|
EMPIRE BUILDING
Egypt hosts dozens of multinational companies, but
only a handful of Egyptian companies have managed the arduous and
challenging task of expanding beyond their borders. Business Monthly
speaks to the management of four prestigious companies that have
attained multinational status to learn how they got there and where
they’re going next.
BY REHAB EL-BAKRY
THE MIDAS TOUCH
Orascom Telecom chief Naguib Sawiris has developed a reputation
as a no-nonsense, sharp and outspoken businessman who relies heavy
on strategic planning and seeks out opportunities where few would
dare.
Naguib Sawiris’ uncanny ability to turn a risky venture into
a lucrative enterprise has translated into Egypt’s biggest
and most successful company. Under his leadership, Orascom Telecom
has grown from a feisty upstart in the late 1990s to a telecommunications
empire that generated £E 3.9 billion in profits last year
through its operations in Africa, Asia and the Middle East.
Yet Sawiris admits that attaining multinational status was never
part of the original game plan; it was simply the result of a sound
business strategy. “I don’t like the conventional –
to imitate and to do things like others,” he says. “Everything
we’ve achieved is based on our own unique way of doing things
because it’s been developed based on [OT’s] unique experience.
We’re a young company – seven or eight years – so
we had to start from nothing. We developed everything on our own
and we have our own way of doing things and our own style. We are
not imitating anyone.”
But no doubt many companies would love to imitate OT’s success.
The telecom giant has generated $13 billion in revenue since 1998
and its stock has climbed an unbelievable 4,000 percent since its
initial public offering (IPO) in 2000. Sawiris himself was ranked
278 on Forbes magazine’s 2006 list of the richest people on
the planet.
Orascom Telecom, a division of the family-owned Orascom conglomerate,
secured this surreal success when it won the bid for Egypt’s
first private mobile license, Mobinil, in 1998. At the time, the
country’s telecommunications sector was limited to a single
incumbent operator, Telecom Egypt, and OT’s venture –
with license fees alone costing $516 million – was considered
an enormous gamble. But it quickly paid off for the company.
For Sawiris, it all came down to forward planning and strategic
positioning. Two years before the government opened bidding for
the mobile license, the astute businessman had struck a partnership
with France Telecom and Motorola to build the first private network
in Egypt. “When the license came around, everyone was [scrambling]
to find a partner and the end result was in us winning the mobile
license,” he says.
Sawiris recognized early that the only way for Orascom Telecom to
fully control its development would be to become self-sufficient.
“I [became] very heavily engaged in all the activities of Mobinil
so that I got to know the business,” he says. “I decided
that in the future I would get my own resources.”
And he did. Using £E 1.1 billion in capital raised from OT’s
July 2000 IPO, Sawiris financed the payments and network expansion
of a growing roster of GSM operator licenses. While much of OT’s
initial thrust was in the African market, Sawiris quickly realized
that the challenges of working in sub-Saharan Africa outweighed
the profits generated from the region. “If you are in a small
market with a small population, your management gets distracted,
your human resources are scattered, and you don’t generate
enough value,” he says. “We had 14 subsidiaries in sub-Saharan
Africa, but we cashed out because of the limited value they were
generating.”
Instead, OT turned its attention to mobile licenses in the Middle
East and North Africa (MENA) region – a young market of 350
million potential customers. “We decided to focus on a smaller
number of countries with a larger population base and maintain a
very dominant position in these markets,” he says. “The
Middle East market is simply bigger. There is a higher population
base with a higher income, which has more value to be created.”
And with a common language and culture, OT had a clear edge over
rival European bidders. “We [also] had advantages versus [foreigners]
because they don’t like this area because of the risk factor.
We come from the same area, so we don’t think of the risk.
For us the perception of risk is much lower,” he says.
