The knitwear industry in Pakistan has been unable to realise its full potential. Pakistan’s share in world knitwear exports has been declining since 2005. During July to December 2015, Pakistan’s exports of knitwear declined by around three per cent in dollar terms as compared to the previous year. However exports went up by three per cent in quantity terms.
Global demand for knitwear is rather weak. When global demand for any product is weak, the only option left is to go in for value addition since value-added products can maintain and fetch higher prices. Knitwear firms in developing countries may upgrade either their processes or products or upgrade to other functions such as design, logistics, branding and marketing.
By entering global value chains, Pakistan’s knitwear firms can improve their processes. Although process upgrading enables firms to survive in the export market, it does not help them to attain value added functions. Making a higher value added product is known as product upgrading. But only a handful of firms manage to produce slightly higher value added products.
Although designing is a high value added function, developing countries’ suppliers cannot attain this capability with ease since they cannot compete with designers of developed countries.