Chinese firm plans $150m industrial park in Lahore to lift exports

[Kabira]

LAHORE: A Chinese company is investing $150 million in an industrial park on Lahore’s border with Kasur, which will house state-of-the-art fabric units, dyeing facilities and garment manufacturing units for exporting sportswear from Pakistan to the Americas, Europe, Asia-Pacific and other regions of the world.

The project by the Shanghai-based Challenge is probably the first foreign direct investment (FDI) in an export industry in Pakistan. The firm is already operating as Challenge Apparel since 2017 with its garment manufacturing unit on Multan Road near Lahore fetching nearly $44m in export revenue during the last fiscal year, according to its managing director Chen Yan, who is known in the government and business circles as Karen.

She expects exports from her existing facility to grow to $54m this fiscal year. Once the Challenge Fashion Industrial Park becomes functional from July next year, its sportswear exports from Pakistan are projected to grow to $120m in the first year and to $400m in the next few.

The largest Pakistani textile exporting company’s exports stood at less than $300m last year.

“Our total production is meant for export,” Chen told Dawn in an interview. “We’re bringing modern, most-efficient and environment-friendly technology to Pakistan from across the world besides introducing new ways of management at our new flagship industrial park. Our plan is to make Pakistan the hub for our polyester-based sportswear exports. Our Chinese operations in Shanghai and Hubei have customers like Adidas and Reebok who’re willing to come to Pakistan if we’ve capacity here. We’ll bring Pakistan new business. We’re a different breed and our product line is new for Pakistan.”

Currently, the company employs around 3,000 workers, including 28 Chinese nationals. Once the industrial park becomes fully functional, the company would have created nearly 10,000-11,000 new jobs.

Challenge’s exports from China stand at $150m. Its garments manufactured in China are sold at an average price of $20. Compared to that, its Lahore operation fetches an average unit price of $8-9, which is double the average unit price of around $4 fetched by Pakistani garment companies.

“This difference in unit price isn’t about value-addition; this is all about the quality of the fabric. Fabric is the key to higher unit prices. You can charge customer whatever you want if you can give them high-end product,” Chen said. The Pakistani cotton-based garments attract lower unit prices because of poor quality of short-staple local cotton, she said. “Even a cotton product can sell for $100-200 if made from finer cloth produced from long staple fibre.”

Challenge entered the Pakistan market in 2014 when it invested $47m in a joint venture with Masood Textiles, a major exporter from Faisalabad. But the venture couldn’t last long as the company bled money profusely and the Chinese investor decided to relocate to Lahore as an independent company.

Chen said Weiguo Huang, chairman of the company, had evaluated Vietnam, Bangladesh, India and Myanmar for moving garment operations out of China. “Vietnam is too crowded already and moved into automobiles and electronics. There is no space for investment in Vietnam. Myanmar doesn’t have infrastructure. India is terrible. In Bangladesh you don’t have right conditions for setting up fabric units. So Pakistan is the ideal location for such garment manufacturing because of abundance of cheaper labour. The investment and tax policies for SEZs and new projects are also good. We’ve confidence to be at here.”

Red tape key hurdle to relocation
Answering a question why no other Chinese companies are relocating to Pakistan, she says Chinese textile industry is trying to relocate out of the country because of shortage of labour and rising wages and many firms want to come to Pakistan. But they don’t find a place to set up shop here. When you buy land you don’t get electricity or gas and other utilities.

“Chinese want to shift their business to a place where they can set up their operations in 3-6 months. You know when you go overseas to invest even in Africa they have industrial parks ready. You just go there and enjoy the ‘plug-and-play’ facility. No firm wants to waste two years in acquiring land and another couple of years in securing utilities to start operations. By the time you get utilities the opportunity is gone and you are already out of business. This is the biggest problem in Pakistan.”

Chen also spoke in detail about the bureaucratic difficulties her company has faced in acquiring land for the industrial park. “The bureaucracy uses different tactics to discourage foreign investors to extort money from them. The bureaucrats are working at cross-purposes with the government. There is no use of a good policy unless it is executed in letter and spirit.”

