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The Ceramic market in Egypt before and after the revolution.

Interview Transcript

Interviewer: Aliaa El Sallab

Interviewee: Hossam Mostafa

Date: 27/09/11

Place: Narrator’s office

Block 13034, Al Obour City
Cairo, Egypt
02-46102080

College: American University in Cairo

Professor: Dr. Kim Fox

Date completed: 27 Sep. 11

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Mr. Hossam Mostafa is the Vice Chairman of Royal Ceramica, he was born

in Mansoura, Egypt on September 3, 1986. Hossam Mostafa is engaged to be

married to Ms. Marwa Saleh in December. He graduated from The American

University in Cairo in the year 2007 and has been working in his family’s

company since then. Even though Mr. Hossam is a young man he has worked

very hard to achieve his place in the company, he has put Royal Ceramica in one

of the top ranks compared to other companies that has been around for a longer

time than Royal Ceramica. The company first started in 2004 even though the

family has been working in the ceramic business for more than 50 years going

through all the past generations.

The reason I chose Mr. Hossam for my interview was because of my

interest of the Egyptian economy and its fall, especially after the Egyptian

Revolution. Royal Ceramica is not based only in Egypt; it sells to many other

countries in the Middle East North African region and around the globe as well.

Mr. Hossam has been fighting to prove that the Egyptian product is a heavy and

strong product that can compete internationally with some of the big names

around the world.

With the big hit in the Egyptian economy many people thought that a

huge percentage of the factories in Egypt are willing to shut down. The reason

for that was because there are no more customers who are willing to buy any

new product, no new investors willing to make business in the country and all

the old international investors want to finish their old deals so they would stop

working. This was because there was no money and very few companies had the

cash to continue working and producing products in the finest quality. Which is
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why I wanted to know if there was any truth to those rumors of business

stopping in Egypt.

The reason I was so interested in that topic specifically is because I have

heard in the news about many investments stopping and the country is losing a

lot of money. I wanted to hear first hand what really is going on and what is the

truth about the Egyptian market even in one sector of it which is the Ceramics

market.
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27 September 2011

Persons present: Aliaa El Sallab - I

Hossam Mostafa - VP

First I would like to ask you a few questions so the audience would get to know
you

El Sallab: What is your name?

Mostafa: Hossam Mostafa

El Sallab: What is your title of work?

Mostafa: The vice chairman of Royal Ceramica

El Sallab: Where do you live? (Your district Giza, Heliopolis…)

Mostafa: No in Heliopolis area

El Sallab: How old are you?

Mostafa: I’m 25

El Sallab: How long have you been working?

Mostafa: On full time basis for more than (for about) three years
now.

El Sallab: What was the ceramic market like in the past few years
compared to the market after the Egyptian Revolution?

Mostafa: the ceramics market in the past 10 years have changed

tremendously, usually were very focused on seasonality’s
and timing of the summer season, before school season, the
return of Egyptians abroad, there are two or three seasons
in the year mainly they are all focused from march till the
end of September when everyone was willing to start
renovations in their houses with the construction work
starting to pick up in the past ten years with new
compounds, new districts, people starting to get out of the
city which happened not only in Cairo, it happened all over
Egypt you’d find even in Upper Egypt you’d find New Sohag,
you’d fine new everywhere in all Egypt you’d find people
starting to get out of the city starting new construction, so
mainly in the past ten years the seasonality have been
declining too much and work have been starting to be
steady all year long with of course the main season of the
summer, which people start to renovate when they go out
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to Alexandria, go to the north coast, there is more capability
for people to have things renovation in their houses,
because the kids are not in school, so the summer is our
main timing plus the market dynamics have changed due to
the change in Egypt with the constructing, were too closely
related to construction. Which takes us to after or post
revolution, (this) the market with its main link to
construction, although were a bit delayed when you start
speaking of construction cycles we have a delay, we finish
in furbish the construction projects that are already done so
right before the revolution people stopped investing in all
their construction projects to know what’s going to happen
but very quickly a month, a month and a half after the
revolution people started to finish their open projects
which in return had the ceramics market going up. We will
feel a decline, a major decline in our field during the next,
let’s say eight to ten months because the construction work
have been tremendously hit in the past eight months, and
we as I just said were a bit delayed so we usually count on
the project that should have started in February and march
and April we start to furbish them by December, and Jan. 10
or 8 months later. So the main hit for our market is still to
be seen, and thanks to our strong presence as Egypt and the
Egyptian ceramic market in the MENA (Middle East North
Africa) region especially, we could maneuver for a bit by
exporting our products. Although there is also a hit in the
MENA (Middle East North Africa) region and honestly
speaking the Egyptian ceramics hasn’t taken yet the
position in the global market as the ceramics market abroad
is huge and there are two big players in the market
especially China and Italy with one of them very superior
quality and very known for its high end in Fashion and
quality in everything and also in pricing and the other
competitor, big market which is china with its massive,
massive production and of course cheaper products and
they’re starting to pick up a bit even in their quality, so
were in the middle in between china and Italy. And when I
say china I also add in it in India, in the places that follow
the lead of China and Italy they’re also…
So we’ve managed now to maneuver a bit in our regional
market in MENA (Middle East North Africa) region
especially in like Saudi, Syria, now Libya is off the market is
totally stopped, morocco is a good market, and thanks to
the logistics of our product it’s a heavy product, you pay a
lot to transfer and transport the product which is mainly
giving an edge for our local production versus Chinese
production as when you would buy from china you’d have
to pay a lot to transport the product from china to Egypt,
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per say, so until now we have had a hit, a small hit in our
production and were forecasting a major hit in 2012.

El Sallab: But now the summer season has just ended how is it
compared to last year’s summer?

Mostafa: 2011 has completely different demographics, situation from

all the years in the past that we have passed through.
February we didn’t sell one tile in the market in the local
market in half of March we started to take up from there so
everyone there has been quite a shift during the year. So the
summer season has changed with Ramadan coming also, its
known that in Ramadan there are no ceramics sales what so
ever and Ramadan came this year in the middle of the
summer so we have a complete demographic situation or a
complete season that we have never seen before, it’s
mainly, it has been not so bad as we started to distribute all
the production on through out the year but I have been
saying the seasonality’s were starting to decline and this
year no one can predict, and this is not only in Egypt
because of the revolution after the economic crisis
everything started to change. We have a special scenario in
Egypt but the same is happening in other countries in the
region and even in Europe now the economic crisis the
follow ups with the economic crisis in 2008 is also working
in there is a major hit in Spain, Greece and Italy. The market
is changing for the ceramics world due to our very closely
related link to construction.

El Sallab: So the international market, there are no big investors that

are wiling to take your product right now because the
economic crisis around the world?

Mostafa: We have a good a good thing about our production and

about the Egyptian product in ceramics as I have been
saying the product is very heavy and for us and our short
distance from here to mainly Eastern Europe, the European
market, Western European market, the Middle East and this
region, Africa which is I confess that no Egyptian producer
and very minimal amount of European producer have been
to Africa as the transportation cost for us is good compared
to other Chinese markets also there is a tariff increase of the
Chinese products in Europe so were seen as a good quality
product not as good as the European products especially
the Italian product. Were actually good in the same range as
the Spanish products but not as good as the Italian. So were
seen as a cheap alternative to the Italian products. We had a
chance to have more presence in the Italian market and the
European market, not the Italian actually the European
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market, especially eastern Europe and now also maybe a
good start in the UK (United Kingdom) not to take all the
production because we need to have a good period of
building trust between us and the involvement of the
Egyptian product in the European markets.