Pakistan's Small Entrepreneurs Survive Downturn
By Riaz Haq
CA
A new class of entrepreneurs has emerged in Pakistan during this decade that, in small but significant ways, has challenged religious orthodoxy. This class presents a sharp contrast to the rising wave of Islamic radicalism that the US and others view as an existential threat to Pakistan. And with many well-traveled Pakistanis importing ideas from abroad, it is contributing to Pakistan's 21st-century search for itself.
The new entrepreneurial outfits range from fashion apparel and cosmetics to upscale restaurants, personal fitness clubs and places offering men's hair transplants.
The consumer-driven growth during Musharraf years has fueled the spread of a middle class in Pakistan's biggest cities. For decades after independence in 1947, a handful of extremely wealthy industrial families dominated the economy. In the 1970s, nationalization of important industries gave the government a major economic role. In recent years, a privatization program has sought to shrink the state's hand, while introducing more investment and competition. In an effort to promote small businesses, President Musharraf's government eased credit availability for entrepreneurs in the country.
While most of the entrepreneurs cater to Pakistan's young, urban consumers, there are a few who have found highly unusual niches for export markets. For example, Integrated Dynamics of Karachi designs, builds and exports unmanned aerial vehicles used by the US for border patrol duty on its southern border with Mexico. Recently highlighted by the New York Times, AQTH offers a more shocking example of a small, entrepreneurial Karachi company that caters to the $3 billion a year bondage and fetish industry in the United States and Europe.
AQTH's mom-and-pop-style garment business earns more than $1 million a year manufacturing 2,000 fetish and bondage products, including the Mistress Flogger, and exporting them to the United States and Europe.
The company sells its products to online and brick-and-mortar shops, and to individuals via eBay. The company's market research shows that 70 percent of its customers are middle- to upper-class Americans, and a majority of them Democrats. The Netherlands and Germany account for the bulk of their European sales. Company workers who assemble the handmade items — gag balls, lime-green corsets, thonged spanking skirts — have no idea of what the items are used for. Even the owners’ wives, and their conservative Muslim mother, have not been informed.
Overall, the entrepreneurial class remains a sliver, just over a million people by some estimates, according to the Wall Street Journal. In addition to small export niches, much of the business is confined to pockets of urban wealth that most Pakistanis won't experience in their lifetimes. And yet, the brief business careers of many entrepreneurs show how rapidly dramatic change can unfold in Pakistan.
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