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Future of Chinese products, brands in Pakistan

Various experts suggest that the Government of Pakistan needs review to the Free Trade Agreement (FTA) with our great friend China mainly for quality and product safety, make essential amendments and bring stringent principles for complying with the standard requirements of the Chinese commodities landing on our ports.

It is also assumed that the entire Chinese market shall be obtainable to Pakistan; instead, we have lost various industries due to the influx of Chinese products. Experts also calculated that the trade volume because of agreement between these states was recorded $13 billion during 2013, and stood to $20 billion by 2015 when both countries inked 51 agreements and MoUs for cooperation in dissimilar fields. No doubt, both countries have strong trade relations but as well our interest should be safeguarded first.

Pakistan: Export Receipts By Commodity (Thousand US Dollar)
Commodity Nov-17 (R) Dec-17 (R) Jan-18 (R) Feb-18 (R) Mar-18 (P)
A. Food Group 407,750 428,277 445,295 455,065 582,658
B. Textile Group 1,109,128 1,038,377 1,201,401 1,073,730 1,136,331
C. Petroleum Group 52,472 39,089 53,548 52,803 22,830
D. Other Manufacture 359,569 317,110 334,711 343,032 392,713
28 Carpets, Rugs & Mats 7,770 7,191 6,911 6,364 8,564
29 Sports Goods 45,613 43,382 49,742 42,272 52,899
30 Leather Tanned 31,673 25,115 28,522 24,672 28,545
31 Leather Manufactures 55,087 46,154 55,117 53,411 47,122
32 Footwear 5,663 6,887 7,901 10,844 10,443
33 Surgical Goods & Medical Instr 35,014 38,554 36,015 33,554 41,946
34 Cutlery 6,188 5,394 6,010 5,658 6,486
35 Onyx Manufactured 333 569 372 703 441
36 Chemical & Pharmaceutical Prod 130,398 110,771 103,396 131,467 128,217
37 Engineering Goods 19,133 16,492 18,391 13,253 43,340
38 Gems 507 511 661 692 606
39 Jewellary 394 492 695 372 2,872
40 Furniture 205 298 332 230 333
41 Molasses 423 415 0 2,529 400
42 Handicrafts 0 0 0 6 12
43 Cement 18,537 12,476 16,600 13,982 17,569
44 Guar and Guar Products 2,633 2,410 4,046 3,024 2,916

Economists have recorded that during 2007, over 7.3 million Polly pocket dolls and other accessories were removed from the shelves of the superstores of America and even the toys had small magnets that were dislodging and getting swallowed through the children. Chinese toys didn’t enhance even after such a massive recall, and during 2008, thousands of more toys were recalled from the supermarkets.

Pakistani sources urged that Chinese made toys that are widely easily available in our country; are notorious world over for dangerous lead paint that violates global lead paint standards. Sources also mention that with the much anticipated entry of Chinese retail chains in the country, there are many apprehensions over the impact that this development may have on existing, locally-owned chains in particular and the manufacturing sector in general. But some apprehensions relating to the impact on the economy, such as loss of employment and annihilation of local manufacturing, are unfounded and exaggerated. Bulk of product ranges at local retail chains already comprise goods majorly imported from China.

With Chinese investment in this sector unlikely the government of Pakistan has been encouraging Chinese companies or financiers to organize plants in Pakistan. Furthermore, expansion of retail setups domestic or international as well, is predicted to create further career opportunities. It is worth pointing out that many Pakistani retailers are well organized in Western and ethnic fashion retail but the consumer hasn’t benefited yet, from the growth of fashion retail.

The point to keep in mind is that any competition is predicted to advantage the consumer eventually. The government must also ensure that for every rupee Chinese financiers earn from Pakistan, a Pakistani investor too can earn the same from China. For every Chinese product landing on the Pakistani seaport, there should be a third party testing conducted in the country’s laboratories like PCSIR at the cost of the seller. Furthermore, for appliances and non-eatable products, there should be a customer care centre in all main regions of the country. Particular attention should be paid to the cosmetics, food and baby products.

As far as economic cooperation between these two countries are concerned, presently a 9-member delegation of CCCCS (Chengdu Chamber of Commerce for Commercial Services) visited in Pakistan where they promoted opportunities to organized an industrial zone either in Lahore, Karachi or Gwadar.

Experts also suggested that the trade body is also mulling to organize a Pakistan Commodity Center in Chengdu, on the lines of Chengdu European Center, where agriculture products, furniture and marble products from Pakistan would be displayed to be sold in domestic market. It is also looking to invest in include garment, ceramics, electronics, automobile and IT sector. Presently furniture manufacturers from Guangzhou-southern China, have shown interest in organizing a ‘furniture manufacturing units through joint ventures in Pakistan with focus on furniture manufacturing also organizing Pakistani furniture outlets in Canton to promote furniture trade between Pakistan and China.

Statistics also revealed that Pakistan exported $8 to $12 million worth of furniture products yearly, but the facts did not reflect the actual potential of the industry and its capacity to produce high-quality furniture but Chinese technology could help in upgrading the furniture sector of Pakistan.

Presently the finance ministry also revealed that unluckily Pakistan missed all its targets set for the industrial sector despite giving it a preferential treatment in the supply of electricity. Against a target of 7.3 percent, output in the industrial sector stood at 5.8 percent. The output of large-scale manufacturing stood at 6.2 percent, which was below the official target while small-scale manufacturing grew to 6.1 percent, also below the target, the finance ministry added. Economists also predicted that investment in CPEC projects would eventually swell to $100 billion by 2030 compared to the existing estimate of almost $60 billion. However, they have also noted that Chinese investors and firms had been given preferential treatment and when they would start manufacturing goods at the Special Economic Zones (SEZs), it would wreak havoc on Pakistan’s industry.

Conclusion

I would like to mention here, the best thing the Government of Pakistan could do to protect local interest was to promote joint ventures, meaning Chinese firms should have a local partner. However, it seems tough at the moment. In many of the Middle Eastern states, foreign firms or individuals must have a local partner for launching a company. I am confident that access of Chinese products in Pakistan will disturb our local market cause unemployment, poverty and also crime rate in the future.

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