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Sukkur Institute of Business

Administration
(Assignment Micro Economics for competitiveness)
Case Study
From street to FIFA 2014
Football manufacturing industry of Sialkot (Pakistan)
Submitted To: Dr. Khalid Ahmed
By: Iram Naz
ID: 231-15-0009
MS I (Management)
Date: 24-06-2015
It was when I felt the roar of the crowd at the 2006World Cup that I dreamt of a goal of my
own: to manufacturer the ball for the biggest football Tournament on the planet
(Malik Khwaja Masood Akhtar , owner of Forward sports private limited)
Sialkot, a town in eastern Pakistan, was once the unassailable soccer ball production capital of
the world -- exporting about 30 million balls a year, an estimated 40 percent of global
production.
History of sports industry in Sub continent and Pakistan:
The first record of manufacturing of sports goods in Sialkot can be traced back to 1883 when
Sardar Bahadur Singh and Sardar Ganda Sigh Oberoi built a factory to produce sports goods for
the British Army soldiers stationed in the northern sub-continent. The products manufactured
were wooden, such as cricket bats, hockey sticks, polo sticks, etc.

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In 1895 when the city of Sialkot started becoming famous for its tennis racquets (when a British
man broke his tennis racquet and, since an immediate replacement was not possible, he asked a
local craftsman to repair it. The man did a perfect job and the sports goods manufacturing
industry took root in Sialkot). By 1903, cricket bats were being crafted from imported English
willow and exported to different parts of South Asia and beyond. In 1918, a British Army soldier
for repairs at Oberois factory, where a Muslim artisan known as Syed Sahib was assigned the
task, brought a football. Syed Sahib not only re-stitched the football to the full satisfaction of
army personal but also reverse engineered it in his own small manufacturing unit.
British soldiers were astonished to play with the local version and they praised Syed Sahib for
his skills. Subsequently Syed Sahib started catering to the needs of local troops. In 1922, Syed
Sahib was awarded the first Export Award from the British Empire for his outstanding venture to
supply footballs to the British Army camped in Singapore. The sports goods sector bravely
passed through the turmoil at the time of independence in 1947 when most factory owners, who
were Hindus, migrated to India. The craftsmen, who were mostly Muslims, took over and greatly
expanded the businesses. Over the years the industry grew to include a variety of wood and
leather-based sports equipment, and diversified into related industries such as cricket balls,
volleyballs, field hockey sticks, polo sticks, recreational fishing equipment, sports apparel and
horse riding equipment and even the Scottish bag pipes.
By the 1970s, the city was a center of shore production for many European soccer-ball
companies, and in 1982 Sialkots manufactured balls used in the FIFA World Cup for the first
time.
In 1980s Sialkot gained international celebrity status when it produced the Tango Ball used in
FIFA Football World cup in 1982 which led further growth of soccer ball industry.
All the major international brands like Adidas, Nike, Puma, Select, Litto, Umbro, Mitre,
Micassa, Diadora, Wilsoms and Decathion are sourcing their supply of footballs from this
export-oriented city and hub of cottage industry of the country.

In 1994, it was also official supplier of world cup in USA. Therefore, export of football become
doubled from Rs. 1.6 billion in 1992-93 to Rs. 3.2 billion in 1993-94.
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This boom period for Sialkot industry remained till 1998 world cup when footballs manufactured
from Sialkot were again selected. In this era Sialkot Pakistan, makes headlines over the world for
its very high quality footballs. As per an estimate, approximately 80-85% high quality hand
stitched inflatable balls production of the world originates from Sialkot
Hand-stitched balls used in the 2012 Olympic Games.
FIFA World Cup 2014, the ball was produced by Forward Sports Sialkot for Adidas. The name
Brazuca is an informal local term which means Brazilian or to describe the Brazilian way of
life. The Brazuca features a striking new design and new panel system. Six identical interlocking
panels make up the ball's synthetic surface, thermally bonded to keep out moisture.
Like its predicesors it is spherical and multi layered with aerodynamic groves and a rough outer
surface for flight accuracy. Whether evolution of the football is the quest for more spectacular
play (and goals) and or reduction in injuries related to kicking and heading the ball remains
unclear.
Over 42 million soccer balls worth Rs17.473 million have been exported from Sialkot so far
ahead of the FIFA Football World Cup 2014.
Major challenges:
From 2013 and onwards, The global market share of the football cluster has been shrinking.

