Pakistan’s garment industry

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