wants -- find out what is required and just do it"; and the style of furniture so ably produced in Egypt makes up but eight per cent of the international market. The rest, he says, is "contemporary"; and it is with this, and this alone, that the market can ultimately grow.
