Sialkot : How a small Pakistani city became a world-class manufacturing hub

[endymion248]

If you want it done right - How a small Pakistani city became a world-class manufacturing hub

PHOTOGRAPHY is fiercely restricted inside Khawaja Masood Akhtar’s factory in Sialkot, a small city in northern Pakistan. His products—top-of-the-range footballs—must be zealously guarded until the time comes for his customers, big international sports brands, to unveil their offerings for the new season. Until then the latest ball designs are subjected to a battery of tests in windowless laboratories. They must endure everything from hard poundings from mechanised boot studs to repeated dusting with fungus spores. The quality of the factory’s output is so high that Adidas chose it as one of only two in the world to manufacture the balls used in the World Cup in 2014.

Pakistan has precious few globally competitive exporters, but a good number of them are clustered in Sialkot, an out-of-the-way city of fewer than 1m people in north-eastern Punjab. It supplies the world with all sorts of sporting gear, from hockey sticks to judo suits, as well as leather goods and surgical instruments. Sialkoti Lederhosen are all the rage in Bavaria. The city’s 8,000-member chamber of commerce says Sialkot exported $2bn-worth of goods last year, or 9% of the country’s total exports of $22bn.

Sialkot’s success is especially surprising as it was cut off from its natural economic hinterland, the Kashmir Valley, when the subcontinent was split between India and Pakistan in 1947. Yet it is doing much better these days than the rest of the country. Its exports have remained reasonably steady for the past two years, even as those of the country as a whole have fallen by 12%. How are firms from such a backwater thriving, ask the exporters of Lahore and Karachi, while they struggle?

Pakistani businesses tend to blame the government for the country’s feeble export performance. Domestic and foreign investors alike are put off by the breakdown of law and order in Karachi, the commercial capital, and the storm of Islamic militancy across the rest of the country (a suicide attack on a police training college on the outskirts of the city of Quetta claimed over 60 lives this week).
Manufacturers must endure crippling shortages of electricity in the summer and gas in the winter. Antiquated land administration and customs systems make buying property and exporting goods tiresome. It can take almost three years to settle a commercial dispute. Pakistan ranks a lowly 144th out of the 190 economies assessed in the World Bank’s latest “Doing Business” report.

Mr Akhtar, however, dismisses these “lame excuses”: any half-decent entrepreneurs, he insists, should be able to find their own solutions to such problems. That is what the businessmen of Sialkot have done, at any rate: instead of waiting for politicians to stump up for local infrastructure, they have built it themselves. The Chamber of Commerce set up the country’s first privately financed dry port, where goods can clear customs before being shipped to a conventional port. It later charged members a special fee to raise funds to contribute towards the resurfacing of the city’s once-appalling streets. Local businesses also funded the construction of the city’s airport, the only private one in the country. It boasts both the longest and hardiest runways in the region, and handles 53 flights a week. That helps bring in foreign buyers who do not fancy the wearisome drive from Lahore. Some of the investors in the airport are now on the verge of launching their own airline.

As well as determination, Sialkot’s businessmen have had their fair share of luck. The city happens to specialise in niche products, which are relatively insulated from competition from China. The nearby towns of Wazirabad and Gujrat, once known for their cutlery and electrical goods respectively, have struggled against a tide of cheap Chinese exports. But even Sialkot is not immune to competition. Local manufacturers lost their grip on the world market for badminton rackets when they failed to anticipate the switch from wood to aluminium and graphite. If anything, however, that has only made the Sialkotis more vigilant. The local business community is now trying to set up a technology university in the city.

http://www.economist.com/news/asia/...s-manufacturing-hub-if-you-want-it-done-right

 

[s28]

<blockquote class="twitter-tweet" data-lang="en-gb"><p lang="en" dir="ltr">Much of the world's sporting gear comes from the small Pakistani city of Sialkot <a href="https://t.co/FFi8pE0Ueh">https://t.co/FFi8pE0Ueh</a></p>— The Economist (@TheEconomist) <a href="https://twitter.com/TheEconomist/status/795415564189630464">7 November 2016</a></blockquote>
<script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script>

 

[last_knight]

<blockquote class="twitter-tweet" data-lang="en-gb"><p lang="en" dir="ltr">Much of the world's sporting gear comes from the small Pakistani city of Sialkot <a href="https://t.co/FFi8pE0Ueh">https://t.co/FFi8pE0Ueh</a></p>— The Economist (@TheEconomist) <a href="https://twitter.com/TheEconomist/status/795415564189630464">7 November 2016</a></blockquote>
<script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script>

MUCH of world's sporting gear, AND Surgical instruments AND Leather goods come from the small city of Sialkot.

