Pakistan is one of the top cotton producing countries of the world

Pakistan is one of the nobble cotton producing countries of the worldExecutive SummaryPakistan is one of the most top cotton producing country of the world. Pakistan has the tendency to produce the best quality cotton in the world, beca employment of that Pakistan exportations its cotton to contrasting buyers across the globe. Garment and material patience of Pakistan of necessity a component p art of investment to flourish its production plants to cave in more than and more to the country and others in the globe as well.Currently country creation in inflation affected the entire industry. As prices of all products take in gone extravagantly, companies are forced to produce little. The governmental situations in our country have made the industrial arena bare losses. The policies and laws are hindering the activities of the industry. Beca economic consumption of that the other competing countries are acquiring an edge oer Pakistan.More research postulate to be done in this sector to avail all the possible technologies to murder our material and garment industry break. Other than that our makes to start producing end wearable garments and then export them to attach the exports and increase awareness of the local brands. Currently popular cloth is working on producing jean for renowned brands of the world. Government demand to make struggles to establish the garment industry in Pakistan.Table of ContentContentsContents 2Introduction 4 perseverance Scenario 7Industry Facts and Figures 7Problems in industry 7Technology being implied 8Business Model epitome 8 uprise Analysis 12 energy 12Weakness 13Opportunity 16Threats 18SWOT Analysis (Summary) 19Strengths 19Weaknesses 19Opportunities 19Threats 19PEST Analysis 2020Political Outfit 2020Economical Analysis and Performance 20Social Liabilities and Duties 21Technological Requirements and up class 22PORTER Five Forces Model 231.Bargaining power of customers (demand scenario) 2424Factors 242.B argaining power of suppliers ( provide scenario) 24243. Threat of new entrants 26264. Threat of substitutes 275. Competitive rivalry 28Contri aloneion to Exports 30Conclusion 31References 32Garment Industry of PakistanIntroduction stuff and Garments is considered the most important sector of Pakistans economy and the largest industry with a 46% look at of total manufacturing. Accounting for 67% of exports, employment for 40% of the workforce and a 10.20% share in GDP confirms the importance of this sector. Pakistans large available human resource pool offers an important incentive for further growth of this get the picture intensive industry.Contribution of Textile Garment SectorPercentage ContributionTotal Manufacturing46%Total Exports67%Employment for Workforce40%Total treat in GDP10.20%Although Pakistan is the fourth largest cotton producer in the world with strong spinning and weaving bag, the look on added sector (cotton products) has a small share in exports. The main re ason is shortage of training facilities able to enhance skills and produce competent middle managers having in-depth knowledge of processes and hands-on experience in coeval technologies.Garment manufacturing is a major growing sub-sector of the cloth range chain. It consumes the majority of the workforce in Pakistans textile and garments industry and has been contributing towards the high growth-rate in exports as figures shows it is 67% contributing in export of Pakistan.However, the garment industry is now suffering from some acute problems in productivity, in quality, in care merchandising skills and thus facing a serious threat of a reduced share of international securities industrys. jibe to the World Banks report on the impact of Quota excretory product in Pakistan, the effect on apparel exports from Pakistan will be negative due(p) to stronger competition from other countries. The implication would be serious if no implement is taken to improve productivity and e fficiency.In the garments sector, Pakistans productivity is estimated to be only 37% of the benchmark established by China. Compared to this, Indias garments sector productivity is better, at 46%. For Pakistan, raising productivity by improving production process efficiency is disclose to reap benefits later on the Multi-Fibre Agreement was abolished. If Pakistan is able to increase its productivity in textiles and clothing by 60% and reach Chinas productivity level, the gain would likely be over US$ 1 billion per year.Keeping in thought process the emerging trend in the global market, there is a huge potential for Pakistans garment sector. However, to be hawkish in the global market after the removal of the quota regime in January 2005, it is imperative to have efficient and cost effective production systems with minimum wastages to attract buyers. The TUSDEC need assessment which included discussions/interviews with the key garment exporters cl early(a) revealed the need for u rgent reforms in the textile industry and especially in garment manufacturing and exporting as this is the most value added sector. This need had never before been felt as intensely as now, in the major garments clusters located in Lahore, Karachi, Sialkot, Faisalabad and Multan. In unison they expressed that the existing infrastructure of textile garments institutes in the country is not able to fulfill the requirement for skilled human resources to meet the immediate demand.The need assessment showed that an intervention for fast-track depicted object building of the garment