Aqua Chiara Egypt: Pivoting in the high-end water filter market

Photo by Venngage

While an undergrad, Ahmed Abdel Monem Abdou was already selling water filters he bought from wholesalers. Studying mechanical engineering, he was also able to invent a new kind of water filtration process which significantly reduced the number of processes to make purified drinking water.

However, when he tried to patent his invention, someone else had already claimed it. Refusing to borrow money to file for reregistering the patent, Abdou decided to just focus on building a world-class factory in Egypt to manufacture high quality water filters.

He established his first company in 2001, importing water filters from Taiwan. While they were more expensive than his competitors, they were of a considerably higher quality and still sold well.

10 years later in 2011, Abdou established an assembly line in the Cairo suburb of Obour, a largely industrial district, to assemble the different components of water filters imported from abroad. Then, four years later, in 6th October City, Abdou built his first factory manufacturing the components from scratch, naming it Aqua Chiara Egypt.

Covering 30,000 square meters and housing more than 200 machines and 300 employees, the facility manufactures 40,000 water filtration units a month. Initially, its capital expenses were high thanks to having the latest technologies and an advanced research and development (R&D) department.

This presented a challenge for Abdou: dwindling cash to be able to pay for the capital expenses, leading him to acquire debt financing from a bank to cover them. However, because Aqua Chiara was dedicated to only delivering high quality products along with providing good customer service and after-sales services, Abdou’s company maintained a competitive hold over the high-end water filter market, capturing almost 60 percent of the market.

However, another challenge came to fruition. Abdou had to bring his partnership with his sole supplier of parts and materials in Taiwan to an end. In response, he set up a new company in Taiwan to provide the 6th October factory with all its manufacturing needs, bringing most of the supply chain under the same ownership.

This was not the end of Aqua Chiara’s obstacles, though. The Egyptian water filter market was becoming more fiercely competitive with many new companies entering the fold, as well as other players beginning to import assembled filters from Taiwan and selling them for much cheaper prices.

Aqua Chiara’s manufacturing capabilities still remained among the most advanced in the market, providing much higher quality water filters than its competitors which kept them in the game and in a very healthy and robust position.

Demand for water filters had also increased across the Arab world, leading Aqua Chiara to export to Jordan and Tunisia.

Demand in the local market has also been increasing significantly thanks to a growing awareness among Egyptians of the need for clean drinking water, the impact on health of unfiltered tap water, as well as the increasing costs of bottled drinking water.

Khazindar Business Research and Case Center KCC

This version of Aqua Chiara’s case is adapted from its original version as a case study titled: “Aqua Chiara Egypt: the story of a hurdler”, produced by El-Khazindar Business Research and Case Center (KCC), AUC School of Business.

 

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