Pakistan is the world’s third-largest cotton consumer, fourth largest cotton producer, fourth largest textile producer, and 12th largest textile exporter. The textile industry is Pakistan’s most important pillar industry and largest export industry. In recent years, Pakistan's textile industry has suffered from problems such as insecurity, high operating costs, declining product competitiveness, and sluggish international market demand, and its development has encountered bottlenecks.(Suntech)
Pakistan textile market situation
1. Textile is the most important pillar industry
Pakistan is an important textile country in the world, and its export volume of cotton yarn and cotton cloth ranks among the top in the world. The number of employees is about 15 million, accounting for 40% of the manufacturing labor force, the scale of credit accounts for 40% of the total scale of manufacturing credit in Pakistan, and the industrial added value accounts for 8% of GDP. The textile industry is Pakistan’s most export-oriented industry. From 2019 to 2020, Pakistan’s textile exports totaled US$12.45 billion, accounting for 60% of its total exports.
2. The industrial chain is relatively complete
Pakistan is one of the few major textile countries in the world with a full industrial chain production capacity. According to statistics from the Ministry of Textile Industry, Pakistan currently has 1,221 cotton ginning plants, 442 spinning mills, 124 large-scale textile and garment factories, and 425 small textile and garment factories; the annual production capacity of cotton yarn is about 11.3 million spindles, with a total of 300,000 There are textile machines, 350,000 power looms and 18,000 knitting machines; the annual production capacity of cotton cloth is 5.2 billion square meters, with a total of 700,000 industrial sewing machines. Pakistan is a big cotton-producing country. The annual output of cotton is about 13 million bales (480 lbs/bag), the annual output of man-made fibers is about 600,000 tons, and the annual output of terephthalic acid is 500,000 tons. All of these provide a solid foundation for the development of the textile industry.
Problems in Pakistan's textile industry
1. The scale of the enterprise is small and the degree of industrialization is not high
Most of the enterprises engaged in ginning, spinning, weaving, garment production and chemical fiber production in Pakistan are small-scale or workshop-type enterprises, and manual labor still accounts for a large proportion. Only enterprises with a certain scale and a high degree of industrialization account for About 10%, the technology and equipment of chemical fiber, clothing, printing and dyeing are relatively backward. Due to the difficulty of financing, expensive financing and insufficient investment that has plagued Pakistan for a long time, textile enterprises are seriously inadequate to invest in technological upgrading and transformation, and it is difficult to expand the production scale, which restricts the improvement of product technology and the realization of economies of scale.
2. High production costs, business difficulties
(1) Electricity costs remain high. The Pakistani government implements a new energy policy based on reducing government subsidies and raising electricity prices to raise funds for large-scale energy projects. According to calculations by the All Pakistan Textile Mills Association, the new energy policy increased the electricity price from 9.2 rupees/kWh to 14.8 rupees/kWh. Although the Pakistani government lowered the industrial sector electricity price to 11 rupees/kWh in mid-2016, it was still higher than that of China ( 8.5 rupees/kWh), Bangladesh (7.3 rupees/kWh), and Sri Lanka (9.2 rupees/kWh), and other major textile industry competitors' electricity price levels.
(2) High financing costs. Pakistan’s national savings rate is low, funds are scarce, and the textile industry, which is dominated by small companies, has long faced the problem of financing difficulties and expensive financing. Although inflation has been controlled in the past two years and the central bank’s base interest rate has been lowered to 5.75%, the financing costs of the textile industry are still high. . In addition, factors such as high natural gas prices, high corporate tax burdens, rising wages, and high logistics costs have also increased the operating costs of companies. In the first half of 2016, nearly two-thirds of textile enterprises in Punjab Province were unable to carry out normal production at one time.
3. The added value of the product is not high, and it is at the low end of the global industrial chain
Pakistan’s textile industry is generally at the low end of the international industrial chain, mainly staying in the relatively low value-added links such as primary products, primary finished products, medium and low-grade textile consumer goods, and low value-added links such as cotton yarn, cotton cloth, towels, bedding, and knitted garments. Value products account for nearly 80% of textile exports. The top five categories of products exported from 2019 to 2020 are: knitted garments 2.37 billion US dollars, cotton 2.21 billion US dollars, ready-made garment exports 2.20 billion US dollars, bedding products 2.02 billion US dollars, cotton yarn 1.26 billion US dollars, clothing exports accounted for only 36.7%, far lower than 60% of the international level. Under the combined influence of inadequate development of new products, inadequate human resource training, and lagging development of productive services such as brand management and marketing, the Pakistani textile industry is gradually lagging behind the mainstream of the development of the world's textile industry.
How to get out of the predicament?
Because Pakistan’s textile industry is at the low end of the global industrial chain, the added value and competitiveness are not high, and the international competition situation is becoming increasingly severe. Among the main competitors, China and India, the two major textile exporters, have been The market poses a challenge. Small countries such as Bangladesh and Sri Lanka have used their status as least developed countries to gain access to European and American markets and preferential tariff treatment, and they are also squeezing Pakistan's export share.
Pakistani textile companies are plagued by high operating costs and a poor business environment. At the same time, the domestic security situation in Pakistan has been insecure for a long time. Foreign buyers have moved their orders to other countries because they are worried that Pakistani companies will not be able to provide stable supplies as scheduled. Pakistan’s textile exports fell by US$1.4 billion from 2018 to 2020, the international market share fell from 2.3% to 1.5%, while India increased from 3.5% to 5%, and Bangladesh increased from 1.6% to 3.7%.
At present, Pakistan urgently needs to improve the industrialization and automation of the textile industry, reduce production and operating costs, and increase product competitiveness and added value. Intelligent machinery can help optimize the structure of the textile industry, improve production management efficiency, product quality, and added value, thereby increasing The comprehensive competitiveness of textile products reduces production and operation costs.
Suntech has developed and produced intelligent textile machinery such as rapier looms, cloth inspection machines, packaging machines, electric axle cars, axle warehouses, etc., aiming at a low-industrial and automated textile country like Pakistan. We use intelligent technology to optimize textile processes and improve textile production efficiency. There are many successful cases around the world, providing complete after-sales service such as installation and commissioning, overseas technical support, 24-hour customer service, 12-month warranty period, etc. Welcome to inquire in detail.