industry to meet the challenges posed by the ever-changing demand of international markets was justified. To cope with this dire need, it was proposed to hire contradictory experts on eagle-eyed term basis to upgrade the knowledge and skills of the workers employed in the garment industry.Industry ScenarioAs quoted by Chairman of All Pakistan Textile Mill Association, Textiles are the most important indust ry in Pakistan. It accounts for just about 40 percent of manufacturing employment, over 60 percent of total exports, and over 30 percent of value-added production. Pakistans textile industry, based on locally grown cotton, produces cotton yarn, cotton cloth, and made-up textiles and apparel.Industry Facts and FiguresAs data cited at web published edition of aptma, Pakistan had a total of 503 spinning mills with an installed capacity of 10,437,000 spindles and 155,104 rotors. The weaving industry has 53 integrated units (composite units with spinning and weaving in one unit) with an installed capacity of 14,130 looms 512 shuttle less weaving units with an installed capacity of 13,340 1ooms and approximately 30,000 units in the power loom (shuttle loom) sector, with an estimated 225,253 looms. In PFY-97 it excessly had 670 finishing units with a production capacity of 3,460 gazillion sq. meters of fabric per annum, 700 knitwear units with 15,000 plain machines, and 4,000 garment un its with 160,000 industrial and 450,000 domestic sewing machines. Exports of all textiles in PFY-97 totaled a value of USD 5.4 billion. The major buyer of textile clothing and accessories was the United States, which purchased USD 309.2 million of goods. (Michelle, Pakistan Profile, January/February 2007)Problems in industryPakistans excessive economic reliance on the textile industry now necessitates the upgrade of its confused value-added textile products to higher value-added products and the development of additional export markets. The Government of Pakistan (GOP) has reportedly constituted a textile commission to examine the problems of the textile industry and guide its future planning in the effort to turn this vital sector of the country economy into a healthy and internationally competitive industry. The upgrade to value-added production will require more school machinery. Trade sources believe that given favorable rupee/dollar parity, the textile industry may be expecte d to grow by as frequently as 10 to 15 percent annually over the next 2-3 years.Technology being impliedIn PFY-98 Pakistan offered an import market of USD 213 million for the sale of textile machinery, equipment and parts. Statistics for domestic production are not available, but trade sources report that manufacture, which is gear to demand, is at the present time negligible. The market has declined drastically over the cash in ones chips six years. In PFY-93, Pakistan imported USD 789.2 million worth of textile machinery. Imports poisonous in subsequent years to USD 352.7 million in PFY-94, USD 294.9 in PFY-95, USD 187.0 million in PFY-96 and USD 129 million in PFY 97. Given improved financial conditions, the import market share is expected to increase by 10 percent annually over the next three years. (Citied at website of aptma.)Business Model AnalysisThe textile industry is today based almost entirely in the private sector as the inefficiency of the public sector units has fo rced the GOP to privatize them. The three remaining textile units in the public sector are integrated units and are to be offered for privatization in the very near future.Pakistans textile spinning industry is presently in a crisis. As a return of poor cotton harvest-festivals, the sezession of cotton subsidy and the export of raw cotton, the industry, whose feasibility has been based on the use of low-priced cotton, is no spaciouser viable.Pakistans weaving sector has an installed capacity of 14,130 looms in integrated weaving mills 13,340 looms in shuttless weaving units and approximately 200,500 to 225,250 looms in the power loom sector. The looms installed in the integrated units are nonagenarian and less than approximately 40 percent are working. The independent weaving units are a relatively new phenomenon in the Pakistan market, and have been created as a result of market demand, government incentives and the move towards higher quality products.Pakistans finishing indu stry is comprised of approximately 670 units, the majority of which are independent units and complimentary to the weaving industry. Their installed capacity is old and needs replacement. The integrated units are reported to have a capacity utilization of only 35 percent of installed capacity as most of their machinery is as well old and uses outdated applied science. (Citied at Directors Review of aptma.)Competing CountriesExport Share of Market- Trend AnalysisCountry1980199020002005Variance2000 2005China4.08.918.226.98.7Turkey0.33.13.34.31.0India1.72.33.13.0(0.1)Mexico0.00.54.42.6(1.8)Bangladesh0.00.62.02.30.3Vietnam0.91.70.8Pakistan0.30.91.11.30.2Sri Lanka0.30.61.41.0(0.4)Thailand0.72.61.91.5(0.4)Source United States Department of kitchen-gardeningGlobal Market SharesTop 15 retailers worldwideS. NoRetailerOriginMarket Share USD Millions1Wal-Mart Stores Inc.the States$219,0002Carrefour radicalFRANCE$61,5653Royal A holdHOLLAND$57,9764The Home Depot, IncUSA$53,5535The Kroger Co. USA$50,0986Metro AGGERMANY$43,3577TargetUSA$43,3558AlbertsonsUSA$37,9319KmartUSA$36,15110SearsUSA$35,84311SafewayUK$34,30112CostcoUSA$34,13713TescoUK$33,61414JCPennyUSA$32,00415Aldi EinkaufGERMANY$31,310(Source