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A must-read for all Pakistani textiles exporters. Where does the Pakistani textiles industry stand in terms of exports to the USA and in relation to our competitors? Statistics from the Office of Textiles and Apparel (US Department of Commerce) paint an interesting picture. By Faryal Virk

A must-read for all Pakistani textiles exporters. Where does the Pakistani textiles industry stand in terms of exports to the USA and in relation to our competitors? Statistics from the Office of Textiles and Apparel (US Department of Commerce) paint an interesting picture.

By Faryal Virk

P

akistan’s textiles and apparel exports to the USA grew at a cumulative annual rate of 12.4 percent from 1996 to 2005, allowing the country to maintain its share of the value of US imports of textiles and apparel products over the period. In terms of volume, Pakistan ranked as the third largest supplier to the US in 2005. However, the value of these exports placed the country in sixth place, indicating that Pakistan is at the lower end of the value addition chain for exports to the USA (Table 1).graph 1

Going down a level and splitting these numbers into the apparel and non-apparel categories, makes the picture clearer. For the five year period from 2000 to 2005, apparel exports to the US grew at an annual rate of 6.46 percent, from $920 million to $1.26 billion. However, the volume of apparel grew at an annualized rate of 11.84 percent during the same period. While these figures appear attractive, this is less than the growth rates of 8.94 percent and 12.30 percent for total value and volume respectively of apparel exported by the ten largest suppliers to the USA. The fact that volumes grew faster than values indicates that the industry is facing pricing pressure, and in Pakistan’s case, not only did volume grow at a slower pace than the average, the impact on prices was greater than the top ten exporters by volume to the US.

Non-apparel exports to the US fared better. Pakistan grew volume and value at annualized rates of 10.24 percent and 12.47 percent respectively. The ten-largest suppliers had combined growth rates of 14.7 percent and 10.27 percent in comparison for the same period.

What does this mean? Pakistan appears to have an advantage in non-apparel textiles exports to the US, and has grown the value of its products at faster pace than its competitors. The league tables indicate Pakistan’s position in non-apparel products is stronger, whereas it appears to lag in the higher value-added apparel segment (Table 2).

In a comparison with regional competitors (India, Sri Lanka and Bangladesh), Pakistan’s emphasis on non-apparel exports to the US is amply evidenced. While Pakistan generates significantly more revenue than its regional rivals in the non-apparel segment, it lags behind India and Bangladesh in apparels revenue.

table 1During the 2000-2005 period, increased competition and pricing pressures impacted Pakistan’s regional competitors and the industry as a whole. Apparel value per unit declined at a steeper rate for Pakistan than the benchmark of ten largest exporters to the USA. Interestingly, during the same period, Pakistan was one of the few countries that increased the unit price of its non-apparel exports to the USA. The fact that Pakistan has successfully established a niche for itself is a positive factor. However, it is important to note that over the period under review, Pakistani products are at the lower end of the scale in terms if value per unit (Table 3).

From a planning perspective, this information generates interesting launching points for all stakeholders in the Pakistani textiles industry. It raises questions about the long term ability of exporters to maintain profitability and the production volumes required to do so. At both the micro and macro levels, Pakistan needs to define whether it wants to be in the commodities market and stick with the high volume/low value product profile, particularly in light of China’s dominance in this area (25 percent of the market share of US textiles imports). At the individual level, exporters will determine their capabilities and maximize their profits accordingly. However, at the national level, it will require the involvement of industry and government leaders to develop a coherent long term strategy for the textiles sector as a whole.

This article was originally intended for print edition of The Knit-Xtyle Fashion Review (TKFR), March 2006, issue 14. As you know, we decided to discontinue the print edition back in 2006. However, its still very much relevant and a good benchmark for a look back at Y2005. Editor

table 2chart 1chart 2table 3

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Fareeha Qayoom
Fareeha Qayoom
Publisher and editor-in-chief of Tkfr.com and former print editions of The Knit-Xtyle Fashion Review (tkfr), a trade newsletter for the textile and apparel industry of Pakistan. In short, Publisher, editor, and a blogger. In addition, she has served as Managing Editor of MIT Technology Review Pakistan, print and web editions (2015-16). Total of 7 editions were published under her leadership by ITU, Punjab's first public technology university under the license of MIT Technology Review (USA). She has also managed Value Mag in the same capacity, a real estate and lifestyle magazine for Value TV - 2008-9. Published freelancer for The News on Sunday 1994-96. Fareeha has over 21 years of solid management experience – of managing brands (like Harley Davidson, Munsingwear, Chaps, Chaps Ralph Lauren etc.,), Retailers (like Target, Mervyns, Kohl's, Marks and Spencer etc.,), customers (VPs, Product Managers, Unit Managers, and Buyers), and products (apparel - woven, knits, men's, women's, children's, Print and online publishing units), projects, teams, and processes, information, content, and data, staff, vendors, and time. Versatile and adaptable with international exposure, communication and language skills (oral and written), and a consistent track record of achieving company targets and objectives, plus a MA in Political Science from Punjab University, a MSc in Economics from La Salle University, Louisiana, USA, and a BA in Economics from Kinnaird College for Women.

