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SPORTS GOODS INDUSTRY OF

PAKISTAN

PRESENTED BY MEHREEN KADIRAISHA ISHTIAQ

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SPORTS GOODS INDUSTRY OF PAKISTAN

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SPORTS GOODS INDUSTRY

OVERVIEW At the time of independence, this industry was in an infant stage with a nominal export of Rs.0.82 million. The Government took immediate steps to

develop this industry by providing loans and subsidies to the manufacturers and arrangements

were made to market the manufactured goods. Since then, the industry has flourished locally and enjoys good reputation in the international markets as

well.

Pakistan produces a wide range of sports goods, accessories, games and athletic equipments. This industry is one of the major foreign exchange earners for Pakistan government

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SPORTS GOODS INDUSTRY OF PAKISTAN The Sports Goods Industry contributes 5.33% to

the total exports of Pakistan, and its contribution to the

GDP is 1.31%. There has been an improvement in the management techniques as well as manpower

skills have also improved over a period of time, due to

the collaboration of international brand names like;

Adidas Nike Reebok

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SPORTS GOODS INDUSTRY OF PAKISTAN.

Number of total exporting units in Sialkot:

There are There are 30003000units.units.This figure included all manufacturing & exporting units This figure included all manufacturing & exporting units such as sports goods units, sports garments, general such as sports goods units, sports garments, general wear garments, sports protective items, sports wear garments, sports protective items, sports accessories, gloves, leather goods and garments, accessories, gloves, leather goods and garments, surgical instruments etc. Practically everything which surgical instruments etc. Practically everything which was being produced in Sialkot, was being exported.   was being produced in Sialkot, was being exported.  

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Share in national exports  

2000 – 01 3.15%   2000 – 01 3.15%   2001 – 02 3.44%   2001 – 02 3.44%   

Exports of sports goods:

2000 – 01 Rs.   16,461 Millions  2000 – 01 Rs.   16,461 Millions      2001 – 02 Rs.   17,405 Millions   2001 – 02 Rs.   17,405 Millions   

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Total members of PSGMEA:         

There are There are 400400 members of PSGMEA.  members of PSGMEA. Only the small units working in the SialkOnly the small units working in the Sialk7777ot needed the ot needed the services of Pakistan Sports Goods Manufacturing & Exporting services of Pakistan Sports Goods Manufacturing & Exporting Association. All the big units did not need the membership and Association. All the big units did not need the membership and support of the PSGMEA.  support of the PSGMEA.  

Small & medium productive sports units: This figure also do not include sports garments units. These This figure also do not include sports garments units. These 12001200 SMEs are really the back bone of the sports industry.   SMEs are really the back bone of the sports industry.  

Average percent-age increase in sports goods exports per Average percent-age increase in sports goods exports per year  isyear  is 7.45 % 7.45 %

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SPORTS GOODS INDUSTRY OF PAKISTANPRODUCTION OF SPORTS

INDUSTRY A major portion of the total production comes

from cottage and small scale manufacturing units.

The important items being produced are tennis racquets, hockey sticks, hockey balls, polo sticks, cricket bats and balls, footballs, Soccer ball, Volleyball, Handball, Beach ball, and numerous goods used in both in-doors as well as out-door games. Gymnastics/athletic items etc

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Some Famous Sports Goods Companies And Their Products CA SPORTS Famous for its cricket bats in the whole world Alberta Sports Pvt Ltd Alberta Sports (Pvt) Ltd.is the firm with FIFA

Approved Category Balls.   Ali Trading Co., Pvt. Ltd  Footballs Soccer, Handballs, Hockey Equipment And

Accessories, Boxing Equipment And Accessories, Sporting Goods & Equipment.

Assac Industries  , Volleyball, Weight Lifting, Sporting Goods &

Equipment.  

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Some Famous Sports Goods Companies And Their Products Awan Sports Ice Skating, Tennis Balls, Tennis Rackets, Volleyball, Sporting

Goods & Equipment Chenab Sports Pvt. Ltd. Hockey Equipment And Accessories, Cricket Equipment And

Accessories, Martial Sports And Karate Suits, Kick Boxing Accessories And Clothing, Boxing Equipment And Accessories, Sporting Goods & Equipment 

Eureka Industries   Soccer Balls, Volley Balls, Promotional Balls & Gift Items,

Outdoor & Sporting Items Halifax Woodwind Instruments, Music Products, Equipment &

Services  Kapur Pvt. Limited Sports Goods, Sports Toys, Soccer Balls, Volley Balls,etc

