NEEDS SERVICES OF INTERNATIONAL DESIGNERS
MADE IN PAKISTAN
By AMANULLAH BASHAR
August 09 - 15, 1999
"How to make 'MADE IN PAKISTAN' label
the best seller in the export market" is a pertinent issue to be addressed both by
the public and private sectors in the country.
Actually, the label is struggling for its
survival in the world market for want of a genuine support by quality products, price
competitiveness, honest, sophisticated and aggressive marketing efforts to make a place
for itself, both at home front and in the international market.
Honestly speaking, it wouldn't help to
attract local customers merely by raising slogans like "Be Pakistani and Buy
Pakistani" unless strategic marketing efforts are made and good quality products are
offered in return, to the people.
For instance, the overwhelming response to
international food chains like KFC, McDonald and Pizza Hut etc. in Pakistan speaks itself
that it is the quality and presentation of the products which matters. These international
chains have become the much sought after food products in Pakistan despite the fact that
these companies are selling Pakistani chickens but it is the quality and way of
presentation which have outclassed the local vendors. The speedy penetration of these
international fast food companies into Pakistani market signals that people would go for
quality products even if they have to pay more. Practically speaking, no amount of
patriotism can excel the poor stuff over quality goods, even in the local market what to
say about choosy export market.
Gulzar Firoz, former chairman, Pakistan
Tanners Association (PTA), while supporting the idea of 'Pakistani goods with the labels
of internationally known companies' said: "Marketing strategy demands that we should
make our presence felt in the world market with the support of the internationally known
He said that as the first step we should
go into franchise with renowned marketing houses to make our place in the world market. As
there is no harm in it as it is practiced elsewhere in the world. The marketing companies
having internationally known brands originally are not the manufacturers. These companies
have hired the services of manufacturers to produce goods in different countries, however,
the designs of the goods is provided by the marketing companies.
Regarding leather and leather goods,
Gulzar said: "Pakistan exports finished leather and leather garments. The total
exports of leather and leather goods was over $511 million in 1998-99 as compared to $541
million in 1997-98. Out of the total exports in 1998-99 finished leather fetched $172
million while leather garments fetched $339 million. In the segment of leather garments,
Pakistan is exporting only leather jackets, while export of other products like wallets,
bags or footwear is insignificant which is hardly between 6-8 per cent of the total
leather garments exports. As far as the quality production is concerned, leather jackets,
produced in Pakistan are second to none, however, they are unable to fetch the price they
deserve because they do not carry the label of internationally known designers.
Since these designers charge heavily for
designing the products, their services cannot be hired by the exporters individually. He
strongly recommended that the Export Promotion Bureau (EPB) should organize seminars about
branding of the products in which international designers be invited to speak on this
important subject. The services of internationally known designers can be hired for
designing of Pakistani products. There could be a provision in the Export Development Fund
(EDF), collected by the government, for payment of charges of these designers in the
larger national interest to promote our export on sound footings, he suggested. The
designing of Pakistani products like leather garments, fashion apparels, sports goods,
surgical items, footwear, and other exportables can do a magic in increasing export
volumes from Pakistan, he felt.
Gulzar, who led a delegation of Pakistan
leather products manufacturers in the 9th International Shoes and Leather Fair, held in
China recently, said that Pakistani leather products fetched export orders worth Rs10
billion in that particular exhibition. This was for the first time that Pakistan had
participated in that Fair. The volume of trade in such fairs can go to any extent provided
our products are designed and marketed under the labels of international designers and
Pakistan's sports goods, however, have
their identity in the export market. International sports marketing companies like Nike
and Adidas have started marketing of Pakistani sports goods under their labels from
Pakistan. Pakistani exports of sports goods declined last year due to non-tariff barriers
like ISO-9000, environment issues and child labour charges erected by developed countries.
These barriers and also international recession were the factors for the decline. The
export of sports goods stood at $383.61 million in 1997-98 which sharply declined to the
level of $256.67 million in 1998-99. It is, however, expected that export volume of sports
goods is likely to take a quantum jump following arrival of world's sports giant into
Pakistan sports manufacturing sector. Pakistan has recently participated in world's
largest sports goods fair ISPO Summer, held in Munich. About 32 exporters of sports goods
participated in that exhibition.
NIKE has awarded a $5 million contract to
Emery Company for one year to provide air cargo services for its products to North America
from Pakistan and other countries in the region.
The agreement includes air transport from
Pakistan to destinations in Europe, North America and Asia.
Nike, the world's leading manufacturers of
sports goods including sports apparel, equipment and footwear, buys from Pakistan and
other regional countries, raw and finished goods and materials for its wide array of
products. Emercy Worldwide will also ship Nike products to North America from India,
Singapore, Bangladesh, Sri Lanka, The Philippines and Malaysia.
