Pakistani Footwear Industry

7/28/2019 Pakistani Footwear Industry

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Footwear Industry

Term Report Presentation


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Introduction

Inelastic demand Pakistan is among the most populous countries of

the world, so demand continues to increase.

Footwear industry is of pivotal importance for it

provides and creates jobs, earns foreign exchangefrom exports and fulfills local consumption.


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60% of world footwear is made entirely ofnon-leather materials and for the remaining 40% only the

upper part of shoe is made up ofleather.

Mostly concentrated in Punjab.

Chinese footwearpose a serious threat to the local

footwear products.

Leather, man-made materials, rubber/canvas,

synthetic and textile accessories are used to makefootwear.


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Highly protected industry 24% tariff

World footwear production exceeded US $ 20 billionout of whichAsian countries produced 87%

Pakistan produced 295 million pairs out of which 2

million were exported.


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Government agencies including PFMA have acteddormant and failed to earn incentives for the

manufacturers

Online trading of footwear

Imported raw material for production.

Faisalabad is the center for locally manufactured

leather shoes

Chinese footwear mostly cater to male footwearwhile local footwear cater to ladies demand


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Why Pakistan imports from China?

Style, quality and innovative designs Varieties in quality

Automated production

Local manufacturing slightly declining; Chinese

footwearfilling the gap

Bulk import

Cheap


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Reasons for the transfer of

industry to Punjab: Cheap labor Closely connected stations

More demand

Deteriorated law and ordersituation in Karachi

Tanneries in Qasur


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Supply ChainLocal manufacturers

Importers

Wholesalers

Customers Retailers


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Popular Footwear Brands

S. Naveed ul Kamil


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Popular footwear brands in Pakistan


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Subsidiary of Bata Shoes international

One of the oldest and footwear companies in Pakistan

Working since 1951

400 retail stores across the country

Targets middle/upper middle class men women andchildren

Provides employment to 10,000 people

In 2010 Bata produced over17.2 million pairs

Exported 1 million pairs to European and Africancountries.

Generated turnover of Rs.6.5, billon

As of 2012, showed a constant growth of over 15% for

last 4 years


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Oldest local footwear company 1941 Subsidiary of Servis Industries Limited (SIL)

Pakistan's largest footwearmanufacturer and

exporter

Humble start with single retail footwear outlet

Aggressive growth- today it has 500+ stores

presence in Pakistan, 2000+ dealer-base

Successfully opened stores in UAE and Saudi Arabia Exports to Germany, UK, Kenya, Belgium, France


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Shafi Shoes

Licensed for Production of most popularFrench brandPierre Cardin.

Local brand; Urbansole

Established in 1998

Capacity to produce around 1 Million pairs annually ofLeather shoes.

30 retail outlets and 48 dealers across the urban centersin Pakistan

Targets relatively high end urban consumers State-of-art production facilities

Exports to Germany, Italy, Spain, France, Greece,Belgium, Switzerland, Austria, Portugal, Netherland,

Croatia .


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Started business in Pakistan in 2001

One of the most popular(US based) global footwear brands operating in 150countries.

Targets high end customers in urban centers of Pakistan through its 25 retailoutlets.

Famous fortop quality and toughness of the shoes .

Local Production in Shaikhupura

Aero Soft Shoes

Aerosoft is a specialized brand in making sandals and slippers for men and

women No local manufacturing, all the products are imported from Thailand.

Wide presence across the country through its retail stores and dealers.

Targets middle class and upper middle class segment

Direct competitor of Bata and Servis


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Stylo Shoes

One outlet in Lahore in 1974 A constant growth over the years

Market leader in ladies shoes

Makes all types of ladies footwearin Lahore

Follows all latest trends in fashion.

100+ outlets across the country.

Exports to UAE, Saudi Arabia, and USA


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Miscellaneous

Askari Shoe Project

Established in 1990 for production of the DMS boots for Pak army.

A unit ofArmy Welfare Trust

Currently it produces all types of shoes, competing with other local

manufacturers.

Peshawari Chappal Chappal/'Kheri' has over hundred years old history

It is widely worn footwear by men in Pakistan/India/Afghanistan with the

traditional dress of Shalwar Kameez. New trend : Chappal is now worn with Jeans and the new fashion of using

Chappal as summer shoes is getting popular each day

Mostly manufactured in Peshawar/Charsadda by cottage footwear industry.

Greatly exported toAfghanistan (especially before Eid)


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Some crazy shoes

Some local manufacturers make shoes from Ostrich,snake and crocodile skin

Landlords in Punjab use them as a status symbol

a pair costs up to Rs. 50,000


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Imports and Exports

Salah uddin


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Production


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Exports Trend


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Exports to various countries(US Dollar thousand)

Source: ITC COMTRADE


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Important Trade Indicators


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Top Ten Exporters


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Imports from various countries(US Dollar thousand)

Source: ITC COMTRADE


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Important Trade Indicators


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Top Ten Importers


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Problems

Murtaza


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Problems

Inconsistent and non-focused government policies

Duty drawback for export is nominal

Pakistans immigration authorities have the policy of

granting visas to business visitors on arrival The Government does not understand the

economics of trade

The Government does not encourage free

exhibitions at shoe fairs worldwide


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Problems

Export promoting bodies, especially TDAP, are not

playing an active role in representing footwear

exporters at international level

Non liberal policy for the import of footwearmachinery and raw material

The environment is highly volatile making it insecure

for local and especially foreign investment


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Problems

Footwear buyers throughout the world have become

choosier about designs and quality

Long lead times

There is a dire need for a fashion and designdevelopment institute

High cost imports of raw materials from USA and

Europe


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An Interview with an

Online Shoe Brand(Shoe-preneur)


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Porters Five Forces and

RecommendationsManal Yousuf


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Porters Five Forces in the Footwear

Industry

Threat of new entrants:

Increasing energy crisis and inputs prices

The start-up capital is costly and is both labor and

capital intensive All of this greatly affects the ability of new firms to

enterthe market.

Despite this, there are still many firms, both on a

large scale (such as Servis Shoes) and smaller scale(locally made sandals, for example).


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Threat of substitute products or services Competition with the emerging economies like

India and China.

Despite of competition with China, thefootwearindustry is doing betterand is

regaining the strength to fulfill local demand

as well as compete efficiently in the world

market.

Imports ofChinese footwear


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Bargaining power of customers Consumers have very high control in this market

because of the many substitutes and

competitors, which gives them have a lot of

purchasing options.

Bargaining power of suppliers

Suppliers have medium control, because of

substitute brands. Thus, the suppliers have less

bargaining power than their customers, and need

to offer good value in order to compete

effectively.


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Recommendations

Build footwear training institutes Invest in R&D to update production methods

Create a mechanism ofcollaboration between

industry units and related research organization and

academic institution.

Provide adequate transport and utility infrastructure

facilities.

Compete with foreign competitors on the basis of

price when it comes to the lower classes, and on the

basis of quality when dealing with middle to upper

classes.

Documents

Pakistani Footwear Industry