Published in Dawn, February 21st, 2021

Chinese firm plans $150m industrial park in Lahore to lift exports

Once the fashion park becomes functional, its sportswear exports from Pakistan are projected to grow to $120m in first year.

www.dawn.com

Finally some Chinese investment in worth anything. Need $15 billion more such investment in few years instead of another power plant.

 

[Crimson Blue]

Thank you Bilawal.

.. and lest not forget mandatory slam ..... Imran Khan is thoroughly corrupt .

Here, I saved @BATMAN and @El Sidd trouble of posting their opinion about this development.

 

[TheSnakeEatingMarkhur]

LAHORE: A Chinese company is investing $150 million in an industrial park on Lahore’s border with Kasur, which will house state-of-the-art fabric units, dyeing facilities and garment manufacturing units for exporting sportswear from Pakistan to the Americas, Europe, Asia-Pacific and other regions of the world.

The project by the Shanghai-based Challenge is probably the first foreign direct investment (FDI) in an export industry in Pakistan. The firm is already operating as Challenge Apparel since 2017 with its garment manufacturing unit on Multan Road near Lahore fetching nearly $44m in export revenue during the last fiscal year, according to its managing director Chen Yan, who is known in the government and business circles as Karen.

She expects exports from her existing facility to grow to $54m this fiscal year. Once the Challenge Fashion Industrial Park becomes functional from July next year, its sportswear exports from Pakistan are projected to grow to $120m in the first year and to $400m in the next few.

The largest Pakistani textile exporting company’s exports stood at less than $300m last year.

“Our total production is meant for export,” Chen told Dawn in an interview. “We’re bringing modern, most-efficient and environment-friendly technology to Pakistan from across the world besides introducing new ways of management at our new flagship industrial park. Our plan is to make Pakistan the hub for our polyester-based sportswear exports. Our Chinese operations in Shanghai and Hubei have customers like Adidas and Reebok who’re willing to come to Pakistan if we’ve capacity here. We’ll bring Pakistan new business. We’re a different breed and our product line is new for Pakistan.”

Currently, the company employs around 3,000 workers, including 28 Chinese nationals. Once the industrial park becomes fully functional, the company would have created nearly 10,000-11,000 new jobs.

Challenge’s exports from China stand at $150m. Its garments manufactured in China are sold at an average price of $20. Compared to that, its Lahore operation fetches an average unit price of $8-9, which is double the average unit price of around $4 fetched by Pakistani garment companies.

“This difference in unit price isn’t about value-addition; this is all about the quality of the fabric. Fabric is the key to higher unit prices. You can charge customer whatever you want if you can give them high-end product,” Chen said. The Pakistani cotton-based garments attract lower unit prices because of poor quality of short-staple local cotton, she said. “Even a cotton product can sell for $100-200 if made from finer cloth produced from long staple fibre.”

Challenge entered the Pakistan market in 2014 when it invested $47m in a joint venture with Masood Textiles, a major exporter from Faisalabad. But the venture couldn’t last long as the company bled money profusely and the Chinese investor decided to relocate to Lahore as an independent company.

Chen said Weiguo Huang, chairman of the company, had evaluated Vietnam, Bangladesh, India and Myanmar for moving garment operations out of China. “Vietnam is too crowded already and moved into automobiles and electronics. There is no space for investment in Vietnam. Myanmar doesn’t have infrastructure. India is terrible. In Bangladesh you don’t have right conditions for setting up fabric units. So Pakistan is the ideal location for such garment manufacturing because of abundance of cheaper labour. The investment and tax policies for SEZs and new projects are also good. We’ve confidence to be at here.”

Red tape key hurdle to relocation
Answering a question why no other Chinese companies are relocating to Pakistan, she says Chinese textile industry is trying to relocate out of the country because of shortage of labour and rising wages and many firms want to come to Pakistan. But they don’t find a place to set up shop here. When you buy land you don’t get electricity or gas and other utilities.

