Exporting From Pakistan

Exporting from Pakistan has been an enigma for most of our women entrepreneurs. How does one get into global sales from Pakistan?

First of all - let's clear it out at the outset - it is NOT taking a suitcase full of clothes/jewellery/any other item, and selling it at a home sale in other countries at your friends'/relatives' apartment/house.

The 'suitcase' transactions help you earn but do not add to the export base of your country and also do not build your performance as these transactions do not get documented.

Again, if it is just small quantities that sort of take care of your travel expense probably, its no big deal. However, if it is a regular practice of yours to send stuff with every friend /relative traveling abroad - you are doing a great disservice to your country and to yourself.

As you decide to start reach global markets with your products, the main things to consider are:

1. Develop a product that is unique - it doesn't mean that you should 'invent' something, however, it means creating something that has its own style, for example, suppose you already make bridal wear - you can put new designs, may be fusion style for your market in US, UK and Canada.

Or suppose you make home textile, may be you try with the 'Banarsi prints' style that became quite a rage in the US.

Similarly, for party wear and for jewellery, you can either add old styles to new patterns or add the western styles to give it a 'fusion-fashion' look.

2. As you design your product try to put it on paper. You can write what went into the product as raw material along with its cost. As you prepare costing of your product remember to get invoices for all the products you buy.

Then add the number of man-hours used with cost and the electricity and rent as well as other overheads. This will give you a benchmark figure for cost per unit.

In exports the main earning factor is quantities. You should have the ability to sell at competitive rates and in bulk quantities. So your calculation will be in dozens perhaps.

Now that you have arrived at a cost and the time it takes to put together the raw material and the initial order you can safely give a 'Lead Time'.

Lead Time is usually higher for the first order and with subsequent orders it becomes less. For example, for your initial order you might need a lead time of 45 - 60 days depending upon your product while for subsequent orders it may be 30 days or so.

This is because for the initial order you need to 'source' all the inputs which also includes locating vendors that offer best rates, local as well as foreign, testing for quality, calculation of consumption with trial runs etc. Once all these sources have been established and you have given your first order, repeats are comparatively easier.

3. As you enter into negotiations with a foreign buyer (a separate page on how to find foreign buyers) your homework should be complete. There are two kinds of foreign buyers - one that give orders for manufacturing i.e. they outsource manufacturing - this is the more prevalent practice. The second type of buyer is who takes your designs and sells them. A difficult option and not much in practice still more possible with women as they make their own designs. These buyers usually go to the exhibitions to pick up new ideas and styles.

As you enter into negotiations with either the price you quote should be competitive yet give you a good return. A rule of thumb in pricing goods for exports is 3 times of your cost so that you cover:

i)  The actual cost with shipping and freight
ii)  Any amount you may have to pay to agents/brokers and any unforeseen costs
iii) Profit margin

If you do not keep a profit margin your business will die. You should be getting your service charges as 'salary' which will be built in the 'cost' part of the product. The cost will be:

Cost = Raw Material + Labour + Overhead

Your payout comes from the overhead part of the cost. As your business grows bigger you will move the administrative expenses out of 'cost' and below the contribution margin.

You offer him a price on FOB or C&F i.e. 'Freight on Board' or 'Cost and Freight' so now you have negotiated the price and given your buyer a lead time. If he asks send him a sample (you can charge for it if it is a costly item).

If the deal is struck and he places an order with you, send him your company's details along with bank account in the Invoice. The buyer will issue a Purchase Oder (PO) which you will accept (if you think it is okay) and then he should send an L/C (Letter of Credit) in your name.

Review the terms of the L/C along with your banker. Ensure that all the clauses are in place and the shipment schedule has taken into account the lead time.

You will have to ship by the date given in the L/C or obtain an extension well ahead in case you feel you will be late in shipping the goods.

Do a good job at exporting your products and you will have a regular source of very good income for a long time. Maintain quality and ship on time.

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