The majority of consumers in the Arab world see goods imported from abroad as better than local ones in principle, in a phenomenon that Arab societies have called the “Khawaja complex.”
Many Western companies have worked to connect consumers in non-manufactured markets with their brand by providing their products with high quality and a high price category over the course of decades, and this is what made their brand represent in the minds of consumers a symbol of high quality.
“Imported is better”
Yasmine Ibrahim, an Egyptian housewife, says that she prefers imported goods because they are better than local goods in manufacturing, even if they are reasonably higher in price, because in the end they are used for a longer period than local goods and therefore in the end they are cheaper.
She adds that local goods are often higher in price than imported ones.
Egypt’s trade deficit reached $36.9 billion last year, down from $48 billion in 2022, according to what the Minister of Trade and Industry, Ahmed Samir, said in a statement issued earlier this year.
The situation in Morocco was not much different. The trade balance deficit reached 286.4 billion dirhams ($28.77 billion) during 2023, compared to 308.8 billion dirhams ($31 billion) during 2022, according to data from the Exchange Office (government).
Secretary General of the Federation of Arab Chambers of Commerce, Dr. Khaled Hanafi, says that there is a great Arab demand for imported goods as a result of the unavailability of a significant amount of goods produced by Arabs.
He added in an interview with Al Jazeera Net that the Arab countries are divided into groups:
- Net importing countries that do not produce.
- Countries have entered production fields to the point that the local market has begun to absorb a large proportion of their products and have even begun exporting to foreign markets.
- Arab countries are still searching for a productive identity.
Hanafi points out that there are Arab consumers who prefer to buy local products if they are of the same quality as foreign products, as opposed to other consumers who accept imported goods with famous brands for the purpose of showing off, demonstrating, and proving or pretending to be wealthy.
For his part, economic expert Sherif Fahmy said in a comment to Al Jazeera Net, “The Arab consumer often sees that imported goods are better than local ones, if they are manufactured locally, and sometimes the consumer mood tends to be among a significant percentage of the upper segments, especially in the GCC countries.” GCC into branded goods to manufacture luxury goods.”
Factors of dependence on imported goods
Sherif Fahmy pointed out that there are factors that increase imports in Arab countries compared to other Arab countries, and this is due to the following reasons:
- Customs tariffsLower customs tariffs lead to an increase in imports from abroad, with the Arab mood tending toward imported goods and weak competition from the local product in the case of producing Arab countries, or a lack of competition at all in the case of non-producing countries.
- Purchasing powerThe purchasing power of Gulf currencies increases, for example, and imports from abroad increase compared to countries such as Egypt, Tunisia, Algeria, Sudan, and others.
In addition, a high level of income makes a difference in consumption and local preferences, as luxury goods are often sold only to those with higher incomes.
However, Fahmy believes that product manufacturers in the Arab world have begun to care about the quality of what they produce after the free trade agreements between the Arab countries of the world, and in some areas they have found their way to compete with foreign luxury goods.
Localization of industry
It cannot be said that an Arab country has achieved complete localization of industries, according to the Secretary-General of the Federation of Arab Chambers of Commerce, Khaled Hanafi, who confirms that there are successes in various regions of the Arab world, such as Morocco’s success in localizing the automobile industry by 70%.
He said that there is development in the food industries in the Arab Gulf countries, and that Egypt has turned to industries, especially those related to digitization.
In general, Hanafi said that the development in the localization of industries in the Arab world was linked during the last period to pumping investments, and Arab countries were encouraged to coordinate with economic blocs. Egypt, Saudi Arabia, and the UAE have joined the BRICS bloc, which opens the way for greater trade movement.
As for Sherif Fahmy, he says that the Arab world has begun to seek to localize industries, with success rates varying so far between some countries in deepening local components in industries, while other countries have succeeded in different fields.
He adds that the Gulf Cooperation Council countries, with their efforts to localize industries, have not yet reached the level of competition with imported products in many areas of manufacturing, while the proportion of local industries is increasing in the Maghreb countries and Egypt, for example, pointing out that foreign brands are now manufacturing their own products. In Arab countries, benefiting from investment incentives and the markets in which it has become famous.
Fahmy believes that attempts to localize the industry have succeeded in varying degrees in terms of fields. The Gulf Cooperation Council countries are focusing on the localization of technological industries, while Egypt seeks to meet the needs of its population (the largest population in the Arab world with more than 106 million people), and thus launches campaigns to attract foreign companies’ factories and encourage local products, which receive a varying response.
In the Maghreb countries – according to Fahmi – Morocco excels in attracting investments and localizing industries due to incentive policies, while Tunisia declines due to political unrest and the difficulties that foreign companies find in working in Algeria.