But there was no downplaying the risk involved when OT won the license
to operate a mobile network in central Iraq in 2003. While Sawiris
has often pointed out that Iraqna, Orascom Telecom’s subsidiary
in Iraq, provides an essential service to the people, it has come
at significant cost. A number of OT staff have been kidnapped over
the past three years, though each time released unharmed.
Today, Orascom Telecom has six subsidiaries operating mobile services
in Egypt, Algeria, Pakistan, Tunisia, Iraq and Bangladesh, with
a total of 30 million subscribers. It also holds a 23-percent stake
in Hong Kong-based Hutchison Telecommunications, which operates
fixed-line and mobile services in Hong Kong, as well as mobile services
in key Asian markets, with an estimated 10 million subscribers.
Sawiris is also the lead investor in Weather Investments, a consortium
that acquired Wind, Italy’s third-largest mobile operator,
in a leveraged buy-out in 2005. Costing $15 billion, the acquisition
of Wind put Sawiris in the international spotlight, but had many
speculating that the move was one of pride rather than strategy,
an accusation he flatly denies. “For $15 billion, that would
be very costly pride,” he shrugs.
Instead, he says, the acquisition of Wind represents an opportunity
for OT (of which Weather owns a controlling stake) to patch into
the Italian operator’s existing 28 million subscriber base
while imparting its hard-earned management experience to turn the
faltering mobile operator around. “We believe this company
could benefit a lot from our management,” Sawiris says confidently.
“We’re a multi-country operator and we have efficiency
and management operations that we could bring to the company, which
will bring in value beyond its existing assets. That’s why
we want to be there.”
But OT also stands to gain from Wind’s 3G network. “With
the increase in demand for 3G technology, we need access to this
technology, which we don’t have right now,” he says. “Now,
OT will have it so when we come to deploy this type of technology
to this part of this world we will have the know-how and the technology.
So it was very important for us to complete this deal.”
Egyptian companies face additional challenges when expanding outside
the region, he acknowledges. “We were very lucky when we went
to Italy that this deal went through, to tell you the truth. When
you look at any of the other deals coming from this part of the
world, they are usually blocked.” The US Congress’ opposition
to the Bush administration’s decision to award a ports management
contract to UAE-based Dubai Ports World is a case in point.
Sawiris, however, attributes much of his success in navigating these
difficult waters to his networking skills. Being a micromanager
by his own admission, he says the fact that he personally meets
with his financers, shareholders, partner companies and the media
contributes to his ability to achieve deals that others might not.
People view him as a business partner first, and as an Arab second.
While some might argue that achieving multinational status is a
goal in and of itself, Sawiris believes a company’s goal should
be to increase its value and profits. If this means one must look
beyond the borders of the company’s origin, then so be it.
“Being a multinational was never [OT’s] goal,” he
says. “The goal was to build something bigger, have more revenues
and build more value.”
OT’s expansion strategy reflects what Sawiris sees as today’s
business reality: expand or shrink. “You won’t get a medal
for going global, [but] globalization is taking place all over the
world and you have to decide if you want to be part of it or not,”
he says. “All industries are consolidating, so the number of
players is shrinking. If you know that and you don’t want to
be left out of the competition, then you should plan to be part
of this movement.”
As for the risks involved, he believes there can be no gain without
them. “I’m a person who takes bigger risks than others...
but I believe they are always well calculated.” Certainly,
there’s no arguing that they have paid off.
CAPACITY TO GROW
Medhat Khalil, CEO of Raya Holdings, has charted a course for his
company that has opened new markets in the region, and is now looking
beyond. All this with a long-term, tenacious growth plan and, of
course, a few clicks of the mouse.
A decade ago, to suggest that an Egyptian IT company would one
day become a respected regional leader would have had the room in
stitches. Yet today, Raya Holding is the one laughing, having grown
from a humble consortium operating in the shadows of multinationals
to a diversified IT powerhouse with £E 1 billion in issued
capital and branches in five countries.
