Leather Industry in Pakistan

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TABLE OF CONTENTS
EXECUTIVE SUMMARY9
INTRODUCTION11
a.OVERVIEW OF THE LEATHER INDUSTRY12
b.CATEGORIES OF LEATHER INDUSTRY14
c.TANNED LEATHER15
d.PAKISTAN’S LEATHER INDUSTRY17
CONTRIBUTION AND IMPORTANCE OF LEATHER INDUSTRY TO PAKISTAN ECONOMY17 e.CONTRIBUTION OF LEATHER INDUSTRY TO ECONOMY OF PAKISTAN17 f.LEATHER PLAYS A VITAL ROLE IN THE ECONOMY OF PAKISTAN21
g.PAKISTAN’S TRADING PARTNERS22
h.EXPORTS OF LEATHER22
i.GLOBAL IMPORTS30
STRUCTURE OF THE INDUSTRY30
j.LEATHER GARMENTS30
k.LEATHER GLOVES32
l.FOOTWEAR INDUSTRY34
ANALYSIS OF THE INDUSTRY34
m.PORTERS DIAMOND MODEL34
n.SUPPLY CHAIN MANAGEMENT OF LEATHER INDUSTRY37
o.SWOT ANALYSIS OF THE PAKISTAN LEATHER INDUSTRY40
p.PORTER’S COMPETITIVE FORCES41
WTO IMPACT ON LEATHER INDUSTRY62
IMPACT OF GLOBALIZATION ON LEATHER INDUSTRY OF PAKISTAN72
ISSUES / PROBLEMS75

EXECUTIVE SUMMARY

Leather industry is the second largest export-earning sector of Pakistan after textiles, and this sector is contributing around $800 million a year but has the potential to multiply volume of exports with the improvement of quality and diversification in different range of products, specially garments and footwear.

Out of the seven major exports of Pakistan, Leather is one of the major contributors. Although the industry started it journey way back in the 1947 since then it has moved from exporting raw hides and skins to more value added products.

Leather industry may major areas includes leather garments, leather gloves and leather footwear. According to Pakistan Tannery Association in July to December2006 is worth US $ 443,110 (000). This includes leather, leather apparel and clothing, leather gloves, leather footwear and other leather manufacturers.

Porter's diamond-model is one of the renowned models of regional economic development programming. Porter measures a region's competitiveness on level of productivity and productivity growth. Porter identified four geographically development determinants that contributed to an industry's and/or regions competitive capabilities: •Factor conditions

Demand conditions
Related and supporting industries
Firm strategy, structure and rivalry
These four determinants mutually reinforce one another and the interactions existing within a region. Pakistan has the competitive advantage due to its good supply of the raw material that is required in the production process. Although the industry is mostly labor based but the lack of modern machinery and designing facilities have somewhat given away the advantage that we had enjoyed for many years. The local conditions do not permit the use of leather related products, which would have been crucial for the development of this industry. Pakistan faces its competition from countries like India and China who are now trying to compete with Pakistan both in terms of its quality and price too by introducing its new PIG leather into the market.

Because of compliance with WTO rules and regulations there a few confronting challenges which the leather garment industry of Pakistan will have to resolve in order to survive in the international market. Leather garments face stiff competition from Chinese & Indian products. At the one hand, cost of production is very high in Pakistan due to high cost of various inputs especially utilities and taxes. On the other hand, leather garments are made mostly from low grade & medium grade leather because good quality leather is mostly exported. On top of them the use of hi-tech for quality products and availability of skilled manpower to cater to the needs of the world market are also severe challenges to the industry.

INTRODUCTION
HISTORY

Pakistan’s leather industry has grown gradually over the last 5 decades. The first 25 years saw the development and export of semi-processed leathers, which did not, required much investment and technology. Expertise was required in the purchase of raw...
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