And good proportion of musical instruments.

 

[daytrader]

Sialkot leads Pakistani sellers on Alibaba.com

KARACHI: As many as 85 per cent of Pakistani sellers on Alibaba.com, one of the largest global platforms for business-to-business (B2B) e-commerce, are based out of a single city: Sialkot.

Speaking at a sellers’ summit organised by the international B2B platform on Thursday, Alibaba.com Pakistan Business Growth Manager Muhammad Sadiq said there’ve been 3.2 million listings from Pakistani sellers so far. The largest concentration of Pakistani sellers is in the apparel and clothing category with a 63pc share, followed by sports, entertainment, health, medical, tools, hardware and minerals categories.

Speakers from Alibaba.com highlighted multiple opportunities for Karachi-based exporters, manufacturers, wholesalers, traders and retailers to reach the digital B2B buyer base via the international platform. The summit resulted in 700-plus registrations.

Speaking via Zoom, company’s Country Head Song Song said Alibaba.com provides micro and small and medium enterprises (MSMEs) with a full range of digital, one-stop, integrated B2B services for global trade.

“Up to 70pc of global MSMEs have seen a sales decline and two-thirds have reported their sales dropped by 40pc due to the global pandemic,” he said while highlighting the need for local companies to go international.

Pakistan’s B2B e-commerce market is expected to achieve an annual growth rate of 28pc in the coming three years, he said. The inflation-led recession, Russian-Ukraine war and oil scarcity have created some economic challenges. The rupee is getting weaker with respect to the dollar but growing exports is the best counter-measure for bringing the national economy back on track, he said.

“Pakistan has now become our top overseas supplier market in terms of the number of paying suppliers,” he said, encouraging the local businesses to grow beyond their home market and “get discovered by more than 40m-strong global online buyer community on Alibaba.com”.

He lamented the fact that only 3.3pc of the total Pakistani exporters on Alibaba.com are from Karachi. “These dynamics should change. I invite all exporters from Karachi to embrace the export e-commerce route,” he said.

DAWN

 

[KB]

http://www.economist.com/news/asia/...s-manufacturing-hub-if-you-want-it-done-right

Some historical context might be useful. The following is based on the work of the Pakistani historian Ilyas Chattha in his book: Partition and Locality.

The manufacture of sporting goods and surgical instruments can be traced to colonial times. In 1940, the Governor of Punjab noted, “Sialkot is an industrial City of considerable importance” which contained “several large factories for manufacture of sports goods and, in addition, there are at least two small metal factories, one of which manufactures surgical instruments of excellent quality.”

To focus on sporting goods, it was in 1894 that the Uberoi Brothers began manufacturing badminton and tennis racquets in Sialkot. By the end of the first World War, Sialkot was a leading centre for the production and export of sports goods.

But Partition caused significant disruption. As Hindus and Sikhs departed, there was a flight of capital, financial know-how and managerial expertise. In Sialkot the number of operating banks went from nineteen, at the start of 1947, to one by the end of 1947. As Hindu and Sikh engineers departed, the city faced frequent spells of electrical black-outs. Access to raw materials also became more difficult - the sports good industry had relied on willow from Kashmir, for example. The decision by Pakistan not to devalue its currency in 1949 also adversely impacted Sialkot’s economy, by raising the prices of its export goods. The city also began facing competition from Jullundur as refugees from Sialkot settled in that area established their own firms that manufactured sports goods. And unlike some other areas in West Punjab, refugee entrepreneurs from East Punjab did not tend to accumulate in great numbers in Sialkot. In fact, instead, there was significant migration of “poor migrants” from Jammu and Kashmir, who, “could not replace the former Hindu and Sikh trading classes.”

