Export from Pakistan: a guide for Pakistan SME Exporters

Pakistan is a major exporter, distributing cotton, textiles, chemicals and industrial raw materials around the world. Continuing to grow in 2020, despite the global pandemic, if you’re an SME exporter in Pakistan and thinking of expanding overseas, now might be a great opportunity.

Exporting goods on an international scale can seem daunting at first, but with the professional support and intelligent digital tools from Alibaba.com, the world’s largest B2B trade portal, and this ultimate guide for Pakistan exporters, it has never been easier to grow your business internationally and meet overseas demand for your products and goods.

In our ultimate guide for Pakistan exporters, we’re going to reflect on the current economic climate, discuss Pakistan’s export industry and geo-economic benefits, and reveal key opportunities for businesses from Pakistan and how to launch an SME in Pakistan exporting goods around the world.

Exporting from Pakistan & the global pandemic

Despite international travel restrictions, national lockdowns and economic uncertainty, Pakistan’s export industry has continued to thrive during the global pandemic.

Pakistan is not immune to the economic hardship caused by the global pandemic and the country did record a 34 per cent drop in exports in early 2020, but its new industrial strategy, “Make in Pakistan” has helped exporters to stay strong through these unusual and unstable economic times.

With a strong relationship with China, in the first quarter of 2020, Pakistan saw bilateral trade increase. In the second quarter, there was an initial dip due to international travel restrictions, but as the year draws to an end, the country continues to see growth and opportunity in abundance. The updated China-Pakistan Free Trade Agreement (FTA) has made over 300 items duty-free¹ in order to allow Pakistan and China to access each other’s countries, including fisheries and pharmaceuticals.

Pakistan is a major manufacturer and exporter of the N95 face mask, and with the “Make in Pakistan” strategy, tariffs, regulatory duty and customs duty were eliminated, helping boost the Pakistan economy further. The country also produced homemade PPE equipment and as the global pandemic spread across the world, received orders worth over $100 million. Federal Minister for Science and Technology Fawad Chaudhry said ‘Pakistan is a major exporter of materials for protection against the coronavirus.’²

Pakistan-China also cooperates in all areas, from defense to security, to trade, investment, education, science and culture. Perhaps this strong tie and Pakistan’s close proximity to both India and China has helped its economy to remain strong even in these uncertain times. When travel restrictions caused chaos for airlines and exporters around the world, Pakistan was able to transport goods by rail or road to India and China.

For SMEs in Pakistan, an international demand for affordable goods and in particular PPE will continue into the new year. Personal protection equipment is certainly an interesting sector to focus on at the moment, but there are also plenty of opportunities to move into other industries such as homeware, casual clothing and health food too. As people invest more in their health, home and comfort, Pakistan can provide cotton, clothing, soft furnishings and superfood supplies around the world.

So, what are the current opportunities for SMEs in Pakistan in relation to exporting internationally?

Traditionally Pakistan exports leather goods, raw industrial materials, cotton, textiles and chemicals but as many industries struggle to stay open, there are new and emerging markets that SMEs in Pakistan could target and move into. From health supplies and superfood, to homeware and soft furnishings, for the next 6 to 12 months at least, hundreds of thousands of professionals will be working from home and looking to improve their lifestyle, home and health, and this is a massive market to explore. Let’s take a look at some key opportunities for Pakistan exporters.

Discover the top exported goods from Pakistan

The top 10 exported goods from Pakistan are as follows:

• Cotton
• Textiles
• Knit or crochet clothing
• Cereals
• Leather
• Copper
• Optical, technical and medical apparatus
• Mineral fuels
• Fish and poultry
• Sugar and confectionary

To adapt to the global pandemic and new buyer trends, SMEs in Pakistan hoping to export overseas should consider the following new and emerging markets to diversify and rethink their business model and product range.

