Dress up used clothing exports

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LAHORE: The global recession presents an opportunity for our knitwear and garment producers, as Pakistan is one of the cheapest exporters of these products.

However, they need yarns and fabrics at competitive rates. This requires quick action from planners.

According to an analysis by the International Trade Center (ITC), Bangladesh, Pakistan and Cambodia are consistently paid lower than world average prices for the same garment, while Vietnam, Indonesia, Turkey and Mexico get higher than average prices.

The ITC reached this conclusion after analyzing data from these countries’ top apparel export items with those of their main global competitors. Our planners must realize that overseas buyers would prefer low-cost suppliers during the recession, as famous brands outsource millions of parts to suppliers around the world. In times of recession, orders are lower and buying from low-cost suppliers is convenient for buyers.

Interaction with Pakistani exporters reveals that famous brands pay them a fraction of the amount of clothes they charge at the retail stage. Exporters ship the garments in retail-ready packaging with prices printed on the products. Exporters make these garments at nearly one-tenth the retail price. ITC research confirmed this. The most surprising aspect in this regard is that Bangladesh is also among the countries that are poorly paid for the clothes they produce. Cambodia is a relative newcomer, and its lower rates are understandable.

The current situation of the textile sector in Pakistan does not favor the clothing sector. There is a shortage of cotton and yarn while prices are high. This would have an impact on the competitiveness of the clothing sector which already operates with low margins. We cannot blame spinners and weavers for the current situation. Cotton prices are high and its availability is suspect. Spinners and weavers may not be able to supply basic raw materials to garment exporters at competitive rates.

The current situation will not last long, but we must facilitate the garment sector by giving it carte blanche to import yarn and fabric at competitive rates for the next six months at zero duty to enable it to take advantage of the current opportunity. The value-added sector would prefer to buy Pakistani fabric and yarn if prices are lower than imports.

We have seen that Pakistan’s garment exports surged when the Pakistani market was the first to open after Covid-19 compared to competing economies. The business relationships that Pakistani exporters were building at that time continued after the lifting of Covid-19 restrictions in competing economies. The current situation offers a similar opportunity. Shortage or higher rates of yarn and fabric could rob the country of this opportunity.

According to the ITC report, apparel manufacturing has evolved from a simple manufacturing operation to a complex service industry. First-generation garment producers in Asian cities such as Hong Kong, Singapore and Seoul have grown from simple product manufacturers to multinational corporations. They operate globally and invest in engineering, advanced information technology, and advanced manufacturing technologies. Yet most small and medium sized garment manufacturers in developing countries, especially the least developed countries, have ignored these disruptions and continue with simple cut and sew operations, supplying less services and producing basic garments.

Pakistani players will have to adapt to changing trends in the garment industry.

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