ANALYSIS OF KNIT WEAR INDUSTRY IN PAKISTAN

Introduction
The knitwear industry in Pakistan has grown fairly rapidly after the independence. Since the
industry is closely related to the textile industry its development and growth has closely followed
the footsteps of the textile industry. Starting with 2 or 3 units in 1950 today there are 700 units
with more than 15000 machines, of these 700 units, more than 50 are fully integrated. In early
years the industry produced simple items such as socks and undergarments but with the passage
of time it has increasingly produced more sophisticated items and there is more value addition in
the sector.

Industry

Industry Structure of Apparel Sector of Pakistan

Pakistan's apparel & garment industry comprised of approximately 700 vertically
Integrated units in the knitwear sector, whereas very few integrated woven Garment
manufacturing units are present. It additionally has 670 finishing units both for the knit and woven
fabrics There are approximately 4,000 garment units, with a diverse range of stitching capability
including leather, knit and woven garments and made-ups with 160,000 industrial and 450,000
domestic sewing machines. Most of these garment manufacturers are small units having less
than 30 stitching machines. There are 400 units with 30 – 50 machines and 600 units with 50 –
300 machines.
Knitting industry is growing at a rate of 15 to 17 percent annually. The knitting sector has become a
large consumer of domestic cotton yarns. Pakistan's knitting industry comprises of approximately 700
separate or vertically integrated units with approximately 15,000 knitting machines, which are mostly
imported. The machinery used in the knitting sector, especially for circular knitting is largely imported from
Europe and Japan. Major portion of the country's entire production of knitwear, valued at nearly US$ 742
million in 1998-99, is exported. Despite current economic conditions, the industry is expected to continue to
grow at a stable rate either through the expansion of existing units and /or through the establishment of new
small and medium scale specialized knitting units.
Pakistan's fabric finishing industry comprises of approximately 670 units, the majority of which are
independent small units with obsolete dyeing and finishing
facilities. Their installed machinery is considerably old and in need of major maintenance or
replacement. The state of the art large-size processing units are a part of the integrated mill
sector, which process woven fabric. Most of the knit processing units are also small scale with
traditional winch dyeing facilities. The ready-made garments sector is comprised of 4,000 small,
medium and large-scale units that altogether have approx. 160,000 industrial and 450,000
domestic sewing machines.
Garments Sector is divided in to some sub-sectors:
• Men's Wear (Woven & Knit),
• Women's Wear (Woven & Knit)
• Babies wear
• Sports wear
• T-Shirts & Pull Overs
• Hosiery.

Men's Wear – Knit

Exports of $ Number Share inShare
Pakistan Mens’ Million of UnitsValue in Qty
wear Knit-1997 '000
WORLD 314 78
USA 229 53 73% 68%
GERMANY 14 5 5% 6%
UNTD 18 5 6% 7%
KINGDOM
CANADA 11 3 3% 4%
FRANCE 7 2 2% 2%
NETHERLANDS 7 2 2% 3%
UNTD ARAB EM 3 1 1% 1%
BELGIUM 6 1 2% 2%
ITALY 2 0 1% 1%
SAUDI ARABIA 2 1 1% 1%
Others 15 4 5% 5%

In the knit based sector, menswear exports of Pakistan are

less as compare to the woven-based mens garment
segment. In 1997, the exports of knit menswear were $314
million, while in the woven menswear segment, the
exports are almost 65% higher. However, this fact is
understandable when the overall global value in both
categories are taken into account. With exports of $314
million, Pakistan holds a market share of 4.5% of the
world imports. Again here quantity growth has been
stagnant since 1993, registering a meager rise of 5 million
units, while export earnings showing a substantial growth
increased by more than 70% in five years. However, this
growth in value has now stabilized indicating that it would
be impossible to increase export value without products as
well as market diversification.

