The Prospects for Sialkot
The sports goods industry in Sialkot, producing quality products mainly for foreign markets, is over a century old. It is a labour-intensive industry providing direct and indirect jobs to about 60,000 workers. Here sub-contracting work on piece basis is a common practice, providing income for more people. A major portion of the production comes from cottage and small scale manufacturing units. Some units have joint venture collaborations with foreign manufacturers and provide technical and marketing support to their foreign partners.
Presently, Pakistan is competing with India, Japan, Taiwan and South Korea in international markets. India has the advantage of cheaper labour and raw material, whereas countries with semiautomatic mechanized units can produce low-cost and inexpensive sports gear such as metal rackets and cricket bats, etc.
Since the entry of Japan, Taiwan and Korea, the industry is tilting towards mechanization and the use of modern equipment, which has resulted in tougher competition for manufacturers and exporters of sports goods from Sialkot.
Statistics show that the export of sports goods from the country registered an increase of 11.92 per cent during the last seven months of the current financial year. According to data from the Federal Bureau of Statistic (FBS), sports goods including footballs, gloves and other products worth US$ 16.70 million were exported from July 2010 to January 2011.
Like the positive outcome of exports, profit margins are excellent in the sports industry as well. If a wholesaler purchases a container of sports goods for Rs.1 crore, he can easily sell it in the local market within 15 to 30 days on a margin of 15% to 20%, meaning that he can earn Rs. 15 to 20 lakhs in some 30 days.
The situation is changing, though. Like any other industry around the world these days, the sports goods business is also dominated by Chinese products. Previously, the market in Sialkot was believed to be very strong in sports manufacturing, producing quality products even for World Cup matches. The market is now caught in the deluge from China with products available at much lower prices. A few items are still available in the market manufactured by the local industry. The poor law and order situation in the country also contributes negatively, besides the absence of a central authority to regulate pricing issues. The lack of playgrounds in the country is also adversely affecting the once prosperous business.
Entrepreneurs in Pakistan’s sports goods industry, most of them located in Sialkot, must think hard and gird up their loins to compete on the one hand from the Chinese invasion as well as the hi-tech producers from Japan, Taiwan and South Korea