HSBC’s market knowledge and dedicated support underpin business growth plans

Backed by its long-term relationship with HSBC, elevator supplier MELCO-MEC Egypt is eyeing a new market segment and, in the medium term, potential expansion into Africa.

Since its foundation in 1999 as a joint venture between Japan’s Mitsubishi Electric Corporation (MELCO) and Modern Engineering Company (MEC), the firm has captured around 13 percent of the Egyptian market, becoming the fourth-largest player in elevator supply, trade, installation and maintenance. It is the sole supplier of Mitsubishi elevators and escalators in Egypt.

With 800 employees and capital of EGP5 million (U.S.$320,000), the company now has around 5,000 elevator and escalator units in operation, mainly in the high-end segment for private and governmental entities, and another 1,000 under construction in various projects across the country.

With 800 employees and capital of EGP5 million (U.S.$320,000), the company now has around 5,000 elevator and escalator units in operation, mainly in the high-end segment for private and governmental entities, and another 1,000 under construction in various projects across the country.

The pandemic has had a limited impact on the company, as it imports products from Thailand, Japan and Korea, where factories have been operating normally.

Although the slowdown in tourism due to COVID-19 restrictions took a toll on its maintenance business as hotels closed, the firm’s total revenue and sales in 2020 were up 10 percent at EGP342 million (U.S.$21.7 million) and around 510 units respectively.

The company, with a total net worth of EGP93.5 million (U.S.$5.9 million), is now looking for ways to further increase its market share in Egypt, while considering growth opportunities beyond its borders over the next five years or so.

"One of our targets is to expand into the medium zone segment, aiming more at the residential market by cutting costs and becoming a bit more affordable to more clients,” says Mehry Shawky, CEO of MELCO-MEC Egypt.

“Also, we are thinking about expanding into other territories, maybe Africa, but this would have to be in coordination with Mitsubishi. It is not a short-term thing, but maybe in five years,” she says.

Understanding of customer business

HSBC Bank Egypt is MELCO-MEC’s long-term banking partner of choice, with a deep knowledge of the company’s business and its innovative HSBCnet online banking platform ensuring seamless running of day-to-day treasury operations. MELCO itself is a customer of HSBC UK.

MELCO-MEC has recently increased its usage of HSBCnet, benefiting from the platform’s powerful advanced capabilities while managing trade as well as issuance of letters of guarantee (LGs) and letters of credit (LCs).

Last August, the bank launched its HSBCnet mobile application in Egypt to help corporate customers access their accounts while on the move and manage their trade financing by integrating key tools such as trade authorisation and trade transaction tracker.

The bank’s flagship HSBCnet Internet Trade Services (ITS) enables clients to initiate and manage trade transactions locally and internationally with access to real-time trade account information anywhere and anytime.

HSBC’s cutting-edge digital banking solutions, combined with nearly 40 years’ experience in Egypt alone and global connectivity across 64 countries, offer customers a seamless and secure experience along with access to over 90 percent of the world’s trade flows.

Negotiating business challenges

The ongoing COVID-related disruption of the worldwide shipping industry has been the main challenge for MELCO-MEC due to its reliance on imports. Other challenges include the threat of inflation and a lack of skilled local labour.

“The biggest challenge now is shipment. Prices have escalated tremendously, maybe more than twice or three times, and we have issues with late shipments,” Shawky says.

“What used to take a month now takes a month and a half, or two months,” she says.

Inflation, which has been surging globally due to economic recovery, rising wages and logistics and production issues, is also a big factor for the company.

“We take a little bit of margin for contingency for the price increase, and we try to book or pay some of our suppliers in advance so that the prices don’t increase on us,” Shawky says.

The final main challenge is an ongoing lack of skilled labour in Egypt for a company selling and installing very technical and sophisticated products.

“We are overcoming this obstacle by training. We have our own training centre, which trains newcomers and technicians to be up to our standards,” she concludes.