Nike, based in Oregon in the United
States, is the World's leading manufacturers of athletes footwear, apparel, equipment and
accessories for sports. It has manufacturing facilities in Europe, North and South America
Like sports goods manufacturing sector,
the manufacturers of surgical items were also facing charges of child labour. This left a
serious effect on the exports of surgical instruments which have a reputation for their
A team of International Labour
Organization (ILO) and UNICEF which recently visited Sialkot, however, has exonerated
surgical industry of child labour abuse charges.
According to surgical instruments
manufacturers, a joint group of experts, belonging to the two top world bodies, visited
Sialkot and adjacent areas recently where surgical instruments are produced.
The visitors found out that child labour
was being used only at units which were operative in villages as part of the cottage
industry. Almost all the units, set up at the industrial areas in that region and
manufacturing high grade surgical instruments, had no traces of child labour, the team
reported to an Italian NGO which arranged the visit to probe child labour abuse charges.
The surgical instrument manufacturers and
exporters hope to boost shipments of surgical kits to European countries which consume
around 65 per cent of the total exports of these goods from Pakistan.
Pakistan's exports which rose to Rs4.9
billion in 1996-97 from Rs4.2 billion a year ago, fell sharply during first half of
1997-98 in the wake of child labour charges. Pakistan's exports of surgical instruments
was estimated at $125.29 million in 1997-98 which declined to $112.38 mainly on account of
child labour issue.
With ILO and UNICEF report, exonerating
Pakistan of these accusations, the exports may touch to Rs 5 billion mark as there has
been an increased demand of Pakistani surgical goods in most European markets.
At present there were about 6,300 children
engaged in manufacturing different surgical articles by mainly working as part time
workers at cottage level units. The strength of the total labour force engaged in the
surgical industry was more than 100,000.
The surgical industry, according to
sources, provides all possible health care to its labour force and arrangements have been
made for their education at schools set up by the industry by its own resources.
There is a scheme to employ these
children, currently working in cottage industry, in the mainstream industry producing
sophisticated surgical gadgets after completion of their schooling and other required
training as they have inherited potential to produce best quality surgical goods.
The joint mission of ILO and UNICEF has,
however, expressed the hope to cut down the size of child labour by at least 50 per cent
in the next couple of years.
Despite global recession and erosion in
the unit value the carpet industry of Pakistan generated $190.063 million in 1998-99.
During the year, the carpet export in term
of quantity increased by 295 thousand square metre or 8.51 per cent, but in term of value,
the export of carpet declined by 5 per cent due to fall in unit value and devaluation.
This indicates that carpet sector has also
potential to go far ahead provided strategic designing and marketing efforts are made in
this sector. According to a carpet exporter, Afghan style trendy carpets had a lion's
share in overall exports because most of the designs of Pakistani hand-knotted carpets
have become outdated and unimpressive in the international market. In order to remain in
the international market, eye catching colours and market oriented designs are needed to
be introduced in Pakistani carpets, said an exporter.
The economic conditions in Pakistan always
demand of the economic managers to evolve export policies aimed at earning more and more
foreign exchange overcome resource constraints constantly faced by the country. In order
to achieve this cherished goal they always rush to explore new markets and offering
incentives to the private sector, yet the export sector is lagging far behind the desired
goal despite having enormous natural resource potentials the country has. In the mad rush
for enhancing the exports, the most significant area of image building of Pakistan as a
producer of quality goods was not left neglected. Some unscrupulous elements in the export
business damaged country's reputation by criminally comprising on quality and despatched
shipments of sub-standard goods to make quick money. "To tell you the truth,
whosoever they may be, they not only damaged the reputation of Made in Pakistan goods but
also tarnished the image of Pakistan. These elements have done a damage to such an extent
that for the past many years, the export target of $10 billion has become a psychological
barrier for country's exports.
The commercial attaches appointed in
Pakistan Embassies abroad can be highly significant for image building of Pakistan as a
producer of good quality products. Unfortunately, the Pak envoys have failed to deliver
the goods and majority of them is appointed on certain considerations and their party
affiliations which can never serve the country upto the desired level.
Recently, Federation of Pakistan Chambers
of Commerce and Industry (FPCCI) has taken a serious note of the case forwarded by the
commercial attaches in which one of the leading Pakistani exporters of fruits and
vegetables was accused of exporting sub-standard (over-riped) mangoes to Green Fellas of
The government is considering to review
the caliber and performance of commercial attaches posted in Pakistani foreign missions.
Defending the accused exporter, FPCCI has
said that Al-Mahmood Establishment was the winner of FPCCI's export trophy for several
years and it is beyond comprehension that the company which is a leading exporter of fresh
fruits, especially mangoes for the last five years around the world will ship inferior
quality mangoes on credit terms.
