Pakistan's textile industry, especially the large factories, was structured from the very beginning to manufacture commodity textiles for international markets.

Built on heavy government subsidies and fat profits, few textile manufacturers realised the crucial importance of moving towards value-addition and focusing on the domestic market in their initial years.

Even if someone thought of tapping the country’s market potential, the high costs, time and commitment required to be successful domestically, as well as the small size of the middle class, fraud, lack of infrastructure for inland trade and other difficulties prevented them from venturing fully into the local market.

‘If you can sustain and grow in the domestic market, you will be successful in export markets even in the face of stiff competition’

Consequently, the gap in the domestic market was largely filled by cheaper imports from China, India and other textile producing countries in the region.

But now, as the exporters face a huge crisis and losses because of the rising cost of doing business, energy shortage and increased competition from highly subsidised regional competitors, many of them are turning to the domestic market to sustain their business.

Indeed, they have come to realise that success in the domestic market could increase their ability to diversify their products and compete with regional rivals. With their domestic sales revenues helping them cover the fixed costs of exporting, they feel that they can also jack up their earnings and profitability.

The Chenab Group was one of the country’s few textile manufacturers to understand the importance of the local market towards the end of the 1990s, and launched its retail stores in major cities to tap the domestic business potential offered by a growing middle class.

“We were the first Pakistani textile label to set up our retail stores in the country. We are the pioneers in this sector. Many others like Nishat and Gul Ahmed followed us,” claimed Kashif Ashfaq, the chief executive officer of ChenOne, during an interview with Dawn.

What makes the company unique is the fact that it has been offering a wide range of home and fashion products, such as home textiles and accessories, furniture, fabric, apparel, footwear etc under one roof since 1997.

“We had a choice when we decided to venture into the retail sector: import the products we wanted to offer to high-end Pakistani consumers or introduce our own brand. We chose the difficult path and decided to develop our own label,” Kashif said.

Over the years, ChenOne has expanded across the country with 35 stores in 15 cities, as well as to the United Arab Emirates, Bahrain and Saudi Arabia with seven outlets. In recent years, it has entered into a joint venture with a Chinese furniture-and-shoe retailer and is supplying it home textiles for its 70 stores across that country.

“It is a matter of pride for us that our products are being sold in China with the ‘Made in Pakistan’ label,” he said. “It is a major breakthrough for us in such a big market, and we intend to take full advantage of it and grow in China as well.”

The company’s turnover soared to Rs3bn during last year. “We are targeting sales turnover to spike to Rs5bn this year and Rs10bn by the end of 2020. For this, we are restructuring our company and focusing on human resource and product development,” said Kashif.

The company has already launched a new brand — House of Chenab — with 14 stores in 10 cities for the middle-income segments of the population, and plans to add 20 stores before the end of this year. Currently, it employs 1,500 people, including a significant number of women.

When the Chenab Group decided to venture into domestic business, the retail culture was not very encouraging for opening such large stores in the country.

“We didn’t find many designers who knew the local market trends and consumers’ tastes. Nor were trained sales staff available. We had to struggle initially because of high staff turnover,” Kashif said.

“Those who entered the domestic market after us were lucky as they did not have to face these difficulties and challenges. They just had to break away our trained staff for their own stores,” he laughed.

“But we also had an advantage: our companies were producing textile products for top American and European brands, which helped us quickly arrange bulk production for our own stores. From the start we have focused on maintaining quality, which is the key to success in any business.”

His advice for the industry: “If you can sustain and grow in the domestic market, you will be successful in export markets even in the face of stiff competition.”

Published in Dawn, Economic & Business, July 27th, 2015

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