There are certain ingredients that define their product, and Egyptian Extra Long Staple (ELS) cotton is one of them. Comparable with perhaps American Pima, its durability and length allow it to be spun into long yarns that are desirable for the luxury textile market.

To give you a measure of how vital Egyptian cotton is to the global textile industry and to the Egyptian economy, according to a recent report by the General Authority for Investment, the textile sector is the second-largest producing sector, after the agro-industry, and the first in terms of employment, accounting for 30% of local employment in 2008.

One company built around this global brand of Egyptian cotton is Diamond Canari, a family-owned textile business tracing its roots back to 1908. Mohamed Arafa, CEO, speaks fondly of his grandfather, who had dabbled in many other trades before settling on textiles and founding Diamond Canari. “In my family, we call him ‘The Big Arafa,’” he says.

Hayssam Samir

In the 1960s, in an attempt to modernize Diamond Canari’s production processes, Arafa’s father traveled to the UK to study textile companies there and to import the latest manufacturing equipment. Since 1982, the company’s main products have been socks, hosiery and garments for children. Clothing for children are mid-priced, ranging from LE 70 to LE 150.

Arafa was involved in every aspect of the textile factory, now located on the outskirts of Imbaba, Giza, from a very young age.“Ever since I was 10 years old, I would come here to the factory and help my parents out. From that age I began to learn everything about the company and about business in general — I even got my first allowance from here. And just like my grandfather and father passed this company on to me, I would like to see my own children inherit this place.”

Diamond Canari products use at least 70% mercerized and combed Egyptian cotton, which goes through a heating process to help smooth it out and remove imperfections. Supplies of the local crop are at healthy levels, says Arafa, comparing it to the huge price spikes in 2009 and 2010 when prices more than quadrupled from approximately LE 10 to LE 42 per kilogram.This was an increase that was attributed to all-time highs in global demand (namely from China), coupled with poor harvests in other cotton growing countries, such as Pakistan.

Approximately 20% of all Diamond Canari’s products are made for export to European countries such as Poland, France, Greece, Spain and Portugal, as well as to the Gulf region. The rest of their production serves the local market with at least 1,000 stores across the country.

Hayssam Samir


Despite the steep recessions facing many of his Eurozone partners at the moment, Arafa prefers to stick to Europe for his exports. “The EU’s quality requirements for garments make it much more difficult to export to them than, for example, the US. But our tradition has always been to partner with smaller, higher-end boutiques, rather than with large discount stores.”

Hayssam Samir

According to GAFI, exports to Europe were also on the rise, reaching roughly $460 million (LE 2.8 billion) in 2009. The US, however, remains the top single-largest market of Egyptian ready-mades, totaling $600 million (LE 3.7 billion), also in the same year.Analysts contribute gains in Egyptian-American trade relations to the Qualifying Industrial Zone (QIZ) agreements, signed in the late-1990s, between the US, Egypt and Israel. Designed to foster economic conditions conducive to peace, Egypt is allowed free-trade access to American markets, under the condition that it uses at least 10.5% Israeli inputs in their products.

Besides producing socks, hosiery and children’s clothing as part of their own brand, Diamond Canari also functions as a local supplier for socks for global chains such as Adidas, Carrefour and Guy Laroche. It is the exclusive importer and distributor for international brands in the Egyptian market, such as Falke, Burlington and Sisi. Additionally, they perform custom work orders such as school uniforms. With over 80 machines, their factory floor has the capacity to turn out at least 600 items of clothing per day.

Despite some struggle with the factory workers in the immediate aftermath of the revolution, Arafa says he maintains healthy relations with the workers. “We’ve always made sure to treat them fairly and, in doing so, [have earned] their loyalty.”

Hayssam Samir

But perhaps the biggest problems currently facing the Egyptian textile industry, and companies such as Diamond Canari, are neither the continued volatilities in cotton prices, nor labor spats: As part of the economic liberalization reforms of the 2000s, particularly under former trade minister Rachid Mohamed Rachid in 2005, Egypt began to open up its trade markets and local producers. In turn, the country faced some steep competition from outsiders, particularly China, Turkey and Syria.

“Now, these foreign companies have suddenly come in, opened their own factories and dumped their products in local markets at very low prices.

They also use Egypt as a midway point for destinations in Europe and North America [for their higher end products]. As a result, it has placed a lot of pressure on the local manufacturers.” Egypt

The resulting strain on Egypt’s textile sector which is still considered to be struggling to bounce back from the losses caused by higher cotton prices in 2009 to 2010 has been pronounced. Cotton exports alone have fallen 27% from March to May, compared to the same months last year, according to CAPMAS. Meanwhile, the massive strikes that took place this past July at Misr Spinning and Weaving in the Delta city of Mahalla are a reminder of the persistent labor unrest that plagues the sector.

Hayssam Samir

In determining whether Arafa recommends specific legal protection for the Egyptian textile industry, he claims that “you need to make sure local manufacturers are strong enough to compete before you invite everyone else in. Right now we are in a sort of muddle, policy-wise, regarding these issues, and we’re not quite sure where we stand.”

Nevertheless, the government can take specific measures to support local textile producers, such as through an export fund that will direct funds to companies who meet certain export quotas, or are better with respect to coordination with the customs department. GAFI cites goals for boosting exports to European markets, in particular, and focusing on higher-quality ready-mades, while better penetrating the local market and keeping Asian competitors at bay. In doing so, Egyptian companies would be in more control of the garment production value chain, which would in turn make Egypt less reliant on yarn imports from countries such as India, Pakistan and Turkey.

For his own, company, the key to survival is the protection of his company’s good reputation and continuing to innovate, Arafa confides. “I always make sure we are doing something unique in the market to make us stand out. If you follow everyone else you are sure to lose.” bt