SWOT Analysis of Pakistani Furniture Industry

SWOT Analysis

Strengths

 Skilled Labor Force
 Wood seasoning facility centre is available
 Suppliers of raw material are available
 Local tools available
 350 furniture manufacturing units
 8,000 people (approx.) are directly and indirectly attached with this occupation
 Strong historical background of craftsmen

Weaknesses

 High cost of production due to high rate of raw material
 Lack of educated, certified and professionally trained, work force
 Unavailability of ready to use raw material
 No Designing and R&D facilities available
 Unawareness of Social compliance and Environmental issues
 Unawareness of any quality control and standards
 Lack of international marketing skills
 Unavailability of ready-to use seasoned wood
 Constraint of Technology
 Fluctuating prices of the raw material.

Opportunities

 Technical up gradation
 International exhibitions
 International warehouses
 Networking & linkages of cluster players/stakeholders
 Development of consortiums with specified objectives

Threats

 Migration of trained work forces from the sector
 Raw material cost increase (shortage in the stock of Sheesham wood at any stage
because no further plantation as required)
 Import of low price articles from China and India
 Instable political set up of the country.


Investment Opportunities

 Chip/Hard Board Manufacturing
 Win Board Manufacturing
 Particle/Veneer Board
 Flush Doors/Windows
 Small wood seasoning plant
 Furniture Design Center

Kinds of woods in Gujrat Cluster

Kinds of Woods;

Following different types are available to cluster

 Sheesham
 Deyodar
 Popular
 Pertal
 Chilgoza

The woods that are fashioned into furniture fall into following three categories:

1. Hardwoods
2. Softwoods
3. Composites

Even the term 'hardwood' or 'softwood' is deceptive. Hardwoods aren't necessarily harder, denser material. For example, balsa wood is one of the lightest, least dense woods there is, and it's considered a hardwood. Technically, lumber is classified based on how the tree reproduces. As a general rule, though, softwood trees are evergreen year round while the hardwoods create the gorgeous autumn foliage that we all love so much.

Hardwoods are considered the highest quality and are the most expensive. Their natural colors vary from the darkest woods to the lightest ones and they can be stained or painted for even more variety. Hardwood furniture is least likely to warp or bend and is prized in all high quality homes. The five woods most commonly used in furniture production are cherry, walnut, oak, maple and mahogany.

Softwoods are less expensive than hardwoods, but they require extra care. Because they are less durable, it's much easier to scratch or dent softwood furniture. In addition, they often don't have the beautiful grains of a hardwood, and therefore don't stain as beautifully.
Pine is an example of softwood that is commonly used for furniture. These woods are often used in construction as well so the choicest pieces are reserved for furniture. In construction, knots and splits are common. Lots of construction lumber will not accept paint and this kind of wood is used for shelves or packing crates.
The softwood used in furniture is designated as "Appearance" lumber and includes most softwood lumber that has been custom milled to a pattern or otherwise surfaced on all four sides.

Composites are the cheapest form of wood and are literally manufactured, rather than grown.

Plywood: multiple layers of thin wooden sheets are glued together and pressed. Plywood is strong and resists swelling, shrinking and warping. There is some furniture made directly from plywood, but generally it is only used as a support when incorporated into furniture.

Particle board: sawdust and small wood chips are mixed with glue or resin which is then shaped and pressure treated. When used for inexpensive furniture, particle board is usually covered with laminate or veneer. This is necessary because particle board splits easily and the laminate prevents splitting. However, the downside is that the laminate may separate from the wood because the particle board responds to temperature and pressure changes by swelling and shrinking.

Hardboard: is made like particle board but it's placed under higher pressure so it's stronger.

MDF or Medium Density Fiberboard: wood particles are bonded with resin and compressed. It is harder than particle board or hardboard, and can be cut like plywood although it isn't as strong as plywood. Some MDF is covered with melamine which is a durable plastic in a variety of colors. The exposed edges of MDF are rough and needcovering with molding or some other decorative material.
Technically, furniture made from all of these wood products is "real" wood furniture, even the composites. Prices and quality range from the hardwoods down to the composites. The higher you go up the spectrum, the more you can expect to pay for your wood furniture. The good part, of course, is that with proper care hardwood furniture will last for decades or even generations. If you can afford it, always choose hardwood furniture.

Major Furniture Cluster City of Pakistan-Gujrat-2

Other Cluster Actors
Following are the supportive actors of the cluster.

Hard Board/Plywood/Chip Board
As mentioned before, these items are also used in the manufacturing of the furniture. The supply sources of these items to Gujrat cluster are the different plywood factories in district Gujrat and Jhelum. These factories include KDC Plywood Factory Jhelum, National Plywood Factory Jhelum, Chenab Particle Board Alipur Chatha, Plyfo Industries Alipur Chatta, Islamabad board Hattar. These items are sold on the hardware shops in Gujrat.

