Exports hit by Euro crisis and China demand2 March 2012
Leather garments manufacturers and exporters are confronting higher raw material prices and depressed demand from the European Union (EU).As a result of this exports of apparel and clothing of leather declined by around 11% during first half of current fiscal over the corresponding period last year.
Fawad Ijaz Khan, Chairman Pakistan Leather Garments Manufacturers and Exporters Association (PLGMEA) told Pakistan’s Dawn that on strong demand from China prices of hide and skins had surged on the world markets, which also impacted domestic prices upward.
‘With the rising purchasing power Chinese consumers are preferring leather products particularly garments such as jackets, jeans and gloves over artificial leather apparels,’ Khan observed.
He said that in the past most of leather apparel and clothing from Pakistan used to find its way to EU countries but following the euro zone crisis, a drastic change in the consumers’ tastes was observed.
‘High price of leather apparel has forced the European consumers to opt for cheaper products made from artificial leather and this has adversely affected our exports in the traditional EU market,’ he explained.
‘China has never been a traditional market for leather garments has witnessed a strong demand owing to the strong middle class,’ he added.
Induced by a surge in demand for apparel and clothing of leather, local manufacturers in China went on a buying spree for hide and skins in the world market, which resulted in a price hike, Khan said.
He further said that during a recent visit to leading stores in Europe, he witnessed that they had almost stopped displaying apparel and clothing of leather and replaced them with similar designs and quality products made from ‘faux’ leather.
The PLGMEA chief also criticised the government for being indifferent towards issues confronting leather garments manufacturers and exporters.
Presently, he said most of the apparel and clothing leather units are running under-capacity, which is threatening the industry’s viability.
‘Many export promoting initiatives announced under the three-year Trade Policy 2009-12 have not been implemented and this is causing difficulties to the exporters,’ he maintained.
He urged Pakistan’s Federal Board of Revenue (FBR) to enhance duty drawback rates between 2.4 to 4.84% and also provide funding for research and development, hiring of foreign experts and setting up a design institute.