Pak-China cooperation in cotton industry providing more possibilities for textiles

China Economic Net

Xinjiang: “Country of Origin: Pakistan” – if you walk into a clothing store in any shopping mall in a major Chinese city-whether it is an international or a local brand-such a hang tag is not uncommon. Especially in jeans wear section, these high-quality Pakistani products are increasingly popular with Chinese consumers.

According to the Pakistani government, the textile industry contributes nearly 60 percent to the country’s total exports. Denim fabric, as one of Pakistan’s main garment products exported to the world, also occupies a pivotal position in its garment industry chain. According to the Pakistan Bureau of Statistics, exports of denim fabric from Pakistan have reached Rs 96. 92 billion during the year 2017-18, a commendable performance of denim sector of Pakistan.

However, whether it is jeans wear or other garment products, the impact of recent global cotton prices and other factors cannot be ignored. Pakistani industrialists argue that the textile and garment industry of Pakistan faces a series of challenges, including low production of cotton and difficulty in obtaining financing for new facilities.

Pakistan, one of the world’s largest cotton producers, is finding it increasingly hard to meet its own needs. “Last year, we had to import more than 50% of cotton,” said Muhammad Abdullah, executive director of Sapphire Fiber, one of the largest textile companies in Pakistan. Low production and quality force the local industry to choose imports. “So far, the domestic consumption of cotton is 14 million bales. Nevertheless, Pakistan only harvested 5.6 million bales of cotton in the last season only.”

“As far as I’m concerned, the seed of high quality must be the top priority. Unless we can increase the yield per unit area, the demand cannot be met.” the idea of Muhammad Abdullah was echoed by Dr. Zahid Mehmood, director of Central Cotton Research Institute, “under CPEC, we hope to see the plan between China and Pakistan in cottonseed cooperation soon.” Regarding this, Chen Quanjia, deputy dean of Xinjiang Agricultural University, introduced the further planning during the interview with China Economic Net, “local high-temperature-resistant cotton varieties in Pakistan are of great use to us. In Xinjiang, the heat resistance of cottonseed is particularly indispensable when facing the extreme high temperature. At the same time, our high-yielding cotton varieties are also needed for Pakistani farmers.”

Recently, international cotton futures have remained high, and China’s domestic cotton futures prices have also risen simultaneously. According to a survey conducted by the China Cotton Association, the country’s cotton planting area this year has dropped year-on-year, but due to the favorable weather conditions, the total output remains relatively stable. It is expected to be 5.83 million tons, down 1.5 percent year-on-year. Improving cotton production to maintain the stability of the futures market will be a problem demanding prompt solution fromChina and Pakistan.

Besides, the impurity which is caused by 100% manual picking also worsen the dilemma of Pakistan cotton. Kamran Razaq, cotton field supervisor of Sapphire Fiber said that the impurity content of imported cotton is 4.5%, while the counterpart in Pakistan cotton is 8-9%, which is well below the criteria of the textile mills.

Accordingly, Xinjiang Agricultural University and University of Agriculture Faisalabad (UAF) has set up experimental fields in Faisalabad and plan to test mechanical picking in Pakistan. “In North Xinjiang, one of the biggest cotton areas in China, the mechanization can reach 90 percent. We use machine picking everywhere so as to decrease the impurities,” said Chen Quanjia, adding that in the future, China’s advanced cotton pickers can play a role in Pakistan as well.

Except for raw material shortage, financing difficulty is also included in the restraining factor in Pakistani textiles. In this regard, China and Pakistan are also seeking for a wider cooperative space.

Chairman of Department of Garment Manufacturing of National Textile University Faisalabad Abher Rasheed told us that Pakistan and China can collaborate in two main areas which are accessories and fabric. China has the capacity in both areas while Pakistan has comparatively cheaper workforce available. Joint ventures in both areas could create a positive impact, he emphasized.

Obviously, his ideas coincide with some Chinese entrepreneurs with strategic vision. “The strong bilateral ties between China and Pakistan provides great convenience for our local investment,” said Karen Chen, manager director of Challenge Fashion, a Chinese company is investing US$150 million in an industrial park on Lahore’s border with Kasur. The park will host fabric units, dyeing facilities and garment manufacturing units for exporting sportswear from Pakistan to the Americas, Europe, Asia-Pacific and other regions. The firm is already operating in Pakistan as Challenge Apparel since 2017. It has a garment manufacturing unit on Multan Road near Lahore, fetching nearly US$ 44 million in export revenue during the last fiscal, according to Chen.

Pakistan textile industry officials said that it reflects China’s desire to relocate labour intensive industries to neighbouring counties such as Pakistan that already have a solid textile and garment manufacturing base. Government officials say they hope its manufacturing units might earn as much as US$ 300 million to US$ 500 million per year in export earnings.

“Pakistan was given the Generalized Scheme of Preferences (GSP) Plus by the European Union, and also signed the free trade agreement with China. In the future, the industry park is expected to be a regional supply chain park. More Chinese accessory and fabric companies will be invited and workers will make zippers, labels, buttons altogether here. Undoubtedly, the park will also help modernize the Pakistani textile industry besides increasing its foreign investments and offering a better balance of payments. It will also help urbanize areas surrounding the park. “We estimate in five years later, we can reach around US$ 400 million export,” Chen concluded.

So far, Companies like Challenge remain a minority. There is still a huge space for cooperation between the two countries in textile industry. Muhammad Amjad Baig, a textile entrepreneur and chief executive officer of Lead International, a consulting and trading company, underlined that China can greatly help modernize Pakistan’s textile industry and reduce trade barriers between the two countries which will ultimately boost the export of textile products from Pakistan. “The two countries need to collaborate and develop corporate and strategic alliances for different parts of supply chain integration,” he said.