On June 17, the board of directors of Sailun Tire (601058.SH) reviewed and approved a proposal to invest US$1.141 billion in a tire production capacity improvement project in Egypt.
This huge investment not only pushes the company’s overseas layout to a new height, but also tests the strategic resilience of China’s manufacturing industry from “product exports” to “production capacity overseas” under the background of the China-Egypt zero-tariff policy taking effect.
The project is positioned to radiate the African, Middle Eastern and European markets, but practical challenges such as insufficient local supply chain support and institutional differences in Egypt have added uncertainty to its globalization game.
According to the announcement, Sailun Tire will be sold through its existing wholly-owned subsidiary Shams El
Sherouk and its newly established subsidiary SenroTyre will implement the project. Once completed, it will be able to produce 27 million semi-steel radial tires, 1.65 million all-steel radial tires and 20,000 tons of off-highway tires annually.
The company also plans to increase the capital of relevant subsidiaries by no more than US$691 million to meet capital needs. The proposal still needs to be submitted to the shareholders’ meeting for review.
This production expansion far exceeds Sailun’s previous layout in Egypt.
The company has invested US$285 million earlier to build a tire production base in the Suez Canal Economic Zone, and the first phase of the project is expected to be put into operation in 2026.
Part of the capital increase will be used for project construction, and the remaining funds need to be raised through other methods.
Sailun chose Egypt as its production hub based on multiple strategic considerations.
Starting from May 1, 2026, China will fully implement zero tariffs with 53 African countries that have diplomatic relations with Egypt, covering all tax items.
This significantly reduces the cost of cross-border flow of raw materials, equipment and finished products, and provides an institutional basis for supply chain integration.
Ghadda Kamel, an Egyptian international affairs expert, pointed out that the zero-tariff policy has brought tangible competitive advantages to Egyptian goods in the Chinese market. Egypt has become one of the biggest beneficiaries due to its improved industrial production capacity and geographical advantages.
The project is located in the China-Egypt TEDA Suez Economic and Trade Cooperation Zone, which is a flagship project of supply chain cooperation between the two countries.
As of the end of 2025, the cooperation zone has attracted more than 200 companies to settle in, with a cumulative investment of approximately US$3.8 billion, forming a “1 + 8” industrial system with bonded logistics as the core and covering manufacturing industries such as new building materials and petroleum equipment.
Egyptian Prime Minister Madbouly hailed it as “an ideal model for the development of Egyptian industrial parks.”
Sailun Tire has four major R&D centers and nine production bases around the world, and its products sell well in more than 180 countries and regions.
The Egyptian project is a key step in improving its global production capacity matrix, aiming to avoid trade barriers and get closer to the end market.
Relying on the hub location of the Suez Canal Economic Zone, products can efficiently cover Africa, the Middle East and Europe.
This reflects the trend of “capacity exporting overseas” – shifting from pure product exports to localized manufacturing and deeply integrating into the Egyptian industrial chain.
Sailun’s manufacturing strength provides the foundation for its overseas expansion.
The company uses the world’s first “chemical rubber refining” technology to produce high-end liquid gold tires, and was selected into the first batch of carbon footprint label certification pilots in Dongying City to promote low-carbon transformation throughout the tire life cycle.
In the production process, the company has added 53 sets (sets) of intelligent production equipment in the past two years. Through the intelligent warehousing and logistics system of embryo embryos and the automatic transportation of EMS trolleys, it has realized the automation of the entire process from molding to vulcanization, replacing traditional manual handling, improving efficiency and reducing losses.
Despite its promising prospects, the Egyptian market still faces challenges.
Egypt’s logistics system and industrial supporting capabilities still have considerable room for improvement, and there is a gap between port throughput, inland transportation and warehousing facilities and supply chain hub positioning.
In addition, the local supply chain is highly dependent on external parties in precision parts and high-end raw materials, and the localized procurement system is not yet mature.
Differences in inspection and quarantine standards and technical specifications between China and Egypt have increased the transaction costs of trade and investment.
Egypt’s investment policies, tax system and labor regulations pose high learning costs and compliance risks to Chinese companies.
The cooperation zone is promoting the “chain owner-driven + cluster overseas” model, attracting upstream and downstream supporting enterprises to settle in around leading enterprises, while strengthening the cultivation of local suppliers, and building smart infrastructure to enhance the resilience of the supply chain with digital technology.
Sailun’s Egyptian project is the epitome of in-depth supply chain cooperation in the context of the 70th anniversary of the establishment of diplomatic relations between China and Egypt.
Catalyzed by the zero-tariff policy, Chinese companies’ investment in Egypt is accelerating and extending to new energy, automobiles, chemicals and other fields, evolving from trade channels to production capacity integration.
For Sailun, the investment of US$1.141 billion is a key step in transforming production capacity advantages into market advantages.
If the project is approved by the shareholders’ meeting and implemented smoothly, it will not only enhance its global competitiveness, but also provide a new model for the “R&D in China, manufacturing in Egypt, and global sales” model.
However, whether it can overcome the supply chain and institutional obstacles in localized operations will be the real test of its success.
