The Furniture Sector in Pakistan: Export performance and ... - TRTA i

2 Furniture sector in Pakistan
2.1 The sector in general
2.1.1 Furniture sector in Pakistan and global furniture industry
International forest industry system: Raw material and product flows
Conceptually, the Pakistani furniture industry may want to consider their world competitors
through the following positioning (Figure 2.1). It summarises on a very broad level the global
flows of wood and also non-wood fibres in a larger system of forest industries. It shows, for
example, the relative importance of wood from various sources (types of forests) and it shows
where the significant flows on non-wood fibres come into the industry’s system. It also
attaches the furniture industry to the downstream processing where close linkages can be made
to the builder’s joinery, carpentry and pre-fabricated houses, etc.
The figure shows how the wood product sector consists of a chain of successive manufacturing
activities, each having traded outputs. In the processing and distribution chain, added value is
multiplied at each phase of further processing. For this reason, the national trade plans and
strategies of timber-producing countries tend to put emphasis on the exports of high valueadded
products such as joinery and furniture. (ITTO-ITC (a), 2004).
The comparative advantage derived purely from resource endowment declines as the degree of
processing increases. The economies of scale tend to behave similarly, i.e. the higher the
degree of processing, the less there is dependence on plant size as a factor of cost
competitiveness. Typically, the relative importance of small and medium-sized enterprises
(SMEs) is high in furniture, and they play a key role in satisfying domestic demand. Being
labour-intensive, small-scale enterprises tend to make a positive contribution to the general
socio-economic development. Industrial policies should recognise the strategic importance of
SMEs as a source of employment and income.
In conclusion, countries will have to base the competitiveness of their wooden furniture on
either one, or preferably all, of the following factors:
• Low-cost local inputs (notably wood and labour)
• High total productivity (measured over all factors of production i.e. wood, labour,
capital, energy and operating supplies)
• Superior quality of products (including design and articulate handwork)
• Consistent operational efficiency through prompt supply-delivery schedules, and
• Genuine customer satisfaction through willingness to replace damaged goods and other
after-sales service.
International Trade Centre 7