Crusading against counterfeit products

Bashir Ali Mohammad is the Chairman of Gul Ahmed Textile Mills Limited, as well as a director of Gul Ahmed Energy Limited and Habib Metropolitan Bank Limited. He is also the first Pakistani to hold the office of the President of International Textile Manufacturers Federation.
Bashir is a Fellow of the Chartered Institute of Management Accountants, United Kingdom, and has held honourary government and industry positions in various organizations, where he has also been a Member of the Economic Advisory Council, Government of Pakistan, since 2008. The Government of Pakistan has bestowed Sitara-e-Imtiaz on Bashir - one of the most prestigious civil awards of the country.
CRUSADING AGAINST COUNTERFEIT PRODUCTS Bashir Ali Mohammad is in the business of competing with the rag-trader or what he calls the sweat shops of the world that includes countries like Bangladesh and new emerging exporters of South East Asia and Africa - countries that enjoy very cheap labour and have full market access to developed economies.
But the man, who is the Chairman of one of the leading names in Pakistans textile industry, Gul Ahmed Textile Mills Limited, is perhaps more troubled by domestic issues than to sweat over foreign competition. Take for instance, the firms famed Chairman Lattha whose counterfeit copies are available in the market for one-fourth of the price.
"The counterfeit-ratio of some of our products is 1:100; we are producing one, and the counterfeits in the market are 100," says Bashir, who has been lately busy on a campaign against numerous counterfeit producers in the country.
"We have been working closely with the authorities to get a stay order against counterfeit producers from the court........we also go to shop committees in each town and then we try to educate them and also negotiate with them," he said.
Gul Ahmed has contracted with specialised companies to get each of its designs registered; it has a separate department that is involved in getting the designs registered. Considering that there are at least 200-350 designs each season, there are about 1000 designs each year - the monitoring of which is a huge task.
"The cost is definitely huge; we have to get everything patented, we also have to make very expensive packaging, follow up with the courts, and get the best lawyers. Yes, we have to pay a big price for being legitimate, but when you go to the courts you need something to prove that this design is ours," he said.
One of the major hurdles in the whole process is the nature of the countrys largely undocumented textile economy.
"The organised sector in the domestic textile value-added industry is only 20 percent, the rest is unorganised; its totally undocumented", says Bashir, adding that up to 20 percent of the textile exports are also undocumented.
In a rather shocking revelation, Bashir reasons that half of Pakistans population should be without clothes if the documented textile production numbers are anything to go by.
"The government data show that 80 percent of total production is exported; only 20 percent is consumed in the domestic market, which means that the size of the domestic market is $2.4-2.5 billion. This means that each Pakistani is supposedly spending less than $15 dollars per year on all kinds of textile, products combined," he noted, while pointing out the obvious inadequacy of documentation. "Over 50 percent of the domestic market is fed by smuggling, Afghan Transit and under invoicing of goods," he added.
Bashir says that 90 percent of the countrys knitting industry makes less than $3 million a year, a number too small to be able to afford product development, research, branding, marketing, advertising, travelling, cost of exhibitions and so forth.
"To be able to sell under your own name you should be an over 500 million dollar company because the cost of branding is a huge and expensive affair. In Pakistan, the top ten companies are 200-300 million dollar companies, some are 50-100 million dollar companies," says Bashir, who is also the Chairman of International Textile Manufacturers Association - the first Pakistani ever to hold that office.
GROWTH MODEL Asserting that everybody should not be an exporter, Bashir is for the promotion of SMEs in the sub-contracting business, by making them more profitable.
"The world can only grow by SMEs; it can grow by globalisation, because when the big companies take over, employment erodes as everything becomes robotic. This is big factor that Pakistan needs to understand," he said.
"The small companies should be allowed to survive and grow; I am for consolidation at the top, with SME players working below. A small player cannot hold an exhibition in a foreign country, or invest in research and testing and product development and so forth. Instead, we can invest in all that and we can produce according to standards," says Bashir citing successful examples from Japan, China and Germany.
Pakistans textile industry has followed a different model, where players have focused on spinning, weaving, stitching, and selling also - a model which Bashir says "can go on for long term growth".
But why isn it happening in Pakistan? "It is because the big players have invested in technology whereas the small players did not invest in Pakistan in their business and they took their money and invested in stock markets and real estate," he said, adding that the governments failure to give a long-term policy to promote subcontracting is also an impediment.
Another way to ensure textile growth is to increase worker productivity, and Bashir says the way forward in achieving that is to employ women.
