Garment industry

Analysis of Industries in
Pakistan
Introduction
Despite having well developed industrial base
substantiated by a strong agricultural support, the
textile sector in Pakistan has reached to an export
level of around $7 billion which does not translate
the actual potential of this industry.
The textile experts are of the opinion that exports
of textile goods from Pakistan can attain the level
of $22 billion provided concerted efforts are made
by working together as an integrated industry
instead of doing business in isolation by different
segments of this industry which is the main stay of
the national economy.
Cont…
Being the largest foreign exchange earner for the
country, the textile industry in Pakistan occupies a
special place in eyes of the government as well as
the private sector.
The textile sector contributes over 67-68 per cent
to the total exports of the country which were
estimated over $11 billion last year.
The export target for the current year was set at
$12.1 billion for the current year which would
hopefully achieved mainly because of better
performance of the textile sector which is poised to
hit the mark of $8 billion this year.
Cont…
Despite all hue and cries over increase in cotton
and cotton yarn prices within the local market, the
overall performance of the textile exports are
encouraging and likely to hit the mark of $8 billion
at the end of the current financial year in June this
year.
Pakistan's volume of textile exports remained
hovering around $5 billion for many years which
became a psychological barrier in the textile
industry. For the first time, the textile industry
managed to break the psychological barrier by
adding around $2 billion dollars in the year 2002-
03 by reaching around $7 billion. It is estimated
that the textile industry continued to stride and is
expected to register an increase of 37 percent
over the total exports of previous year.
Textile mix
Pakistan's overall textile exports in fact are a pool
of different component of which the major
contributors are cotton fabrics, bed wear, knitwear,
readymade garment and cotton yarn etc. By and
large all these components are the front rankers in
the export field with a close export performance.
However, the experts feel that the ready-made
garment has the potential to take over all its
contemporaries and going to assume the role as a
leader of the textile industry.
The experts in the textile sector, however, single
out the readymade garment sector to be the top
foreign exchange earner in the coming years
because tremendous export opportunities
available in the world market.
Main problem
The working style of the textile sector was closely
identical to the polarization prevailing in our society.
A close look at the industry reveals that every sector
of the textile industry operating in isolation. The spirit
of working together towards a common direction
does not prevail in this important segment of the
economy.
For instance, the All Pakistan Textile Mills
Association (APTMA) claims to be the parent body of
the textile sector, it mainly deals with the spinning
sector. In fact different sectors in the textile industry
have formed their own castles such as Bed wear
Association, Knit Wear Association, Towel
Manufacturing Association, Ready-Made Garment
Association etc.
Cont…
Though these organizations usually demand for
transparency in the government policies and
decision and raise hue and cry against what they
call bureaucratic attitude of the government
officials, but practically speaking they are working
in highly suspicious and intriguing manners.
They are never prepared to share about the
developments in their sector. The so-called
websites are either carry outdated information or
totally black.
This unfortunate situation prevailing in our textile
sector is mainly due to lack of corporate culture
and deep rooted Sethya system in the industry.
Govt policy
The Export Promotion Bureau (EPB) on its part has
chalked out plans for capacity building with new
aggressive marketing strategies for the textile sector
especially for the garments on most modern lines.
Under capacity building scheme for manufacturing
export companies including indirect exporters,
consultancy services will be provided on 50:50 cost
sharing basis between the government and the
private sector enterprises. The technological up
gradation is to bringing about up gradation in the
management of the business and not limited to only
the production of goods and services, through BMR
of production and expansion, better marketing
procurement, financial management, induction of
different technologies etc. aimed at increase
productivity, better product quality or production,
adaptation to meet changing market requirements.
BRAND DEVELOPMENT
For enhancement of exports, an important enable is to
provide marketing support to strengthen the selling and
marketing capabilities of the exporters who are at present
weak in marketing management. To encourage the exporters
in this respect and in conjunction with the capacity building
scheme announced in the Trade Policy 2003-04, a
specialized scheme is also offered for assisting, willing and
able exporters to undertake better marketing preferably for
branded products and services. While the development of
brand names is covered in the scheme for capacity building
for exporters, and brand acquisition and franchising scheme,
this specialized initiative provide for guidance in overall
marketing independently of other supportive scheme. This
support will cover product design, packaging, pricing
distribution and selling, shelf display, advertising and
promotions, brand name and brand equity development,
research etc. It would also cover overall business image
enhancement including brochures, participation in exhibition
and fairs, company's presentation, websites etc.
Cont…
Majority of readymade garment exports from
Pakistan does not carry even the made-in
Pakistan label. Since, our products have not yet
developed an identity for themselves in the world
market; they are fetching comparatively much less
prices as compared to those items being sold
under a brand name. Developing a brand name of
our own is not any easy task, hence to overcome
this problem, the EPB has suggested acquiring or
franchising existing international brands to excel in
the export market and get better price of our
products. This is the right decision and can make a
visible change in terms of quality, quantity and
value of our products.
CHALLENGE
Though, the readymade garments exporters
are getting ready to join billion-dollar global
market after implementation of WTO rules in
January next year, they should also get
mentally prepared to face the challenges of
SA 8000, the standard for social
accountability, which could soon start telling
on our manufacturing industries.
The social compliance requirements from
foreign buyers could create a lot of problems
for the country's exporters in getting export
orders from the US and European markets in
the near future.
COMPETITORS
The international textile analysts estimate that
China, which commands over 15 per cent of the
nearly $400 billion global market in textiles, would
be the biggest gainer in quota free regime. Indeed,
there is evidence that China's market share could
cross 25 per cent.
To substantiate their assumptions, they cited the
precedents of three categories of both man-made
fiber and cotton made-ups and apparel in which
quotas in the US market were abolished in
January 2002, China's exports surged by 300 to
500 per cent in just one year.
Cont…
a recent US assessment says that India
could be a gainer, although it would lag
behind China by a substantial margin. An
India-China comparison clearly shows how
India has crippled the competitive
advantage it once enjoyed in textiles by
myopic policies and confusion about goals.
While China has the capacity to make rapid
advances in the global market, the moment
opportunity arises, the size of India's
industry is diminutive in comparison.
Cont…
China has created large capacities and capitalized on
economies of scale to dominate the world market. In
sharp contrast, India's policy framework has fragmented
industry by discouraging large-scale production and
encouraging proliferation of small units. Large garment
exporting units in India employ less than 1,500 workers,
whereas in China that number goes up to 25,000. It's not
surprising that the $6 billion garment exports from India
are spread across over 10,000 units. Even Sri Lanka's
garment exports of $3.5 billion come from only 300 units.
The growing obsolescence in the mill sector and
fragmentation of garment manufacture into small units
has resulted in India selling low value-added goods. The
evidence is shocking, while India's quantitative share of
the global textile trade is around 8 per cent, its share of
value added in the global trade is only 3 per cent. We
have missed the huge opportunity in processing, made-
ups and ready-made garments.
TASK AHEAD
To grab its due share out of the huge $400
billion global textile market, Pakistani
exporters have to concentrate on the following
basic fundamentals:
1. Increasing volume production to cut down cost
of production through economy of the scale
through mass production.
2. These steps could be achieved only through
integration of the smaller units through
mergers and acquisitions
3. Instead of working in isolation as an individual
collective mental approach would be a
prerequisite.
Cont…
4. Pakistani industrialists are used to enjoy
huge profits of their products. They would
have to comprise on the principles of
more business and less profit which is in
vogue the world over.

5. Most of the garments units produce for

men while a huge portion of the garment
exports comprise over women fashion
apparels. They have to bring in the
change for ladies garments according to
market requirements.