Foam & Cloth
Foam and Cloth are used in sofa sets, chairs and the bed sets. These are 15% of the total quantity of raw material used in the furniture manufacturing.

Glue/Nails/Screws/Accessories
These items are about 5% of the total raw material used in the furniture manufacturing. These are also sold at the hardware stores in the city. There are different varieties of the accessories available in the market. These include local as well as foreign made accessories.

Paint/Polish/Other Related Material
These include about 15% of the total raw material used in the furniture manufacturing. These materials are available at the hardware stores as well as the agents of the different companies sell these materials directly to the furniture manufacturers.

Sales Distribution Channels
There are different sales distribution channels of furniture industry of Gujrat. The medium sized and the small sized units have their showrooms on the G.T road, Sargodha Road, Railway Road and Gujrat Bypass. The micro sized manufacturers don’t have their own showrooms, so they are dependent on the other two categories for their furniture sales. Around 10% of the total furniture manufactured is sold in Gujrat. The rest 90% of the furniture is sold in the other cities like Lahore, Sialkot, Gujranwala, Rawalpindi, Islamabad, Peshawar, Karachi, Quetta etc. Medium sized units have made their sales points (showrooms) in Lahore & Rawalpindi and certain other cities. Most of the furniture that is sent to the other cities is sold to the traders who have their own showrooms. A small quantity of furniture is also exported to different countries but this export is dependent on the personal contacts of the manufacturers.

Current Cluster Scenario
Furniture industry is developing gradually at its own and the idea of setting up showrooms on G.T Road, and Gujrat By-pass is increasing. The estimated overall furniture sale from Gujrat is about Rs. 250 million per annum. This figure is gradually increasing with the increasing demand and quality consciousness of the consumers.

There are around 350 units overall and over 8,000 persons are directly or indirectly involved in this sector. At the moment, a few of the local furniture manufacturers are exporting furniture items to the individual clients in UK, US, Saudi Arabia and Middle East. The total export of Furniture from Gujrat is about US$ 4.5 million. (Directorate of industries), however due to limited production capacity these firms are not able to fulfill the large export orders and hence can not compete vigorously in international markets. China and India are the major competitors. Their prices are less and quality is better.

Sheesham wood which is basic raw material is short in supply to fulfill the local market requirement. This shortage has caused a price hike. There is no schedule rate of wood in the market.

Major Furniture Cluster City of Pakistan-Gujrat-1

Real wood furniture is the most popular furniture in existence. It's been around for hundreds of years and probably existed when the cave people got tired of squatting on the dirt floor of their caves and looked around for a better way. Furniture industry is developing gradually at its own and the idea of setting up showrooms on G.T Road, and Gujrat By pass is increasing. The estimated overall furniture sale from Gujrat is about Rs. 500 million per annum. Furniture cluster of Gujrat is famous for the production of quality wooden furniture. Gujrat was known for its furniture manufacturing even before the independence because of the availability of cheap skilled labor. Presently most of the manufacturers are depending on traditional method (labor intensive technology) that results in the low productivity. Following are the categorization of the Units with respect to capacity of the major cluster Gujrat.

Micro Sized Units
According to the statistics provided by the industry, there are about 300-325 micro sized units involved in the business of furniture manufacturing. The number 300 include all the units that are either directly or indirectly involved in the furniture manufacturing. These units are vertically integrated and are involved in the different stages of furniture manufacturing. Some of these units also have organized themselves in specialized products manufacturing, i.e. one unit is producing only one kind of products not all the products (e.g. a unit producing chairs will only produce chairs). The furniture manufacturing units are selling their products in semi finished and finished form in Gujrat as well in the other cities.

The small-scaled units can be further divided into:

 Saw Mills
 Furniture Manufacturers
 Upholstery Units
 Polishing & Finishing Units

Small Sized Units
Gujrat furniture cluster consists of about 35-40 small sized units. These units manufacture the furniture themselves as well as depend on the micro sized units for their manufacturing requirements. In the second case these units buy the semi finished furniture from micro sized units and then finish these products. These Units have their own show rooms to display their finished products. Most of their sales are domestic (inside country) but a few of them are also involved in the exports. These units have workers ranging from 15 to 50 in number depending upon the amount of work. These units sometimes also hire workers on contract basis in case of more orders.

Medium Sized Units
Gujrat cluster consists of 4 to 5 medium-sized units. These units can be called as the market leaders because of their level of achievement. Most of these units are operating at least for the last 30 to 40 years and have developed a lot during this time period. These units can be called self-sufficient because they have solved most of their problems and issues related to production. These units have workers ranging from 50 to 100 in number depending on the work load.