Raya was born in 1999 as a partnership between five local IT companies
seeking to expand their position within the Egyptian market. Although
each of the companies was doing well on its own, they didn’t
have the necessary muscle to compete with the big boys. “The
IT sector in 1999 was monopolized by three main multinational players.
There were three or four very small Egyptian companies trying to
penetrate this market, but it was extremely difficult even though
the Egyptian market was booming,” recalls CEO Medhat Khalil.
“We were in a situation where we were trying to compete against
companies such as IBM and NCR, and it was actually quite embarrassing,
because at the end of the day, we didn’t have what the large
customers were looking for, at least [in terms of] financial stability.”
Large customers may have been impressed with the five companies’
technical capabilities, but they lacked the capital, image and brand
appeal of their multinational competitors. By consolidating these
companies, Khalil pooled their resources, allowing the Egyptian
firm to match the size of rival multinationals. “The market
was not going to wait for us, so we decided to become what the market
wanted,” he says.
Smart move. The companies went from having collective revenues of
around £E 80 million in 1999 to £E 1.5 billion in 2005,
with the number of employees swelling from around 160 to more than
2,700. Raya now has permanent offices in Algeria, Saudi Arabia,
Qatar and the United Arab Emirates, as well as a small office in
the US. In addition, the company has operations and projects in
almost every Arab country.
From the very beginning, Raya’s strategy focused on consolidating
its reputation at home while building the proper corporate culture
to become Egypt’s first IT multinational company (MNC). “There
are two types of companies working in Egypt, [those] working for
the short term to make real good money for a short period of time,
and those that go through the very strategic and painful process
of building their corporate culture,” says Khalil. “The
second is painful because it requires a heavy upfront investment
in the company’s infrastructure in what we call ‘supporting
functions,’ which don’t yield money in the short term.
[Instead], you invest in human resources to build your staff...
build your brand through a very strong marketing strategy... and
go through the process of fully automating all processes. These
are all very investment-heavy functions that only pay off in the
long term.”
With a capital-intensive business strategy geared towards the long
term, Raya needed to generate short-term revenues until these investments
matured. The company ventured into IT-related fast-moving consumer
goods (FMCG) such as mobile phone, computer software and hardware
sales. Diversification, Khalil says, was necessary in Egypt because
the IT market was neither large enough nor sophisticated enough
to support a highly specialized company.
At the same time, the Egyptian market’s limited size made it
extremely difficult for Raya to find the right talent. Khalil has
made a point of finding the best of the best, setting minimum requirements
for university grades and skills testing. “To keep them in
the company, we encourage them to upgrade their education all the
time. Today, more than 50 of our staff are doing MBAs, which are
100 percent subsidized by the company. We also convinced our shareholders
to allocate 10 percent of the company’s shares to finance the
Employee Stock Option Program (ESOP), which gives [employees] ownership
and ensures they don’t leave us.”
The limited size of the Egyptian market had Khalil pondering contracts
in regional markets. Yet when Raya first began seeking contracts
outside of Egypt, it found itself encumbered by the stigma of its
nationality. Even when the company offered significantly lower bids
than its competitors, foreign clients needed extra convincing that
they were landing good deals as they felt they were compromising
by contracting an Egyptian firm.
“The customer in the States or the Gulf simply wouldn’t
like to outsource all its IT services to an Egyptian company because,
in his opinion, Egypt is not that stable. That’s why being
a multinational company was an objective in itself. As an MNC, your
risk is diversified; you’re not depending on a single market,
which is important for the shareholders and the customers because
they know you’re stable. For us, it’s grabbing the opportunities
outside Egypt, [because] that gives us stability, foreign currency
and more opportunities.”
However, once Raya got a foothold in the Gulf, its opportunities
snowballed. “The good thing about working in the Gulf, is that
once you’ve got a few strong projects under your belt, they’ll
recommend you to one another,” he says. “Now we can afford
to quote good prices and [Gulf clients] will accept because they
know that we will deliver.”
