For a healthy lifestyle, sports have always been beneficial. A healthy person can even think and work in a better way to conduct any kind of business. The sporting goods industry itself is a billion dollar market.
In Pakistan,Sialkot is the hub of the sports industry and manufacturing. Nowadays, however, the situation is different. Like any other industry, this business is also being dominated by the Chinese products. Previously, the market inSialkotwas believed to be very strong in sports manufacturing producing quality products even for the world cup matches held in various countries. At present, the whole market has been affected by the Chinese products because of the low prices they offer. A few items are still available in the market manufactured by the local industry.
Most of the sporting goods are being imported fromChina. AsChinais the most populous country of the world, the economies of scale concept automatically applies to all of the various manufacturing areas. They produce everything in bulk causing the price to decline automatically. Local sports manufacturers inPakistanhave been affected considerably by the entrance of Chinese products in the market. This effect on the other hand does not influence the shopkeepers.
Purchasing from China
Nowadays, even the sports dealers inSialkotare purchasing fromChina. There are two routes of shipment, one is via road through the Karakoram highway and the other is the sea port. AsSialkotis situated in the northern part of the country, the route by road is taken for the shipment of the goods. The shipment passesIslamabad,Rawalpindi,Lahoreand finally toSialkot. To procure fromChina, one must have a representative there who has an extensive knowledge of the Chinese market. Purchasing fromChinais not an easy task because of the language difference and various other fraudulent practices in the Chinese market.
If one is interested to buy a large quantity of merchandize then it is ideal to purchase from factories on reasonable rates with no chances of fraud. Unfortunately, most entrepreneurs do not avail this opportunity and like to acquire sporting goods from different 3rd party distributors inChina in low quantities. There are a number of dealers for a particular product. An investor needs to research the market as to know which dealer is selling the product at the best rate.
As far as the pricing of a product is concerned, there is an interesting trend inChinawhich is not only confined to the sports industry, but on all the Chinese products. The Chinese manufacturers can accept any price for manufacturing a product while reducing the quality of that product. The wholesalers who purchase from China can easily buy a specific product at different prices but with varying qualities.
Issues of the Industry
The sale of the overall industry is declining because of the law and order situation in the country which has affected both the business activities and the customer demand. Another reason of the declining sports activities is the lack of interest of the government in opening new play grounds for the general public. In metropolitan cities, there are a limited numbers of grounds where children can go out in the evening and take part in some kind of sports.
There is also a huge price difference in the cost of a particular product in the local market. There is no central authority to regulate the pricing issues. To purchase products from Sialkot, market knowledge and know how is important in terms of quality and price.
Entering the Industry
It is a highly competitive industry to enter for new entrepreneurs. A new investor can easily be forced out even with his huge investment. A person must have extensive market knowledge about the prices of different products at different places and should have good contacts or resources in the Chinese market.
Investment and Profit Margins
If a person wants to start a business in the sports industry, a market survey is a pre- requisite. Visiting different wholesalers and factories is essential to analyze the quality of products and also to acquire the minimum possible prices from the wholesalers. To start a normal shop, an investor must have an initial investment of approximately Rs. 1 crore for the sports merchandize, in addition to the shop rent which varies from place to place.
The same kind of a shop can be started from a small investment, but this business requires variety. If the sports shop has a variety of products, the investor can easily attract a greater number of customers. Like in any other business, location of the shop also plays a significant role in the sales.
One can also invest in the sports industry as a wholesaler with the above mentioned amount as the initial investment. The wholesaler must have a representative inChinawho understands the Chinese market competently. He must also acquire the expertise on handling the shipments coming fromChina.
According to a local shopkeeper, a person who has been in the sports business for the past 15 years can easily lose his investment in the Chinese market or in the shipment procedures because of the fraudulent practices. Only the fittest and sharpest investor can survive in the whole sale market of sports merchandize.
Profit margins are excellent in the sports industry. If a wholesaler purchases a container of sports goods for Rs. 1 crore, he can easily sell that in the local market within 15 to 30 days on a margin of 15% to 20% meaning that an investor can earn Rs. 15 to 20 lacs in around 30 days. On the other hand, when the shopkeeper buys merchandize from the wholesaler, it could take 6 months to sell the entire stock in his shop depending upon the location of the shop and the prices of the products.