Green Fellas, the importer of mangoes in
Singapore, has already remitted the proceeds with discount of five per cent to the
exporter and has also placed further orders which is an ample proof that the party is
innocent and allegations of supplying inferior quality mangoes against are unfounded.
Describing the action of the commercial
attaché as unprofessional and immature, the officer has tried not only to tarnish the
image of the company but done a colossal damage to the country's reputation as one of the
best producers of agricultural items in the world.
Whatever the reasons may be, the fact
remains that our commercial officers operating in different missions in the world need
brain storming to build up country's image as the producer of quality goods.
Country's image as producer of quality
goods plays the central role on international front. Japan, which was notorious for
producing sub-standard quality goods some three decades back, has played a model role in
fighting back to achieve number one position in the world market. To reach the present
status, the key factor, however, was the gradual improvement in producing quality goods by
Japan's manufacturing sector.
According to a leading exporter, bulk of
Pakistan's exportable goods are re-marketed by reputed international business houses with
their own brand names or labels of different origin. Generally speaking, exporters from
Pakistan use detachable labels for their products on the instructions of the importers so
that they could replace labels of their choice.
So much so, the matchless Pakistan's
Basmati rice which is internationally known for their aroma and exotic taste are
re-marketed under the label of "Packed in England". The marketing companies
having respect and credibility for quality goods are charging 6-8 times more in European
markets when compared with export prices fetched by Pakistani exporters. This was not the
case with Basmati rice alone, by and large other products from Pakistan such as sports
goods, surgical instruments, leather garments etc are facing the identical treatment.
The demand of Pakistani sports goods is
reflected in the fact that Pakistani footballs are generally used in the international
tournaments on the recommendations of the International Football Association.
Unfortunately, these footballs do not carry "Made in Pakistan" tags.
We cannot blame the international business
houses for selling Pakistani goods under their own brand names. They are taking advantage
of the situation because of their goodwill and hard earned reputation in the world market.
Pakistan loses more than Rs250 billion
annually in the international market due to poor quality of goods and services. This
unfortunate situation would continue to be so if quality standards are not improved,
stringent code of right and wrong is not adopted to root out all pervasive corruption from
the public as well as private sectors.
Ahsan Iqbal, Chief Coordinator, Programme
2010, and Deputy Chairman, Planning Commission of Pakistan, while
delivering his keynote address at a
seminar on: 'The Fight Against Corruption', organized by the Institute of Cost and
Management Accountants of Pakistan, said that studies in cost management had shown that
from 62 per cent to 80 per cent cost of goods was the "soft component" and that
needed complete elimination. "Some corrupt countries have reduced the soft component
to 50-55 per cent thus improved their competitiveness in the international market,"
He said that increase in cost was caused
by many factors but the institutionalized corruption and poor quality production were the
two factors which had made Pakistani goods incompetitive in the international market.
Analyzing the way, the public and private
sectors were working, he said that they were yet to realize the damage, the corruption and
other ancillary factors were doing to Pakistani trade and industry.
He acknowledged that the information
system of the government was too bad to check irregularities in the system as there was no
accurate collection of data and all statistics were questionable.
COST OF PRODUCTION
Despite availability of cheap labour
resources, the heavy taxes levied by the government, accompanied by an army of corrupt tax
collecting agencies, exorbitant price of utilities altogether have rendered our
manufacturing sector incompetitive in the export market.
Although different governments, time and
again, have acceded to the demands of the manufacturing sector for rationalization of tax
regime, steps to correct the situation are yet to be taken.
The present government has appointed task
force for amalgamation of eight labour-related taxes into one tax. The task force has been
asked to submit its recommendations to the government latest by December 31, 1999. Another
task force has recently been asked to evolve basic changes in the resource mobilization
strategy in Pakistan.
This task force has been assigned to
recommend changes in the taxation system to enhance built-in elasticity and to orient
towards faster growing segments of the economy.
The working paper, given by the Planning
Commission to the task force, suggests that budgets involving large increments in tax
rates and heavy new taxation have not only been politically self defeating but have also
not yielded the desired results.
The task force has been asked to focus on
improvement in the quality of tax administration, which reduces the component of evasion
and corruption in the process of tax collection.
The government, according to working
paper, has realized that system should be fair in terms of treatment and the tax burden
should be on the basis of ability to pay taxes by the persons.
It feels that the success of domestic
resource mobilization over the medium term depends significantly on the implementation of
comprehensive reforms in tax administration. The working paper agrees that strengthening
institutional capacity and improving systems and procedures by giving greater autonomy to
tax administration is necessary to achieve promising results.
The reform of tax administration should
include elements such as wider registration of tax payers, the simplification of
procedures for taxing the informal sector, the establishment of taxpayers compliance unit
and staff training and computerization.