Women's Wear

Women wear is the largest single product category of

garments in value terms. In 1997, total global imports in
this single category were to the tune of US$ 48 billion.
This means that this segment accounts for 32% of the total
world apparel imports. Total trade in woven women
garments is around $28.4 billion having a lion's share of
74% in the women apparel segment. The magnitude of
trade in women woven garments can also be measured by
looking at it in the broader framework of total apparel
exports including the mens and women garments. The
woven women apparel constitutes almost one-fourth of
the total apparel trade.
The knitted women garments sector is comparatively a
smaller segment with world imports of $10.8 billion in
1997. However, higher growth rates in value terms of knit
women garments make this segment highly attractive. The
women woven clothing exports have grown by 4% during
1993-1997, the knit segment grew by a healthy
cumulative annual growth rate of 10% over the same
period. This phenomenon of growth in women knit
garments is also observed in the world's largest market, i.e
the USA, but at the same time the importance of the
woven women garment segment cannot be
underestimated, which still is the largest segment in
global apparel trade.

Women's Wear - Woven

Exports of Pakistan Womenwear Woven-1997
$ Number ofShare inShare
Million units mln Value in Qty
WORLD 136 43,625

USA 61 17,850 45% 41%

GERMANY 15 5,178 11% 12%
UNTD 11 4,394 8% 10%
KINGDOM
NETHERLANDS 14 4,570 10% 10%
CANADA 7 2,090 5% 5%
FRANCE 6 2,172 4% 5%
SAUDI ARABIA 4 1,537 3% 4%
UAE 1 443 1% 1%
BELGIUM-LUX 4 1,444 3% 3%
ITALY 1 414 1% 1%
Others 12 3533 9% 8%

Despite the fact that the women wear have the largest
share of 33% in the global apparel exports, Pakistani
manufacturers and exporters have not been able to gain a
sizable portion in this total trade. Pakistan's exports in
woven women wear were US$136 million during 1997,
which dropped almost 17% over a period of five years. In
1993, the exports in this segment were US$168 million.
This is not a very promising performance by any standard,
particularly for a growing global market segment such as
women wear. Pakistan's share in the total export value of
woven women garments is only 0.5%. One threatening
fact is that Pakistani exporters are gradually losing out
their market share of quantities exported in all major
markets. The volume of woven women apparel has
declined by 7% during 1993-97.
Japan & Hong Kong together imported $7 billion worth of
women woven garments in 1997. However, Pakistani
exporters have completely overlooked these non-quota
countries.

Women's Wear - Knit

Exports of Pakistan Womenwear-Knit-1997
Value- Qty- Share Share
mln 000 in in Qty
Value
WORLD 52 19,644

USA 24 7,687 46% 39%

GERMANY 5 2,177 10% 11%
UNTD 7 3,131 13% 16%
KINGDOM
NETHERLANDS 4 2,277 8% 12%
FRANCE 2 908 4% 5%
CANADA 3 867 6% 4%
BELGIUM-LUX 1 309 2% 2%
SWEDEN 1 258 2% 1%
ITALY 0 170 0% 1%
UAE 1 416 2% 2%
Others 4 1,444 8% 7%
The knit based women garments sector is a smaller market
segment as compared to woven based women apparel,
with total world imports of $10.8 billion in 1997. Exports
of knit women garments from Pakistan in 1997 were $52
million, which is only 0.63% of total global trade value in
the sector.
Quantities exported from Pakistan in this category has not
shown any growth in five years while export values have
marginally increased by less than 1% annually. Latest
figures however show a marginal rise in value with an
exports of around $90 million in 1999.
Babies wear

Babies wear is a relatively smaller sector when compared

with apparel product segments including men's and
women's
wear. The global market of knit and
woven babies' wear is around US $3.5
billion, with a market share of 2.3%
in the total apparel trade. The world
imports in babies' wear have shown
a cumulative annual growth rate of
7% during 1993-1997. Growth in
the world imports of babies' wear has been greater in knit
segment as compared to
woven-based babies' wear. The overall split of knit and
woven in the segment is 70%
and 30% respectively.
 The Pakistani apparel exporters/manufacturers have kept
their focus on producing only traditional products.
Product development is considered to be a high-risk
activity in the business circles. This is also true for the
babies wear segment that is considered a complex product
with little export opportunities. Despite the fact that the
babies wear segment is limited to US$ 3.5 billion, it still
holds the potential to enhance export earnings through
developing and marketing high value-added products in
this segment.