Employment Generation
According to the estimates provided by the industry there are about 7,000 to 8,000 persons in Gujrat that are directly involved in the furniture manufacturing. These persons can be divided into the categories of carpenters, polishers, upholstery workers and the general laborers. As far as the training of this work force is concerned, there is no specialized training institute for furniture workers in Gujrat except for the wood working service center but this center is producing only 10 certified furniture workers per year. These workers can work as supervisors but the quantity is negligible as compare to the demand of supervisors and skilled workers in the cluster.

Total Production
The estimated annual wood consumption is around 350,000-400,000 cubic ft. The average cost of this wood is around Rs. 160 million calculating on the basis of 400 rupees per cubic foot on an average. Besides this around 100 million of manmade material is also used. Hardly, any source available to gather the anticipated growth rate. Estimated growth figure is around 10%.

Capacity Utilization
Capacity utilization of the existing unit is not sufficient even to meet the demand of the domestic market. It is below 50%. None of the unit has the capability to produce goods at mass level. Even the medium sized units take minimum 3-4 months for an order. Sufficient gap exists and it is increasing day by day with the increase in the population of the country.

Furniture Clusters in Pakistan-2

Gujarat

There are about 300 units (including shops) in Gujarat associated with this sector. The sector breakdown shows that majority of the sector is based on 225 to 250 micro units, 40 to 50 small units and 5 medium sized units. There are approximately 7,000 to 8,000 people directly employed in this industry. Gujarat is well known for its top quality furniture all over Pakistan. A few units are exporting furniture to different countries including, UK, USA, Saudi Arabia, Middle East etc. The total export of Furniture from Gujarat was about US$ 4.5 million. (Directorate of Industries). However, due to limited production capacity these firms are not able to fulfill the large export orders and hence can not compete vigorously in international markets. China and India are the major competitors. Their prices are less and quality is better.

Karachi

Furniture items produced in Sindh comprise of chairs, tables, musical instruments and other items like doors and windows. During the last decade, the units have started diversifying their products into office and kid’s furniture, which is designed more trendy designs. At present there are two main clusters of small furniture manufacturers in Karachi, i.e. Manzoor Colony and Akhtar Colony. There are some 1,200 to 1,300 units in these clusters that have employed almost 6,000 to 7,500 people.
The machinery used includes four basic tools/ machines for furniture making. The average wood requirement of each of these units is around 150 to 200 cubic feet per month. Wood is purchased by unit owners and seasoned naturally. This market mostly caters to the needs of the domestic market and because of the poor finishing/polishing quality the furniture manufactured here is not exported.
Two smaller clusters in Patelpara and Liaquatabad are also engaged in the manufacturing of low quality (MDF and Keekar wood) furniture. Almost three hundreds small/micro units are operating in these areas. Ayshamanzil, Arambagh, Nursery, Liaquatabad and Manzoor Colony are some of the major furniture retail markets in Karachi selling hardwood, steel, MDF furniture. The prices of raw material fluctuate tremendously and quality raw material is scarce. Seasoned quality rosewood trades at around Rs 650 to Rs 850 per cubic ft. American Oakwood and Burma teakwood can be purchased at a price of Rs 2,400 and Rs 3,200 respectively in this market.
Lacquer work is another powerful traditional craft of Sindh. These items have grown popular over the time period. However, furniture items are simple in design. Articles such as table lamps, chairs and sofa sets produced by Lacquer industries of Hala in Hyderabad district and Kashmir in the Jacobabad district are very popular.
Moreover, these areas are also in close proximity from retail markets. Majority of the wooden furniture manufacturing units are classified as small and medium sized having small and specified production. Most of the manufacturers do not have the complete manufacturing facilities to manufacture the complete range of products. The orders are sub contracted to independent workshops for manufacturing. This reduces the capital cost of the manufacturer but increases the quality control cost.

Furniture Clusters in Pakistan-1

There are some furniture clusters working in different countries in Pakistan.

Lahore

The Lahore cluster is basically based on the traders of wooden furniture. There are more than 1,500 retail shops trading in MDF furniture, office, bedroom and living room furniture. However, in the last decade this market has diversified its product range to all kinds of furniture articles. These traders usually purchase furniture in semi-finished form from Chiniot and polish and upholster it in their workshops. However, there are around 100-200 small cottage sized workshops in Lahore are engaged in wooden furniture manufacturing. There profit margins are quite high as all the value addition is done in Lahore according to the requirement of the customers.
Majority of these manufacturing units use low-tech machinery which are either locally made or are second hand imported machines. However, some furniture manufacturers have established a production line based on new modern machinery and seasoning kiln facilities. On average each manufacturing facilities employs 5 to 20 workers depending on its scope of work.
At present there are around five large clusters of furniture markets within Lahore i.e. Fortress Stadium, Gulberg, AIlama Iqbal Town, Ferozepur Road and Multan Road. These markets mostly cater to the needs of the domestic market. Because of the poor finishing quality and inferior packaging the exports are not existent or negligible.

