Chiniot’s Furniture industry

Furniture Industry of Pakistan

AMJAD NAWAZ

AMMAR AKRAM ALIZAI

SAQIB KHAN

ZAIN GOHAR

SYED HAMMAD RAZA

Group Members:

Ammar Akram Alizai

Furniture Industry The “wooden furniture” industry represents 95 percent of the

total furniture market in the country.

The leading furniture making areas of Pakistan are Chiniot, Gujrat, Peshawar, Lahore and Karachi.

Exporters are suffering manifold problems while local manufacturers are facing challenges due to heavy imports of furniture.

Chinese furniture has also hit the local industry by 70 percent and the sales of locally manufactured household furniture have gone down by 30 percent.

Furniture Industry

The prices of all raw materials used in making furniture which include chipboard, timber, foam, polish chemical materials, color paints and hard ware have increased.

Timber production on the other hand has gone down drastically because of unchecked deforestation.

Pakistan’s major buyers of wooden furniture are the UK, the USA, Sri Lanka and Gulf countries like the UAE, Saudi Arabia, Oman and Kuwait.

Furniture Industry

Quality export furniture is being produced at Chiniot, Gujrat, Peshawar, Rawalpindi and Karachi.

The demand for Pakistani furniture has been rising constantly.

It has bright prospects to export more than $1 billion worth of furniture annually in the international furniture market.

Chiniot’s Furniture Industry

Chiniot is world famous for its exotically carved and brightly lacquered furniture.

Furniture making in Chiniot forms a vital part of Pakistan's secondary industry and is also essential to the Punjab’s regional economy.

In total there are more than 175 small and medium furniture manufacturers in Chiniot. And there are over 2500 home units operating in Chiniot.

Zain Bin Gohar

Literature Review (ARTICLES)

Prospects and fears for Pakistan’s furniture industry

Why do small firms fails to graduate to medium and large firms in Pakistan

Wooden furniture: Great Export Potential

Dimensions of manufacturing strength in the furniture industry

Aggressive and passive exporters: a study in the furniture industry

Handbook On Long Term Financing Schemes  Of State Bank Of Pakistan

Hypothesis

Chinioti Furniture SME’s

Increased Exports

Empowering throughChange in Government Policy

“Empowering Furniture Manufacturing based SMEs in Chiniot will result in higher volumes of Furniture

Exports”

Population Frame

Population Size: 175 SME’s (According to SMEDA’s Data – 2009)

○ Other Home Based Units : 2500

Sample Size: 12 SME’s (Convenient Sampling)

LimitationWe were not able to travel to Chiniot, therefore did

telephonic surveyLack of FundsTime

Questionnaire

Are you an exporter of furniture?

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Hammad Raza

Questionnaire

Your Annual Turnover?

Below 1M 1.5M - 3M 3.1M - 5M Above 5M0

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QuestionnaireDo you think that government support to this industry is

sufficient?

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QuestionnaireHave you ever been rejected on the reasons of bad

quality?

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Questionnaire Do buyers try to influence your furniture designs?

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Amjad Nawaz

Problem Identification Sheesham Wood getting expensive

Chinioti Furniture is known for use of sheesham wood in carving, the recent increase in its prices has affected the industry in a big way. To cover this huge amount of sheesham is imported which is 4 times expensive.

Transportation rates are increasingWhere previously a company would have sent 4 containers, it ends

up sending only two. Diesel/petrol rates have also increased.

Raw material is diseasedRaw materials cost is high and it is of sub standard. As a result, low

quality of furniture is produced. Companies have to suffer severe loss.

Problem Identification Customs examination done is very severe

During customs examination furniture is broken / torn for inspection. As a result all material has to be made again. A huge loss is incurred on the companies.

Some companies give money and get their material cleared from the Customs.

In this process, even the poor quality material reaches foreign buyers and the image of the whole industry is destroyed.

Problem in basic utilities Load-shedding is a major problem. Furthermore, gas rates are on the rise with

increase shortage of supply too.

Railway Transportation Pakistan Railway is only used for movement of bonded goods and it is not

available for commercial exporters. Railway is one of the most cheapest means of transportation in country.

Other Factors Lack of space is a problem

Because of small area, less pieces of furniture are produced. There’s 40% loss and as a result all opportunities are lost. If more material is produced, it is wasted because there is no space for its storage. 

Lack of practical implications SMEs seeking to go international need to learn a lot about external and

internal environment impacting their organizations.

Lack of skilled labor Since the injunction of contemporary furniture, there is a decline in overall

hand carvers in the market.

No association or chamber to support these SMEs There is no established association or chamber who help protects the rights

and problems faced by this industry.

Saqib Zahoor Khan

Other Obstacles Access to the international markets tends to be a problem

As producers may be unfavorably located; far from the main consumption centers and suffer from costly transportation.

Access to raw materials at competitive costs becomes a problem as SMEs   This can become a hindrance to organizing the flow of raw materials from

domestic, non-transparent timber markets controlled by various intermediaries, and often leads to timber shortages just when exports are growing.

Access to knowledge and technology is a major problem area. SMEs tend to fall behind because of their strong reliance on traditions: e.g.

they may be using high-value timber for secondary uses, simply through force of habit and thus gain revenues far below the timber’s real potential.

Other Obstacles Access to capital is difficult to find at competitive rates

Since domestic bank finance is scarce, interest rates are generally high and collateral requirements are strict.

Access to designers is limitedThe exporters rely on simply selling items “as they are”, copying

new models or producing according to the buyer’s designs.

There are shortages of skilled labor and in-house training (Apprenticeships, on-the job training, etc.) is usually considered

too much of a burden. 

Conclusion & Recommendation

The government should initiate export quality standards in conjunction with PCSIR, through which substandard and low quality furniture should be discouraged and manufacturers and suppliers of quality furniture made of quality wood should be issued a certification. This helps exporters and manufacturer get orders from European and American countries.

Government should encourage hand carving art and train workers in this field in the vocational training institutes so that more carvers graduate with the required skills to support the industry.

To help reduce Sheesham Wood prices the government should wave off the duty on import of this wood. This will help bring down the prices of Sheesham wood in local market and thus reducing the overall prices of hand carved furniture.

Conclusion & Recommendation

Government should subsidies 50% of the total transportation cost of inland goods movement especially for this industry to encourage furniture exports.

Government should allot its own land and warehouses are reduced prices with proper infrastructure to store furniture and charge a nominal rate. The proposed location of this warehouse could be near the Chiniot bypass near the motorway.

Government should make a new department inside the Export Promotion Bureau, and its sole purpose should be to promote the furniture industry of Pakistan. It should mediate between foreign exhibitionists and the exporters so that Furniture manufacturer can participate in such exhibitions worldwide.

Government should subsidize import of latest technology so that manufacturer is encouraged to use latest technological means of manufacturing.