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Some Famous Sports Goods Companies And Their Products Khawaja Mir Volleyball, Weight Lifting, Sporting Goods &

Equipment Kicker Sports 

Footballs, Volley Balls, Indoor & Outdoor Balls, Promotional & Advertisement Balls, Track Suit etc

Nizam Sons Pvt Active wear Gloves, Bags & Luggage, Baseball

Accessories, Boxing, Cycle wear, , Cycling Accessories, Exercise Equipment, Fitness Apparel, Fitness Gloves, Football, Football Accessories etc

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THE EXPORTS Sports industry is lucky enough, to have brilliant record

of quality products of international standards as well as excellent performance of continuous expanding export-base for Pakistan

Approximately 240 sports items are manufactured and exported from Sialkot to about 130 countries of the world and the total value of sports goods at international level is about US$25 billion

IN 2002 sports goods from Sialkot worth to Rs11039 indicating 16.91% increase in foreign exchange as compare to last year

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Major Importers The major importers are; Indonesia, Hong Kong, Thailand, Korea, Vietnam, USA, Europe, UAE

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Porter Diamond Model Analysis Of Sports Industry

OVERVIEW:

Porter is a famous Harvard business professor. He conducted a comprehensive study of 10 nations to learn what leads to success. Porter believes standard classical theories on comparative are inadequate or even wrong.

According to porter a nation attains a competitive advantage if the firms are competitive. Firms become competitive through innovation .Innovation can include technical improvements to the product or to the production processes. The four determinants of Porter’s diamond model are;

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Porter Diamond Model Analysis Of Sports Industry 1. FACTOR CONDITION: Refers to the inputs used as factor of production such as

labor, land, natural resources and the infrastructure. 2. DEMAND CONDITION: Refers to the sophisticated customers in the home

market. 3. RELATED AND SUPPORTING INDUSTRIES: Refers to the suppliers and related industries 4. FIRM STRATEGY, STRUCTURE, AND RIVALRY: Refers to the conditions for the organization of the

companies and the nature of domestic rivalry.

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Porter Diamond Model Analysis Of Sports Industry

FACTORS CONDITION:

Raw Materials:

The raw materials required for the production of sports goods, are leather, wood, glue, nylon guts, rubber and chemicals, cotton and synthetic material.

While the new materials like PVC and PU sheets are imported. 

The industry annually utilizes materials worth Rs.8 billion, including imported raw material.

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FACTOR CONDITION Labor: The Pakistan sports goods industry is a highly labor

intensive industry. The total number of persons working in the entire sports goods industry is about 300,000. The skilled and unskilled labor ratio is 70:30

Geographic concentration: Sialkot is the center for the production of sports goods.

Major industries units are located here. Capital: Since it is a cottage industry investment is made on a

small scale. The capital output ratio is 1: 0.75

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FACTOR CONDITION Technology: Pakistan needs to adopt new technologies in order to

compete with other countries Presently the technology statistics are:

Low technology 84% Medium technology 16% High technology -

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FACTOR CONDITION Tariff Structure: Raw material imported for manufacturing of exportable

sports products are exempted from custom duties and other taxes

Infrastructure: Inadequate infrastructure has remained a very

troublesome issue for this industry. Transport lags, with high costs becomes a major issue when competing with international competitors

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DEMAND CONDITIONS

DEMAND PATTERNS Most of industry’s consumers of sports goods are

between 15 and 35 years of age. Older consumers tend to purchase local brands, younger ones are highly devoted to name brand recognition and trend following.

ITEMS PURCHASED Cricket Bats, Hockey sticks, Basketball shoes and

clothing, in-line skating apparel, American sports teams’ baseball style hats, sports sandals, and sport t-shirts are the most popular items with the younger consumers. Older consumers prefer jogging shoes and golf apparel.

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DEMAND CONDITIONS Consumers: The purchases are not in large volumes. Furthermore,

the industry sets and creates the fads and determines what is "hot". Buyer countries include;

        Indonesia         Hong Kong         Thailand         Korea         Vietnam         USA         European countries

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DEMAND CONDITIONSSUBSTITUTES:

The threat of substitute products is basically low.

The industry is upgrading the products frequently to cope with fashion. There are not too many close substitute products .

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RELATED AND SUPPORTING INDUSTRIES SUPPLIERS: Since there are few companies so the bargaining power of

suppliers is medium to high. The product is unique, and the switching costs are high.

