This photo taken on July 6, 2023, shows Chinese company New Hope Egypt Co., Ltd. in Menoufia province, Egypt. (Xinhua/Wang Dongzhen)
CAIRO, July 11 (Xinhua) -- Facing a dollar crisis and consequent spiraling inflation over the past year, many companies and people in Egypt, the most populous country in the Middle East, found themselves in the gutter.
Due to successive interest rate hikes in the United States, the spillover effect of the Russia-Ukraine conflict, and a tepid domestic recovery, the Egyptian currency has plummeted by more than 50 percent since early 2022, and the annual core inflation rate has hovered above 30 percent since the beginning of this year.
Despite severe economic headwinds, a Chinese company focusing on Egypt's domestic market has managed to not only achieve the growth of sales and market share but also establish a good reputation for Chinese brands in Egypt.
How does the company prosper despite the challenging economic environment?
At a feed factory in Sadat city of Menoufia province, north of the Egyptian capital Cairo, New Hope Egypt General Manager Su Hao told Xinhua that the elevated inflation in Egypt eroded the purchasing power of locals and the volume of the meat market, posing a great setback for the operation of the company, which was established in Egypt in 2011.
An employee works at the factory of Chinese company New Hope Egypt Co., Ltd. in Menoufia province, Egypt, July 6, 2023. (Xinhua/Wang Dongzhen)
"Thanks to our long-term branding and development in Egypt for more than a decade, New Hope has been recognized by local farmers and consumers," he said, "therefore, despite the decline in the economic output and market capacity, our sales have achieved an average growth of more than 20 percent in the past three years."
The company runs four feed manufacturing factories and one poultry farm in Egypt, which help provide 120 million broilers annually, and its market share ranks among the top three in the sector, Su said.
The reasons behind such progress include advanced products, excellent services, and forward-looking management of the company, he revealed.
First of all, New Hope is the first company that brings "green feed," an environmentally-friendly and bio-based feed that markedly improves breeding efficiency, to the Egyptian market.
"At present, the average feed conversion ratio (FCR) in Egypt is about 1.6, and our product can achieve 1.5. In other words, for every kilogram of weight gained by a broiler, 0.1 kilograms of feed will be reduced, and the breeding cycle will be shortened by three to five days," Su said.
Second, as a leader in China's animal husbandry, New Hope has also brought "Chinese standards" to Egypt. The comprehensive technical support and thoughtful services for farmers during the 40-day poultry breeding cycle are crucial to New Hope's success in the Egyptian market from a "new face" into today's "big brand," said Asmaa Saeid, deputy manager of the company's technical service department.
A chemist works at the lab of Chinese company New Hope Egypt Co., Ltd. in Menoufia province, Egypt, July 6, 2023. (Xinhua/Wang Dongzhen)
"New Hope keeps in touch with farmers throughout the whole process. Through technical support and services of subordinate laboratories, New Hope is trying our best to help farmers reduce costs and tide over the economic difficulties with them," she added.
Lastly but importantly, New Hope has effectively minimized currency risk through various strategies, including converting cash into inventory, using financial instruments to hedge against losses, and accelerating the turnover rate of the company's capital.
As a Fortune 500 company, New Hope has tapped on its rich operating experience to defuse the crisis and made it an opportunity to expand in the North African country, according to Su.
Given the temporary difficulty of currency conversion, New Hope is holding a huge amount of Egyptian pounds and is short of hard currency to purchase materials, which has set some hurdles for the company's operation. However, the company still has confidence in the Egyptian market.
Mohamed Ramadan, deputy manager of the company's production department, told Xinhua that during the past year of economic turmoil in Egypt, his department has succeeded to meet market demand. "Our wages have increased, and our employees are very satisfied," he said.
Shao Wen, head of the Egypt area of New Hope, acknowledged that the current economic challenges are the most significant faced by the company in over a decade. However, he expressed optimism, saying that "as long as we keep our confidence and respond positively, all the difficulties will be cleared away."
Employees work at the factory of Chinese company New Hope Egypt Co., Ltd. in Menoufia province, Egypt, July 6, 2023. (Xinhua/Wang Dongzhen)
Outside the New Hope's feed factory in Sadat, trucks are waiting in a queue to be loaded. Su told Xinhua that the company is planning to expand production capacity in Egypt, aiming to help Egyptian farmers improve their farming techniques and generate greater economic benefits for them.
"It is not easy to achieve such success in the past, and we will continue to benefit Egyptian farmers and consumers in the future," he concluded.
A single purchase
