Significance
Pakistan is the 4th largest producer and 3rd largest consumer of cotton in the world and 8th largest exporter of textile products in Asia. The industry contributes 8-9% to the GDP and provides employment to 38% of overall work force and 45% of industrial work force. Pakistan's 60-70% of foreign exchange is dependent on textiles.
• We export $ 10.62 billion of cotton
• Textile share in exports is 57%
• Textile share in GDP is 8.5%
• Levels of skills required are not very high
• Standardized technology
• Economies of scale are insignificant so it suits our domestic environment
Factor Condition
Cotton
• Produce short to medium quality staple cotton
• 4th largest producer of cotton
• The cotton yields for Pakistan were 586 kgs/hectare compared to 1129 kgs/hectare in China in 1999-2000.
• Impurity content due to water, thrash and packaging in jute bags
Labor Force
• Low labor cost (43 cents for Pakistan followed by 47 cents in India, 57 cents in China, 52 cents in Indonesia and 60 cents in Egypt while Bangladesh and Vietnam outweighed this advantage with even lower costs 27 and 29 cents respectively (BR 2007))
• Lack of skilled labour
• Low labor productivity……6:1 Korea: Pakistan….ACCORDING TO MS KHADIJA
• CIRCLE:--- Impure short staple>>>>coarse to medium count yarn>>>>difficulty in dying>>>>can be used in limited range of low priced products>>>>market order such products(IMAGE)>>>>Impure short staple
• Technical institutions:- Curriculum is old
• Lack of incentives and pay scale given to employees
Machinery and Equipment
• Spinning sector has good equipment
• Weaving sector has OK equipment
• Garment Sector has pathetic equipment
• Weaving capacity is less than spinning capacity
Synthetic fibre
International firms are focused on blended fibre because it's more durable and comortable. India is using 40% of cotton for the production of blended fabric where as Pakistan is using only 18%.
Firm strategy and structure
• Many of the looms are in the unorganized sector
• Units are small so its is difficult to attract large contracts
• Middle level management is incompetent
• World Bank notes that textile sector suffered from low diversification due to government restrictive policies on import of polyester (25% tariff rate) coupled with poor administration of import duties and duty rebates schemes (World Bank 2002).
• 6 % R&D gone….NO R&D department
• No timely order deliver
• Loans taken on the pretext of textile sector during the 1990’s invested in real estate in DUBAI
• Few quality control department
• Seth culture
• Spun yarn is not used to make high quality value added product
Demand condition
• Pakistan catered to around 3 % of the textile market globally in 2005 producing $10 billion of textile worth
• Pakistan is heavily dependent on European countries, USA and the Middle East for exports due to demand from those countries
• People in Pakistan prefer short staple
• Demand is not sophisticated in Pakistan
• The demand for blended cotton is increasing while we manufacture 100 % cotton products
• Thailand and Korea have strong synthetic strength which gives us tough time
Related and Supporting Industry
• The capacity of related and supporting industries is often weak
• We are well supported by the local building industry such as curtains, insulation etc.
• The health sector requires high quality textile products which we do not make .e.g. artificial heart and kidneys
• Protective material also require high quality textile products e.g. bullet proof vests
• No manufacturing plant for developing capital units
• No fashion schools
• Film industry(no comments….e.g. gunda Punjab da and Raju rocket)
• No trading companies
Recommendations
Pakistan is the 4th largest producer and 3rd largest consumer of cotton in the world and 8th largest exporter of textile products in Asia. The industry contributes 8-9% to the GDP and provides employment to 38% of overall work force and 45% of industrial work force. Pakistan's 60-70% of foreign exchange is dependent on textiles.
• We export $ 10.62 billion of cotton
• Textile share in exports is 57%
• Textile share in GDP is 8.5%
• Levels of skills required are not very high
• Standardized technology
• Economies of scale are insignificant so it suits our domestic environment
Factor Condition
Cotton
• Produce short to medium quality staple cotton
• 4th largest producer of cotton
• The cotton yields for Pakistan were 586 kgs/hectare compared to 1129 kgs/hectare in China in 1999-2000.
• Impurity content due to water, thrash and packaging in jute bags
Labor Force
• Low labor cost (43 cents for Pakistan followed by 47 cents in India, 57 cents in China, 52 cents in Indonesia and 60 cents in Egypt while Bangladesh and Vietnam outweighed this advantage with even lower costs 27 and 29 cents respectively (BR 2007))
• Lack of skilled labour
• Low labor productivity……6:1 Korea: Pakistan….ACCORDING TO MS KHADIJA
• CIRCLE:--- Impure short staple>>>>coarse to medium count yarn>>>>difficulty in dying>>>>can be used in limited range of low priced products>>>>market order such products(IMAGE)>>>>Impure short staple
• Technical institutions:- Curriculum is old
• Lack of incentives and pay scale given to employees
Machinery and Equipment
• Spinning sector has good equipment
• Weaving sector has OK equipment
• Garment Sector has pathetic equipment
• Weaving capacity is less than spinning capacity
Synthetic fibre
International firms are focused on blended fibre because it's more durable and comortable. India is using 40% of cotton for the production of blended fabric where as Pakistan is using only 18%.
Firm strategy and structure
• Many of the looms are in the unorganized sector
• Units are small so its is difficult to attract large contracts
• Middle level management is incompetent
• World Bank notes that textile sector suffered from low diversification due to government restrictive policies on import of polyester (25% tariff rate) coupled with poor administration of import duties and duty rebates schemes (World Bank 2002).
• 6 % R&D gone….NO R&D department
• No timely order deliver
• Loans taken on the pretext of textile sector during the 1990’s invested in real estate in DUBAI
• Few quality control department
• Seth culture
• Spun yarn is not used to make high quality value added product
Demand condition
• Pakistan catered to around 3 % of the textile market globally in 2005 producing $10 billion of textile worth
• Pakistan is heavily dependent on European countries, USA and the Middle East for exports due to demand from those countries
• People in Pakistan prefer short staple
• Demand is not sophisticated in Pakistan
• The demand for blended cotton is increasing while we manufacture 100 % cotton products
• Thailand and Korea have strong synthetic strength which gives us tough time
Related and Supporting Industry
• The capacity of related and supporting industries is often weak
• We are well supported by the local building industry such as curtains, insulation etc.
• The health sector requires high quality textile products which we do not make .e.g. artificial heart and kidneys
• Protective material also require high quality textile products e.g. bullet proof vests
• No manufacturing plant for developing capital units
• No fashion schools
• Film industry(no comments….e.g. gunda Punjab da and Raju rocket)
• No trading companies
Recommendations
- Venture capital markets to import new capital
- Economic planning board:- industry and institution to develop curriculum in line with industry needs
- Textile city or parks:- banking system, export trading, industry units etc. economies of scale and sharing of knowledge
- Internship programs by textile industry
- Outlets in Pakistan of products we export to sophisticate demand
- Product development department should be established
- Competition should be encouraged to promote rivalry
- Diversify markets, Refocusing and Exploring new market
- Ensure timely delivery of orders
- Proper management practices
- Decentralize chain of command
- development of manufacturing plants
- Advanced machinery should be imported
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