Stores/Deloitte Touch Tomahatsu)SWOT AnalysisStrength huffy material BasePakistan has high self sufficiency in raw material and is the fourth largest producer of cotton. Abundant use of cotton resources has made the Textile industry of Pakistan move towards the area of industrialization.LaborCheap labor has always been the backbone of the economy of Pakistan. Cheap and ample supply of labor strengthens the industrial and agriculture sector of the country. Around 39% of the labor force works in the textile sector. As Karl Marx said that we have to use the army of labor present in the country for productive means. Thus cheap and abundant labor means low cost of production.Rich hereditary patternDue to cultural diversity and rich heritage, designers come up with new different a nd attractive designs which are appreciated worldwide. Our culture comprises of Sindhi, Punjabi, Balochi and Pushtoo values. Also we are besides influenced by the Indian culture through the media exposure, which of course gives the Pakistani designers an inspiration and taste of Karnataka, Rajhastani styles, etc. This varied culture and fusion among these two neighbours gives inspiration to the designers to give their best in terms of styles, creativity and fashion.Domestic MarketThe recent shift of the universe from the agrarian society to the urban areas, increased income levels and growth of the population raised the domestic demand. This means more factories more manufacturing units, more supply and more labor.WeaknessResearch DevelopmentDeveloped countries are using the applied science of genetic engineering and biotechnology to increase the quality and quantity of their cotton production. They are able to grow colored cotton, organic cotton and several different varieties cotton to added value to the textile chain. In Pakistan, there is very some research done on small scale by private companies to pay modified cotton fibers. Practically no efforts are being made by the APTMA in the RD of the textile industry to enhance the quality of its products, upgrade the technology used, and encourage effective methods of production in order to compete internationally. Instead the industry suffers miss of latest means of production and falling cotton crop output every year. Due to low quality of cotton crop, profitability decreases and the farmer switch to the other crop such as sugar cane, lemon yellow and thus the cotton production decreases.More Dependence on CottonAs the textile sector is heavily dependent on cotton production, low cultivation of cotton will deteriorate the textile industry. On the other hand, Pakistan lacks expertise in the development, production and marketing of synthetic products and fabrics required for items like swimwear, skiwear and industrial apparel. So far Pakistan has been unable to diversify in the export of textiles and is heavily dependent on undivided fibre that is cotton and its blends. This dependence on single crop economy is restricting the diversification of exports from Pakistan.Labor productivityDespite of the abundant supply of the labor, productivity of the labor is very low. According to a shoot by Federal Adviser on textiles, the regional competitors of Pakistan take75 minutes to complete and produce one piece of cloth whereas we take 133 minutes for the same work. We overly waste 30% in finishing and 12% in washing. European buyers recommended that we should cut our costs up to 45%in sewing by getting more efficient. Labor productivity can be improved by giving the labor appropriate training with the advancement of technology so as to make them more efficient and with lower wastage of resources. In China an average 70 hours of training are given to labor to enhance their expertise.Po or rootThe important resources and infrastructure, such as adequate of supply of water, continuous supply of electricity and gas, efficient logistics and transportation, tax structure, raw material supply are all basic requirements for the development of an industrial base. However, on the other hand, the industry is faced with rising charges of the energy sector, which increases the cost of production, making it difficult to compete with the other regional rivals.Poor Quality StandardsWith the exception of big and leading units who comply with global quality standards in textiles, most of the medium and small sized units can not ensure the reliable and consistent quality standards. Some of these textile units import second hand machinery from China, India, Korea, and Taiwan with no checks and balances on the quality of the machinery parts and tools. alternative is only given to the cheap and workable machinery with no concern of the quality of the machine, therefore, resulting in poor quality of the end product. The industry can generate more profit by adding more value to the product, as value can be measured in terms of quality, increased per unit price, etc. Pakistans textile industry should focus on latest material handling techniques and should train workers. The inability to timely modernize the equipment, machinery and labor has led to the decline of Pakistani textile competitiveness.Unstable Political SituationPolitical unrest, strikes and terrorism have critically affected the economy of Pakistan. Frequent changing of the government has adversely maligned the policies of the textile sector. According to the World Trade Review Pakistan has failed to take necessary steps needed to meet post Multi-Fiber Agreement (MFA) challenges for its textile industry owing to lack of political will by the