Build It Series: Modernising Fashion Factories with Shahkam Industries' Shahid Butt

Inheriting a traditional fashion factory in Pakistan:
Raised amidst the rich tapestry of a family-owned garment production business, Shahid Butt now helms his father's empire Shahkam Industries in Lahore, Pakistan. This episode offers a unique perspective on the balancing act between maintaining cultural heritage and embracing the cutting-edge transformations shaping the garment industry today. Shahid challenges preconceived notions of Pakistani manufacturers and invites listeners to reconsider the opportunities in partnering with local manufacturers.

Digitising a factory:
Shahid discussed with Peter the complexities of managing a vertically integrated knitwear operation, a challenge compounded by external factors like fluctuating taxes and environmental limitations. He shares his insights on transitioning from instinctual decision-making to data-driven strategies, revealing the pivotal role of AI and technology in modernising Shahkam Industries. We explore the pressures and privileges of inheriting a family business, as well as running the group's private label One Retail, and Shahid's vision for preparing it for future generations with advanced technological integration.

Find out more about Shackham Industries: www.shahkam.com

Chapters

• 12:37 Managing Vertical Integration in Fashion
• 22:46 Sustainability Challenges in Fashion Industry
• 30:04 Global Customer Demands and Sustainability
• 39:53 Business Opportunities in Pakistan

Transcript

Peter Jeun Ho Tsang: 0:00

Hello, I'm Peter Jeun Ho Tsang, founder and CEO of Beyond Form, and welcome to the special series Build It, where I speak to founders and their clients as to how they're building fashion technologies. This series gives you a glimpse into topics such as personal struggles, technical challenges, working in fashion and more. On today's episode, I'm speaking to Shahid Butt, the CEO of the family-owned business Shahkam Industries. We talk about his vertically integrated knitwear facility, which he runs alongside his private fashion label One. The nuances between a manufacturing facility and a fashion private label can give us many insights that he can then try to instil in his clients globally. However, it's not always easy to get that across.

Shahid Butt: 0:50

The customer isn't always willing to pay the extra price for the garment, so they'll just go on and go down the food chain. So they'll go to the Leva Macy's, the Leva Kohl's and they're like, okay, I'm going to go to TJ Maxx or Debenhams and they go to a Primark. You can go to every single country and there's discounted customers, discounted buyers that customers will drop drop down to if it doesn't meet their price. But there is a big issue with regard to sustainability as we move forward into the next century.

Shahid Butt: 1:19

I think that what's going to happen is that...

Peter Jeun Ho Tsang: 1:21

Let's get this conversation going with Shahid on today's episode of Venturing into Fashion Tech. How are you today, Shahid?

Shahid Butt: 1:32

I'm fine. Peter, how are you?

Peter Jeun Ho Tsang: 1:34

I'm good, thank you, and how are you, abdul? We have you back on the show again.

Abdul Sajjad: 1:38

Thank you so much. I'm doing great. And thank you for having us over.

Peter Jeun Ho Tsang: 1:42

No, thank you guys for taking the time to speak to me. I'm glad to be revisiting Pakistan and supply chain and factories today again, but before we get the conversation going, I want to set the scene for our listeners. So Shahid Shakham Industries is based in Lahore, which is on the eastern side of Pakistan and is the second largest city within the country, with a population of around 11 million people. So it's much larger than Paris, where I'm based, and much larger than London, where I was previously as well. The textile and garment industry is vibrant within the city and it's known for its rich textile heritage and traditional embroidery techniques, such as Pocari, gote and Zadoz.

Peter Jeun Ho Tsang: 2:29

From a mass production perspective, lahore sees a high concentration of knitwear and woven factories and, zahid, you are knitwear, I believe. So I am looking forward to speaking about knitwear, because quite often we always speak about wovens and we quite often see that with our fashion textiles as well. So knitwear is always a a little left field for us and it's nice to speak about that. Of course, fashion industry contributes significantly to Pakistan's economy through exports. Garments and textiles from Lahore are shipped to various countries, including the USA, europe and the Middle East. So we'll revisit some of those topics a little bit later on.

