Avais Mazhar Hussain, the CEO of Angora Textiles, gave
a presentation at NIPA to government policy makers on the state
of garment industry. He stressed an urgent need for human resource
development and course correction in government policies to stop
the progress of the sudden decline in Pakistani apparel industry in
post quota 2005.
GLOBAL APPAREL TRADE AND PAKISTAN
“Silver fiber is the silver lining to the dark clouds of poverty
engulfing Pakistan,” he said in his opening statement. “Our fabric
processing is poor. If we look at capital investment ratio, China
is 28% of total global apparel market. Pakistan is the strongest in
comparison, about 20% for USA in category 338 men’s knitted
apparel and 339 – women’s knitted apparel alone.”
“Under WTO regime, the apparel industry is going down in Pakistan,”
he said as he explained the global textile trade, walking the
audience through the facts and figures on global apparel and textiles
in comparison to Pakistan. The world produced 165 billions in
textile goods, 225 billions in apparel, totaling 390 billion
dollars worth of textile and apparel goods. He discussed Pakistan’s
textile exports by category in the year 2004 and 2005, citing
figures he remarked that Pakistan’s textiles industry is doing well
in the global market place if you just look at exports of raw
materials — cotton, cotton yarn, unprocessed fabrics (knitted and
woven), and home textiles but the apparel business is not doing as
well as expected or as it should from the perspective of a indigenous
cotton producing country. “Even Bangladesh has become a better
player than Pakistan – the sequence of apparel export reads now as
follows: China ($43,010 Million), India ($ 5,467 Million), Bangladesh
($3,579 million) and Pakistan ($ 2,172 million),” he said.
Bangladesh’s ranking seems surprising since it’s not a cotton
producing country and has to import raw materials like fabric from
Pakistan, India and China for their apparel industry. Pakistan’s
total textile exports including all sectors like yarn (45.51%),
cotton cloth (40%), bed linen (42.36%), woven garments (65.54%), and
knitwear (26.33%) in the period of July 2004 to August 2005 grew by
13.4% but knitwear in the period of January to June 2005 declined by
5%. Explaining these figures, he said, it was a “Sad reflection on
the industry, governance, and the country.”
MARKET SEGMENTATION AND PAKISTAN’S QUOTA POLICY
Discussing the customer market segmentation, he explained that
Pakistan was competing at the low end of the market only. “Pakistan
is ideally suited for market segments 3 & 4 (departmental
stores and mass market retail chains), since Lahore and Faisalabad
have vertically integrated industry, however, Pakistan is
operating at 6 and 5 (mass retail chains and discount chain stores),
partially at 3 & 4 (first tier specialty shops and better
department stores),” he said.
Explaining the reason for the industry’s move in this direction,
he cited government’s quota policy. “Back in 1991, the quota was
awarded on performance and value. In 1994, government changed it
back to performance. The average price in 1994 was $48 per dozen. In
2004, it was $40 per dozen. This policy change affected our
performance – it forced the exporters to pursue low priced, high
volume supply strategy– from competing with middle tier
suppliers: Hong Kong, Turkey, Egypt, Korea, Taiwan, Indonesia,
Malaysia, it made them compete with the low end — main land China,
India, Sri Lanka, South Africa and Bangladesh. The government was
entirely responsible, since if you give a certain direction, the
exporters have no choice but to comply.”
PAKISTAN’S INDUSTRIAL STRENTHS AND WEAKNESSES
Discussing Pakistan’s strengths, he said, “Pakistan has abundant
supply of cheap labor, a well developed spinning industry and
availability of raw materials. Even though Pakistan’s labor cost is
$0.38 per hour, (Germany has the highest labor cost in the world, in
spite of high costs, their growth rate in the first 7 months of 2005 was
16% and Italy was 6%), this cost advantage is almost nullified by an
undisciplined and unproductive labor force,” he said.
