- Egypt signs $1B deal with China’s Sailun to build tire plant in Suez Canal Economic Zone by 2026.
- The project aims to meet local demand and make Egypt a tire export hub for Africa, the Middle East, and Europe.
- Supports Egypt’s automotive localization goals, job creation, and foreign investment growth.
Egypt has made another important advancement in enhancing its automotive industry by signing a $1 billion deal with China's Sailun Group to establish a large tire manufacturing plant in the Suez Canal Economic Zone (SCZone).
The cabinet announcement also indicates that the initial phase is expected to end in 2026. Sailun, a global tire manufacturer with state-of-the-art facilities in China and Vietnam and established sales networks in Canada, Germany and other markets will provide state-of-the-art experience and expertise to Egypt.
The factory will meet local requirements but will also be able to position Egypt as a tire export facility for Africa, the Middle East and Europe, given the favourable location of the SCZone. The government has bestowed zone-specific legal and tax benefits to capitalize on international ships transiting, according to Reuters. The chairman of the zone mentioned last year that it was heavily investing in infrastructure while trying to attract businesses.
China has been working to boost its economic engagement in Egypt through projects focused on manufacturing, green hydrogen, ports, and space. This investment aligns with Egypt's automotive industry objectives, which involve localizing production, decreasing import dependency, and creating a regional manufacturing center.
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In recent years, Egypt has adopted strategies to entice global automakers and parts producers, enhance domestic supply chains, and increase export levels. Moreover, Egypt set aside EGP 1.5 billion in its budget for 2024–2025 to improve localization. This included backing for Sumitomo's worldwide automotive wiring harness operation, which is set to generate 10,000 jobs and function as an export center for European car manufacturers.
The establishment of a new tire manufacturing facility tackles an essential element of the automotive value chain, creating opportunities for collaboration with Egypt's existing vehicle assembly plants and expected electric vehicle initiatives. It is expected to generate significant jobs, enhance technical skills of Egyptian employees, and encourage more foreign investment in the region.
Incorporating upstream activities, such as tire production, into the industrial ecosystem puts Egypt in a better competitive position to serve regional demand for automobiles. The SCZone is a trade facilitation tool that demonstrates Egypt's desire to develop from a vehicle assembly market into a full automotive production market. If done right, the Sailun Joint Venture could mark a significant shift toward self-sufficiency and international competitiveness in the automotive domain of Egypt.