SIALKOT: SPORTS' POWERHOUSE

S.KAMAL HAYDER KAZMI,
(feedback@pgeconomist.com)
Research Analyst
, PAGE
Feb 21 - 27, 2011

Sialkot is known world over for its expertise in manufacturing and export of sports goods and accessories for the past 100 years or so.

The city was a hub of sports goods manufacturing even before the independence. It bravely passed through the turmoil created by fleecing capitalists and investors and proved to the world that the skilled hands could establish and run any business rather than mere power of capital. The products are mostly made for international market and have received worldwide recognition merely because of the care that goes into selection of raw material, designing and manufacturing.

International linkages of cluster were developed mostly in the British colonies. Product range includes soccer balls, volley balls, rugby balls, beach balls, cricket balls, hockey balls, baseball balls, tennis balls, shuttle cocks, nets, gloves, hockey bats, cricket bats, baseball bats, protective guards, pads, sports wears, etc.

Sports wear cluster was developed as an offshoot of sports goods cluster. Initially the international buyers used to buy sports goods from Sialkot and sports wear from South Korea, Taiwan, USA, Germany, UK, Spain, Portugal, Turkey, etc. As the apparel industry diminished or in some cases was wiped out from above countries, buyers who were already very satisfied with the quality of sports goods, asked the local exporters to produce sports wear as well. This helped international buyers in reducing their sourcing overheads. Skilled stitchers were abundantly available locally, fabric initially was mostly imported and supplied by buyers, the profit margins were quite huge, supported by friendly government policies, and the sports wear cluster successfully established itself on international level within a very short span of time.

Structure of the sporting goods sector in Pakistan is heavily export-oriented. The increasing outsourcing of part orders leads to a growing number of small-scale businesses and workshops.

The success of a Pakistani sports goods company depends on the extent to which it obtains direct access to the world market. The export business as such is concentrated in a small group of companies, while the importers of footballs and other sports goods appear as ordering party only, except for a Pakistani-British joint venture in hockey equipment production. The importers as a rule work together with different Pakistani companies change their partners now and then.

Of the 3000 sporting goods companies in Sialkot only a few have it as core business, with steady export orders and their own production capacity. Numerous sports goods businesspersons have no production of their own. They place occasional orders to the small local workshops.

Besides the bigger companies, there are 2500 to 3000 urban small enterprises and workshops in Sialkot region with average four people employed, which mostly fulfill orders from the above large enterprises in Sialkot. These small urban companies specialize in one type of goods normally, e.g. footballs or hockey clubs. Most of the small workshops only carry out a single production step. These small workshops are very widespread as they are easy to establish requiring little resources and as there is constant pressure for cost-cutting from the export companies.

The abundance of businesspersons without production facilities that are only shopping for and placing occasional orders are the booster for these small workshops. The main outsourced area in the football production is the stitching, which links the urban businesses with numerous rural areas surrounding Sialkot.

Many of these stitching locations can be found along major roads or at junctions. These locations are spread within 30 km radius around the city of Sialkot. The stitching orders are either placed by the world market integrated sports goods companies direct or by the urban small-scale businesses.

Furthermore, Sialkot is the third largest economic hub in Punjab after Lahore and Faisalabad. It is commercially linked with the LSE through its Sialkot branch, known as the Sialkot Trading Floor (STF).

SBP and the Export Promotion Bureau of Pakistan have branch offices in Sialkot. After Karachi, Sialkot is Pakistanís second largest source of foreign exchange earnings through its exports and remittances from the overseas work force. Sialkot has an industrial estate and an export-processing zone. Another Export Processing Zone is planned along the Sialkot Lahore Motorway. The per capita income of Sialkot is ranked among the highest in Pakistan.

CONCLUSION

Sialkot is leading and unique city in manufacturing sports goods. All big sports brands like Nike, Adidas, Puma, Slazenger, woodworm etc are manufacturing their products in Sialkot. Now, Sialkot is promoting own brands. Soccer or football is the world's most popular sport. The Sialkot district in Pakistan is the principal global source of hand stitched sports balls, supplying over 70 per cent of the worldís global demand.

Over the years, the industry grew to include a variety of wood and leather-based items and later diversified into related industries such as sports balls and sportswear. On the other side, the poverty is widespread in Pakistan while Sialkot is densely populated with around 40,000 people involved in the sports ball industry. Sport ball manufactures are criticized for low pay, poor working conditions, and illegal employment of children who are forced into work because wages are often too low to support a family.