China Lucrative market for Pakistani products
Pakistan is China’s second largest trade partner in South Asia. The economic giant will be the major export destination for Pakistan during 2011-12, with over 30 percent of the total exports. In 2010, bilateral trade grew by 27.7 percent to $ 8.67 billion, with exports increasing by 25.5 percent to $ 6.94 billion and imports by 37.2 percent to $ 1.73 billion.
Previously, financial experts had remained skeptical of the trade imbalance between the two countries, which is heavily tilted in favour of China. However, in the backdrop of appreciation of the Chinese currency ( RBM) against the US dollar, China has become a more attractive market. There is considerable demand for Pakistani leather in China as it is cheaper for manufacturing of shoes, garments and other products.
Recently, a Pavilion was set up at the Shoes and Leather Fair in China through collaboration between the Pakistan Tanners Association and the Trade Development Authority of Pakistan ( TDAP). Over $ 10 million were generated at the Pavilion through on-spot sales of leather products presented there by 24 leading leather manufacturers from Pakistan. It also proved to be a good opportunity for the Pakistani leather companies to establish contacts for future exports.
Business visitors at the fair included people from Japan, Hong Kong, Taiwan, Italy, Malaysia, Turkey, Germany, Korea, Spain, Brazil, Thailand, Vietnam, USA, Sweden and Denmark. They all visited the Pavilion and appreciated the fine quality of finished leather goods from Pakistan. Analysts say this would bring great marketing benefits for the Pakistani leather export industry.
The Asia Pacific Leather Fair held earlier had found China to be a major buyer as it had lifted huge quantities of leather at very high prices. Most of the finished leather garments and products displayed by the Pakistan Leather Garments Manufacturers and Exporters Association ( PLGMEA) were bought by the Chinese market. Fawad Ijaz Khan, Chairman PLGMEA, says that consumers in China pay more prices for finished leather products.
China has an entire industrial belt on the coastal city of Guangzhou where shoes and leather products are produced. The country has a growing consumer base that comprises quality-conscious buyers and an efficient retail network for shoes and leather. Member manufacturers of the Pakistan Tanners Association are engaged in catering to the needs of this potential market aimed at yielding maximum share for Pakistani exports.
Pakistan has signed a Free Trade Agreement with China which allows duty-free exports of leather garments from Pakistan to China. The agreement should help the industry in a big way with just 10 percent import duty imposed by China on leather garments. The TDAP is also pushing PLGMEA for aggressive marketing of leather garments in the Chinese market.
The Federal Ministry of Trade and Commerce as well as TDAP have strongly recommended that China and Pakistan must work together to improve the impact of the Free Trade Agreement by dismantling Non Tariff Barriers. To achieve higher exports to China, the Pakistan government is also planning to hold workshops and seminars in China and Pakistan, to educate and create awareness about the trade potential. At present China is mainly importing raw materials from Pakistan. Therefore, roadmaps are being drawn to change this into exporting value-added products, as part of the export plan for China