Khalil takes tremendous pride in the fact that Raya has implemented
some of the region’s biggest and most sophisticated projects
– ones that would have traditionally gone to foreign MNCs or
their biggest Asian rival, India. Among them, the full automation
of Abu Dhabi’s Ministry of Finance, a lucrative contract that
led to a similar contract in Egypt.
Yet despite its geographical proximity, the company has made no
attempt to tap into sub-Saharan Africa. Khalil says projects in
the Middle East and North Africa (MENA) region promise familiar
markets and higher returns, with Raya competing at par with other
regional IT entities. “You should also compete in markets where
your chances of winning are bigger,” he explains. “South
Africa is a very strong competitor in IT [and] they are dominant
in sub-Saharan Africa. You don’t really want to face very tough
competition in very small and difficult countries, so sub-Saharan
Africa is not very high on our priority list.”
By contrast, Saudi Arabia, where Raya has implemented a number of
projects for the private sector, consumes 50 percent of the region’s
IT services. The company also sees promising markets further afield.
It recently signed an agreement with Telekom Malaysia to create
a secure, virtual private network that allows Egyptian companies
to contact their offices in the Asia Pacific directly from Egypt,
bypassing traditional Europe-routed communication links.
In May 2005, Raya took another major step towards solidifying its
international status, launching an initial public offering (IPO)
of 6.6 million shares, representing 27 percent of the company, on
the Egyptian stock exchange. Khalil says the decision to go public
was not as much about raising capital as it was about earning credibility.
“Being traded publicly garners international credibility because
your information is all public. It’s one of those things that
other companies around the region look for when they are considering
you for a project. At the same time, it’s a status symbol for
the company and the confidence you have in yourself, your market
and your business.”
Although nearly a third of Raya’s projects are outside Egypt,
Khalil says the company still hasn’t realized its goal as an
MNC. He says this will only happen when the company is no longer
identified with any specific nationality, which he expects will
happen when over 70 percent of its projects are outside Egypt. Yet
for now, he can boast that Raya has become a regional leader with
a strong portfolio and dozens of projects to its credit.
VALUATION OF RISK
EFG-Hermes has built a reputation as a strong and aggressive player
on the Egyptian capital market, but its CEO and chairman, Yasser
El Mallawany, says the time is right to venture into other regional
markets.
The capital market is not for everyone. It requires a strong understanding
of fundamentals, valuations and the nature of calculated risk. The
same applies when charting a course to enter foreign markets, which,
according to EFG-Hermes chairman and CEO Yasser El Mallawany, makes
the Egyptian investment bank a good candidate for regional expansion.
EFG-Hermes, formed by the 1996 merger of the Egyptian Financial
Group and Hermes Financial, has made an indelible impact on the
Egyptian capital market, accounting for nearly 50 percent of all
securities transactions on the Cairo & Alexandria Stock Exchanges
(CASE) and many of the country’s largest IPO, merger and acquisition
deals. “We’ve been in this market for a very long time,”
says El Mallawany. “We’ve seen the ups and the downs.
We’ve seen all the cycles.”
A regional expansion strategy was formulated in 2001 shortly after
the company’s merger with long-time rival Commercial International
Investment Company (CIIC), a move that gave it a broader, more robust
spread of operations and thus more breathing space to manage risk.
The union, which brought El Mallawany from CIIC to the helm of the
company, allowed EFG-Hermes to consolidate its financial position
and gave it a strong foundation as a regional player.
But making an impact in Egypt, where even in today’s booming
market daily transactions hover around £E 1 billion, is one
thing; making a splash in Gulf markets, where daily transactions
exceed the equivalent of £E 25 billion, is something altogether
different. El Mallawany says the investment bank’s strategy
has been to invest heavily in a talented team able to manage the
transition. But with Gulf markets sapping Egypt’s relatively
small pool of talent, EFG-Hermes recognized it needed to offer attractive
packages to lure and retain the country’s brightest talent.