Chiniot

Although Chiniot wooden furniture industry is approximately 150 to 200 years old, but still remained at cottage sized scale. There are almost 3,000 to 4,000 manufacturing units in Chiniot, which use primitive technology and techniques for manufacturing. Around 40,000 people are directly employed by this industry. The demand for this kind of furniture is increasing in the international market.
Chiniot is a major cluster engaged in the manufacturing of handmade wooden carved furniture. The basic raw material used for hand carved furniture is Sheesham wood, which is under an attack of an unknown kind of disease. This has resulted in a shortage of raw material and increase in its price.
The stakeholders can be categorized into manufacturers, craftsmen, traders, timber merchants, exporters, transporters and financial institutions. The number of skilled craftsmen is declining, which is creating severe shortage in the industry. The semi-finished items (Kora) are sold to all major cities throughout Pakistan. Direct export from this industry or cluster is negligible.

Some Recommendations for the Furniture Producers

Enforcement of the rule of law and good governance on timber cutting and trade. Eradicate illegal and rent-seeking behaviors of Forestry Department officials, if such misconduct is proven.

Sustainable raw materials. A plan is needed to create and develop a sustainable source of wood raw materials. Forestry/reforestation programs should ensure a stable source of low cost raw materials, and to the extent possible maintain or improve ecological conditions, enhance the community income and employment, etc.

Product quality. The quality of furniture is determined by professionalism in the handling of raw materials, production techniques and manufacturing process. Due to insufficient skills and facilities, as well as the lack of quality standards and agencies conducting inspections, quality is bound to suffer. Quality enhancement and Standardization is thus needed, and all furniture manufacturers should preferably adhere to the quality management system (ISO).

Design. Creation of easily accessible design libraries in each major furniture cluster of the country would disseminate effectively new designs. The items collected could include trend reports, contemporary design books, consumer magazines, mail-order catalogues, trade publications, raw material samples, etc. Training programs and exchange of foreign designers can be an integral part of this design upgrading.

Human resources. Even if labor force is abundant, lack of technical capabilities can hinder competitiveness. Public support to vocational training for workers in factories is recommendable, in order to reduce direct training expenses of enterprises, and for managers to allow them to professionally grow with their businesses.

Market information. Access to information on market characteristics (for example trends in distribution, retail success stories, and new furniture marketing concepts) and market access (tariff and non-tariff barriers) is often very difficult. It would thus be useful to centralize this information (into Furniture Exporters’ Association level) for regular distribution.

Marketing activities. The furniture industry should focus on marketing activities in key markets (the United States, Japan, the European Union, and the Gulf). A concerted action should include exhibitions; websites; international trade fairs; in-depth market analyses, etc. Special encouragement may be warranted for importers and retailers’ buyer’s groups to visit Pakistani factories or Permanent Exhibition Halls. Marketing efforts in the booming Gulf markets should be intensified.

Potential Benefits of Global Value Chains for the Developing Countries-Furniture

Furniture firms across Asia are becoming partners in global value chains (GVC). It can be an important catalyst in learning and adapting more advanced technologies. It can also enhance the managerial and business development processes. The benefits of trade liberalization that are accompanied by the establishment of international supplier chain arrangements between firms in the industrial and less developed countries are estimated 10-20 times larger than those without such networks.
There are at least the following mechanisms on how furniture industry in developing countries can improve their position by engaging in GVCs:

· Adherence to “just in time” global networks requires the improvement of efficiency in transports and communication infrastructure and for a stable business environment.

· GVCs can enable firms to enter global production networks more easily, allowing them to benefit from globalization, climb the technology ladder, and gain wider access to international markets.

· GVCs provide firms with a wide spectrum of options to operate in global markets with a view to staying competitive.

· GVCs offer a way for local enterprises in developing countries to engage in international markets at their own level of capability.

Critical Success Factors & Elements for Furniture Industry

A focused furniture sector strategy would help in allocating resources to where success can be reached.

Pakistan will not be competitive in mass furniture segments. Authenticity and material knowledge should be made to work for the competitiveness of “niche” or “ethnic” furniture for the higher end of the market. Good example: the Philippines.

Good value for price, timely deliveries and proper after-sales service are needed for keeping competitive at the special niches like antique/traditional ethnic furniture markets.

New furniture collections will have to be created at shorter intervals in order to keep pace with market opportunities.

Creating original designs and attractive branding are necessary for moving to higher price points. Design should provide real added value to the product. Brand should be the flag to catch the attention of buyers.

Avoid using wood raw material that comes from illegal or unsustainable sources, as products thereof are subject to trade barriers and retailer resistance.

The following social safeguards can be added here

· Avoid the reputation of inferior social conditions and child labor (not really an issue due to strictly regulated labor rules in Pakistan).

· Refer to the ILO basic working condition convention on occupational health and safety measures as a guideline.

