Consumers, eager to wear Shalwar Kamiz in the Eid-ul-Fitr, are tempted by the display of peach fabrics arriving from China


By Aamir Shafaat Khan
Nov 17 - 23, 2003



This year, it will be Eid-ul-Fitr for the Chinese fabric and children garment makers as their items have swarmed the local markets through illegal channels.The entry of smuggled and under-invoiced fabric, apparel, garments, etc., of Chinese, Indian, Korean and Indonesian origins are now changing the market scenario in favour of consumers but causing sleepless nights for the local producers particularly the organized sector.

At a time of galloping inflation, arrival of Chinese goods has so far proved a boon for the general public but bane for the local manufacturers who paint a doomsday scenario if the arrival of these goods continues to thrive through illegal channels.

Clothes have never been so cheap. Invasion of Chinese, Korean, Indonesian, Malaysian clothes, apparel and garments either through legal or illegal channels, are encouraging consumers to meet their second most pressing demand after food as per their pocket outcome.

"I can now easily buy a quality printed imported georgat, crinkle and crush suit at Rs 200-250 as compared to local suit of Rs 350-500," some woman buyers interviewed at Tariq Road and Saddar areasaid, maintaining that they are more interested in prices and are not concerned how the material is reaching the market.

Consumers are thrilled by the presence of Chinese children clothes at affordable rates. Shopkeepers say that locally made clothes are costly as compared to Chinese varieties, which offer both unique designs, colour and quality stitching.

Consumers' shift towards smuggled and under-invoiced fabrics and readymade garments has shocked value-added manufacturers of garments, apparels, garments, knitwear, sweaters, etc., in the organized sector.

Pakistani markets have seen a mushroom growth of bara markets in various parts of the country. A sizable number of consumers walk into the Tariq Road's Rabi Centre, Mateen Centre, Dolmen Centre, Murshid Bazar in Saddar, Motan Das, Anarkali Bazar, Jinnah Road, Kharadar, Jama Cloth Market, Hyderi, Chawla Market Nazimabad, etc.

An old player of Cloth Market main hub of city's massive wholesale trading, near Memon Masjid, said that foreign fabrics (both ladies and gents) have captured over 50 per cent market share. On condition of anonymity, he said that many leading boutique owners are procuring fabrics heavily to make windfalls.

Consumers, eager to wear Shalwar Kamiz in the Eid-ul-Fitr, are tempted by the display of peach fabrics arriving from China. Shopkeepers are now demanding Rs500-600 for only Kurta available mainly in dark shades. Though, it does not worth more than Rs400 per Kurta, consumers think. Stone wash Kurtas of Korean fabrics have also hit the markets in the same price range.

On the emerging trend in the local consumer market ahead of the WTO implementations in 2005, leading textile and garment manufacturers offer their comments and discuss problems being faced by them.

"My production has suffered a fall of 33 per cent in the last one year due to dwindling sales of our products," Director Sales, Al Karam Textile Mills, Rafiq Ibrahim said. He said the company is continuously reviewing its production schedule and cutting productions of various products.

He said many Indian varieties specially for ladies outfits are finding their way into the market through misdeclaration, under- invoicing and smuggling. He said price of these suits (georgat, siphon, crinkle, crush etc) range between Rs500-600 as compared to local of Rs900-1,000. Some Indian clothes are cheaper at Rs200-300 for full suit as compared to Rs700. He said Indian clothes have captured 15-20 per cent market share. "Ladies still reckon the qualities of local products as compared to Indian products," he claimed by saying that designs of Indian products are quite good. He said Chinese peach had also arrived with a bang. "Actually it is in fashion and people are making heavy purchases despite its low quality," he said that China has acquired the market share in the Shalwar Kamiz segment by 15-20 per cent. He said cotton from China has also started arriving at Rs40 per metre as compared to local Rs60-100 per metre. But the quality of China is not as good. He disclosed the textile mills in Karachi were paying sales tax on fabric production while Punjab mills enjoyed exemption.



Another leading producer of ladies and gents wear said that the production had come down by 50 per cent in the last few years and every year the company was cutting its production. Smuggled items had virtually threatened the financial viability of the organized sector, he added. "Time is not far when readymade shalwar kamiz, stitched in China, will be available in the next Eid-ul-Fitr at Rs300 per suit as compared to Rs500-600 currently," president of MHG Group of Companies, a leading producer of value-added fabrics, Majyd Aziz said.

He said many producers of suiting have virtually disappeared from the market owing to unjustified competition from the smuggled products and only a few survive. A complete fabric for trouser of Chinese, Korean, Malaysian and Indonesian origins were available at Rs300, while a high quality of locally-made trouser fabric range between Rs400-600. "Time is not far when the existing players in the suiting will become a history due to proliferation of smuggled, under- invoiced and Afghan Transit Trade items in the country," he said. He said fabrics, apparel and sweaters were entering through China border. The landed cost of these items are almost half or less than half of the production cost of comparable products manufactured in Pakistan. Indonesian suiting was being imported at less than $0.45 per metre, while quality suiting from China was selling at Rs55 per metre when it cost around Rs95-100 per metre to produce one comparable metre in local mills.

He said dyeing shirting from Thailand was available at ridiculous prices and even all known apparel brands were using this smuggled fabrics. Garment stores were stocked with apparels made of imported cheap fabrics. "If a container, carrying smuggled 42,000 metres of suiting for making 28,000 trousers, arrives in Pakistan then it means a job loss of 100-300 persons from yarn to finished product stages," he said predicting job loss of 200 persons in case 12,000 shirts arrive through illegal means. Besides, joblessness, the government loses different revenues at various stages and it definitely hurts the economy of scale of local makers.

Majyd Aziz, an ex-Site Association chief, said that Pakistan had to overcome this menace as it was eating away the local industries. The government's irresponsive attitude to control the smuggling had resulted in closing down of factories because it was impossible to compete in an unfavourable environment when local makers had to fight with low quality smuggled products. He urged the government to set up an industrial cost commission to determine the basic cost structure of each product so that the competitive studies and analyses could help decide how Pakistani products stand in local and global markets. He also asked the government to set up a team consisting of representatives of Supreme Court, CBR, NAB, FPCCI, Finance and Commerce Ministries and Interior Ministry to ascertain the true facts about the future of industries in the light of smuggling.