September 21, 2003	Sunday	Rajab 23, 1424

KARACHI, Sept 20: Chinese shoes have swarmed Pakistan market and have acquired a 30 per cent market share in Karachi followed by 50 per cent share in the upcountry.

Shopkeepers predict that the share of Chinese footwear is expected to rise when the country fully opens its border for imported goods after 15 months under the WTO requirement.

Market conditions have forced top brands of Pakistani shoe makers to get their product made in China and put their local brands on them for sale in domestic market. “It has led to closure of shoe factories in Pakistan,” Vice President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Mian Arshad Alam told Dawn on Saturday from Lahore.

Leading footwear manufacturers, with brand names, have now approached the National Tariff Commission (NTC) to prepare a case of imposing anti-dumping duty on Chinese footwear that is causing material injury to the local industry, he disclosed.

The local industry, he said, is now engaged in preparing a convincing case in order to safeguard the industry as well as to secure jobs of thousands of people engaged in this industry. Arshad, who is also in leather and tanning business, said the FPCCI will also give advice in this regard to the NTC.

He said the branded shoe makers, who enjoy 13-14 per cent market share out of the over 80 per cent production arriving from the cottage industry, feel that there should be an anti-dumping duties otherwise Chinese products will take away the local industry by storm.

Pakistani industries cannot compete with the prices of Chinese products as the cost of production, labour and utility charges in China are lower by over 50 per cent as compared to Pakistan where rising utility rates and labour charges are enhancing cost of production, making productive price uncompetitive against the foreign goods, the FPCCI vice-president said.

The government has imposed 25 per cent import duty on shoe imports followed by 15 per cent sales, making a cumulative impact of 60 per cent on shoe imports. As a result of this, heavy under- invoicing and smuggling has been going on, he said. There is virtually no financial cost in China in making consumer goods. Under the economy of scale, cost of production automatically comes down when the production is being done on a massive scale. China is the example, he said.

He said the government should further cut the import duties on raw materials used in footwear making so that the industry’s products could easily compete in the local markets.

A survey at Light House at M.A.Jinnah Road, often dubbed as dumping ground of smuggled foreign shoes, is now attracting a sizable number of buyers owing to heavy influx of cheap Chinese shoes. Shops have been flooded with a variety of shoes with price hovering between Rs300-800 in low quality shoes and Rs1,000- 2,000 in high quality shoes.

Many shoe stores in the city have also followed the suit putting on display Chinese products to cater to the needs of lower and middle income group buyers, who could not afford to buy high quality locally made shoes at higher prices ranging from Rs1,000 to Rs2,000 (fully leather).

The rates of Chinese shoes, which the clever retailers claim of being full leather, range between Rs300-800 depending on the designs and finishing. In real sense, retailers are befooling the innocent buyers as the Chinese shoes, being dumped in Pakistan, are made up of artificial and synthetic leather.

In order to compete with Chinese goods, the local industry has also introduced shoes of medium price ranging between Rs300-600 (not fully leather) which the shopkeepers claim that its quality is far superior than Chinese shoes and are competing well in the markets.

Proprietor of Sputnik Footwear outlets, Hassan Veljee said that Chinese footwear range has captured 30 per cent share in Karachi and 50 per cent share in the upcountry in cheap shoes varieties.

“Pakistani shoes in high price categories still rule the market due to good leather quality and finishing,” he said.

He said that his chains of stores have also put on display around 10 per cent Chinese shoes of high quality carrying price tag of Rs2,000. But there is definitely a difference in quality.

“As far as high price market is concerned, Chinese products cannot take slice of the market share, dominated by the Pakistani leather shoes,” he said. However, in low price category, there is stiff competition going on and Chinese product shares may rise in coming months.

“I think the current 30 per cent market share will go up to 50 per cent in low category Chinese shoes and the share in the upcountry may rise to 70 from existing 50 per cent after 15 months,” he said.

Velgee claimed that even the high quality Chinese shoes available in the market are not made of fully leather. It is made up of synthetic and artificial leather and shopkeepers are bluffing with the buyers of claiming them as genuine leather shoes.

A leading shoe outlet owner in Zaibunnisa Street offered a different view on quality of Chinese product. He said he had kept two to three per cent high quality Chinese shoes with price ranging between Rs1,500-1,600. The quality of Chinese leather shoes was quite better than local shoes.

He claimed that Chinese designing and sole rubber quality was good. He said in artificial and synthetic categories, Pakistani quality enjoyed an edge over Chinese goods.

Proprietor of Bali’s Footwear stores, Pervez Ahmed believed that Chinese products have captured 15-20 per cent market share.

“The entry of Chinese shoes was imminent as local prices have gone up too high,” he said. “The market share of Chinese shoes will not go up further. This is the saturation point since the requirement of the markets and buyers have now been fulfilled,” Pervez opined. To a query what paved the way for the entry of Chinese shoes, he said the leather prices had not shot up. Actually there were some production problems and new designs were not coming. Local workers had adopted a go-slow attitude. The change in shape of Chinese shoes was inevitable.

He said he has also kept one per cent of Chinese shoes in his outlets with price ranging between Rs1,500-2,000.

He claimed that Chinese shoes market share in the US has reached to 80 per cent and in Europe the share is rising.

Vice president and secretary of Saddar Businessmen Association (SBA), Mashkoor Ahmed and Fahimul Huda, who have been running retail outlets for over three decades in Saddar, also reckoned the existence of 30 per cent market share of Chinese shoes in the markets, which used to be five to 10 per cent two years back.

They said that Chinese shoes are being dumped in the markets from the Sust Border (Shahra-e-Resham) by road and heavy under- invoicing and smuggling are going on.

In sports shoes and joggers category, many shop owners in the markets are now facing humiliation at the hands of buyers who come up with the joggers with two to three defects. This has been going on due to the use of expired glues and adhesive in the making of sports shoes which ultimately loses its grip in just a couple of days use. That clearly shows that vested interest people are bringing defective items to give a bad name to China, they said.

They claimed that there are still quality-conscious shop owners who are avoiding to keep Chinese shoes after receiving huge complaints.

They feared a massive unemployment if the inflow of Chinese goods persists in future. Over 80 per cent of the shoes are being made in the cottage industry in which millions of people are directly and indirectly engaged.

They are of the view that competition between foreign products and local products will boost in case good quality shoes arrive from China. Otherwise, people would turn from buying these foreign shoes owing to their low quality. “Our quality in low price category of Rs 500-600 is far more superior than Chinese shoes,” they said claiming that “our designs also enjoy edge over Chinese footwear range.”