"The problem with Pakistani textile makers is that we don employ women; women are much more efficient in stitching compared to men. Their skills are better, their finishing is better and then over time you can train them to become more efficient," he said while highlighting that "the success factor behind Bangladesh textile industry was women".
DIVERSIFICATION Domestically, Gul Ahmed Textile is expanding; it is opening two more retail stores in Islamabad, one in Lahore, one in Hyderabad. "We are assessing the performance of all the shops; we are looking at area-wise product mix; we will also look at government policy before we make any aggressive decision," says Bashir.
Internationally, Bashir is eyeing the regional markets, especially the Far East, with China, Malaysia, and Thailand in the spotlight, where Gul Ahmed plans to open offices and warehouses.
"There is no growth in the EU or America, they are mature markets marked with over consumption, they are debt-ridden; they are unlikely to grow for at least the next five years. So its going to be a losing battle competing in that market," said Bashir, while stressing on the need for Pakistan to change the direction of trade.
When asked how he plans to beat competitors out in the Far East and China, Bashir said he expects a vacuum in China in a year or two, and therefore, "now is the time to prepare for that".
"China has agreed to appreciate the currency; then they have a limited labour force because of the one-child policy in China. Plus, their labour force is more educated and therefore they will do more value-added work, in other industries like electronics, pharmaceuticals and machinery", Bashir notes, highlighting the cost effectiveness of the sweat-shop model applied by Bangladesh.
STUMBLING BLOCKS One of the biggest handicap to Pakistani producers, however, comes from its role as a front line state in war against terror.
"Textile is a very competitive industry, if designers are not coming to Pakistan due to war against terror, they can go to China, India or Bangladesh. Right now, we go and meet these buyers in Dubai; we bring them here for a day trip and send them off before evening," explains Bashir.
In fashion business, where the real money is, the supply chain and the consumer need to be very interactive. Therefore, it is customary for foreign designers to work with local designers and assess every detail, like the colour of the button, the shape, the belt style, the pocket etc, on a real time basis. It often takes 10 -15 trial productions before the final design is prepared.
This means that if the foreign representative does come to Pakistan, then the time as well as the costs increase; producers like Gul Ahmed make a sample, ship it, then they revert back, and the whole process is repeated a few times before the design is finalised.
"Sometimes our own designer needs to take the sample himself but he is not given visas or visas are delayed......even technology experts are unable to come to train our people for new machines, which then lie useless for months and increase the hidden costs," says Bashir.
Foreign buyers are also concerned about delivery security. They fear that somebody will blow up the containers; due to which their shelves would be empty.
"If I have to go market in the US or the UK, then I have to go to Wal-Mart, Tesco or some other big player, who already has fixed contracts with their supplier. So in order to beat my competition, I will have to offer further discounts, and with the kind of economic conditions here at home, how much can I bear" says Bashir.
"Plus, these buyers say that why should we buy from Pakistan and create problems for ourselves; we are quite happy with our existing suppliers," he added.
For Bashir, the solution lies in making the allies understand the gravity of the situation, considering that more people are dying in Pakistan because of war on terror than in Iraq or in Afghanistan, as the country has a fighting arena for all the major players of the world.
"They (the allies) are not willing to give us anything back, except for the aid money. Money doesn solve our problems. Our problems will be solved by job creation," says Bashir. "The US has given zero duty to 80 countries, but somehow it thinks that one more to Pakistan will hurt it".
Pakistans exports to the US is no more than $2 billion in the value-added sector, the rest are raw material which America needs anyways. So if the US allows Pakistan duty free in the value-added textile export sector, and even if it increases Pakistans sales by 25 percent - which will only be half a billion dollars - it would still be less than Chinas or Bangladeshs export to the US.
Bashir urges the government to present Pakistans case properly. "The government should say that unless you give us trade access, we will not survive," he said adding that there is an imminent need to upgrade the trade negotiation skills of Pakistani officials.
"We need a special committee to work on the EU trade concession and let the private sector steer, because in the government, the secretary gets changed every year, which breaks the momentum," suggests Bashir.
"You see all across the world, market access experts are given positions for 20 years, in India people have been sitting there for 20 years, because its a specialised field, and then working for so long they become friends with each other, and so they can lobby better," he said.
Asked how he would describe a typical day, Bashir says "we come at 9 and leave at 9, mostly doing damage control; one day its gas shortage, the other day water shortage, the next day riots, and the fourth day there is a blast or strike or unrest. Damage control takes away a lot of our time - it is not easy to run a labour intensive business in Pakistan".
Interview by Sohaib Jamali