Peter Jeun Ho Tsang: 3:07

But, shahid, let's go to your family history and specifically how you've grown up with textiles and factories surrounding you. I read on the website that your company has been crafting legacies since 1992. You're a family-owned business going from small production to large-scale production, covering a whopping 1.5 million square feet worth of space and employing 7,000 employees, just to give our listeners some context when it comes to the size of your facilities. At the size of your facilities, what was it like growing up in the environment to eventually taking over the family business as CEO?

Shahid Butt: 3:52

Yeah, so thanks for having me, of course, and thanks for the listeners to listening. Basically, our company was set up in 1992. It's a family-owned business and at that particular time we had moved back to Pakistan from the Far East. We lived in family-owned business and at that particular time we had moved back to Pakistan from the Far East. We'd lived in Hong Kong and Taiwan. My father was working as an engineer there and he set up the business in 92 when the government was giving some very aggressive rebates and tax breaks.

Shahid Butt: 4:21

I basically felt that the garment industry was a good one to go into. I was leaving for UCLA at that particular moment. So for the first four years my father and my sister ran it. Essentially my sister was the managing director and then, when I came back in 96, I joined as well. So I joined when I was 22 years old. Essentially, that was really when my understanding of the garment industry first started to develop and how to work in it would be what it's like to be in a family business, what it's like to be in a vertically integrated business. From that day onwards I've been working in the company itself as a CEO and it's grown quite a lot, of course, over the years and continues to run.

Peter Jeun Ho Tsang: 5:05

How did they manage to convince you to come into the family business? So did they just wake up one day and make you hold you at gunpoint?

Shahid Butt: 5:13

I mean, I'm an only son, right, and I had three older sisters. So culturally, as you know from the East as well, only son has responsibilities. And of course I felt like I also came back for familial reasons as well. To be with my mom, to be with my dad, and working in the business was somewhat of a byproduct of that. It wasn't too difficult In fact, if I remember carefully, on a personal note, I wasn't even asked or told, I just was kind of understood that I would do that, told, I just was kind of understood that I would do that. And I haven't regretted it as such, because I got to spend a lot of time with my parents before they passed and, being the only son, there was really no other choice to be highest figure.

Peter Jeun Ho Tsang: 5:55

Yeah, that kind of like unset peer pressure.

Abdul Sajjad: 5:59

But I highly doubt Mr Shahid has been doing it because of pressure, because you know there are very few CEOs who have these hands on experience of the process and you'd often see Mr Shahid going across the facility and just seeing the process and trying to optimize it in his own way. So I think this is what I really liked about Mr Shahid is that you know he's one of those very few CEOs who have this hands on experience.

Peter Jeun Ho Tsang: 6:23

And in terms of entering the industry, how was that for you personally, Shahid? Because it's not easy in terms of fashion and garment and production. It does take time to get used to it.

Shahid Butt: 6:35

Well, you see, there's different ways to define it. Some people call it the frontier market, some people call it the third world market, but obviously it's not just the industry. So the industry has its own set of difficulties. Competitiveness, which we really come up against because it's a global industry and it's sometimes I describe it as a race to the bottom, you know. But also, working in pakistan is not, even at that particular moment, was not the easiest task because, again, you're trying to upgrade domestic mindset into a international, export oriented requirement.

Shahid Butt: 7:14

So that is one of the ways that we actually ended up becoming very vertical, because we would try to do some horizontal work with a subcon for whether it be embroidery or printing or different types of knitting or even sewing, and the local manufacturer did not at that particular time have the same type of constraints or requirements or standards that the export-oriented lead manufacturer would have.

Shahid Butt: 7:45

So then we were like listen, we're letting down our clients, we're losing money, we need to bring this in-house. That kind of led to us becoming more and more bigger, because we felt that we were affecting and controlling the production in a way that we were not letting down our clients as much as we would otherwise. And then when you become more and more vertical, as you would logically would know that the overheads go up and your costs go up. So then that kind of led us into becoming a more fashion oriented manufacturer, because that's where you can get a better price. If you are looking to cover a massive overhead, you have to look for a better average selling price, and for that your garment cannot be as basic as it would be otherwise. So then we kind of struck onto this unique combination of having mass production and fashion.

Peter Jeun Ho Tsang: 8:36

By vertical you mean processes and facilities and hardware machinery that you directly own. Is that correct?