Faced with such challenges, that Sialkot’s sports goods industry, and its economy in general, was able to weather the storm in the long run, was an impressive achievement. Government assistance was clearly important. There were loans, tax reductions, import licences, export incentives, subsidies, and exemptions from sales tax. There was the organising of industrial exhibitions and the signing of trade pacts with other countries that took the interests of the sports good industry into account. The development of co-operative industrial societies also helped. Co-operative associations were formed of a network of private firms that worked together to procure raw materials at affordable prices. Finally, in the absence of refugee entrepreneurs it was local Muslim artisans who stepped up into the functions previously fulfilled by Hindu and Sikh capitalists.

Exports from Sialkot rose through the 1950s, but Chattha informs us that it was not until 1969 that Sialkot’s exports matched the 1946 level of Rs 30,000,000.

 

[MenInG]

Some historical context might be useful. The following is based on the work of the Pakistani historian Ilyas Chattha in his book: Partition and Locality.

The manufacture of sporting goods and surgical instruments can be traced to colonial times. In 1940, the Governor of Punjab noted, “Sialkot is an industrial City of considerable importance” which contained “several large factories for manufacture of sports goods and, in addition, there are at least two small metal factories, one of which manufactures surgical instruments of excellent quality.”

To focus on sporting goods, it was in 1894 that the Uberoi Brothers began manufacturing badminton and tennis racquets in Sialkot. By the end of the first World War, Sialkot was a leading centre for the production and export of sports goods.

But Partition caused significant disruption. As Hindus and Sikhs departed, there was a flight of capital, financial know-how and managerial expertise. In Sialkot the number of operating banks went from nineteen, at the start of 1947, to one by the end of 1947. As Hindu and Sikh engineers departed, the city faced frequent spells of electrical black-outs. Access to raw materials also became more difficult - the sports good industry had relied on willow from Kashmir, for example. The decision by Pakistan not to devalue its currency in 1949 also adversely impacted Sialkot’s economy, by raising the prices of its export goods. The city also began facing competition from Jullundur as refugees from Sialkot settled in that area established their own firms that manufactured sports goods. And unlike some other areas in West Punjab, refugee entrepreneurs from East Punjab did not tend to accumulate in great numbers in Sialkot. In fact, instead, there was significant migration of “poor migrants” from Jammu and Kashmir, who, “could not replace the former Hindu and Sikh trading classes.”

Faced with such challenges, that Sialkot’s sports goods industry, and its economy in general, was able to weather the storm in the long run, was an impressive achievement. Government assistance was clearly important. There were loans, tax reductions, import licences, export incentives, subsidies, and exemptions from sales tax. There was the organising of industrial exhibitions and the signing of trade pacts with other countries that took the interests of the sports good industry into account. The development of co-operative industrial societies also helped. Co-operative associations were formed of a network of private firms that worked together to procure raw materials at affordable prices. Finally, in the absence of refugee entrepreneurs it was local Muslim artisans who stepped up into the functions previously fulfilled by Hindu and Sikh capitalists.

Exports from Sialkot rose through the 1950s, but Chattha informs us that it was not until 1969 that Sialkot’s exports matched the 1946 level of Rs 30,000,000.

Many thanks for this insight @KB

Sporting goods will always be what Sialkot is known by - not sure surgical stuff still a big thing there?

 

[KB]

Many thanks for this insight @KB

Sporting goods will always be what Sialkot is known by - not sure surgical stuff still a big thing there?

Someone with more knowledge of Sialkot can provide a more insightful answer than me.

But I looked at the Statistical Supplement of the Pakistan economic survey for 2020-21 (which is published by the Government of Pakistan) and interestingly in every year from the fiscal year 2014-15, Pakistan has earned more export income from “Medical and surgical instruments” than “Sports goods excluding toys.” And the gap between the two categories has tended to get wider each year, suggesting that at least in terms of export income, surgical goods have become relatively more valuable than sports goods. I think it is safe to assume most of these items for export are manufactured in Sialkot.

The most recent Pakistan economic survey states that, “Surgical industry is an important sector of the economy having an annual export of US$426 million in FY2021, providing employment to hundreds of thousands of skilled and semi-skilled workforces in the country.”

 

[MenInG]

Someone with more knowledge of Sialkot can provide a more insightful answer than me.

But I looked at the Statistical Supplement of the Pakistan economic survey for 2020-21 (which is published by the Government of Pakistan) and interestingly in every year from the fiscal year 2014-15, Pakistan has earned more export income from “Medical and surgical instruments” than “Sports goods excluding toys.” And the gap between the two categories has tended to get wider each year, suggesting that at least in terms of export income, surgical goods have become relatively more valuable than sports goods. I think it is safe to assume most of these items for export are manufactured in Sialkot.

