Pakistans footwear industry manufactures some 120 million pair annually for local consumption and it exports 2 million

pair per annum roughly and the average price charged for each pair stands around $10. Its share in Pakistans total exports is about to touch the figure of $200 million. Out of all only 25% shoe market is with SERVIS and Bata. Other individual players hold the rest of the market share of overall shoe industry. Ladies footwear industry is a 50 billion market where 80% shares lie with the individual players. Growth trends in the industry The special subsidized rates for Pakistans worldwide footwear trade have helped increase the exports to the extent of 250 per cent in the last couple of years. Export of shoes has shown an increase of 13 per cent in the previous fiscal year till Apr against the corresponding period of last year. If the support was not withheld the footwear industry would have certainly crossed the $2000000. Pakistans footwear industry manufactures around 120 million pair annually for local Consumption and it exports 2 million pair per annum roughly and the average price charged for Each pair stands around $10. Its share in Pakistans total exports is about to touch the figure of $200 million. Volume of Pakistans footwear exports grew at a considerable rate of 16% for the years 2003 and 2004. The share of Pakistans footwear exports in the worlds total footwear exports is about 0.18% while it is 1.6% for India and 29% for China in the year 2006. For Pakistan it rose from 0.16% to0.23% in 2005 and decreased to 0.18% in 2006. Footwear exports share in Pakistans total exports rose to 1% in 2005 from 0.7% in 2002 and it accounts for about 0.8% in 2006 of Pakistans total exports. Indias footwear exports account for about 1.6% of total exports while for China the same is 2.2% in the year 2006. The industry has entered into mass production especially local industry. There are 306 manufacturing sites in Lahore which are 59% of total Pakistan and 44 manufacturing units in Karachi which are 8 % of total in Pakistan. Asian economies such as China and India are enjoying a notable growth in changing circumstances across the world. Pakistan also has great potential for higher growth however the political threats, socio economic environment and lack of updated technologies are obstruction in the way of progress.

Industry Analysis
Political Trends: Political instability is effecting badly to the footwear industry. Energy problem (high cost and power failure) is the main issue in these days, because it leads to increase in production cost. Leather footwear is also provided R&D support at 6% From the previous some years Government of the Pakistan are encouraging import and export policies. And also encourage the foreign investors to invest in Pakistan.

Government should take measures to check the inflow of foreign footwear into Pakistani market through the tactics of under-invoicing and miss-declaration. To establish a plant for this industry is not so much easy, one has to fulfill certain rules and regulations, and also the huge investment is required.

Economic Trends: Economic crisis hit badly on footwear industry especially raw material to manufacture footwear. One of the most important problems in the growth of footwear industry is higher energy prices. Increasing energy and inputs prices leads to an increase in the cost of Production that influences the expected production of the industries and the exports. Pakistan footwear exports for the year 2006 were about US$ 135 million. Out of total footwear exports, leather footwear accounts for 43.15%, which makes leather Footwear extremely significant. Pakistans footwear industry manufactures around 120 million pair annually for local Consumption and it exports 2 million pair per annum roughly and the average price charged for each pair stands around $10. Its share in Pakistans total exports is about to touch the figure of$200 million. So economic downward trend is badly affecting the industry. Impact of international Competition: Local footwear dealers confirm of their business getting a big setback because of what they say flooding of the footwear from China and Korea. These are of pig leather, well known local footwear with a popular brand name informed this correspondent. But you cannot say that China has dumped footwear in Pakistan market, another leading footwear manufacturers from Lahore said. He said the bulk of Chinese footwear are either being under-invoiced or are being smuggled through known routes. Chinese have set up big warehousing facilities in Jabal-e-Ali in Sharjah from where a lot of goods are making their way into Pakistan.

Industry/Market Summary:

Leading Exporting Countries China Italy Spain Hong Kong Taiwan Korean Republic

World Export Share in 1980 1.6% 29.2% 4.5% 1.4% 12.3% 7.6%

World Export Share in 1985 1.9% 25.8% 5.7% 1.7% 15.6% 10.6%

World Export Share in 1990 7.1% 22.7% 5.0% 6.5% 8.9% 14.7%

World Export Share in 1995 14.6% 17.9% 4.6% 17.2% 2.1% 2.9%

World Export Share in 1999 20.9% 15.5% 4.7% 13.7% 1.2% 1.1%

FEDERAL BUREAU OF STATISTICS DATA FOR IMPORTS OF SHOE INDUSTRY

YEAR 2001 2002 2003 2004 Social Trends: In Pakistan the life style of people is changing with a fast pace. Their life has become more money and time oriented. There is a major shift in the values of the people of Pakistan. People now prefer western life style rather than the traditional one. Everyone wants that he or she wear new shoes at every occasion. Especially it is a race between ladies to have more and matching shoes with her dresses which are more trendy and fashionable. So it overall increased demand for foot wear products especially in young generation. Technological Trends: New technology trends also effecting footwear industry in Pakistan. Multinational competitors are introducing innovative techniques to manufacture footwear. Like in sports footwear new PAIRS 521,117 1,509,422 5,339,976 9,117,068

technology is being used regarding technical aspects on that particular sport. For processing of raw material like leather new techniques are being implemented by multinationals. Forecast: In the nutshell we can say that there is potential for higher growth of the industry and it can become a source of export earnings. The rapidly changing global economic environment and in the face of increasing cost of doing business in Pakistan, there is a need to strengthen the competitiveness of the footwear industry in Pakistan. Reasons of financial issues for Bata: 1. Commission to agency (franchisee) is high 16 % on each pair (It should be on the total sales or the target of the shop) 2. K- stores where inventories rent and utilities paid by company, employee received commission. It should that ex employees get discounted product instead of free pairs of Shoes. It causes a huge burden on budget and sometimes you gave shoes on credit. 3. Depots should be company owned and company should had its clear policy regarding depots. 4. More credits to distributors (trade debt). 5. Clothing stuff main reason u are specialized in foot wear and u are opening cloth business due to which suffers to lot 6. Suffering in women fashion shoe segment 7. China shoes in men(joggers etc) The profit after tax of Bata Pakistan Limited has declined to Rs 748.170 million in the year ended December 31, 2011 as compared to Rs 871.293 million earned in the year 2010. The company's earning per share stood at Rs 98.96 in the period under review against Rs 115.25 in the same period a year back. The board of directors of the company in its meeting held on Monday recommended final cash dividend at Rs 20.00 per share i.e 200 percent. According to the financial results sent to Karachi Stock Exchange, the company's sales increased to Rs 9.816 billion in 2011 against Rs 8.329 billion in 2010 while the cost of sales increased to Rs6.275billion against Rs 4.997 billion. The company's profit before taxation stood at Rs 1.025 billion in 2011 against Rs 1.189 billion in 2010. http://www.scribd.com/doc/40307223/Pakistan-Shoe-Industry http://www.brecorder.com/company-news/235/1159842/ http://www.amcy5.com/projects/marketing/amcy10.htm