Shahid Butt: 8:43

Yes, so basically, basically we purchased the yarn and we had many different discussions about opening up a yarn spinning mill as well over the years, which at particular times we almost did, so we have our own knitting.

Shahid Butt: 8:54

So once we purchase the yarn, we are doing the knitting of the fabric, then we're doing the dyeing we used to be one of the biggest yarn dyeing manufacturers before that kind of declined in the market and then of course we're doing our own fabric finishing our fabric raising, drying the embroidery, the printing, the cutting, stitching, packing.

Shahid Butt: 9:14

We do garment dyeing as well on site and we do carton manufacturing on site. So we've tried to do as much as possible within the same four walls and that allows us to a lot of quick turnaround time as well and of course allows us to add different elements to the garment which are not costing us as much if we were doing the transportation of the goods in and out of the company or if we were paying commercial rates for them. It kind of has flipped now because of course, being an exporter, we of course have to meet all the compliant regulations. So our costs are much higher than sub-con costs would be. So from that perspective it is a little bit more expensive to do everything in-house, but you control the production, you control the labor rules and regulations, you control the safety mechanisms, you control the timelines. So I still think that it's a better way to go.

Abdul Sajjad: 10:08

And how did your understanding evolve when you also opened up a brand? Because you know now you understand both sides of the things. So tell us more about that.

Shahid Butt: 10:20

Yeah well, we opened a brand up like seven to eight years ago. Of course we got hit with two and a half years, three years of COVID in the middle as well, so that has kind of elongated the process of getting the brand to shoot up to its potential couple of stores. We try to provide a little bit of production for our own facility so that we could see the pricing itself. And then we just realized that it's not going to work if we don't scale up. And once we had committed a certain amount of money and time to it we really felt that now if we were to back out of it, we'd be losing the money and losing the effort that we had put, the opportunity cost of the effort that we put into it. So we pushed on with it and of course it's taken us. It took us three to four years to understand me personally, to understand what retail is. So there's so many acronyms in retail that I didn't even know about. Actually, I had to call in some consultants to do consultancy for my management to understand what retail is and I ended up learning quite a bit during that process, which had later on led to my understanding of digitization and led to where I am today, right now, on this podcast. So the brand was actually the origin of where we ended up. Because, look, one of the benefits of going into retail was it was already kind of mature industry. So we were not pioneers, which we kind of were in the early 90s when we put up the factory. There were a lot of other factories being put up at the same time but apart from Amar Textile there was nobody who had been in the market for a long time. So it was a burgeoning industry. At that stage.

Shahid Butt: 12:11

With retail, one of the things that attracted it to wheat was that it had already been in the market for 15 to 17 and 18 years Post the Pakistan sanctions, when the nuclear tests were done. We actually as a nation had to become very efficient and dependent on our local industry because we didn't have a lot of foreign investment coming in. So our own brands developed our own hotels, our own restaurants, our own fashion brands. So by the time we entered it, there was already a market for it, there was already a working mechanism for it, there were already softwares available for it. So I liked that element of it.

Shahid Butt: 12:37

I was expecting more margin in retail, to be honest with you, but it's not as much as it was, but that's also because of domestic factors. Actually, the sales tax in Pakistan went up. The GST, like I said, went up, and then there was also other additional costs that were elemented into it. The hours were shortened for shopping because of smog problems in certain cities in the winter, so there were different aspects that restricted it as it is now, but that is also part of our understanding of what retail is. So the first cost sale is really important. Retail versus the sale price. Getting the goods at the right time to the market, being able to manufacture them at the right time and giving them enough time to be sold at their first cost is very critical.

Peter Jeun Ho Tsang: 13:24

So let me just break that down for our listeners. So, shackham Industries, you are a vertically integrated knitwear facility right down to the yarn level. That's your bread and butter since 1992. You then launched your own private label, which I believe you called One.

Shahid Butt: 13:39

Yes.

Peter Jeun Ho Tsang: 13:40

You've just taken us through that journey, but you're one person though, shahid. How do you manage to keep everything afloat between the two different activities? And how is manufacturing different to running a retail business?