As far as the social or labour conditions are concerned, no buyer’s local code of conduct can be imposed on a developing country producer as a mandatory measure. No such mechanism exists by international law. On the other hand, many of buyers’ groups and large retailers set similar “voluntary” agreements on a bilateral basis: their main interest is, however, not to become under the stigma of retailing “sweat-shop” products.

Elements of success

Pakistan should look at other successful role models when figuring out a certain set of success elements for developing the furniture industry and trade. Peninsular Malaysia is one of the world’s leading exporters of furniture from the tropical region, greatly thanks to its success in rubber wood development. Important lessons could be learned from the Malaysian experience, even though success factors cannot be repeated as such. Even in Malaysia this has not been the case in Sarawak and Sabah, which have not yet joined the Peninsula’s success story in adding value to their timber.
One disclaimer is, however, that even Malaysia has been over-using its domestic wood resources in the past. Easy money was made by exporting logs and sawn wood to the big Asian markets. Only the last ten years have raised the country to the main league of furniture exporters.

Federation of Pakistan Chambers of Commerce & Industry -FPCCI

The Federation of Pakistan Chambers of Commerce & Industry (FPCCI) (www.fpcci.com.pk ) was originally formed in 1949 by Mr. G Allana, with headquarters in Karachi but its membership then was confined to a limited number of bodies. The Federation of Pakistan Chambers of Commerce & Industry (FPCCI) is the supreme among all trade and industrial bodies in the country. It enfolds all chambers and all country-wide associations representing specific trades and/or industries. Indeed, it is compulsory for all chambers and associations of commerce and industry to become members of the federation.
Being federal in its constitution, the federation takes up only such issues and matters as concern the country's trade and industry as a whole; in other words, the interests of all chambers and associations put together, e.g. economic planning, investment schedules, tax policy, money and credit transport and communication, export promotion, organization of general trade missions to foreign countries, receiving general trade missions form abroad etc. Matters concerning specific trades and/or industries (e.g. cotton or steel) or individual firms and companies are left to associations and local and regional chambers.
The head office of FPCCI is based in its own building, the Federation House, spread over an area of 11,666 sq. yards in a posh locality of Karachi, Clifton, over-looking the Arabian Sea. FPCCI has zonal offices in Lahore and Peshawar, which mainly deal with the provincial governments. FPCCI has a branch office in Islamabad to liaise with the federal government.

FPCCI offers the following services:

· Trade promotion

· Cooperation agreements

· Bilateral trade committees

· Standing committees

· Exhibitions

· Export trophy awards

· Arbitration

· Pakistan Shippers’ Council (PSC)

· Pakistan International Freight Forwarders’ Council (PIFFC)

· Trade delegations

· Pakistan's trade missions abroad

· International symposia/seminars/workshops

Small and Medium Enterprise Development Authority - SMEDA

The premier institution of the government of Pakistan under the Ministry of Industries, Production and Special initiative, SMEDA (www.smeda.org.pk ) was established in October 1998 to take on the challenge of developing small and medium enterprises (SMEs). With a futuristic approach and professional management structure it has its focus on providing an enabling environment and business development services to small and medium enterprises. SMEDA is not only an SME policy-advisory body for the government of Pakistan, but also facilitates other stakeholders in addressing their SME development agendas.
SMEDA’s head office is in Lahore. There are regional offices in Lahore, Karachi, Peshawar and Quetta.

SMEDA offers the following services:

· Assistance in raising finance

· Financial advice

· Project identification

· Business plan development

· Technical advice

· Marketing advice (branding, labeling, packaging, distribution, promotion, etc)

· Company incorporation, export registration and regulatory advice

· Sales tax, custom duty, excise duty, etc

· Training and development

· Information services (library, databases, project briefs, pre-feasibilities)

· Business matchmaking

Trade Development Authority of Pakistan - TDAP

In late 2006 the Trade Development Authority of Pakistan (TDAP) (www.tdap.gov.pk ) succeeded the Export Promotion Bureau (EPB) as the primary agency engaged in the promotion and boosting of export. Since EPB's inception in 1963 as an attached department of the Ministry of Commerce, it has continued to facilitate exporters in overcoming difficulties faced by them on the supply and demand side of exports.
On the demand side, TDAP helps exporters to participate in exhibitions abroad and sends delegations to export markets with a view to exploring new markets and developing the traditional markets. On the supply side, TDAP has established over 32 training institutes and projects in various export sectors to train necessary manpower that can manage the export trade and industry professionally, meeting the requirements of the export markets. Export promotional activities are carried out in co-ordination with trade bodies at home and Pakistan's trade missions abroad. TDAP has its head office in Karachi, the city which is also a main industrial and commercial centre and a major export outlet of the country. TDAP has a staff of around 800 of which close to 600 are permanent.
Services provided by TDAP are as follows