Considering U.S. imports (for which, conveniently, there is a 10-digit Harmonized System
category for inflatable soccer balls, 9506.62.40.80), Pakistan's market share fell from a peak of
71 percent in 1996 to 17 percent in 2012. In contrast, China's market share rose from 19 percent
to71 percent over the same period. The firms in Sialkot face increasing pressure from Chinese
producers at both the high and low ends of the soccer ball market. At the low end, China
dominates production of lower-quality machine-stitched balls. At the high end, Chinese firms

manufacture the innovative thermo-molded balls that have been used in recent FIFAWorld Cups
(with the balls the 2014 FIFA World Cup being made in both China and Sialkot).
According to industry sources, local soccer ball manufacturers had faced problems. 30 to 40 per
cent of the total orders floated globally for the upcoming Fifa World Cup in 2014. This is a sharp
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decline from the 70-80 per cent bagged during the 1998 and 2002 World tournaments. The local
football industry earned $164 million in export earnings in the financial year 09, as against an
average of $221 million per annum earned during financial years 2005-08. Power and gas
shortage are not making it any easier for the industry, and sources say that a number of business
have failed to meet deadlines which has dented their reputation.
According to Arif Mehmood Sheikh, a former chairman (PSGMEA) the shift of a large number
of orders to China should serve as an eye opener for everyone. He said that the factors behind
the diversion of export orders to China was a combination of rising cost of production and
inability to meet deadlines, which in turn were caused by rising POL prices and unreliable power
supply. This has made it difficult for Sialkot exporters to compete with manufacturers in China,
India, Nepal and Thailand.
Under the directives of federal government a project of Sports Industries Development Centre
(SIDC) has been initiated costing more than Rs435.637 million in Sialkot for modernising soccer
ball industry. The SICD is fully equipped with latest machinery which has already started its trail
production.
The prime objective of setting up of SIDC was to help sports goods sector to adopt modern
technology of mechanized Thermo Lamination Balls by providing the common facilities,
technical advisory services, molding machinery services and training. The SIDC will help
businessmen and manufacturers engaged in soccer ball industry to modernize the industry and as
well as help in resolving problems confronting the industry, especially technology of mechanized
ball that is threatening the hand-stitched soccer ball.
SIDC would have the facilities like making prototype balls for the industry, training of skilled
workers for the industries in mould, rubber technologies, mechanized thermo laminated balls,

provision of manufacturing facilities for SMEs to secure their export orders for mechanized
thermo laminated balls. SIDC would also help develop machinery locally through reverse
engineering and providing assistance in setting up mechanized thermo laminated balls
production in individual industrial units engaged with sports goods sector of Sialkot would be
available in SIDC.
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The project will facilitate in sustaining Pakistans position in international market of inflatable
balls in general and soccer balls in particular.
Federal government has taken this bold step to address the problems of soccer ball industry of
Sialkot, besides modernization of sports goods sector.
The sports goods industry was confronting with a serious threat in the form of thermo molded
balls that are made through medium end technology to produce a ball with most characteristics
of a hand stitched ball.
Rising cost of production due to high prices of electricity, labor cost and raw material cost; and
lower productivity of employees. Football industry also face human resource issues, most of
workers have lower level of education and skills as well as low retention rate. During last
decade, child labor and other labor issues, remain the major issue- got a lot of time and energy of
the producers to solve it. Due to this issue, initially Nike pulled out its production and later
limited its supply from Pakistan; it also detracts the industry to move with changing technology
and market.
For a long time this vital industry also faced criticism from European countries and especially
from United States with allegations of using child labour. The Sialkot Chamber of Commerce
and Industry took prompt measures to curb child labour from the soccer ball industry in
accordance with the Atlanta Agreement signed with the International Labour Organisation (ILO)
and Unicef in February 1997.
It is estimated that some 93 per cent of child labour was progressively eradicated from this vital
industry and necessary steps were taken to provide social protection to children and their
families. The children who were associated with this industry were provided with good

schooling. The vital steps taken by the soccer manufacturers and exporter were highly praised by
the then United States President Bill Clinton in the address at the ILO convention at Geneva in
June 1999.

