How col­lab­o­ra­tion helped small ex­porters beat the odds

Enterprise - - National News -

The La­hore Wo­ven Gar­ments Con­sor­tium, a col­lab­o­ra­tive en­tity of eight small gar­ment ex­porters, has sur­pris­ingly mul­ti­plied their com­bined ex­ports by five times in just 16 years through mutual co­op­er­a­tion in pur­chases, mar­ket­ing, hir­ing, and equipment up­grade.

In­cred­i­bly, this growth is 2.5 times higher than what na­tional ex­ports could man­age and it clearly shows any­thing is pos­si­ble if you re­ally want to make it hap­pen.

This way, the mem­bers of the group, have not only flour­ished but also saved them­selves from ex­tinc­tion like hun­dreds of sim­i­lar businesses that folded up in two decades of eco­nomic tur­bu­lence both due to lo­cal poli­cies and global ups and downs.

This col­lab­o­ra­tion is in vogue in many economies par­tic­u­larly In­dia but it was one of the rarest in Pak­istan.

The fact that the con­sor­tium has sur­vived for so long is a trib­ute to the ac­com­moda­tive na­ture of the group mem­bers.

These in­no­va­tive busi­ness part­ners, who have main­tained their in­di­vid­ual en­ti­ties in over one and a half decade, re­cently shared their ex­pe­ri­ence at an event held at La­hore Univer­sity of Man­age­ment Sci­ences’ Sule­man Da­wood School of Busi­ness.

“This con­sor­tium was formed af­ter the 9/11 when the go­ing was get­ting tougher for Pak­istani ex­porters par­tic­u­larly those, who were begin­ning to ex­plore for­eign mar­kets” said Jawad Chaudhry a mem­ber of the con­sor­tium.

Chaudhry said be­sides scarcity of or­ders, small ex­porters were hand­i­capped by the high in­put costs com­pared with what was avail­able to large ex­porters.

He said it was nat­u­ral that the larger ones en­joyed the ben­e­fit of economies of scale and were granted more dis­count by the in­put providers. “Ini­tially our con­sor­tium com­prised 21 mem­bers and we placed a sin­gle or­der to buy com­mon in­puts in or­der to get the best deal,” he added.

He said this ef­fort ben­e­fited most of the ex­porters and within a few years mem­bers started leav­ing the group be­cause of var­i­ous rea­sons.

Hamid Saleem, a con­sor­tium mem­ber, re­vealed that when the con­sor­tium was formed Pak­istan’s ex­ports were $10 bil­lion per year while the cu­mu­la­tive ex­ports of our mem­bers were only $25 mil­lion.

“Now our ex­ports are 21 bil­lion, while ex­ports of our mem­bers have crossed $125 mil­lion,” Saleem said.

He added that more specif­i­cally the ap­parel ex­port of Pak­istan stood at $4 bil­lion and af­ter the for­ma­tion of the con­sor­tium these ex­ports have now reached $4.8 bil­lion.

“From that point of view, in­crease in the share of con­sor­tium mem­bers’ ex­ports is about 16 times more than the over­all in­crease in ap­parel ex­ports,” the ex­porter said.

Ex­plain­ing the rea­son for so many de­fec­tions, Iqbal Bhatti, a mem­ber, said some grad­u­ated to a higher level while oth­ers lacked trust in the con­sor­tium.

“It took us five years to build full con­fi­dence in each other and dur­ing that pe­riod our only ac­tiv­ity was con­fined to joint buy­ing of in­puts,” Bhatti said and added that grad­u­ally the sur­viv­ing mem­bers mag­ni­fied the scope of co­op­er­a­tion. “We started shar­ing in­for­ma­tion about our ex­port mar­kets. This was due to the con­fi­dence that none of the mem­ber will en­croach upon the for­eign buyer of the other.”

He said the gar­ment mar­ket was very large and mem­bers were able to find new buy­ers that were not catered by oth­ers.

“The joint mar­ket­ing, how­ever, did not suc­ceed and now we in­vite for­eign buy­ers in La­hore and fa­cil­i­tate them to visit all our mem­bers,” Bhatti added.

He fur­ther said the for­eign buy­ers were in the habit of quot­ing prices even lower than the cost from one sup­plier to the other. “This does not work in our group as we know the cost and quote prices with rea­son­able profit,” he said.

Sa­jid Saleem Min­has, a con­sor­tium mem­ber, said the col­lab­o­ra­tion has reached a higher level.

“Now we col­lab­o­rate with each other in the up­grade of equipment. In­stead of plac­ing or­ders sep­a­rately those of us want­ing to up­grade make a col­lec­tive deal that saves cost,” Min­has said.

He added that the mem­bers also share their bad ex­pe­ri­ences of some equipment so that the other mem­ber does not get trapped into buy­ing a de­fec­tive tech­nol­ogy. “We also do not poach each other’s hu­man re­source and in many cases train each other’s work­force in one of our fac­to­ries,” Min­has said.

The group said the next step was merg­ers and ac­qui­si­tion, which was a lit­tle tougher a task as no one in Pak­istan was ready to lose their iden­tity.

“Ef­forts are afoot in this re­gard be­cause real economies of scales could be achieved through full merg­ers. More­over, the newly merged en­tity would have mul­ti­ple for­eign buy­ers in hand,” a mem­ber said.

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