• Casual and comfortable footwear. Pakistan has always had advantage in textile and clothing exporting. With Coronavirus spreading around the globe, people are advocated to stay at home, work from home, cutting down outdoor activities but the demand of comfortable home wears is on the rise. The search popularity of the term ‘slippers’ has increased by 189% on Alibaba.com from Feb 2020 to July 2020.
• Women’s nightwear and activewear. No need to dress up for work or a dinner date, the demand for pajamas, lingerie and activewear such as yoga pants is steadily increasing around the world. From underwear and socks to parent-child wear, more people are choosing to invest in comfortable, cozy clothing to wear while staying safe and at home. Pakistan is rich in cotton production and exporting, thus it should seize the opportunity to export more cotton wears.
• Superfood and health supplies. As the global pandemic makes us more conscious about our weight, lifestyle choices and health, there is more demand for immune-boosting superfoods, healthier snacks and weight loss aids. According to Alibaba.com’s industry reports, consumers will be searching for healthier products, hygiene and immunity goods. Vitamin E rich nuts such as pistachios, almonds and walnuts are becoming more popular in Europe and are being used to make homemade bread and pastries, oatmeal and salads. Pakistan is already a major exporter of nuts, so businesses selling seeds, nuts and other healthy snacks should promote their immune-boosting benefits to attract overseas buyers.

Top export destinations from Pakistan

Pakistan exports to the US, UK, UAE and China as its major destinations. As the UK and US continue to battle the global pandemic and are forced to use national lockdowns to combat the rising numbers of Covid-19 cases, travel restrictions remain in place, causing issues for companies importing products from Pakistan.

However, as Pakistan shares a boarder with China, orders are flowing in from the Chinese market. In fact, according to Shahid Sattar, Secretary General at the All Pakistan Textile Mills Association, Pakistan’s garment manufacturers are operating near maximum capacity, with many companies unable to take order for the next six months³.

Why SMEs in Pakistan should sell internationally

Pakistan is said to be on track to increase its exports by up to $12 billion by 2024⁴, even with the global pandemic disruptions and economic impact. With the ability to mass manufacture in-demand goods and supply to China, India, Bangladesh and US among other countries, there is room for even small SME exporters in Pakistan to grow. With government strategies now giving exporters a helping hand to supply the global demand for PPE, clothing and medical equipment, businesses should start selling internationally now.

Here are some more benefits of exporting products from Pakistan.

Benefits of exporting from Pakistan

Conveniently located in the heart of Asia, Pakistan is well positioned to export goods. From its close relationship with China to its ability to transport goods to Iran and across India, the country provides a gateway to the rest of the world.

Not only is Pakistan in a great spot, but it has the infrastructure and legal system in place to accommodate mass international exporting. Transport goods via road, rail, air or sea and protect your business with Pakistan’s modern legal system. Strategies such as the “Make in Pakistan” initiative are also helping to support cross-border trade and giving SMEs in Pakistan an economic step up to branch out into new markets around the world.

The demand for mangoes, berries, rice and citrus fruit in China has led to the two countries working together to develop a reliable supply chain for high-quality food.

Pakistan also has a high number of English speakers, making it easy to market to UK and US customers online. Links with the UK and in particular Pakistani migrant communities helps to build trust and reliability between sellers and customers.

Cons of exporting from Pakistan

One major challenge for Pakistan exporters is their product range. For years Pakistan has continued to export primarily raw materials and simple manufactured goods instead of developing and offer high-value products. By sticking to labor-intensive technology, the country will be hit hard, should demand for these goods drop, as a vast amount of the population works in manufacturing and exporting goods. It’s important for Pakistan to focus on a long-term development strategy in order to continue to advance and be a world leading exporter.

How to start exporting from Pakistan

So, if you’re ready to start exporting products internationally, first you’ll need to choose an industry, sector and product range. Alibaba.com has a library of free resources and industry reports to help you discover products in demand, industries on the rise and international buyer behavior, so it’s a good idea to start here if you need some advice and guidance. Once you’ve chosen what you want to sell, it’s time to consider how you will reach your intended overseas customers. Alibaba.com’s international marketplace will help you market your business online and start selling goods for buyers from around the world.

Of course, determining the industry you want to invest in and export is far from enough to run a SME in Pakistan, because there will be many details, licenses, policies you must have a full knowledge of to export your goods overseas. Don’t worry if it sounds quite complicated, as we have broken down the steps and matters need attention here for you:

1. Research & define your international target market to succeed

After you have a product range ready, it’s time for you to consider in details that what kind of international customers are you targeting at? You can lock your potential buyers through following aspects:

• Do they speak English, Chinese or Arabic?
• Do they value fast delivery?
• Are they interested in bulk purchases or single items?
• Will you be offering a sample or not?
• Is there a minimum order requirement?
• Are they using a smartphone, tablet or desktop device?
• Are they the end consumer or another business?
• Is price a concern or quality more important to them?
• Will you offer discounts for repeat buyers?
• What are their interests and values?