· Export facilitation committee

· Resolving problems in exports

· Simplification of procedures

· Export procedures handbook

· Establishing buyer-seller contacts

· Fax on demand and the website

· Interface with chambers/trade associations

· Settlements of trade disputes

Regulatory services include the following

· Formulation of proposals for the trade policy

· Implementation of the trade policy

· Textile quota management

· Registration of importers/exporters

· Registration of export contracts

· Determination of minimum export prices

· Issuance of GSP certificates

Functions of TDAP are listed below

Marketing

· Market Research

· Fairs and Exhibitions - local and international

· Trade delegations

· Overseas and local publicity

· Participation in trade-related events

· Expo Centre - holding of exhibitions

· Facilitation through trade officers abroad

· Seminars/conferences/workshops

Communication

· Publication of trade inquiries/opportunities

· Library

· Export intelligence bulletin

· Counseling

· Year Book - statistics

Human resource development

· Training institutes

· Seminars on ISO 9000 and 14000

· TQM

· Social sector concerns

· Environmental concerns

Shortcomings at Company Level to Export-2

Design

Much of the value of furniture is made in the design phase. Manufacturing or carving is supposed to transform a drawn design into a functionally and/or aesthetically performing product. Proper design training is non-existent.
Design capacity in Pakistan is declared as being very fragile and mostly based on ancient traditional ones (sold “as they are”), or copied designs from buyer’s photographs or magazines. Usually detailed design or technical drawings are not deployed to convey the design onto wood components.
Clear and uncomplicated are the words currently used to describe the wooden household furniture fashion. Rustic or country designs have fallen out of style in the last couple of years. Asian themes appear to be appreciated, what may be a positive notion for Pakistan. But reddish, shiny lacquer finishes are a past trend to a large extent. The interpretation of such current design trends should be expedited in Pakistan, if a modernization of furniture trends is sought for.
Function also continues to influence design at market as LCD/plasma TVs are incorporated into home entertainment and bedroom pieces. Taller dressers offer better viewing of the TV from the bed. Home entertainment centers are made with taller TV carts to raise the unit to a better viewing height and allow more storage underneath.

Finishing and lacquering

Finishing tends to be a common bottleneck for furniture coming from developing countries. The quality of final polishing of carvings needs to be improved, as well as the consecutive painting and lacquering. It should be understood that these work processes are none less important than the actual carving. On the contrary, a bad finish can lower the value of the product, and downgrade unnecessarily the carver’s skilled input. Too much variation in blending the colors, paints and solvents is routinely observed. These should follow controlled standard procedures for uniform quality.
Matte finishes are currently well accepted in decorative small furniture items (so-called occasional furniture). But in larger household furniture items the situation is more mixed. Antiquated or natural (visible grain patterns) surfaces have been in fashion in the recent years, and this trend has certainly not been marked by all producers. The shiny or satin lacquered surfaces are still the common norm in many producer countries, but pretty much out-dated in the overseas markets.
Closely linked with the former observation is the technical inadequacy of some key equipment. For instance, if the compressors used for spraying the lacquer is too weak, no proper finishing quality can be achieved. Brush-painting consumes more lacquer and should be avoided. Human health is a growing concern in wood lacquers, and it should be taken seriously into account by exporters to Europe, for example.

Shortcomings at Company Level to Export-1

These comments are made on the basis of documentation received from Pakistan, and from literature and previous studies.

Raw material recovery

Raw material recovery rate needs to be better monitored. It is not only affected by drying defects or fungal diseases of wood, but also if over-sized stock of wood is used, if the log form is difficult to saw, or if basic machining is of inferior quality.

Kiln-drying

Air-drying in the open is commonly used in dry and warm countries. It yields well-seasoned wood with a relatively long drying period (easily 6-24 months depending on country/condition/type of timber). The downside is that it locks up capital idle for that period, and makes it difficult to respond to new market opportunities quickly enough. Production planning can be very difficult if drying periods are lengthy or unpredictable.
It is imperative to use timber that has attained the equilibrium point of moisture content, preferably below 10%. This will help avoiding structural weaknesses of furniture and chairs, and other excessive rejects during production. Less customer reclamations will be received as a consequence.

Tool maintenance and its impact on quality

Tool maintenance is a crucial part of the wooden craft profession, because it enables efficiency and consistent quality in the work. There is reportedly some degree of negligence in this aspect in Pakistan. Tool maintenance often seems to be the responsibility of an individual worker rather than the company.
It has to be remembered that the raw material characteristics also influence tool wear. As wood density and extractives content rises, greater amounts of processing time, energy and tool wear are consumed. Tool material, tool design and tool geometry are the principal criteria to be watched. These may have to be changed if the common wood raw material is replaced by another type of wood.

Access to market information

Broadly speaking, Pakistani furniture firms suffer from a poor access to up-to-date market information. Non-systematic gathering of such info leads easily into inability to assess its reliability and put it into proper use. Therefore, the importance of a continuous flow of market information flow cannot be emphasized too much. Its collection and dissemination is an activity of its own, which requires external resources and dedicated staff to be beneficial for the industry.