Shahid Butt: 13:54

It is. It is very difficult and actually at the time when I had set up one, I was also actually expanding into denim as well. So I felt like there was a potential for that. We could just buy the fabrication and we could go straight into denim. And at that time all three of those heads kind of collided together and I had to actually shut down the denim eventually because I just could not manage it.

Shahid Butt: 14:19

Of course, like I mentioned earlier, my oldest sister sister she works with me, so she's been on and off site and on and off over the last 30 years and she's on right now but she works from home, from dubai. So she helps me a lot with the factories numbers and with the production planning and control. A lot of the sops that of course we picked up from our consultants who really pushed us towards establishing kpis in a more professional manner. We kind of fallen behind in the factory side. That, of course we picked up from our consultants who really pushed us towards establishing KPIs in a more professional manner. We've kind of fallen behind in the factory side of things and the brand my wife runs. So that helps me a lot actually because she has a really she's a very good understanding of fashion, of the modeling shoots, the product, the brand identity, how it needs to be developed, and she runs it on a practical level as well.

Shahid Butt: 15:07

I am facing, and continue to face, a lot of challenges of being spread a little thin, but the truth is that there's no survival for either of the companies unless they're done on a professional level. Being a family business, we're also going into the third generation, because my father set it up, so really the ideal scenario would be a professional organization, which is again related to what we are doing here right now with Webmetrics. Basically, we're trying to look for accurate data analysis more than anything, which allows us to plug and paste all the information at the snap of a finger and plug and paste even the individual actually very quickly, because the systems will be oriented like that. So if you're going to depend on and we have on the strength of personality, the efforts, the hard work of the owner, it can only take you to a certain point and at some point you're hitting an inflection point and that is actually hindering your efficiency, your, your profitability and your growth.

Shahid Butt: 16:05

So a lot of people you know have a hero complex, and I've had it for a long, long time as well in which they want to come in and they want to fix everything. And they and a lot of owners in family businesses have a I wouldn't call it a guilty conscience, but they have, like they have a burden in which they have to prove, to prove that they're worthy of the inheritance. So some of them just blow it off and don't even give any attention to that at all. Or the business and some people, they go above and beyond and they want to prove to everybody that they're worthy of it, sometimes internally to the factory, sometimes to the staff, sometimes to labor, and what you end up doing is you end up working a lot and you end up doing other people's work, and those are the companies that don't grow and aren't efficient. And I have to tell you I've been massively guilty of these things.

Abdul Sajjad: 16:52

So I speak from experience. Mr Shahid once shared a very interesting perspective with me and I want our listeners to know that Mr Shahid told me that by the time the next generation enters the business, he wants it to be at a certain technological level. So I want Mr Shahid to sort of explain more on that, that what are his visions with respect to technology and how does he envision that when the next generations join this business, at what level should the manufacturing, and particularly fashion manufacturing, should be at?

Shahid Butt: 17:24

Well, look, I don't think that a particular individual should be doing any type of work which is not data oriented in AI. In the world of AI Like, some of the things I shared with Moiz are pre-AI, because all of this has happened in the last three to four years In this world, I don't think that this is now any longer an opinion-elemented, personal decision, a gut feeling per se. I don't think that that is the way to go with it, and we have people who used to work like that. It worked, but it's not the need of the hour anymore. So, for example, if you're looking at a retail brand and you want to decide what you want to sell and you want to decide what is a good design, that's not really what you think is a good design the numbers are going to tell you that. And even if you're projecting a new design to go into your store, the numbers from the previous transformation of how your customers move their opinion will also project that to you as well. So, for example, you're a brand, you have 100,000 customers, now you have 200,000, now you have 300,000, now you have 400,000, and you're planning to go to 700,000. Even that journey from 400,000 to 700,000 will be extrapolated from the data that you received, from two to three to 400,000. So every single decision is going to be made with the data that you provide initially, whether you're talking about the manufacturing side of things.

Shahid Butt: 18:54

We should not be deciding now personally what garment should be running in what line, because what we say, the line will tell us which whether the crew neck or the hoodie or whether the zip up is going to fit better.

Shahid Butt: 19:09

So we put it in, picks up the data of that line, the particular staff, what their habits are, what their working hours are, what their efficiency levels are, and then, according to that, it plugs and place the garment into that line and or plugs or paste the labor into that line.

