With government officials talking about easing trade ties with India, some local manufacturers have become uneasy. PHOTO: FILE
KARACHI:
It happened slowly without anyone realising it. The influx of Chinese motorcycles that started in 1990s was a boon for customers and allied industry, that made accessories and spare parts for the bikes. But in a matter of years everything changed. Along with the two-wheelers came pistons, gearboxes, plugs, wheels and literally every other part.
Along Karachi’s busiest thoroughfare of MA Jinnah road, hundreds of motorcycle parts’ shops in Akbar Market are crammed with customers. From ‘genuine’ made-in-Taiwan parts to those made locally, all are available here. And the Chinese are the cheapest.
“No one cares about quality. Customer wants a good price and that’s all,” said a long-time trader. “Chinese have completely taken over the market.”
Having advantage of economies of scale, lax labour laws and the ability to mobilise resources for making various products in record time gives the Chinese bike assemblers an edge over Pakistani counterparts.
Industry people say that size does matter! And now with government officials talking about easing trade ties with India, some local manufacturers have become uneasy.
Notwithstanding the absence of direct banking links between New Delhi and Islamabad and all the other trade barriers, Pakistani businessmen insist that the government needs to initiate a cost-benefit analysis immediately.
This would mean strengthening regulatory bodies especially the National Tariff Commission and revisiting the taxation regime for the local industry.
One reason why all the hue and cry surrounding the units, which were succumbing to trade competition, was never noticed is because large industry particularly textiles, chemicals and its raw material makers remained immune.
Same is the case for farm products and agricultural input manufacturers.
The real hit was taken by small businessmen who ran one-room workshops with the help of half a dozen semi-skilled workers.
From Karachi to Gujranwala, thousands of them vanished when things like toys, pencils, cigarette lighters and steel goods landed at the ports in thousands.
President of Union of Small and Medium Enterprise Zulfikar Thaver said it is time for the government to take remedial steps instead of liberalising trade any further. “When a country like ours starts importing bread and cakes, then it should be a wake up call for everyone.”
He said that the small and medium enterprises have been “brutally crushed” by unbridled competition with stronger foreign competitors. “We have to realise that there are multiple problems in Pakistan that are not faced by our competitors.”
For instance, he said that poor law and order has become a major deterrent for small-scale businessmen in Karachi. “My factory is located in Hawksbay and I go there from different routes because of threats from criminals.”
In many cases, cheaper imports have stopped growth of industry if they have not destroyed it. None of the 400 workshops in Wazirabad where kitchen-use items are made closed in the face of competition from Chinese imports, says Attiqur Rehman, chairman of Pakistan Cutlery and Stainless Utensils Manufacturers and Exporters Association.
“We probably survived because we stuck to a particular trade, which had been done in our families for generations,” he said. “When you have made spoons and knives for so long, you kind of find a way to survive.”
Imports might have brought variety but some customers never compromise on quality, he says. “If imports did anything, it actually helped us review our processes to bring down cost.”
Unfortunately, the state has never helped the cottage industry. “I can’t recall any special fiscal package or low-interest financing scheme for this sector.”
There is another reason that Rehman believes has stunted their growth. “There is lack of drive among our businessmen. If they make spoons, they’ll keep on making them. No one will try expanding into other kitchen items. I don’t know what it takes to break this lethargy.”
Published in The Express Tribune, July 22nd, 2013.
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COMMENTS (11)
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@Vectra: If you are not blind then another fault in the picture, mainly flag should be china and pakistan but stupid again did same mistake by putting Indian flag.
@Dear Mr Thaver, Please visit India, it is only one hour away and see for your self what you can sell here.You have to try new Ideas and the Time is now.Allah Hafiz.
What this article says is that Chinese articles have flooded the market and killed many small manufacturers who were unable to compete. This is not just a Pakistan problem but applies globally, the small manufacturer being the first casualty when any Economy opens up. If the Indian products are kept out the beneficiary will not be Pakistan but China, consumer being the loser. Competition always improves efficiency and lowers costs.
How do you think for trade with India? Pakistan is FOREVER enemy of India so friendship never comes to the picture. India ready for WAR but never for TRADE.
Why trade with Pakistan? NEVER.
Well....India and pakistan should concentrate on their own business in stead cooperation . Since pakistan has low manufacturing base unlike China , India has nothing to import except raw materials . India should concentrate on manufacturing of hi-tech products in manufacturing segment to diversify its exports and become a exporting power house.
None of the auto manufactures never prefer to start a manufacturing facility in pakistan near future considering the security situation as well as load sheddings.Pakistan is not a big market like India or china to consider its own facilities for every big brands.So the best way they can do is to export the stuffs to pakistani market and ultimately benifit your people.Just a day back, Renault-Nissan will going to start pumping 2.5 billion dollar to Indian market for there expanding criteria to capture more share on Indian market.There vision also to have manufacturing facility in India so to export to other emerging economies.This story is an example from only one company.Near future India will be the third biggest automobile industry after China,US, overtaking Japan.Indian growth will benefit Pakistan ultimately.
“There is lack of drive among our businessmen. If they make spoons, they’ll keep on making them. No one will try expanding into other kitchen items. I don’t know what it takes to break this lethargy.”"
Ironic as this may seem, to make Pakistan self-reliant country with a backbone, it needs to expand trade with India. When Indian companies and goods are allowed access to the Pakistani market, the country will know the real difference between relying on low quality Chinese products that have formed a monopoly in Pakistan in almost every sector and much better quality products from India at competitive prices. It will affect some sectors in Pakistan, yes. But I do believe it will be the best thing to happen to Pakistan. Unlike China, wherever Indian companies grow, they improve the local standards and create an environment of competition without affecting quality. Pakistan has become too reliant on China, (and economically on US aswell) and this has stunted its own growth. Trade with India will not only improve relations between the two countries but Pakistanis will have access to better quality products and services across various sectors. And this will actually benefit the end consumer of Pakistan as it will force the local firms to improve their quality standards in order to be able to compete with "others". This will seem a bit "painful" in the starting years, but will result in gradual inner growth of Pakistan's industry, and economy.
no trade. till terrorism stops.
As the author says “Chinese have completely taken over the market.”... these shrewd chinese have completely destroyed out market and taken over control... every segment you take a look, its controlled completely by the chinese.. every sector. millions of pak citizens have lost jobs and left to hunger and poverty by these chinese. Our govt like beggars talk about friendship to hide our incompetency, while the chinese laugh at us like beggars, comes with their insutries and take control of our assets. I dont understand why no one is raising voice against the chinese indirect control of this country.