successive governments. In 1978 World Bank surveyed the Pakistan textile industry and reported many deficiencies in this sector. It also gave certain measures to resolve these issues, but unfortunately all these problems still persist and the industry is still unable to keep its pace with the international market. Successive governments lacked the will to reform human resources and adapt the marketing techniques that resulted present scenario in this industry.System Orientation And Supply ChainNowadays, customers are very systematic in their work and the expect the same professionalism from their vendors. Unfortunately, we lack this capability and are not competent to struggle in the international business, thus losing many opportunities. On the other hand supply chain management is rarely implemented. We are disorganized, disconnected and dis torted. Time management is very much important aspect in the business and buyers expect on time pitching to match the retail launch of the Spring/ Summer or Autumn/Winter seasonal collections on time . Delayed delivery of export orders result increase in cost due to fines by the buyers and at times losing business altogether due to the breach the order con-tract.OpportunityPakistan Textile metropolisPakistan Textile City in Port Qasim, Karachi with an area of 1250 acres, will be completed in 2011 as a private public sector occasion venture. The main purpose of the textile city is to provide the textile industry with the world class infra structure to meet the global competitiveness and challenges and as to provide value added textile industrial zone. Its main features include one way window operation, constant supplies of gas and water, and uninterrupted power supply.MarketingTargeting the unexplored export markets with the help of aggressive sales and marketing will pave the way for the textile growth. Its all about hunting your opportunities with the handful of colorful lollipops. If we make investment in our sales force and train them in the fine art of marketing textile products, we can engender a much bigger market share from other smaller competitors. quislingism with Foreign CompaniesNo company in the world can afford to ignore the strategic and competitive benefits of making partnership with another company to strengthen the market position. By making partners with the foreign companies, we will be able to learn a lot from them in terms system orientation, supply chain and it would be feasible to import latest technology. We can also reduce our costs, comply with the inter-national standards, and add value to our products, easiness in marketing our products in different foreign regions, improved labor and thus catching up with our regional competitors.Re-engineering of Production System data technology has a crucial role in manufacturing sector. Acquiring state of the art machinery is though very much expensive, but a very berried and necessary measure to confront competitive in the immense run. It is the level of trust the exporter builds with its customers by giving them flawless products, made on state of the art machinery. Once this trus t is developed, there is no other way than any unforeseen exception that you may lose a customer to another competitor. Therefore, it is super recommended to produce with great efficiency, minimizing the wastage of the raw material, energy resources and thus reducing the cost of production.Producing high Value ProductsIts better to export yarn than raw cotton. Similarly its better to export finished fabric than to export grey fabric (raw fabric). Furthermore its very much feasible to export readymade garments than to only fabrics. What makes the latter better is the value added and subsequent increase in per unit price. Therefore, the textile industry should focus on the finished products so as to create more value in their products and reap larger margin of profits. The industry should also diversify into other areas such as technical textiles and nonwovens in order decrease its dependence on conventional and commodity textiles, which is highly sensitive to per unit price and volu me for the profit margin.Image Building of Pakistan to Attract FDISecurity measures should be taken to palliate the buyers and investors to visit Pakistan for investments. Secure business environment must be needed to attract golden sparrows to facilitate business dealings and building positive visualise of Pakistan that they can rely upon.Reducing the Cost of BusinessChina and India are much cheaper in labor, raw material and utilities as compared with Pakistan. Rising inflation also increase the cost of production. We have to control these unnecessary costs if we have to survive in the middle of the two giants of the textile sector in the world.Threats vernal competitorsPakistan is facing new competitors in textile sector such asBangladeshVietnamTurkeyThough we cannot avoid competition but we can always stay ahead of them by reforming our strategies and educating our entrepreneurs so as to move one step forward in every aspect.Phasing out of quota SystemAs the quota system is go vern out by WTO, there is a threat by the Chinese and Indian manufacturers to gain most of the market share. We have high costs, low labor productivity and inefficient production processes. direction life CycleFashion changes rapidly now a day. Media has so much penetrated in our daily lives that we good adapt our-selves as it wants us to. This has resulted in shortening the fashion lifecycle thus increasing the fashion risk. Now the buyer does not