In our continued series on alternate sourcing, Amazon Sellers Lawyer focuses on the different benefits associated with manufacturing and sourcing goods in various countries. As the Amazon Marketplace continues to grow and expand, Amazon Sellers are increasingly looking to over-seas manufacturers to produce their products. The article which follows below focuses on the country of Pakistan and recent economic reforms which have led to substantial growth of its economy.
With a population of around 200 million people, Pakistan is the sixth most populated country in the world. The country maintains a cost-reductive process for alternative sourcing of goods and provides an immensely sustainable business module that revolves around adaptability. While more than 10 years ago Pakistan’s economy was not in the best of shape, today the government has dedicated itself to reform. By fostering a pro-entrepreneurial environment and by furthering the development of the private sector, today Pakistan has become one of the world’s most delightful economic surprises.
Pakistan’s economy has been on the rebound since legislative reform was set into place. The largest indication of fiscal growth is in the country’s stock market where the gains have risen to over 46 % within the last year. Pakistan’s gross domestic product has also stayed relatively consistent at about 4%. However, economists believe this number will rise to 5% sooner than later. Although that number doesn’t seem too high in comparison to larger manufacturing hubs, it does however put the economy on a consistent path towards prosperity.
A more important indication of the country’s successful economy lies in the statistic that now, 47% of Pakistani households have a personal washing machine. This number was only at a mere 13% in 1991. The nation’s experience of a 34% growth rate caused by an influx in the appliance-manufacturing sector is certain to dictate a trickle-down economic effect.
Competitive Foreign Wage Structure:
Although Pakistan has experienced an increase in wage growth, the bigger picture has not skewed the cost-reductive reputation of the country. Nine years ago the country endorsed a slow but gradual increase of the Pakistani domestic minimum wage. Workers received raises during the years 1998-2008 of nearly 600 rupee annually (topping out at 6,000 PKR per month). That meant workers were only making $57.00 per month.
Today, wages have nearly doubled thanks to a new pay structure that allots a certain wage standard based on geographic location. The provinces of Punjab, Sindh, Khyber Pakhtunkhwa, Baluchistan and IC now require a minimum wage of 14,000 PKR. However, for the foreign investor, this is very affordable. Further, the average worker would still be making $230.00 less than it would in a manufacturing powerhouse like China.
Cost of Sourcing in Pakistan versus the Cost of Sourcing in China
In terms of the monetary responsibility that an Amazon seller is faced with, wages in Pakistan are considerably lower than most manufacturing hubs around the globe. The operational costs per month for a factory worker is stated to be $134.00 (USD), which means that it is considerably less than ulterior options. This figure is $224.00 less than it would cost an entity per month in China. This equates to a near 60% differential between the two. All-in-all Pakistan can become an attractive Amazon product sourcing hub in the near future, it cannot compete the China though.
Related: Tips to hire right Amazon sourcing agent
About the author:
Michael Joyce is a contributing writer at Rosenbaum Famularo, P.C., The IP Law Firm behind AmazonSellersLawyer.com. Our practice focuses on Amazon Sellers.