What You Need To Know About Manufacturing In Pakistan

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By Riz Khan

Manufacturing in Pakistan Overview

An efficient, cost-effective, and quality manufacturing for any successful business is imperative; without this, profits and customer satisfaction in addition to many other aspects are compromised. As such, the business loses its competitive edge over others. Therefore, a business’ performance is highly contingent on manufacturing.

In Pakistan, the manufacturing sector has developed into a renowned one for its cost-effectiveness and quality all around the world. Presently, it offers a great amount of potential for smaller businesses specifically because the manufacturing sector in Pakistan is not inundated with multinationals.

Due to this, it is the perfect time to forge relationships with the suppliers in Pakistan to push your manufacturing one-notch above and build rapport with the manufacturers in Pakistan so that you can also gain access to even better rates.

The manufacturing sector of Pakistan has progressed rapidly due to increasing globalization. Pakistan’s industrial sector accounts for approximately 20% of the its entire GDP. Textile and apparel production are the largest which contribute 65% of the exports and 40% of the labour force.

This industry has been expanding rapidly; in fact, from July 2019 to July 2020, the exports have seen a 14.14% increase which reached up to 1.272 billion US dollars in July 2020. Pakistan sees an untapped potential in the manufacturing sector for smaller businesses specifically e-Commerce businesses.

Specializations Of Manufacturers

As aforementioned, Pakistan primarily specializes in textile and cotton industries. But, in addition to that, it also specializes in surgical equipment and leather products.

The textile and cotton industries of Pakistan are the largest in the country and Pakistan is the 8th largest exporter of textile in Asia and the 4th largest producer of cotton.

The textile industry has six primary sectors including spinning, weaving, processing, printing, garment manufacturing, and filament yarn manufacturing. The industry specializes in product categories including shirts, knitwear, hosiery, bedwear, towels, tents/canvas, workwear, footwear, bags, and such.

In addition to such products, other services are also provided by the textile sector such as material sourcing, printing, dyeing, knitting, embroidery, and label tags. Many large multinationals currently also operate in Pakistan including H&M, Levi’s, Adidas, Nike, etc. Most of the production takes place in Karachi and Faisalabad with 38% and 18% share respectively.

As for cotton, the industry produces synthetic fibres, filament yarn, wool, and jute. Pakistani manufacturers export this cotton globally to countries including China, Germany, the United States, the United Kingdom, and many European countries. This signifies the quality and efficiency of manufacturers in Pakistan in this particular industry.

Another large manufacturing industry in Pakistan is the leather and leather goods industry. In 2020’s first half, the leather goods exports grew by an astonishing 11.1% compared to last year’s similar period. This leather industry produces and specializes in a diverse range of product categories including leather garments, footwear, dress/fancy gloves, etc. As such, it is divided into six sub-sectors which are tanning, leather, footwear, leather garments, leather gloves, leather shoe uppers, and leather goods.

The leather industry’s strengths are many including good access to raw materials, good access to cheap labour, European markets in exports, and government support. It has many opportunities as well which include room for improvement in capacity utilization, potential in bulk supply of finished leather, and product development and diversification for current and new markets.

Besides leather and textile, Pakistan exports significant amount of surgical goods and equipment as well. The exports of surgical goods and medical instruments has risen sharply in these last few quarters.

In the period July-August 2019, Pakistan saw an increase of 24.52% increase in exports as compared to the same period in 2018 which meant the country exported up to 73.402 million US dollars according to PBS.

The surgical goods and medical instruments industry primarily produce medical, surgical, and dental instruments (HS Code 9018).

Most of the production is concentrated in and around the Pakistani city of Sialkot. This industry has a high potential as well but faces some issues including lack of product diversification and inadequate technology upgrades.

Country Costs

As aforementioned, manufacturers in Pakistan offer one of the lowest labour costs in the Asia but also the world. This labour is not only cost-effective but also efficient and thus your business will face significant savings in these expenses and costs which means that your profit margins will rise. This is especially important for smaller business or eCommerce businesses.

