Recently, the growing interest in Egypt to invest within the Turkish textile sector has accelerated thanks to its cost advantages and trade ties with the US. However, statements made by Mehmet Ulusoy, General Manager of Ulusoy Tekstil, which continues its investment preparations in Egypt, are likely to cause rethinking of this process.
Ulusoy stated, "Egypt may not be a solution for struggling companies" and continued, "those who go to Egypt with the last bullet may not benefit; on the contrary, they may suffer losses" while emphasizing the need for caution in investing. This statement is quite significant for the sector, as a company entering the investment process addresses the public with statements that question its own strategy.
Small-Scale Investment to Divide Risk
Ulusoy stated that their investment in Egypt is not a major move or an escape strategy, but a small-scale initiative designed solely to meet market demands. Ulusoy explained that only a quarter of the 35,000-square-meter area will be used in the first phase and added, "Our goal is to understand the growing market in Egypt and establish a structure that will take shape over time."
"Egypt Should Not Be the Textile Industry's Last Bullet"
Ulusoy Tekstil General Manager Mehmet Ulusoy warned Turkish textile companies turning to Egypt due to the economic pressures in Turkey. According to Ulusoy, investing in Egypt can only make sense as part of a sound strategy. Otherwise, this decision carries significant risks for the companies.
"Many companies are considering Egypt as a potential alternative to Turkey. However, this is an emotional reflex, not a strategic one" Ulusoy said, noting that while labor and energy costs in Egypt may seem attractive in the short term, these advantages could change in the long run. Especially an emphasis was made on a temporary cost advantage which became a reality due to the devaluation of the Egyptian currency but a reminder was made on the energy costs in the past which was in parallel with Turkey.
Another key point highlighted in Mehmet Ulusoy's statements was the administrative challenges. Ulusoy said, "Managing a Turkish production facility from Egypt creates serious challenges in terms of bureaucratic processes, operational turnaround times, and workforce management."
Ulusoy stated that Egypt is not an independence scheme, but rather a growth opportunity for investors with strong capital power and continued, "This market can only benefit with strong capital and long-term planning. Otherwise, investors will be disappointed.”
The Egypt-USA Link and Export Motivation
Ulusoy stated that the biggest factor in their investment in Egypt was the country's strong textile trade with the US and continued, “Many companies in the US have established infrastructure suitable for purchasing Egyptian-origin products. We also want stronger access to the American market for exports.” Although Ulusoy Tekstil has experienced a decline in export revenues in recent years, it aims to reach 50% levels again with the increase in the American market.
Ulusoy said “While exports to Europe are decreasing, orders from the US are increasing. We will establish the balance from here" and emphasized that their strategy is based on diversification.
Editor's Perspective
Strategy or Seeking Independence?
Ulusoy Tekstil's statements regarding its investment in Egypt reveal the need to re-evaluate the rationale behind the "relocation abroad" trend that has been rising in the sector for some time. The phrase, "Do not move Egypt with your last bullet" reminds us that investment decisions should be based not only on cost advantages but also on strategic integrity.
Today's economic hardships are driving companies to seek new opportunities. However, the success of an investment depends on whether you view it as an exit route or a planned growth step.
Cheap labor, incentive packages, and regional access advantages are certainly important.
But for these advantages to truly create value, detailed analysis is necessary for topics such as;
• Scale of the investment,
• Payback period,
• Managerial control,
• Production quality, and supply continuity.
While some companies in our sector plan this step with strategic partnerships and a global vision, for others, this step can be the final push for used up capital. This is where the difference comes in.
In conclusion:
Foreign investment should be engineered with a strategy, not pinned on a single hope.
Otherwise, the path seems like a ‘solution’ could become a new cost burden.
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