“I believe that over the past four or five years, we managed
to reverse the brain drain that has taken place in this sector by
applying a joint venture model between shareholders and management,”
he explains.
EFG-Hermes’ staff has doubled in four years to reach 440. Among
these are 90 equity-owning partners, who bring a wealth of expertise
and international experience to the company. “We can’t
get real talent from international investment banks to come to Egypt
and work unless they are partners,” he says.
EFG-Hermes operates as both a securities brokerage and investment
bank, the latter being an institution that provides corporate finance
advice and acts as an intermediary between companies issuing new
securities and the public. In recent years, however, the company
has shifted its focus away from its brokerage activities and towards
investment banking. “Traditionally, EFG-Hermes had a lot of
private equity positions within its balance sheet. We solidified
our financial positions by phasing out private equity as a [main]
source of profits for the company,” explains El Mallawany.
Having restructured the company’s financial position, realigned
its market strategy and secured the right talent, EFG-Hermes turned
its attention towards the Gulf. “Discussions among the partners
resulted in the decision that our first move would be to the Emirates,”
El Mallawany says. EFG-Hermes opened an office in Dubai in 2004
and has since been granted licenses to conduct brokerage, asset
management and investment banking activities.
He says selecting a market for expansion is not based on a pre-set
list. Rather it is based on the opportunities that present themselves.
He currently has his eyes on two other vibrant regional markets,
but says if opportunities present themselves elsewhere, the company
is prepared to act.
EFG-Hermes’ expansion strategy is moving against the flow,
coming at a time when a flood of Gulf investment banks are moving
into the Egyptian market. But for El Mallawany, regional expansion
is simply a sign of maturity. “If you do not grow then you’re
stagnant. This is the normal progression in the development of the
private sector. When the private sector grows and reaches a certain
point of maturity, it’s only normal for it to grow beyond borders,”
he explains.
Of course, penetrating foreign markets has a unique set of challenges.
“Definitely going to another market, I don’t have the
same access and penetration as I do in my home market in which I’ve
invested time,” El Mallawany admits. In Egypt, for instance,
EFG-Hermes controls 40-50 percent of the securities market, while
in Dubai, by contrast, it holds just a 7-percent share. “However,
[market penetration] is achievable by providing value-added [services]
and by differentiating yourself from others.”
Certainly local companies operating in these markets have the homefield
advantage and years of experience. El Mallawany says that to level
the playing field, the company capitalizes on local expertise. “We
don’t like to send in people with suitcases. We live in the
local market we are penetrating. We have some of our people from
here, but we also hire local people and blend into the community,
though we keep our brand.”
How to judge a successful expansion? El Mallawany says the best
indicator that EFG-Hermes has been successful is that its UAE branch
closed the Emirates’ largest ever IPO – a $656.8 million
offering of a 20-percent stake in Emirates Integrated Telecommunications
Company (EITC). The stake sale was 167 times oversubscribed and
attracted a whopping $109 billion in bids. “It takes time,
effort and sweat until you establish your brand, and until you substantiate
that, you have value added to provide,” he says. “The
answer is that it’s not an easy process, but it’s doable.”
He says Egyptians accept that foreign companies come to Egypt seeking
opportunities, but are critical of local companies that grow too
strong. “The problem is that successful [Egyptian companies]
do not get enough support from the media and the masses. On the
contrary, if somebody grows beyond a certain level, they get more
attacks in their home country than praise. That is the major issue.”
EFG-Hermes has faced its share of criticism despite paying £E
110 million in taxes this year and providing jobs for hundreds of
Egyptians, he says. “We need to educate the masses that the
success of Egyptian companies is a success for the country.”
While the firm is actively pursuing its regional endeavors, El Mallawany
assuredly says this will not come at the expense of its Egyptian
market. He says the Egyptian market shows solid, long-term growth
fundamentals. Operations here will also serve as an incubator for
the talent the firm will use for its regional growth.