Possible Solutions for the Shortcomings and Obstacles

At company level

In-house training programmes should be organized. This will create awareness among the employees and equip them with the latest skills and techniques. This will improve the quality of labor and as a result, better quality furniture would be produced.

At country level

EPB/TDAP should give attention to this sector by organizing exhibitions, seminars, inviting delegates from abroad for the exchange of knowledge. Until now, the exhibitions organized have produced no results. The participation fee for these exhibitions should be minimum. More incentives should be given for participation. Proper marketing should be done before the exhibition. No fee should be involved in putting up stalls. Without proper planning by EPB/TDAP, the majority lose great opportunities. EPB/TDAP should also do market surveys and stop the Forest Department from stealing wood and exporting it illegally. The newsletters and other advertising done by EPB/TDAP is not enough.

Labor law should be introduced which would put restriction that no company can take way other company’s labor by offering good options. Some of them are also moving abroad.

Re-plantation of forests should take place; this would reduce the cost of production.

Display houses should be made in various exporting countries where Pakistani furniture can be displayed. In this way, the foreign buyers can get a chance to physically see, feel and check the product. In addition, the exporters will not have to make a lot of effort in putting up shops.

The government should pay attention to potential big empty places ideal for setting up workshops such as the Bin Qasim Industrial Zone. This would definitely solve the problem of less space for storing furniture.

SMEDA, Chamber of Commerce and Industries and APFEA should pay special attention.

Loan facilities should be given. The rates of loans should be reduced so that every exporter can benefit from it and have more running capital.

The government should import the latest machinery for furniture exporters. Duties should be reduced to a minimum. This would greatly help in improving production.

Shortcomings to Export

At company level

Focus on HR training: Companies have never given attention to this front. Training HR would have a very positive impact on not only the quality of product but also each worker would get paid according to his capabilities.

Work on job security of their workforce. In order to remove discontent of labor force, companies should give them all possible rights

Focus on improving quality of raw material. Currently, the quality of material is not good. A lot of time and efforts are taken to search for good quality wood. In this way, order does not reach on time and the buyer has to face a lot of dissatisfaction even before receiving the shipment.

At country level

Reconciliation of export policies: The government has shown no interest in this sector. Every company is suffering in a different manner. End result: loss of million of dollars.

Qualified individuals should be given full chance to stay in Pakistan by opening all kinds of opportunities rather than creating an atmosphere for them to shift abroad

There should be one-window operation to reduce the delay in the finalization of settlements

The government should monitor the market. It should check material and give attention to prices. Raw material (wood, boards, etc.) should be available at reasonable prices. As a result, good quality and cheap material would be available for exporters.

The government should penalize exporters producing poor quality furniture. This would help in eliminating exporters producing low quality furniture and the image of Pakistani companies would improve.

Obstacles to Exporters

At company level

Raw material is diseased; its cost is high and it is of sub standard. As a result, low quality of furniture is produced. Companies have to suffer severe loss.

Quality of labor is deteriorating, as they do not get proper training. Consequently, the quality of work produced is low.

This wood is very important, there’s no replacement. As a result, sales are affected and importing is done at a large scale in order to meet this need. It costs four times more.

Transportation rates are increasing. Where previously a company would have sent 4 containers, it ends up sending only two. Diesel/petrol rates have also increased.

Lack of space is a problem. Because of small area, less pieces of furniture are produced. There’s 40% loss and as a result all opportunities are lost. If more material is produced, it is wasted because there is no space for its storage

At country level

Government departments follow red tapism, blackmailing, bribery, corruption, taxation and have lengthy procedures for exporters. Companies as a result are affected badly.

No proper guidance is given to companies regarding financial incentives given by the government. The attitude of banks is very bad and they have cumbersome procedures for loans. As a result, companies have no knowledge and they fail to make use of finance facilities. In addition, the government is not providing any subsidy.

No incentives given by the government to make use of the latest technology. As a result, all companies are using traditional methods and the quality of furniture is much below the level of global furniture, especially for “Seasoning” which requires latest machinery, but unfortunately the natural method is used, which is very time-consuming. Some exporters use the wood that has moisture in it. This results in bad piece of furniture in the end. Sometimes due to moisture, it breaks down even after delivery, which ruins the image of Pakistani furniture industry.

Material from China is being used commonly. The government itself is promoting this trend. Local market is decreasing, while no efforts are being made by the government to improve this situation.

Customs examination done is very severe, whereby furniture is broken/torn for inspection. As a result all material has to be made again. A huge loss is incurred on the companies. Some companies give money and get their material cleared from the Customs. In this process, even the poor quality material reaches foreign buyers and the image of the whole industry is destroyed.

Problem in basic utilities. Load-shedding is a major problem. Furthermore, gas rates are on the rise.

Potential Furniture Export Markets

Following is the list of those markets where there seems to be potential for growth of Pakistani furniture export.