Babies Wear - Woven

Pakistan exported a total of $16 million worth of woven

based babies wear in 1997, with a market share of 2% in
the world exports of this segment. Exports in this category
have been continuously declining during 1993-1997.
From a total exports of $27 million in 1993, the exports
have registered a 41% decrease, which in 1997 were
limited to only $16 million. A cumulative annual growth
rate of -12% in a market that is growing by 3% p.a. is not
a very healthy sign especially for a county in which
textiles constitute 65% of exports.

Babies Wear – Knit

Babieswear knit is a larger market than the woven

segment. However, again the category is not very popular
with exporters from Pakistan and in 1997 total export
value from Pakistan was as low as $3 million.
Major export partners of Pakistan in Babieswear have
been EU countries. Germany is the largest importer of
babies' garments from Pakistan with a share of 31% in
woven segment and 21% in knit babieswear. USA is the
second largest market for Pakistan exports in the category.
As mentioned earlier that, Saudi Arabia and U.A.E are
large import markets of babies wear where Pakistani
exporters can increase their trade with these two
countries.

Sportswear

Sportswear is one category, which holds a high growth

potential for exporters. In very recent years this category has
shown healthy growth trends with a simultaneous increase in
unit price realisation. The sportswear category is comprised of
ski suits, swim suits and a diverse range of other sports gear
manufactured from high performance fabrics. Overall
cumulative growth rates in the value of imports of sportswear
were 3% for woven garments and 7% for knit sportswear.
Total world imports in sportswear were $4.1 billion in 1997,
making it one of the major categories besides men's and
women clothing. Sportswear is one category where total trade
is balanced between knit & woven garments, the split is 45%
and 55% respectively.

Sports Wear - Exports from Pakistan

Sportswear is a growing category with high unit values.

Pakistani manufacturers and exporters have not yet been able
to exploit the potential that sportswear offers. Out of total
global exports of more than $4 billion in 1997, Pakistan
exports in the category were only $22.4 million. Except for a
small $0.4 million, all of the exports were in knit sportswear.
In woven sportswear, Pakistan's export product mix is very
narrow with little product diversification. Product range of
sportswear include only two items i.e. women outer and male
swimwear. Germany is the largest buyer of woven sportswear
from Pakistan followed by USA, Italy & Canada. Sportswear
market demands continuous product innovation and
performance improvement. Lack of the concept of product
development in the garment industry of Pakistan has therefore
resulted in declining unit values of sportswear.

In knit sportswear Pakistan has higher exporters in most of its

Asian competitors. However, exports from Pakistan have
shown continuos decline during 1993-1997. Exports in the
category have dropped by 45% in five years. Knitted
sportswear exports from Pakistan have been limited to just
one category i.e. knit tracksuits specially made of synthetic
material. Tracksuits constitutes more than 99% of exports
from Pakistan in the category.

USA is the largest export partner of Pakistan in this category

with a share of 50% while Germany is the second largest
importer of sportswear from Pakistan. Italy and France in
Europe and countries in South and Central America are other
major markets for sportswear that can be explored in order to
diversify the current market mix.

T Shirts & Pull Overs

World Imports T Shirts & Pullovers

 Value '000 Share CAGR
Total 33,877,632 7.38%
USA 9,650,622 28.49% 13.67%
GERMANY 4,571,388 13.49% 0.32%
JAPAN 3,869,621 11.42% 7.53%
HONG KONG 3,218,149 9.50% 7.24%
FRANCE 2,221,726 6.56% 4.99%
UNITED 2,326,991 6.87% 12.28%
KINGDOM
NETHERLANDS 1,192,181 3.52% 6.20%
BELGIUM 857,884 2.53% 8.30%
SWITZERLAND 659,935 1.95% 1.19%
ITALY 869,903 2.57% 14.07%
Others 4,439,232 13.10%

This grouping consists of T-shirts, cardigans, jerseys,

pullovers and kaftan items and other items not covered in
men's wear or women's wear. This is the third largest
apparel category in terms of global trade values, after men
& women woven garments. Total world imports in the
category were $33.8 billion in 1997. Within the category,
there are two main products. Jersey & pullover is the
larger product group with a share of 72% and the second
is T-shirts with a share of 28%.

Pakistan's Performance

Exports of T-shirts, Cardigans, jerseys and pullovers from

Pakistan were $55 million in 1997 which gives Pakistan a
share of 1.7% in total world exports.
One of the reasons of smaller Pakistan exports in the
category is that a large portion of t-shirts from Pakistan
gets reported under men's wear. It is evident that Pakistani
manufacturers and exporters have totally overlooked a
category of this huge size.

