Until recently, Jiahao’s modest guest house in a quiet corner of Cairo mainly served Chinese tourists eager to see Egypt’s famed pyramids. But this spring, the hostel’s clientele changed dramatically. Instead of sightseers, Jiahao, 26, began hosting delegations of seasoned factory owners from China and Southeast Asia. Their purpose wasn’t tourism—it was business survival.
“Many business owners now book week-long stays,” Jiahao explained. “I drive them to meet local officials, help with translations, even sit in on investment negotiations.” These visits are part of a growing shift in global supply chains as Chinese manufacturers move production to Egypt in a bid to escape punishing U.S. tariffs.
The trend began under former U.S. President Donald Trump, who imposed sweeping tariffs on Chinese imports. Many companies initially responded by shifting production to Southeast Asia. But in April, Washington expanded the reach of its duties, imposing up to 49% tariffs on Southeast Asian goods and 145% on Chinese products. Although those tariffs have since been frozen and reduced to 30% for Chinese goods, they are set to resume unless an agreement is reached before the end of summer.
This uncertainty has pushed many Chinese manufacturers to seek alternative production bases, and Egypt has emerged as a top choice. Its relatively low tariff of 10%, strategic location, and political stability make it an appealing option. Egypt’s trade deficit with the U.S. also gives Chinese investors confidence that the country won’t be targeted with retaliatory duties in the near future.
In March, an Egyptian business association announced $60 million in new Chinese investment, mostly in industrial projects within the Suez Canal Economic Zone (SCZone). As of 2023, China’s foreign direct investment in Egypt stood at $1.29 billion, with over 2,500 Chinese companies operating in the country—including major firms like telecoms giant ZTE, smartphone maker OPPO, and car manufacturer GAC Motor.
The surge in Chinese presence is palpable. “A few years ago, we’d maybe host welcome dinners once a month for new Chinese arrivals,” said Huang Ping, who runs five motorcycle parts plants near Cairo. “Now, there are delegation visits nearly every day—often not just with businesspeople, but also Chinese government officials.”
Many of these new arrivals are factory owners with operations in Southeast Asia, pushed westward by geopolitics. “At least half the companies I meet already have factories in Cambodia, Thailand, Myanmar or Laos,” Huang said. “They’re turning to Egypt as a second choice.”
Beyond tariffs, Egypt offers a compelling mix of security, openness, and cost-effectiveness. Huang, who has evaluated investment climates in over 60 countries, says Egypt stands out for its relative stability and absence of anti-Asian sentiment. Labour costs are another strong incentive: factory wages in Egypt typically range from $100 to $150 per month—less than half of what’s paid in Southeast Asia.
This cost advantage is helping Egypt’s textile sector boom. In the first four months of 2025, clothing exports topped $1 billion, a 22% year-on-year increase. Chinese firms are driving much of this growth. One such company, Zhejiang Cady Industry, opened a $100 million factory earlier this year that will create 4,500 jobs.
“Egypt’s balanced foreign policy is a big factor,” said Ding Yong, president of the Chinese Chamber of Commerce in Alexandria. “It has good relations with the U.S. and a relatively balanced trade position, which makes it a safer bet.”
Ding’s chamber now sees regular delegations from China’s manufacturing heartlands, particularly Jiangsu and Zhejiang provinces. But the investment boom is also straining local infrastructure. Land shortages are emerging in the SCZone and neighboring Ismailia, and factory rents have more than doubled over the past six months.
“These companies move quickly,” said Zhou Gong, a civil engineer based in Egypt. “Once they find land, they want construction to begin immediately.”
The influx of large Chinese manufacturers is creating new pressures for smaller firms like Jia Xiangsheng, who relocated to Egypt in 2017 to avoid fierce competition in China. His company, CoolStar, once thrived in the Egyptian market. But the arrival of heavyweights like Midea, Haier, and Hisense, as well as Turkish competitors, is squeezing his margins.
“When I came here, it was a way to survive,” Jia said. “Now we’re cutting prices just to stay in the game.” His profits have halved in the past two years, and he blames overcapacity in China for flooding Egypt with cheap goods.
Despite the challenges, momentum remains strong. For many Chinese exporters, Egypt has become a critical lifeline in a fractured global trade environment. As tariffs and geopolitical tensions reshape global supply chains, Cairo has found itself at the heart of a new industrial migration.