7 Comments

  1. for latest news logs on apparel and textiles, click on story:
    Moment of Truth again for Pakistani Textiles
    http://www.tkfr.com/?p=3030

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  2. Sectoral management
    Published: February 2, 2011
    DR. KAMAL MONNOO
    Often these days, I am confronted with a sense of growing cynicism on the word ‘structural reforms’, where many think that it has simply become a buzzword without really defining what precisely it refers to. Fair enough, because the underlying scope of ‘structure’ indeed is very broad based and needs to be explained in context of institutional management. To put it plainly, when one talks of structural reforms, these entail providing a framework where decision making becomes objective, professional, merit-based, non-political, sustainable, practical (near-term), visionary (long-term), non-ad hoc and targeted towards achieving the goals, as laid down by the apex body (government, corporation, group, organisation, firm, etc).

    http://nation.com.pk/pakistan-news-newspaper-daily-english-online/Opinions/Columns/02-Feb-2011/Sectoral-management

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  3. Collapsing economy
    Friday, February 25, 2011

    The government keeps releasing the textile export figures to the media to give the impression that our exports are increasing. The fact is in real terms the textile exports of Pakistan are declining drastically. Instead of moving forward with value addition, we are going backward in the supply chain by exporting more of the raw materials like cotton and yarn. The cotton prices went up threefold over the past one year. Our textile exports did not see growth anywhere near this figure. The exports of the value-added sectors such as garments and home textiles declined in quantity. Due to the high price of cotton, the export amount in dollars in these categories might have surpassed the last year’s figures, but in quantity the exports actually shrunk. The reason for the shrinking exports of the value-added textiles is bad policies, or in this case, no policy at all. India has a simple policy for cotton and yarn exports. Every year the government reviews its expected cotton crop and the expected cotton consumption for value-added industry of the country. Any surplus cotton is allowed to be exported. This way the farmers get the maximum price for their cotton while the value-added industry can also predict stability in the raw-material prices which helps them secure export orders.

    http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=32959&Cat=11

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  4. What is required of Textile Ministry
    By Dr Kamal Monnoo | Published: April 27, 2011
    Dr Kamal Monnoo

    The party is over and looks like we again missed most of it! The unprecedented period where an exceptional rise in cotton prices (From $0.38 in October 2009 to nearly $2.25 by March 2011) combined with a high demand cycle seems to be coming to an end. Pakistan, with its strong textile backbone and for most parts with capacity in place had the potential and opportunity to at least triple its textile exports, but sadly fell short of even doubling the same. As explained in my previous write-ups as well, we in the past recorded an export figure of nearly $15 billion with national cotton prices at around Rupees 3000 and now with the home cotton prices reaching Rupees 12,500 and given that there was adequate demand for the cotton textile products in the global market place, we should have fared much better than the present ‘total’ exports of $ 24 billion or so (textiles exports on their own would be lower).

    http://nation.com.pk/pakistan-news-newspaper-daily-english-online/Opinions/Columns/27-Apr-2011/What-is-required-of-Textile-Ministry

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  5. Textile, clothing exports face competitive threat

    MUSHTAQ GHUMMAN

    ISLAMABAD (May 08, 2011) : Pakistan’s one-third of textile and clothing exports are facing a competitive threat in the post-quota era. According to a study conducted by Pakistan Institute of PITAD, an attached department of Commerce Ministry, Pakistan has lost its market share to China in those core threatened lines in which world exports growth rate was fast while market share to India was lost in the slow growing categories.

    http://www.brecorder.com/component/news/single/594:news.html?id=1186195

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  6. Textile, clothing exports drop
    From the Newspaper | Mubarak Zeb Khan | 6 hours ago

    ISLAMABAD: Pakistan’s export of textile and clothing dropped 9.961 per cent in the first 11 months of the current fiscal year due to weak demand from recession-hit key markets Europe and US.

    The exports proceeds from these sectors fell to $11.273 billion in July-May period this year from $12.472 billion over the corresponding period of last year, suggested data of Pakistan Bureau of Statistics released on Wednesday.

    Last year exports from textile and clothing sector crossed $14 billion. For the current fiscal year, the government has projected a target of $16 billion.

    http://dawn.com/2012/06/21/textile-clothing-exports-drop/

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  7. China manufacturing hits 7-month low—HSBC
    By: Bill Savadove
    Agence France-Presse
    4:15 pm | Thursday, June 21st, 2012

    BEIJING—Chinese manufacturing activity hit a seven-month low in June, data from HSBC showed Thursday, putting pressure on Beijing to do more to boost the world’s second-largest economy.

    The banking giant said preliminary figures from its closely watched purchasing managers’ index (PMI), which gauges the manufacturing sector, fell to 48.1 in June from 48.4 in May on shrinking exports and weak domestic demand.

    http://business.inquirer.net/66499/china-manufacturing-hits-7-month-low%E2%80%94hsbc

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