“Chinese want to shift their business to a place where they can set up their operations in 3-6 months. You know when you go overseas to invest even in Africa they have industrial parks ready. You just go there and enjoy the ‘plug-and-play’ facility. No firm wants to waste two years in acquiring land and another couple of years in securing utilities to start operations. By the time you get utilities the opportunity is gone and you are already out of business. This is the biggest problem in Pakistan.”

Chen also spoke in detail about the bureaucratic difficulties her company has faced in acquiring land for the industrial park. “The bureaucracy uses different tactics to discourage foreign investors to extort money from them. The bureaucrats are working at cross-purposes with the government. There is no use of a good policy unless it is executed in letter and spirit.”

Published in Dawn, February 21st, 2021

Chinese firm plans $150m industrial park in Lahore to lift exports

Once the fashion park becomes functional, its sportswear exports from Pakistan are projected to grow to $120m in first year.

www.dawn.com

Finally some Chinese investment in worth anything. Need $15 billion more such investment in few years instead of another power plant.

Great but Pakistani govt needs to invest itself in Pakistani startups... 100 million dollars can give em atleast 200 startups...

 

[Syed1.]

Thank you Bilawal.

.. and lest not forget mandatory slam ..... Imran Khan is thoroughly corrupt .

Here, I saved @BATMAN and @El Sidd trouble of posting their opinion about this development.

Those losers won't come here, it's a positive news.

 

[Indus Pakistan]

This is real CPEC. If Pakistan could attract another 100 Chinese like this exports would go out of the roof.

 

[El Sidd]

Challenge entered the Pakistan market in 2014 when it invested $47m in a joint venture with Masood Textiles, a major exporter from Faisalabad. But the venture couldn’t last long as the company bled money profusely and the Chinese investor decided to relocate to Lahore as an independent company.

How come Lahore is more attractive than Faisalabad in this?

Chen also spoke in detail about the bureaucratic difficulties her company has faced in acquiring land for the industrial park. “The bureaucracy uses different tactics to discourage foreign investors to extort money from them. The bureaucrats are working at cross-purposes with the government. There is no use of a good policy unless it is executed in letter and spirit.”

Not as simple as it seems.

 

[Crimson Blue]

Those losers won't come here, it's a positive news.

As a wise person once said, please do not underestimate the predictability of the stupidity ......

 

[Bilal Khan (Quwa)]

This is real CPEC. If Pakistan could attract another 100 Chinese like this exports would go out of the roof.

For CPEC to work, Pakistan will need to attract enough Chinese FDI to keep all those power and infrastructure programs busy. It's starting to seem the Chinese opted to front-load infrastructure with plans to follow with a lot of continual FDI. Still, we'll need to wait and see if it's enough.

Finally, even if the FDI is enough and it employs a lot of Pakistanis, how will the government use that dynamic to fill its exchequer? If we don't fill the exchequer, we can't pay off the debt, much less fund education and/or healthcare. The answer is taxation, but that's a whole other ballgame...

 

[Maxpane]

Thats real news for us . export industry with the state of the art facility will bring new technology in our industry and improve our exports .

 

[Crimson Blue]

How come Lahore is more attractive than Faisalabad in this?

Do you really want an answer to this question or you just post these rhetorical statements to raise your post count?

Name of managing director of 'Challenge Apparel' is in the article and quick search shows phone number +92 42 111 741 741. You can call them and ask why have they selected Lahore over Faisalabad and then come back post your results in this thread.

 

[El Sidd]

Do you really want an answer to this question or you just post these rhetorical statements to raise your post count?

Lahore is an expensive city compared to Faisalabad.

How is raising the cost helpful to the business?

 

[Crimson Blue]

How is raising the cost helpful to the business?

Name of managing director of 'Challenge Apparel' is in the article and quick search shows phone number +92 42 111 741 741. You can call them and ask why have they selected Lahore over Faisalabad and then come back post your results in this thread.