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Power shortage:
Since 2008, Pakistan is facing serious problem of power shortage. This problem distracts the
production process on frequent bases that make the labor idle, in the way not only cost increaseproductivity also decrease. It also make extremely difficult for them to fulfill order on time.
Many orders have been shifted from Pakistan to china- due to delay in order fulfillment. In
addition to this, continuous increase in electricity prices has made the production more
expensive, decreasing profit margin (Dawn, 2011).
Industries and exporters:
Firms of Sialkot manufacture both high-quality\match" and medium-quality \training" balls with
a sports brand or soccer team's logo as well as Lower quality \promotional balls" branded with an
advertiser's logo. Online services are also provided.
2,400 companies of various sizes are manufacturing sports goods in Sialkot.
More than 200,000 employees are working in Sports industries.
Large exporters work with more than 250 employees, Medium exporters with 100250
employees and Small exporters with 10100 employees. Commercial exporters work with (19
employees).
The worth of exporting goods is US$450 million per year. The export of sports goods increased
by 7.85% from US$39.180m US$42.257m by 2013-14.
Sialkot export 70% of total world demand for hand-stitched inflatable soccer balls (footballs).40
million balls annually worth US$210 million.

Sialkot based small and medium industries are earning foreign exchange of over US 1.6 billion
dollars annually through exports and strengthening the national economy.
Sialkot is catering 85 percent of the total world demand for hand stitched inflatable balls, that
mean 60 million balls annually.

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Clusters:
The flagship product of the cluster in international market is hand stitched inflatable ball (mostly
soccer ball). Rest of the products made by the cluster can be considered off shoot of soccer ball
product line. More than 100,000 persons are directly employed by the cluster out of which
60,000 specifically engaged in manufacturing of inflatable balls.
Sialkot caters to around 70% of total world demand of hand stitched inflatable balls which
translates into around 60 million balls annually.
The scope of sports goods contains quite a lot of products, but here only products produced in the
cluster in significant quantities would be mentioned. The products are
Inflatable balls: Mainly soccer balls, ruby balls, volley balls, beach balls, exercise balls, cricket
balls, hockey balls.
Sportswear: Track suits, knickers, shirts, karate suits, wind breakers, etc.
The cluster is scattered over the whole city. The main concentrations are on Daska road, Defence
road, Marala road, S.I.E, Uggoki road, Kashmir road, Pasrur road & Wazirabad road. Apart from
these areas, numerous football stitching centres are also established in villages by the factories.
Raw materials used are both of foreign and local origins. High quality inflatable balls are made
from imported artificial leather. Similarly specialty fabrics used in sportswear stitching are also
imported.

Analysis of business operation

Production process flow

Soccer ball and Sportswear comprise the largest chunk of the sports goods produced in the
cluster. Production operations of these products along with flow charts are discussed below.
Soccer Ball
Purchase of artificial leather, cotton fabric, polyester-cotton fabric, latex, printing inks, bladder,
thread ,chemical additives.
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Cutting of sheets of artificial leather & fabrics.

Lamination of artificial leather with fabric layers (usually 24) using latex mixed with
bonding agents.
Drying of laminated sheets under sun or in dryer.
Cutting laminated sheets into panels by using eccentric power press.
Screen printing on panels according to the designs.
Ball stitching.
Inspection.
Washing.
Packing.
Shipping
Flow Chart Soccer Ball Manufacturing

Purchasing (Artificial leather, Cotton/Polyester Fabric, Latex, Printing inks, Chemical

additives)

Screen Printing on Panels

Drying of Laminated Sheets

Cutting into Sheets (Artificial leather and Cloth)

Lamination of Artificial leather with cloth layers

Panel Cutting

BallInspection
Stitching
Washing, Packing & Shipping

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Technology status
Manufacturing of soccer balls is mostly based on manual skills of expert craftsmen barring only
a few processes like bladder making and panel cutting. This manual skill in fact gives Sialkot the
competitive edge in international markets.

Marketing
The cluster enjoys an impeccable position in international market of sports goods. World famous
brands like Addidas, Nike, Micassa, Puma, Mitre, Select, Umbro, Lotto, Diadora, Decathlon,
Wilsons, etc buy from here. The main markets are EU, North America and Japan. More than 97%
of total output of the cluster is sold internationally. Most of the companies have separate export
departments to look after international sales.
Main activity in international sales is participation in trade fairs in EU and USA. Usually owners
attend the fairs themselves. Meetings with buyers and potential customers are also held during
and after the trade fairs.
Cluster has been weak in developing its own brand(s) internationally.

Financing

Financing is easily available. All the financial institutions have their branches in the cluster.
At the time of business start up; entrepreneurs rely on their own investment. To full fill
working capital needs preference is given to Export Refinance Financing based short term
loans which are provided by State bank of Pakistan through commercial banks at very
nominal rates.
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Informal credit is also available in the form of credit on the purchase of raw materials or
services by the raw material suppliers.
Human Resource
Most of the labour employed by the cluster didnt go through any formal training process.
Traditional UstadShagrid system is still in vogue especially in hand stitched inflatable
balls. The trend has been shifting and now firms prefer those individuals who have received
some sort of formal training. Currently training facilities are being offered in garment
stitching, pattern making & screen printing only by Vocational training institute (VTI).
However a huge gap exists in provision of training on technologies used in manufacturing of
composite

based

sports

goods,

specialized

stitching

machines,

mechanized

ball

manufacturing, embroidery, etc.

