SOHAIL AZIZ is
Managing Director of Intermode (Pvt) Limited, a company in the business
of manufacturing and export of ready-made garments. The company's main
market is the United States of America and products being exported fall
in the category of clothing for infants and children. Sohail completed
his M. Com and MBA from Karachi. He started his career A. F. Ferguson
and Company as management consultant and also worked for a garment
exporting company. Then he joined Pakistan Cotton Fashion Apparel
Manufacturers and Exporters Association (PCFA) as Executive Director.
The biggest achievement on his credit is holding Fashion Apparel Fair (FAF)
for ten consecutive years. He is also associated with an event and
exhibition organizing company, NASA International.
the manufacturers and exporters of textiles and clothing from Pakistan
getting ready to face the global competition once quota regime is
local entrepreneurs can be divided into two categories: 1)
those who consider this a real threat and are taking steps to face the
competition and 2) those who still
believe that quota regime will not be abolished according to the agreed
time frame. Therefore, it is most important that those who still face
some illusion must be waken up to face the reality. Let be go one step
further and add that, once quotas are abolished the exporters will face
other non-tariff barrier like child labour, AZO dyes, ISO certification,
etc. Some of the leading buyers have already asking the exporters to
complete their own certification programmes.
Lately Pakistani exporters have faced declining unit price realization
phenomena, what could be the possible rationalisation?
the September 11, 2001 the global markets witnessed lower demand
temporarily. At this juncture some of the local exporters became a
little impatient and tried to solicit even small orders from their
regular customers at discounted prices. As the situation improved, the
buyers insisted on confirmation of larger orders at lower prices and the
exporters accepted those fearing loss of business, if they insisted on
higher price. And the trend continues. On top of this the local
exporters cater to the lower segment where the largest selling point is
price and not the quality.
The declining unit price realization seems to negate the belief that
local exporters are going for higher value addition. What is reality?
is true that a lot of investment is being made in the textiles and
clothing sector. However, bulk of the amount has gone into spinning, the
lesser percentage has gone to weaving and processing and the least to
made-ups manufacturing sub-sectors. The government only because of the
strong lobby of spinners has endorsed the policy of large-scale
investment in the spinning. As against this, the made-up manufacturers
failed in submitting a convincing argument that the government should
abstain from repeating the mistake it had committed in the past. If
Pakistan wishes to enhance exports of textiles and clothing the
objective can only be achieved by boosting exports of made-ups though
greater value-addition and improvement in quality.
Am I right in assuming that there is lack of commitment by the
could not be as blatant as you are. The government has expressed its
commitment repeatedly but the steps taken to implement its commitment
are not sufficient. For example there is no incentive for achieving
higher value addition at the time of quota allocation. Those exporters
who export larger volume, despite exporting at the lowest price, are the
favourites. On top of this, the quota policy has also helped in
proliferation of 'quota tycoons'. At times, the premium on quota is even
higher than the cost of product. This prohibits manufacturers of higher
quality products from entering the export trade. The government must
redefine its quota policy to encourage higher value addition.
Is the lower unit price realization an outcome of negative perception
general perception about Pakistan is that it is a source of low quality
and low price products. While it is true that many exporters manage to
get US$ 40 for a dozen units of category, it is also a fact that some
get as high as US$ 120 for the similar quantity of the same category. To
change this perception both the government and exporters must
participate in international trade fairs and exhibitions.
Does participation in fairs and exhibitions help in soliciting orders?
PCFA arranged the FAF for ten consecutive years that helped in boosting
exports of made-ups, particularly knitwear manifold. Allow me to refer
to yet another international fair ASAP. An exporter can ensure his/her
participation at as low as US$ 4,000 including rental of the stall,
printing of company profile in the catalogue and four-night stays at a
five-star hotel. The added advantage is that organizers also arrange one
to one meeting with the buyers. If the foreign buyers are reluctant to
visit Pakistan, we must approach them to solicit business.