Presently, Pakistan is competing with India, Japan, Taiwan and South Korea in international market. Since the entry of Japan, Taiwan and Korea, the industry is tilting towards mechanization and the use of modern equipment,

SUPPORTING INDUSTRIES INCLUDE: Plastic Industry Leather Industry Paint Industry Textile Industry Rubber Industry

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RELATED AND SUPPORTING INDUSTRIES DIVERSIFICATION OF SPORTS GOODS: The following new sports items can be manufactured

through the existing sports manufacturing facilities at Sialkot:

Cycle Sports Products industries involve composite material units, Shoe Factories, Engineering, Clothing and Rubber units   .    Swimming Sports product industries involves plastic, rubber and clothing units.

       Water Sports Industries involves rubber, clothing and shoes units.

      Snow Sports Industries involves composite material, clothing and Shoes Industries.

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Snow Sports Industries involves composite involves composite material, clothing and Shoes Industries.material, clothing and Shoes Industries.

Golf Sport Products Industries involves leather, involves leather, shoes, engineering and rubber industries.shoes, engineering and rubber industries.

Tennis, Badminton, Squash involve composite involve composite material, shoes, clothing, plastic and rubber material, shoes, clothing, plastic and rubber industriesindustries.

Baseball Sports involves, metal, rubber, leather, involves, metal, rubber, leather, clothing and shoe industries.clothing and shoe industries.

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STRUCTURE OF INDUSTRY AND COMPETITOR’S ANALYSIS

Foreign companies are becoming more reluctant to do Foreign companies are becoming more reluctant to do business with Pakistani manufacturers, because of the business with Pakistani manufacturers, because of the negative effects on production schedules related to political negative effects on production schedules related to political and social unrestand social unrest

The industry is tilting towards use of mechanization and use The industry is tilting towards use of mechanization and use of modern equipment, which has resulted in tougher of modern equipment, which has resulted in tougher competition for manufacturers and exporters of sports goods competition for manufacturers and exporters of sports goods of Sialkot that it continues to compete in the global market of Sialkot that it continues to compete in the global market without a fully mechanized industry, relying mostly on old and without a fully mechanized industry, relying mostly on old and traditional production techniques.traditional production techniques.

Local production is not at a good pace, so as a proportion of Local production is not at a good pace, so as a proportion of the total sports apparel industry, local production plays an the total sports apparel industry, local production plays an increasingly minor role.increasingly minor role.

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STRUCTURE OF INDUSTRY AND COMPETITOR’S ANALYSIS

THE PROCESS THORUGH WHICH SPORTS GOODS PASS

INPUT: First stage is input so the basic raw materials

required for the production of sports goods, are leather, wood, glue, nylon guts, rubber and chemicals, cotton and synthetic mat. . As the sports goods are manufactured mainly in Sialkot so the raw materials like wood is obtained from the nearby artificial jungle known as Changa Manga situated near Sialkot. Inputs like leather are taken from the industries situated in Sialkot, Gujranwala

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STRUCTURE OF INDUSTRY AND COMPETITOR’S ANALYSIS

PROCESSING: Second step is processing which includes weaving,

stitching, crafting, cutting, polishing, knitting with the use of manual work and machine work.

OUTPUT Finally comes the output which includes Cricket Bats,

Hockey Sticks, Base Ball Bats, Wickets, Cricket Ball, Hockey Ball, Foot Ball, Sports Gloves, Boxing Gloves, Tennis Ball, , Volley Ball, Indoor Ball, Track Suits etc.

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STRUCTURE OF INDUSTRY AND COMPETITOR’S ANALYSIS

COMPETITIVE ANALYSIS Lower priced local or no-name brands have not

increased market share. Sources predict the retail segment of the market may soon see consolidation.

foreign companies are becoming more reluctant to do business with Pakistani manufacturers, because of the negative effects on production schedules related to political and social unrest. The stability of the macro-environment in the U.S., therefore, provides an attractive alternative for Pakistani importers and retailers

. Local production is not at a good pace, thus as a proportion

of the total sports apparel industry, local production plays a increasingly minor role.

There is perfect competition & therefore the market share exists more or less equally with the major companies.

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SWOT ANALYSIS

A SWOT analysis is a tool used in management and strategy formulation. It can help to identify the Strengths, Weaknesses, opportunities and Threats of a company.

Strengths and Weaknesses are INTERNAL FACTORS that create value or destroy value. They can include assets, skills and resources that a company has at its disposal, compared to its competitors. They can be measured using internal assessments or external benchmarking.