Discussing Pakistan’s industry weaknesses, he said, “We cater to
the low end of the global market because of skill deficiencies in
manufacturing and design, furthermore, we have to contend with
poor country image. It’s a desperate situation. The weakest link
in our value chain is dyeing and fabric processing. You can’t find
a single dyeing technician/Chemist in Pakistan who can dye polyester
and spandex (Lycra) satisfactorily. We have better equipment
than China and India. Garment technology is a proper science. India
produces industrial scientists in fifteen months flat since they
have schools that offer industrial training. In Pakistan, totally
clueless people are leading the factories fabric processing
facilities. Some of our technicians do not even know how to use
hydrogen peroxide for example!
We have had to import ex-patriots to
sort these problems out and do cross training in our factory.
Finding them is not a problem, moving them to Pakistan is
a problem, they don’t stay long– anyway, one of the ex-pats,
a Spanish gentleman, conducted a study in our factory for me, only
48% of the garments being produced were first time right. 52% is
a high rejection rate, considering Angora is an approved source for
many first tier customers. Our dye-houses are one of the most
expensive facilities in terms of costs in the world. We have the
state of art computerized machinery but what can technology do if
you don’t have qualified technicians to run your machines? We need
to set up schools urgently; investment must be done in this area. There
is an urgent need to develop our human resources.
Even though, our
woven industry is growing right now, after 9/11 incident, the
knitwear industry is steadily going downhill. We can not rule out the
same possibility for our woven industry. Garment technologists
and industrial scientists are needed urgently by the knitwear and
woven apparel industry. We must strengthen our manufacturing and
design capabilities. Our sewing technology is twenty years behind
Sri Lanka. On the design front, we are no where. Pakistan School of
fashion Design (PSFD) is a good school but its output and
contribution in the industry is comparatively very low, since its
establishment in 1998, it is only producing 18 students per year,”
he said.
“Industry is being driven by individuals. We need to make an
effort at the macro level,” he said. “One of the pioneering knitwear
plants in Lahore closed down last week. Other factories will soon
follow in its wake if steps are not taken to correct these issues by
the government policy makers. By the end of the year, one third of
the people will be unemployed in the textile sector of Knitwear
alone because of large scale factory shut downs. Currently the apparel
sector employs 300,000 people in US$ 1.5 billion industry,” he
said.
Expanding on the poor country image, he read out an excerpt from the letter sent by MOD’SPE Paris to PSFD.
“Pakistan has the image of a somewhat unstable country
suffering from internal tensions and confrontations, relayed by
the Western media. This does not help the influx of buyers into the
country and can hinder the purchase of “Made in Pakistan” clothing
by Western consumers. This is notably not the case for India,
a country perceived as peaceful and open, and which enjoys a good
image with buyers & stylists all over the world. India is
consequently considered as a country of inspiration, ideal for
sourcing. To conclude, it appears that Pakistan is no longer well
placed in terms of value for money. This is especially significant
as its positioning is on the products where the price factor is all
important in the purchasing decision: Basic Products, Sportswear
and Cotton Jeanswear.”
MOD’SPE PARIS
28/07/2005
PAKISTAN’S GOAL
“Pakistan ought to be the clothier of the world in the middle/upper
segments of the global marketplace,” he said. “Pakistan’s biggest
asset is its location at the meeting place of the Indian and
middle-eastern cultures. In a world where authenticity is
increasingly sought after, Pakistan should have a bright future if it
can build on its identity and propose brand alternatives inspired by
this identity,” he said.
“India has 100 percent industrial growth, textiles is one of their
leading industries, precisely because India’s country image is
better in comparison to Pakistan. Their tourist industry is
thriving too. Our port behavior leaves much to be desired. Buyers
don’t come to Pakistan. We have to meet our buyers in some neutral
territory like Hong Kong or Singapore each time they visit this part
of the world. Convincing them to come to Pakistan is non-starter.
There is a travel advisory on Pakistan. If some buyer comes to
Pakistan, they are harassed by the port officials. It’s a sad story,”
he said relating couple of anecdotes on buyers’ recent visits to
Pakistan.
“Customers require value for money; unfortunately, Pakistan is
failing to provide a viable value proposition to its customers,” he
said in conclusion.
First published in the print edition
, The Knit-Xtyle Fashion Review, issue 13, 2006