Hosiery, Underwear and

Nightwear

Hosiery and nightwear has been combined into one

category. This category includes briefs, nightdresses,
undergarments, brassieres, tights, vests and other hosiery
items for both men & women. This is the fourth largest
category with a share of 10% in total apparel trade. Total
 world imports in this category has been $17 billion in
1997.

Major Players

Among the major players of the industry few are: Masood Textiles, Hasni Textiles, Globe Textiles, Three
Star Hosiery, Anwar Textiles, Leisure Knitwear, Klass Textiles, Haroon Textiles, Comfort Knitwear, Sarah
Textiles, Style Enterprises, Jaguar and Pakpenther.

Industry Concentration

Smaller units are scattered all over the country but the industry is concentrated around cities of Karachi,
Lahore and Faisalabad. The units in Faisalabad are smaller and cater the local market. But the units in
Lahore and Karachi are export oriented.

Technology

The knitting technology is a unique and distinct part of the textile industry. In general, textile mills, which
manufacture knitted fabric, do not manufacture woven cloth. The distinctive feature of knitting industry is
that it comprise highly specialized machinery and technical skills required to produce various type of knits:
for example machinery used to manufacture sweater bodies cannot also be used to make hosiery, even
though both are knitted products. The organization of the knitting industry ends to follow the lines of the
specialized machinery used in specific kinds of production.
These machines include various types such as single-knit, double-knit (interlock), loop-knit (terry/fleece),
and pique and rib body for garment accessories.
Sinker body machine is used for producing single knit hosiery cloth, which is lighter in weight per square
meter and cheaper in price; it is mostly for the local market.
Interlock machine is used to produce double knit hoister cloth, which is heavier in weight per square meter
and relatively costly.
On an average one machine out of eight machines is meant for manufacture of collars, rib-boarders, etc. A
large portion of these constitute used and re-conditioned machines, imported over last 15 years under "Non-
Repatriable Investment" (NRI) scheme.

BMR

The total investment made in the re-conditioned and new imported machine is estimated to be around Rs.
150-200 million. The addition of imported machines has contributed to improvement in quality of knitted
fabrics, which in turn, helped the country to earn foreign exchange through exports of knitted fabric as well
as knitwear. Today, knitwear industry alone provides direct employment of 20,000 persons, skilled,
unskilled men and women.

Market

Both domestic and foreign demand for knitwear (hosiery) is increasing rapidly. Domestic uses of
undergarments such as vests and underwear are common in all groups in urban areas and about 15 per cent
of the total output is consumed domestically.
 Export of knitwear (Hosiery) increased from 1.0 million dozens worth $274 million in 1989-90 to 39
million dozens worth $874 million in 1999-2000, thus showing an average increase of 20 per cent annum in
terms of value. Export of knitwear for the last ten years is given in table-1.

Table-1: Export of Knitwear (Hosiery)

Year Quantity Value

(000 Doz.) (in US$ million)
1989-90 19,048 274
1990-91 17,668 334
1991-92 23,427 425
1992-93 23,052 464
1993-94 26,450 509
1994-95 32,418 689
1995-96 30,040 703
1996-97 27,719 689
1997-98 29,312 697
1998-99 32,477 742
1999-00 39,313 873
2000-01* 23,261 525
Source: Export Promotion Bureau,
Government of Pakistan *July- Feb

Table-2: Country-wise Export of Knitwear (Hosiery) Value: 000 US$

Countries 1995-96 1996-97 1997-98 1998-99 % of total

USA 361,280 360,247 385,168 448,102 60.4
Germany 100,109 98,778 63,286 61,562 8.2
UK 63,223 58,028 62,563 54,300 7.2
Netherlands 29,844 31,379 29,194 34,661 4.7
France 32,065 28,541 27,408 26,892 3.5
Canada 17,430 19,882 23,667 23,685 3.1
Belgium 15,630 13,968 20,594 19,001 2.6
Spain 5,681 7,057 7,578 8,811 1.2
Dubai 14,342 10,205 13,047 8,899 1.2
Italy 10,352 11,401 12,413 11,258 1.7
Japan 1,723 2,859 5,035 3,303 0.4
Australia 1,507 1,950 2,356 2,305 0.3
Finland 1,476 1,908 1,865 1,963 0.3
Norway 1,684 2,441 1,975 1,293 0.2
Other countries47,289 41,230 40,556 36,119 4.9
Total 703,635 688,874 696,705 742,154 100.0
Source: Federal Bureau of Statistics, Government of Pakistan.