Opportunities and Threats are EXTERNAL FACTORS that a company can not control. But they emerge from either the competitive dynamics of industry or from demographic, economic, political, social, legal, technical or cultural factors.

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STRENGTHS This sector of the Industry enjoys status of praise worthy

back bone of the economy.

Pakistan is the most dominant brand in the football industry. Pakistan hold first position when it comes to the supply of soccer balls while it enjoys second position in the supply of sports gloves.

This industry is one of the major foreign earners for Pakistan.

The basic raw material required for the production of Sports goods like leather and wood are available in abundance in Pakistan.

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STRENGTHS Pakistan has a unique competitive edge in the global

market because of its sports goods

The monetary and other incentives are provided by the government

This sector was declared as one of the seven-priority sector which focuses its strength

Pakistan is competing with India, Japan, Taiwan and South Korea in international markets.

Media is a vital source of increasing sports goods demand .According to a news item published in a leading English daily, nearly 70% of TV viewers in urban Pakistan takes an interest in watching sports on TV

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WEAKNESSES WEAKNESSES Inadequate infrastructure has remained a very big

problem

The entire industry is more or less concentrated in a specific geographic area

The industry in not expanding and many people remained unemployed.

Soccer ball industry of Sialkot was alleged some time back by foreign print and electronic media to involve child labour in the stitching of balls

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WEAKNESSES Delay in the cargo-based airport at Sialkot and need for

up gradation of road links.

No sufficient foreign investment

Non-existence of Plastic & Rubber Technological Center at Sialkot.

There is a certain dearth of professionals in the field of sports marketing in our country in general and in hockey in particular.

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WEAKNESSES. . Promotion strategy was being neglected as more than

80% of the companies were neither having separate advertising departments nor any contacts with any advertising agency. Only few companies had the web site.

. The industry waits helplessly for the foreign export orders. This practice discourages them to adopt aggressive marketing approach.

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OPPORTUNITIES

Punjab Small Industries Corporation (PSIC) has prepared a multi-dimensional plan for setting up “Product Development Centre (PDC) for sports industry in Sialkot costing 80 million.

The proposed Product Development Centre (PDC) would lead the industry by acting as a vital knowledge centre catering to a wide spectrum of needs ranging material selection to final product setting. PDC consists of dies and molds workshop, proto development shop, testing laboratory and training development. The PDC will be manned by highly skilled human resource which would be providing training, technical advice, common services, testing, entrepreneurship service.

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OPPORTUNITIES Market diversification and expansion into international

markets in search for new potential customers. Market leadership with effective research and development strategies.

The strategy development is being finalized the detailed discussions with the local industry, trade associations and chamber of commerce and industry.

The SMEDA has also pinpointed the some hurdles that have stalled successful entry of local entrepreneurs in Sports industry due to lack of knowledge about new materials and process, high capital cost in setting up units, lack of skilled labor, poor knowledge in production of dies and molds and absence of testing facilities.

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THREATS

The sports goods industry of Sialkot is facing a big test to successfully encounter the challenge posed by introduction mechanized ball called “Roterio Ball” which has already been played in European Championship 2004. The sport industry needs financial and technical support from the government to effectively face this ominous challenge.

Markets aren’t reliable, as one would hope them to be. Clients and choices are often changing hands, making the sustenance of this industry quite unpredictable and volatile.

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THREATS

High tariffs and other non-tariff regulations may be imposed on foreign manufactured goods

Manufacturing and labor costs will increase in South East Asia, and Reebok will confront higher costs of goods sold accounts, which will directly impact on the net income.

International competitors are trying their best to beat this industry by hook and crook. If international competitors in future are successful to manage to control the majority of existing distribution channels of sports industry of Pakistan, will face a big problem

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RECOMMENDATIONS

The industry should devote more resources to the promotion of their products and to establish its own distributions channels

It is the need of the hour that the “Private and Public” sectors should join hands so that sports industry can adopt certain standards like quality parameters etc

There are some areas like technical training, forceful marketing techniques in which government can play an instrumental role for the uplift of the sports goods sector.

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RECOMMENDATIONS

The industry needs to get rid of the problem of child labor, which is causing it many problems including problems of export because foreign countries have now refused to buy goods, which involve using child labor.

With the coming of the WTO, the sports goods industry needs to quickly improve quality and production level, as countries are no more going to be bound to buy Pakistani products.

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RECOMMENDATIONS

Separate “Research and Development” and “Advertising” departments should be made.

The industry should emphasis on hiring the skilled labors and professionals. For this purpose training institutes must be developed for workers and workshops should be conducted.