Alibaba.com is a mature international marketplace for global SMEs. You will definitely find buyers from all over world through Alibaba.com. However, before formally sell your products overseas, you must understand and prepare all the necessary regulations, licenses and relative polices. Following are the potential costs to set up an export company:

2. Rules & regulations for exporting overseas

Here are some legal requirements you’ll need to follow to open an import-export business in Pakistan.

Company Registration:

First step is to get your firm registered as the fundamental step for all business.

NTN - National Tax Number:

To open an import or export business in Pakistan you’ll need a national tax number⁵ issued by the Income Tax Department under the name of your company or firm.

Chamber of Commerce Membership:

You should also be registered with the Chamber of Commerce and have a membership.

Sales Tax Registration:

Another important requirement in Pakistan is to have a sales tax registration, if you are going to be importing goods as well as exporting them.

Bank Account:

Be sure to open a bank account for the company, as it is necessary for both imports and exports.

Import Export License:

Certain goods do require an exporter in Pakistan to obtain a license, but often the sales tax registration replaces the need to hold an import export license.

3. Expenses of running an SME in Pakistan

The cost of running an SME in Pakistan and exporting products worldwide needs to be considered. The cost of manufacturing goods, packaging items and paying employees, along with the fees to ship goods internationally all need to be considered in order to run a profitable Pakistan export company. From storing products in warehouses, customs duty and transporting goods, to business insurance and documentation, these fees can quickly add up and should be considered before formatting your pricing structure. To help you to understand the expenses you might face when selling to international customers, let’s discuss some common fees most international exporters face.

Logistics & freight: A seller can be responsible for transporting and storing goods. This can include transporting items from one warehouse to another, or shipping cargo to a port. Logistics form the backbone of international trade and you should be aware of the cost and expenses of shipping goods to each destination, and whether it’s by sea, rail, road or air. High volume orders are commonly exported by sea, but high value and low weight items are sent via air.

Insurance: This depends on whether you want to offer customers insurance for their goods or not. Having an insurance policy to protect your customers will help you to build trust and increase sales.

Buying stock: Investing in products and goods can be expensive and cause a cash flow problem. This is why researching market demand and buyer behavior is so important for exporters.

Paying employers: Running a business will often involve hiring employees and if you plan to expand overseas, you might need to hire more people to meet an increase in demand. This expense must be taken into consideration in order to run a profitable SME in Pakistan.

Documentation and duty: Depending on the Incoterms used, an exporter can be responsible for custom proceedings and should be able to provide all the relevant documentation to export products. You could hire a customs broker in order to help this process go as smoothly as possible as things can get quite complicated.

Packaging and labelling: Protecting delicate items such as medical equipment and health supplements while in transit comes down to high-quality packaging. As an exporter, you’ll need to pick your packaging carefully or risk dealing with unhappy customers when their orders arrive damaged. Invest in packaging and labels and create a positive unboxing experience for your customers and generate positive reviews and repeat buyers.

4. Figuring out international billing & payments

Making a sale is great news but how will you get paid? There are four commonly used payment methods by international buyers that you should be aware of:

Credit card:

Easy to use and allows you to secure an advance payment for sellers.

Wire Transfer:

Secure and preferred for cash in advance payments, you will need to provide payment details and your business address to process an international payment. There will usually be a fee involved and this can either be added to the buyer’s bill or paid by the seller.

Escrow Service:

Giving customers the confidence that their goods will be sent, an Escrow service can be beneficial for both sellers and international buyers. A third party will hold onto the payment and only release it once the goods have been received.

Payment by check:

Pretty outdated, this is considered the last option if buyers can’t accept another payment method.

How QST International, a Pakistan manufacturer, grew 35 times its revenue over ten years with Alibaba.com

QST International is a family-run business established in Siakot, Pakistan, in 1989 by Tanveer Ahmed’s father. The company manufactures and sells high-quality boxing gear, weight-lifting products, workout clothes and activewear. QST has always wanted to export its products to international market but has failed to secure enough export orders until it met Alibaba.com.

Tanveer Ahmed started to take the leadership of QST in 2007. He started to expand into eCommerce, and valued Alibaba.com as the best option because it had the greatest number of serious business buyers.

“After 10-years of hard work on Alibaba.com, my family business has grown 35 times in revenue, having 170 employees in total. We are now a 100% export business, with 80% of our orders coming from Alibaba.com.”
      - Tanveer Ahmed

Find out more about his inspiring story here.