The most recent Pakistan economic survey states that, “Surgical industry is an important sector of the economy having an annual export of US$426 million in FY2021, providing employment to hundreds of thousands of skilled and semi-skilled workforces in the country.”

Very informative. Thanks.

I think Pakistanis in general don't make a big deal of surgical goods exports or this would be more widely known

 

[MenInG]

Pakistan eyes cooperation with China in sports goods as Pakistan soccer balls to hit the upcoming 2022 FIFA world cup to be held in Qatar from Nov 20, Gwadar Pro reported on Tuesday.

Made-in-Pakistan soccer balls will make a glamourous appearance in the upcoming event. Al Rihla, the official ball of the international event, is made in Sialkot, a city that is home to premium quality sports goods.

The report says, Sialkot produces about 600 million soccer balls per year, accounting for more than half of the world’s total production. “Sialkot has been meeting up to 70 % [soccer ball] requirement of the world,” Saad Ghani, marketing manager of Talon Company, told Gwadar Pro, adding that “a little of its share has been reduced since more countries have ventured into the industry.”

Debuting in the 1982 Spain World Cup, Sialkot-made soccer balls have shone at the apex of the football kingdom for nine times (upcoming one in Qatar included).

The “tango” balls pioneered the use of rubber inlaid over the seams to prevent water from seeping through, becoming the first water-resistant ball in the FIFA world cup.

“No one can make football like it is made in our country even China can’t make it. The quality of our football is so good that it is used all over the world,” exclaimed Imran Zaidi, a local sports shopkeeper.

Apart from a powerhouse of soccer balls, Sialkot also produces a wide range of other sports goods. As per the Small and Medium Enterprises Development Authority (SMEDA), the city has been the “centre of excellence for the production of sports goods” with nearly 95 percent of the sports industry’s total production in the country.

The report added, despite the booming sports goods industry in Sialkot, the industry is far from being a rosy undertaking.

One of the major hurdles is a lack of large-scale mechanisation. “In Sialkot, most sporting goods are made by hand, with long production cycles and high production costs,” said Assad Bajwa, general manager of Talon Group.

In the case of cricket balls, “a worker hand stitch one ball in 25 minutes and a machine is stitching 50 balls in 25 minutes,” said Rana Tahseen.

In its 2021 Sportswear Report, the Trade Development Authority of Pakistan (TDAP) says that Sialkot is plagued by the absence of a materials testing laboratory and state-of-the-art dyeing units and diversified product lines.

To rev up the sports industry, SMEDA suggests bringing the latest technologies into Pakistan, building high-tech manufacturing units for composite-based material goods production and working closely with countries such as China and Korea, in its 2018 sports goods industry report on Sialkot.

To navigate such headwinds, Pakistan is looking to China for collaboration. “Chinese industrialists can provide us with expertise in those [sports] products which we can produce here under their supervision which we had to import from them,” local sports goods manufacturer Nauman Babar told Gwadar Pro.

According to media reports, a Chinese firm called Challenge has planned to invest US$ 150mln in setting up a textile industrial park in Lahore, which will house fabric units, dyeing facilities, and garment manufacturing units to enhance sportswear exports from Pakistan to America, Europe, Asia-Pacific, and other regions.

The company’s managing director predicted, in a February interview with media, that once the industrial park goes into operation, the company’s sportswear exports from Pakistan will grow to US$120 mln in the first year and then, to US$400 mln over the next few years.

In his address at a webinar on Pak-China sports goods cooperation in September 2021, CEO Sun Yongming of a Beijing-based sports goods firm envisioned that Pakistani and Chinese enterprises can set up joint ventures in cricket goods.

“One possible area of cooperation is that Chinese firms provide high tech such as sensors and Pakistani enterprises incorporate such technology in the products during manufacturing,” Sun told Gwadar Pro in an interview after the webinar.

Sun hinted at more possible cricket cooperation between Pakistani enterprises and firms in China’s Zhejiang, as the Chinese province has a relatively long history of playing cricket and more importantly, it will hold the 19th Asian Games in 2023, where the cricket match will come into prominence.

https://dailytimes.com.pk/1028029/p...ports-goods-as-pak-soccer-balls-to-hit-qatar/