United States of America: USA, the first export destination of Pakistan, (16% in value) is among the biggest furniture importers of the world. However, Pakistan’s share of exports is much below than even one percent of the US market. It stands nowhere as compared to other exporters to the USA. China, Canada, Mexico, Italy and Taiwan, which have more than 76% of the United States market. The tariff is zero. There is definite potential for growth for Pakistan.

United Kingdom: The United Kingdom is a big import market (applied tariff is 0%). The UK is Pakistan’s second major export destination (16% in value). However, its market share with us is much less than even 1%. Here again building on our presence (albeit very small) and utilizing our knowledge of this market, there should be good prospects of increasing our share.

United Arab Emirates: UAE (applied tariff is 5%) is at present the third largest export market for Pakistani furniture (15% in value). Despite this fact Pakistan’s share in its imports is below 1% countries like Italy, Malaysia, China and Indonesia have secured major share in UAE’s market with rapid rate of growth of their exports. Pakistan should more intensively focus on prospects in this market with which it is well familiar and which is in the region, offering the advantage of low transportation cost.

Saudi Arabia: Saudi Arabia (applied tariff is 5%) is the sixth largest export destination for Pakistan (3% in value). But Pakistan’s share in its imports is again nominal (below 1%). China, Italy, USA, Malaysia and France are having more than 75% of Saudi Arabian market. Here again, there is potential for growth and need for concerted efforts to optimize the opportunities offered by this market.

Afghanistan: Pakistan is Afghanistan’s top supplier of wooden bedroom and lounge furniture. 26% of Afghanistan imports of wooden furniture are from Pakistan. Pakistan should not lose a market that is one of the major destinations of its exports and is geographically so proximate.

Third parties’/Countries’ Access to other Markets (Threats/Competition)

There is great potential for increasing exports. Pakistani furniture exports represent at best a nominal share in the world exports, but there is a great potential to improve. After the conclusion of Uruguay round and consequential enhancement in the quantum and quality of liberalization, Pakistan has been enjoying better market access. Elimination of quantitative restrictions and reduction in tariffs should prove exceedingly helpful. Under these circumstances Pakistan should seek the benefits of its cheap production factors e.g. lower wages, and cheaper raw material. If the raw materials or furniture parts are required for a finished product, importers in Pakistan should be facilitated by undertaking greater promotional and facilitation efforts on the part of the TDAP. The tariff applied for imports of furniture parts and accessories is comparatively high i.e. 25%. Mechanism should be adopted to ensure duty free import of components used in the finished product instead of obliging exporters to claim duty drawback that is an inefficient way of providing relief.
There is clear need to improve compliance with the WTO agreements. To compete in international market Pakistani exporters will have to become more careful about compliance with SPS and TBT. Pakistani furniture products have been reportedly banned by some countries on the ground that those products were not properly rounded at the edges resulting in the risk of injury to their users. Our exporters have to be also careful about termite treatment that uses chlorpysifos.
Many opportunities have become available after the conclusion of the WTO Agreements and consequential trade liberalization. Needless to say, Pakistan is not alone in the field and competition is really intense. We have to adopt a sound strategy and vigorously follow up trade promotion plans. Two factors have been taken into consideration while identifying opportunity offering markets: (i) size of the market, and (ii) degree of presence of Pakistani products. The size of the market has been given greater weight because we should aim at substantial increase in exports that would be possible only in bigger markets.

Pakistan’s Access to Other/New Markets (Opportunities)

Sustained growth in export earnings has taken place. In the first year, when the WTO regime became operational, export earnings amounted to US$3.142 millions. Thereafter there has been a sustained growth and the values of exports for the year 2004-05 are US$12.3 millions. Though, it can not be claimed that WTO is the only factor underlying this growth yet it can be assumed that the liberalized WTO regime has made a contribution to better export performance. A study of tariff structures in various countries have shown that at present a large number of countries have either lower tariff rates or even zero tariff. The WTO regime has indeed improved market access for Pakistan’s furniture industry.
Information as to tariff rates in markets of our ten major buyers would help us to appreciate the extent of opportunities available to Pakistan.
Market Access is not a problem for Pakistan for furniture products. Statistics in the table above show that the market access is not a problem as such for the Pakistani furniture. The main constraint experienced by Pakistan is that of supply side lack of capacity. Under the WTO liberalized import regime, Pakistani exporters need to concentrate on the markets like OECD countries particularly the EU, where applied tariff is 0%. Although EU is one of the largest furniture importing markets in the world, yet Pakistan’s market share there is less than 1%. Only 30% of the Pakistani exports are destined for EU (Source: ITC Product Map). It would be worthwhile to make efforts to increase flow of exports to the EU. This, of course, would require a radical change in the strategy particularly in terms of range of products and design that are in demand by the EU buyers. We must learn to produce what is liked and required abroad and at competitive prices.