Products

The products made in Pakistan include the following:

1. T-shirts
2. Jogging suits
3. Jerseys, pajamas
4. Sport shirts
5. Children wear
6. Gloves
7. Nightgowns
8. Tracksuits
9. Sweaters
10. Socks
11. Under Garments

Product Designs

Product designs are mostly customized. The customer sends each and every detail of the design
including the thread used to stitch the garment. Once agreed the manufacturer is not allowed to
alter the design.

Manufacturing Process

Cotton Fiber Purchase

The process starts from the cotton fiber. It is easily available in the local market.

Yarn

The fiber is converted into yarn so that it can be used in the production of knitwear garments.

Dying of Yarn

After the preparation of the yarn, then there are two options available to the manufacturer. Either
the yarn can directly used for the knitting or it is first dyed according to the design specifications.

Knitting

Then knitting takes place. It is done through a number of machines. Only one garment can
involve ten to fifteen machines depending upon design specifications.

Dying

If the manufacturer chooses not to dye the yarn before knitting then the fabric has to be dyed
after knitting according to the designs.

Fabric Finishing

After dying the cloth is further processed to increase its quality. This step is named as fabric
finishing.

Cutting

Next step is of cutting. This is done through computerized machines. The design specifications
are feed into the machines which cuts various layers of the cloth at a time.

Stitching
This is one of the main processes. Stitching is done through machines which are highly
sophisticated, automatic and expensive. The numbers of machines used in manufacture of single
garment depend on the design of the product. Here the garment is passed through variety of
machines because each machine performs only single operation. This is called “chain link
operations”.

Quality Control

During the chain link operations when garment passes from one machine to another its quality is
checked. If it is not up to the mark the operation is repeated. If it is approved then it is transferred
to the next machine.

Trimming

When the garment is complete it is in a crude form i.e. it contains free threads of the machine and
of the cloth. They are removed manually. The garment is also scanned for any metal pieces
(needles) which could be harmful for the customer.

Steam Press

After this the garment is steam pressed according to the specifications.

Packaging

After pressing the garment it is packed.

Final Inspection

When the lot is ready then it is again checked for any defects. Once approved the lot is ready to be
dispatched.

Capacity Measure

The capacity of any unit is measured in terms of number of machines installed. The higher the
number of machines larger will be the unit. This can also be measured in terms of operations per
hour i.e. how many machines are used to manufacture a garment in an hour.

Profitability

Few years back this was a very profitable sector but the margins have been reduced to greater
extent these days. This is mainly due to the increasing local and international competition. After
the September 11th the export orders which were the main stay of the industry have shrunk and
international companies are not willing to do business with Pakistani firms. In the local market,
keeping in view the previous profitability of the sector too many new units have entered. With
reduced exports these units are eating one another’s share.

Critical Success Factors

For success in the industry two factors are important.

Latest Machinery

As told earlier the industry is technology intensive. The latest and efficient equipment a unit has
more will be its productivity and quality of the garment produced. Good machines also produce
less waste and reduce the time required to complete an order.

Skilled Labor

No matter how latest and automatic machines a unit has, the nature of production requires skilled
labor to operate the machines. The machines are not locally available and so is the skill.
Manufacturing units have to hire and train their own
Labor force. The better the training, better will be the quality of the garment.

Problems Faced by the Industry

Reduced Exports

Knitwear industry is heavily dependent on exports. After the attacks of September 11 th the exports
have been greatly reduced. New companies are reluctant to do business with Pakistan and
existing orders are also being cancelled. But with the passage of time the situation is improving.

Unavailability of platform

The knitwear industry has no union or association to discuss its problems and fight for the rights
of the sector. Pakistan Hosiery Manufacturers Association only exists on papers and is not active.
Due to this reason sector has to face unnecessary problems that could be avoided otherwise.