Economic development and market share:

All over the world, football regards as the most popular sport. Balls; which are the main inputs
for this, in 2008, it had a sale of $1.15 billion (UN comrade, 2010). According to Nadvi (2010),
there is significant increase of 240% in the trade of football industry from year 2001 to 2008.
Various tournaments and live coverage of footballs have surged the popularity of this game.
However, few brands are dominating in international market such as Nike, Adidas, Puma, and
some other brands. Out of these, Nike and Adidas is the major ruler of market. Adidas has 34%
market share and get sale of $1.57 billion from footballs related products- while Nike has $1.7
billion sale in international market. Both, Nike and Adidas are also two biggest buyers of
footballs (Nadvi, 2010).

Competition with China

Major changes have been taken place in manufacturing technology and production process,
customers preferences, and competition. Pakistan market share begun to decline and china had
strengthened its position. As it is evident from the figure that china which was having market
share of 28.9% in 2004 has been reached to 50.5% in 2009. Meanwhile, in 2004, Pakistan was to
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near to china with market share of 23.2% has seen some major decline in market share and
remained only 13.2% in 2009.
Continues to date, resulting in situation so bleak that it seems difficult for Pakistan to regain its
position. In the next section we will discuss the reasons behind this situation (while drawing
lessons of from china) and make recommendations to redress the situation these challenges and
issues (Lund- Thomsen & Khara, 2011; Nadvi, 2011).

SWOT Analysis
Strengths:

Skilled workforce
Product mix
Entrepreneurial skills
Strong logistic infrastructure
Production in short times
Linkages with international markets.

Weakness:

Internal price competition.

Limited distribution channels.
Limited product innovation.
Non availability of training institutes for latest technology based manufacturing.
Electric power outages

Opportunities:

Removal of subsidies by competing countries due to obligations under WTO.

Unexplored geographic markets of South America, Far East, North Africa & Eastern

Europe.
Better trade access in EU & USA
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Threats:

Domestic/international political situation.

Imposition of social, environmental, technical & compliance barriers to trade by

importing countries
Licensing requirements by international producers of raw materials

Growth of sports manufacturing firms:

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References

Lund-Thomsen, P. and Nadvi, K. (2010). Clusters, chains and compliance: corporate

social responsibility and governance in football manufacturing in South Asia. Journal of

Business Ethics, Vol. 93, pp.201222.

Mansoor, Z. (2011). Football industry hub Sialkot struggles forward.

http://dinarstandard.com/challenges/football-industry-hub-sialkot-struggles-forward-2/.
Brazuca Ball Bounces From Pakistan To Brazil www.mintpressnews.com.
Inflating Pakistans football industry - The Express Tribune
42 million soccer balls exported from Sialkot ahead of FIFA World Cup | Pakistan
Football in pakistan www.slideshare.net
Evolution of the world cup soccer ball www.slideshare.net
FIFA World Cup Balls - All Made in Pakistan - The New Indian Express

www.newindianexpress.com
Remington Sports (PVT) Ltd - Pakistan Manufacturer | HKTDC www.hktdc.com
pakistan soceer manufacturing 1950
clusters of soccer manufacturing in pakistan - Google Search www.google.com.pk
statistical figures of soccer manufacturing in pakistan - Google Search

www.google.com.pk
economic progress of soccer manufacturing in pakistan - Google Search

www.google.com.pk
https://en.wikipedia.org/wiki/Economy_of_Pakistan#Manufacturing_and_finance .
Economy of Pakistan - Wikipedia, the free encyclopedia
Pakistan Ball Maker to Fulfill WORLD CUP Dream.defence.pk
http://www.researchgate.net/profile/Khalid_Nadvi/publication/263753974_Labour_in_Gl

obal_Value_Chains_Work_Con
Sports Goods Sector Strategy A study conducted by Small & Medium Enterprise
Development Authority (SMEDA), Pakistan, 2012. (SMEDA 2012)
IGC working paper Barriers to growth in small firms of Pakistan Nazish Afraz, Syed

Turab Hussain, Usman Khan February 2013

Economy Pakistan 360 Degrees.

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