In the graph below, we see that Pakistan has one of the lowest wages in Asia.

So, in the labour department, Pakistan wins and faces very low costs.

Moving on to shipping, Pakistan has also one of the lowest in the region. According to sources, the cost to import per container was 765 US dollars.

This cost includes all of the administrative fees including customs broker and clearance, terminal handling charges, and inland transport etc. However, note that it does not include tariffs or trade taxes.

The custom duty is 2.8%, however, this may change. In order to calculate a total consolidated cost of importing and sourcing from Pakistan, you can use the import calculator here where you will get the total amount of landed cost to be collected. The costs will change depending on the destination country.

The cost of importing from Pakistan is relatively lower than other competitors because of a low percentage of duty and shipping costs as aforementioned.

Production Capabilities

Pakistan boasts an impressive overall production capability, primarily through cost-effective labour and efficient production facilities which allow Pakistan to a competitive manufacturer throughout the world.

In addition to that, Pakistan’s official language is English, and it is one of the largest English-speaking populations in the world where 49% of the population speaks basic English.

As such, this will allow smooth communication with your manufacturers in Pakistan for negotiations and so that there are no mishaps thus efficiency is maintained.

Moreover, Pakistani manufacturers on general demand a minimum order quantity (MOQ) that is suitable for sizes of businesses which range from 100-1000 pieces depending on the product, style, and design. The flexibility in MOQs is large and thus it will surely suit your small e-Commerce business.

However, as aforementioned, there are some giant firms which work with multinationals, and as such, their MOQs will be accordingly high and for small businesses not suitable at all.

Connected to the point above, as a business owner, you would face competition in almost every niche and market. It is the same case in Pakistan where big brands exist with which you will compete when you manufacture. Many companies like Nishat Mills Ltd are vertically and horizontally integrated and operate as conglomerates. However, you can still manufacture out of the smaller subsidiary factors and receive top management, efficiency, and quality control.

As a business owner, you must also remain aware of the two segments within the Pakistani textile industry or generally any large industry of Pakistan. These are an organized sector and an unorganized sector.

The organized sector contains large firms with colossal production capacities and advanced machinery-based production which produce to satisfy and target different market segments. For the textile industry, these can be mills like Nishat and Artistic Milliners who provide a range of services from spinning to cutting.

The unorganized sector, on the other hand, is a small scale-based one where most of the products are handcrafted through old traditional techniques where the culture and tradition is high reflected. Such goods are suitable for businesses looking to sell labour-intensive and hand-made goods such as hand-woven garments.

Working Legally

It is critical that any business works in accordance with the national laws of that particular country. Importing and manufacturing in Pakistan can be daunting because of a diverse range of laws in the country which can be difficult for a layman to understand.

Moreover, it is also important to ensure that the supplier you are working with is legal and ethical as well and thus it is sometimes cumbersome to find a reliable supplier.

You may try to find listed suppliers on certain websites, but the reliability is never confirmed and you, as a small business, do not want to get involved in any fraud or scam.

As such, Uniway Sourcing reduces exposure to such unnecessary risks for you because the suppliers we are connected with have been thoroughly investigated to ensure that they are legal and not associated with any “shady” activities.

Instead of sifting through so many different manufacturers with no reliability and resulting in confusion and becoming double-minded, Uniway Sourcing will simply request your specifications and you will receive your quotes from the best manufacturers in Pakistan. Therefore, you will be able to easily pick a quote that suits your budget and your needs so that your business performs smoothly without any hiccups.

Conclusion

Pakistan is a great country to manufacture your products in and is suitable for small businesses specially those selling on eCommerce platforms because of their cheap costs, efficiency, and effectiveness. Uniway Sourcing will connect you to these excellent manufacturers in Pakistan so that your business accelerates to excellent brand image and high profit margins.

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