Challenges abound for fan manufacturers

Pakistani fan manufacturers have stated that challenges faced by the industry, both in domestic and export markets, are increasing rapidly, and require joint efforts from the government and industry to get an additional market share globally.

Currently, the fan industry benefits from low labour costs, access to skilled workforce and an established production infrastructure. These advantages allow local manufacturers to produce quality fans at affordable prices, which provide them some competitive edge in the international arena, said industry stakeholders while talking to a select group of journalists.

However, challenges persist, particularly the import cost of raw material, and most recently, the fluctuating exchange rate, which impact profit margins and limit growth.

"One of the primary issues fan manufacturers are facing is the high cost of production alongside rising energy costs," an industry player commented.

According to a report of the Pakistan Business Council, the fan manufacturers rely heavily on imported raw material such as printed circuit boards, electric steel sheets and plastic. This reliance drives up production costs, making it difficult for them to compete with countries like China and India, which benefit from economies of scale and availability of local raw material.

Another significant challenge is the stringent non-tariff barriers in potential export markets. For instance, while Pakistan enjoys zero tariffs on fan exports to several European countries, compliance with carbon emission standards and other regulatory requirements stand as a hurdle.

This puts a strain on the industry's ability to tap into European markets, which have an untapped potential of nearly $1 billion.

The EU's ceiling fan market reached 36.5 million units in 2023 and is expected to grow to 45.9 million units by 2032. Overall, the global market was valued at nearly $11 billion in 2023, with a projection to reach $14.65 billion by 2030.

Although Pakistani fans have gained international recognition, particularly in emerging markets across Asia, the Middle East and Africa, "there is a much larger market in front of us, which we cannot ignore," the industry stakeholders said.

Pakistan's fan industry primarily operates out of Gujrat, often called the "City of Fans," and has significantly grown to meet international standards. According to the Pakistan Bureau of Statistics, fan exports in 2023 amounted to $28.23 million, with average annual growth of nearly 8%.

The uptrend in exports demonstrates the industry's growing presence in global markets, especially in countries with similar climatic conditions that prioritise affordable, energy-efficient cooling solutions, they said.

However, the fan makers are facing stiff competition from established players in global markets.

The Herfindahl-Hirschman Index (HHI) for Pakistan's fan market shrank from 8,889 in 2017 to 7,250 in 2023, indicating a move towards a more concentrated market. This concentration means fewer players are dominating the market, making it harder for new entrants to gain a foothold.

Additionally, the high cost of production and heavy reliance on imported raw material have now made it difficult for exporters to quote competitive prices. Generous duty drawback rates and production-linked incentives in countries like India exacerbate the competitive disadvantage for Pakistani manufacturers, they added.

With the adoption of energy-efficient technology, improved regulatory support and continuous innovation, this industry has the potential to boost exports significantly. As global demand for affordable and efficient cooling solutions rises, Pakistani fans are well-positioned to serve this market, potentially establishing the country as a leading fan exporter.

The combined vision of manufacturers, the government and stakeholders to advance in quality, sustainability, regulatory framework and finding new markets could be the driving force. Also, by addressing high cost of production, improving access to domestic raw material and leveraging public-private-partnership, Pakistani fans may continue to spin a success story on the global stage, the stakeholders added.