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
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).
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.
During 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