With its UAE office showing promising growth, EFG-Hermes is now
looking carefully at the possibility of moving into other regional
markets, though El Mallawany is mum on the details. What is known,
however, is that Europe is not on the agenda. Instead, the investment
bank has applied for an operating license in Saudi Arabia, and is
investigating its options in Lebanon.
WOVEN SUCCESS
From its inception in 1979, Oriental Weavers has had its eye on
the prize. What started as a modest rug company has grown into a
conglomerate of seven companies that manufacture a full line of
floor coverings and their components in factories located around
the world.
When Mohamed Farid Khamis established Oriental Weavers (OW) in
1979, he had just one loom and limited capital, but no shortage
of ambition. That worn-out loom, now encased in display glass in
the company’s main factory in 10th of Ramadan City, serves
as a perennial reminder of how far the company has come in a quarter
of a century.
The company’s business strategy evolved out of its founder’s
acute understanding of the global market. “My father started
off on the opposite side of the business, importing rugs to the
Middle East from Europe,” says Farida Khamis, OW’s investor
relations and international business director, speaking on behalf
of her father, who prefers to stay out of the media spotlight. “He
understood the kinds of demands that existed around the world and
his strategy was to manufacture in Egypt and export rugs to the
US and European markets.”
In the ensuing 27 years, Oriental Weavers has grown to become a
world leader in machine-made rugs and carpets, with production facilities
in Egypt, the US and China. “A major factor that contributed
to the company’s success was that from the very beginning,
it was export-oriented,” she says.
In the early 1980s, a time when most Egyptian companies were focusing
on taking a share of the newly opened local market with export production
a distant afterthought, Khamis’ father was formulating an export
strategy that would blaze a trail into lucrative foreign markets.
The manufactured rug and carpet market was dominated by the well-oiled
factories of Europe and the US. Oriental Weavers, however, had a
few leads over its competitors.
“Our biggest competition [during the 1980s] was from Belgium,
which had a lot of issues with costs, taxes and employment. On the
other side of the ocean was the US, which had similar issues. We
on the other hand had a lot of advantages including cost-effective
labor, incentives such as tax and customs exemptions, because we
were export-oriented. We had all these advantages and we chose to
capitalize on them,” Khamis says.
For over a decade, Oriental Weavers focused on opening and consolidating
its foreign markets, particularly the US. “From the beginning,
we identified that the US market was one with very high potential,
accounting for 60 percent of our exports [at the time].” Still,
the company was facing stiff competition from American manufacturers,
which despite higher costs were undercutting the company’s
sales by offering shorter lead times.
In 1991, Khamis’ father made his boldest move. Instead of slashing
prices to compete in the US market, he decided to take on his American
rivals head-on by setting up manufacturing plants in their backyard.
“We decided that the best way to compete in markets was to
be right there in the market alongside the competition,” Khamis
relates. “So we set up a manufacturing plant in Georgia, USA,
which is considered the Silicon Valley of rug manufacturing.”
While the cost of production in the US was higher, she admits, when
the cost of shipping was factored in, it became evident that the
company could produce competitively priced products. In addition,
a US-based factory would let Oriental Weavers supply its products
in the same lead time as their competitors, eliminating their rivals’
key advantage. Today this factory feeds some 10,000 outlets that
distribute the company’s products in the US and Canada. It
has helped the company secure a 7.5-percent share of the $4.6 billion
US rug market, and up to 25 percent of the woven machine-made area
rug market.
Vertical integration has been a main factor in Oriental Weaver’s
success. The company’s subsidiaries manufacture almost all
the components of its floor coverings, and handle the sale and distribution
of the finished products.