want to wait long for his consignment because he is insecure that by the time it will reach to him he will lost its demand due to change in fashion. Therefore, they select to buy from neighboring countries even at higher cost to get their products instantly rather than to wait weeks or months for their consignments to reach them.SWOT Analysis (Summary)StrengthsRaw material BaseLaborRich HeritageDomestic MarketWeaknessesResearch DevelopmentMore Dependence on CottonLabor ProductivityPoor InfrastructurePoor Quality StandardsUnstable Polit ical SituationSystem Orientation And Supply ChainOpportunitiesPakistan Textile CityMarketingCollaboration with Foreign CompaniesRe-engineering of Production SystemProducing high Value ProductsImage Building of Pakistan to Attract FDIReducing the Cost of BusinessThreatsNew competitorsPhasing out of quota SystemFashion life CyclePEST AnalysisPolitical OutfitTextile industry, and all other business in the field are subjected to very high risk due to unstable political outfit, this restricts joint ventures in the industry. We only have only one example of joint Venture in the industry that is Lucky Tex SITE with J. Rosenthals and Sons of England. As the political outfit is extremely unstable and does not guarantee any consistency over the span of time, therefore attracting foreign investment in the sector is very limited, and only confined to term financing, or credits.Economical Analysis and PerformanceTill not so long ago, the Pakistan textile industry was one of the key drivers of gr owth and employment generation.The plight of the textile exports continued during the first four months (July-October) of current financial as they fell by around one percent during the period.The export of textile products came to $3.539 billion in the period under review, which is 2008 against $3.573 billion in the corresponding period of former year.At a time when growth in export is badly needed to plug the widening trade deficit, the dismal performance of the largest export earning textile sector is causing serious problems for the state in its efforts for registering quantum jump in export earnings.Complaining about the high cost of production of textile products due to expensive raw materials and high rates of utilizes the textile associations are clamoring for incentives in the shape of RD support to enable them to compete in the international market.The dissolution shows that almost all the categories in textile group performed dismally during the period under review. (Pa kistan Textile Journal, October2008)(Microeconomics of competitiveness, Textiles cluster in Pakistan, 2007)Social Liabilities and Duties160 million population growing 3%Growing trend of urbanizationViable middle classIncreasing literacy among femalesPer capita income growing 14% = $ 652GDP growth = 2%Retail whole sale trade is 18.4 % of GDPStock exchange crossed 8000 pointsmillion of expatriate workersTechnological Requirements and up gradationPakistan textile industry is blessed with state of the art machinery, and local entrepreneurs remain well updated in this scenario. Thou, there is no or limited government support in up gradation programs at the moment, but previously from 2003 to 2005 this sector has enjoyed multiple benefits on import of technology and machinery in terms of GOPs program for BMR, so that industry could be geared up to meet challenges of WTO, once the quota regime was over.PORTER Five Forces ModelOne of the worst hit sectors during the skyrocketing intere st rate scenario in the late 90s and early 2000s, the debt-laden Pakistan textile industry has spun many turn-around stories since then. Aided by lower interest rates, restructuring packages from financial institutions and the recent dismantle of quotas the sector is today well poised to capture growth opportunities. In 2008, the sector contributed 20% to industrial production, 9% to excise collections, 18% of employment in industrial sector, nearly 20% to the countrys total export earnings and 4% to the GDP. The textile sector employs nearly 35 m people and is the second highest employer in the country. Infect, it is estimated that one out of every six households in the country directly or indirectly depend on this sector. Here we analyze the sectors dynamics through Porters five-factor model.(Thompson, Strickland III,Strategic Management, Concepts and Cases. 15th Edition)Bargaining power of customers (demand scenario)FactorsHUFAMUFANeutralMFAHFA12345Number of Important buyersFewXM anyThreat of Backward integrationHighX small-scaleProduct suppliedComodityXSpecialitySwitching costLowXHigh% of buyers costHighXLowProfit Earned by BuyerHighXLowTotal1524045Score2.50Global textile clothing industry is currently pegged at around US$ 440 bn. US and European markets dominate the global textile trade accounting for 64% of clothing and 39% of textile market. With the dismantling of quotas, global textile trade is expected to grow (as per Mc Kinsey estimates) to US$ 650 bn by 2010 (5 year CAGR of 10%). Although China is likely to kick the bucket the supplier of choice, other low cost producers like Pakistan would also benefit as the overseas importers would try to mitigate their risk of sourcing from only one country. The two-fold increase in global textile trade is also likely to drive Pakistans exports growth. Pakistans textile export (at US$ 15 bn in 2005) is expected to grow to US$ 40 bn, capturing a market share of close to 8% by 2010. Pakistan, in particular, is l ikely to benefit from the rising demand in the home textiles and apparels