Non-supportive Govt. Policies:

The government makes policies at the top level without taking into consideration the
implementation. As a result most of the policies cause problems instead of helping the sector.
One such example is of quota management. Quota will expire after 2004 and government has not
yet made any policy related to the threats or opportunities subject to this event.

Competitive Environment

Threat of New Entrants

Threat of new competitors entering the industry is low, because the profitability of the sector has
reduced and also the nature of the industry is technology and therefore capital intensive.

Rivalry among the existing Competitors

Rivalry among the local and foreign competitors is very high. In local market the number of orders
are limited and all are fighting to get them. The nature of local competition is cost based.
International competition is also high. Pakistan’s biggest competitors are China, India, Sri Lanka ,
Bangladesh , Far east , Hong Kong and Taiwan.
Substitutability

Threat of substitutes in the industry is also high. There is a long list of stitched convenience and
informal clothing which are substitutes of knitted garments.

Bargaining Power of Buyer

The bargaining Power of buyer is very high because our sector is selling capacity and there are
no brands. Buyers are multinational companies like Nike which can get their product
manufactured from any other country so manufacturers have to strictly comply by their
requirements.

Bargaining Power of Supplier

The bargaining power of the supplier is low because their main raw material is cotton yarn and
there are many suppliers available in the domestic market.
 TEXTILE SECTOR IN A DILEMMA
The value-added textile sector is in a dilemma as the orders from the US were still very low coupled with
lower per unit price in all categories. They are worried about utilizing US textile quota for 2002 even in
those hot categories that they used to over perform in past years including 2001. They are anxiously
awaiting the trade concession package that would determine the extent of boost to Pakistani exports.
Knitwear is one of the main value added textile exports of Pakistan to the US. Chairman Pakistan Hosiery
Manufacturers Association Shehzad Azam Khan said presently there was a 40 per cent decline in the
volume and 30 per cent decrease in the unit price of value added textiles exports to the US since September
11. He said, the situation was very grim. Pakistan, he added, would not benefit much at least for another
three months even from the best of the trade concessions that the government might obtain from the US
authorities.
He said our government was asking the US government to abolish/increase its textile quota, and waive
duties on imports from Pakistan. He said increased textile quota would have no impact on Pakistani exports
this year. He said, Pakistani exporters may not even utilize their full quota in hot quota categories like 338
(knitted men's shirts) or 339 (knitted women's shirts).
In fact, he added, the utilization of quota in category 339 was under utilized in 2001 even while there were
excess 10 per cent exports in 338.
He said, if the duty on import of Pakistani textiles is abolished or reduced by the US government it would
help exporters in the long run. He said exports would start increasing from June onwards as this measure
would give the US importers some advantage. In that case, he added, increased quota would be utilized by
local exporters. A leading exporter and member Quota Advisory Committee M.I Khurram said there are
many issues that need to be resolved with the US authorities. For instance the US authorities consider
category 338 and 339 under one head for imports from India.
He said our government has asked them to do the same for Pakistan. He said the reason is that the rate of
women knitted shirts exported under category 339 is much lower than the rate of men's knitted shirts
imported under category 338.
He said, Indians take advantage of the concession they got from the US by exporting relatively high valued
men's shirts under the combined 338-339 category. He said had it been the case with Pakistan as well the
category 339 would have been fully utilized in 2001 when 30 per cent of the quota was not utilized.
He said, the rates of knitwear from Pakistan are much higher than those quoted by the Indians for similar
shirts. He said the decline in demand in the US markets therefore has effected exports from Pakistan more
than the exports from India.
He said average rate of men's knitted shirt from Pakistan was $3 per piece before September 11. He said the
Indians were marketing similar shirts at $2.5 per piece. After September 11, he added, the US buyers have
decreased the rates of knitted shirts to $2.5 per piece. "Take or leave" it was the comment of US buying
houses in Singapore when Pakistani exporters protested these low offers for their shirts.
He said Indians were waiting to grab the opportunity if Pakistani exporters showed reluctance to accept
lower prices. He said, Pakistan faced getting stiff competition from knitwear manufacturers of India,
Vietnam, Bangladesh and Jordan all of whom supply their knitwear at much lower prices than quoted by
Pakistani exporters. He said the competition has stiffened after recession in the US that has decreased the
demand for higher value products.