As part of its strategy of self-sufficiency, Oriental Weavers established
Egypt’s first and only polypropylene plant in 2001 to secure
a steady supply of synthetic fibers for its rugs and carpets. The
company produces its own wool, fibers and other raw materials for
rug manufacture. “Because these are the components that we
depend on so heavily, our decision to become fully vertically integrated
allowed us to take full control of our production line and our components.
This way we [prevent anyone from interfering] in our ability to
meet our production and export commitments,” explains Khamis.
A key strategy of Oriental Weavers is to identify markets with the
potential for growth or competition, and take them on. The company
has invested over $12 million in a manufacturing plant in Tianjin,
China, that manufactures floor coverings for its Chinese clients.
“This is a market that has great potential. It’s estimated
that the home furnishing industry in China is worth $50 billion
a year. We can’t afford not to be there,” Khamis says.
“Moreover, the cost structure in China is very similar to that
of Egypt, so it made sense for us.”
The company’s Chinese plant reduces the shipping costs and
lead time to a potential market of 1.4 billion people whose purchasing
power is on the rise. “The move to China was about being where
the potential market will be as well as where our big clients are,”
says Khamis. The plant, with three mechanical looms and an annual
production capacity of 1.4 million square meters, is also expected
to manufacture rugs and carpets for export to other vibrant Asian
markets.
Despite its investment in China, the company has no plans to reduce
its operations in Egypt. “We are still growing in Egypt. Our
factories work 24 hours a day, seven days a week and we still can’t
meet our demands. We’re ordering machines on a monthly basis
and still demand outweighs our supply.”
The floor coverings giant continues to spread into new markets,
successfully penetrating nearly 20 new markets in the last two years.
It also managed to gain a foothold in Turkey, a strategy Khamis
says aimed at neutralizing one of its newest competitors in the
machine-made rug industry.
Perhaps the biggest investment Oriental Weavers has made, suggests
Khamis, is in its clients, which include some of the world’s
biggest retail chains, including Wal-Mart, Target, Sears, Carrefour
and Ikea. One way in which it does this is by working with these
clients to develop exclusive design collections based on the particular
specifications, color schemes and tastes of their consumers. “For
each [client], we have a marketing and design team that follows
up with the client throughout the process. Then we have an export
team that works on their products to make sure they are exactly
where the client needs them at the right time,” she explains.
While corporate clients are important, accounting for the bulk of
international business, Oriental Weavers pays close attention to
its individual clients, particularly in the Egyptian market. Its
domestic strategy aims to satisfy the budgets and tastes of all
social classes – a decision that Khamis claims has helped the
company secure an 85-percent market share. “We have over 100
showrooms in Egypt. Some are very sophisticated in big cities, while
others are very simple in small towns. The whole point is that at
Oriental Weavers we want anyone who walks into our showroom to find
something that meets their needs regardless of their budget.”
As its understanding of its customers increased, Oriental Weavers
decided to diversify its product line. “We found that our clients
order area rugs from us but they go to others for other floor coverings.
To us, this was all potential business that we were not getting,
so we decided to expand to do all types of floor coverings in order
to provide our clients with everything they might need,” says
Khamis.
Beginning in the early 1990s, the company began adding on new floor
covering lines, including wall-to-wall carpets, mats, car upholstery
and wall hangings. More recently, the company decided to branch
out to include the production of bed sheets and towels, capitalizing
on their recognized brand name and the international leverage of
Egyptian cotton.
One of the advantages of a decades-old export strategy is that it
keeps a company competitive. Oriental Weavers has faced its toughest
competitors on their own soil, and won. So the company feels confident
it can hold its own against the fresh influx of cheap Asian floor
coverings entering Egypt as a result of recent tariff reductions.
“We already compete with them in their markets, so their entry
into ours does not worry us at all,” Khamis assures. “We’ve
never made the protection of the market our edge, because we always
sought out competition [in their market]. So if they want to try
to compete with us in Egypt, they’re more than welcome to try.”
Submit
your comment
Top
|