Shahid Butt: 19:26

So this is a type of graduated process that I'm looking for. I mean, I was in dubai at a pull-in bear meeting last week and we had to do a couple of prices and I was just, I thought, looked and I said I wish I had like a standing steamer that we could just put down through the garment and our price would come out exactly the price for what our factory wants, rather than we're sitting here and we're calculating, we're recalculating and we're going to go back to the factory and then different departments are going to have different opinions and this whole horse and cattle show starts in which this was not right. This was not a good price. This should be this way. This should be that way. If we have all the data, it should come out and tell us what it is without us even pushing forward, and that saves a lot of time as well.

Peter Jeun Ho Tsang: 20:08

let's ask you, shahid, what came first the brand or your wife?

Shahid Butt: 20:12

my wife came first so you wrote her in then yeah, she came first very, quite a lot, quite a lot earlier actually. But I mean, look, the thing is, with family businesses, you have different types of problems, right? One of them is you, and then also our clients are asking a lot of questions as well. They're like okay, what's your, what is your progression, what is your backup plan? So, from that perspective, we have to look at what's going to happen if you remove one person.

Shahid Butt: 20:40

So if I'm to be removed from the mix, what happens to my family? What happens to my wife? What happens to my children? What happens to my company? What happens to my sisters? What would happen to my parents? And I want every person in my organization to manage their department with the same energy. What will happen if we remove a particular person? And it should all continue to run? We have a lot of jobs at stake. We have a lot of export that the government expects us to make. We have a legacy to protect. We have a future to uphold. It should not be that, oh well, it didn't run properly because one person had an off day or because somebody got poached or because somebody got burned out. So that's what data is there to provide.

Peter Jeun Ho Tsang: 21:28

Absolutely. I think many people really underestimate how fragile that fashion supply chain can be and is actually, as you said, obviously you're a family-owned business, but if you amplify one factory going wrong within a fashion brand supply chain over many factory facilities facilities that could spell disaster for a brand at any given moment and we have seen that go wrong, especially, as you mentioned earlier, the pandemic. During the pandemic, obviously all of the fashion factories had to close, which had a very large knock-on effect with supply chains around the world. You mentioned that people and data and optimization but I want to just talk a little bit about the stability and ethical elements as well, because you are producing roughly around 50,000 garments a day.

Peter Jeun Ho Tsang: 22:12

Yes, around 50,000 is what our production is, and so how do you ensure that you are producing at such large volumes with care, and how do you use technology to make that happen?

Shahid Butt: 22:22

Well, you see, the thing is this is now going to be transforming in the future anyways. First of all, we're very happy that we're doing fashion. So what we really need to be working on is getting a better average selling price. We don't want the run-of-the-mill garment to continue to make more and more garments. So let me tell you about the challenges. So you start out, you say I'm going to make 20,000 garments. Right, you're happy, everything's fine.

Shahid Butt: 22:46

Suddenly, the government shows up and says well, we have inflation, so you need to increase minimum wage. Then they're like listen, we have a balance of power payment, or we have an overpopulation problem and we need more electricity, so we need to import more petrol to function as an electric company. So guess what? Your electric costs are going up A, b, c, on and on. So gas is getting short, but you need gas to run your company. So because there's a shortage, the price is going to go up. So all your inputs and your overheads start going up. When they start going up, then you have to start find a way to manage those costs. So what are you going to do? You can downsize, right, right, but you can only do that to a certain point. At some stage you have to like say to yourself how am I gonna manage the same margins, low margins, to keep the company running? At that stage you have to expand. Or either you look for more garments or you look for a better price, and that's really where some of the difficulties come. The customer isn't always willing to pay the extra price for the garment, so they'll just go on and go down the food chain. So they'll go to, they'll leave a Macy's, they'll leave a Kohl's and they're like okay, I'm going to go to TJ Maxx, or they'll leave a Debenhams and they'll go to a Primark, or they'll leave a Tom Taylor and they'll go to a Lidl. I'll just give an example from the United States, from the UK and from Germany. I can go to every single country and there's discounted customers, discounted buyers that customers will drop down to if it doesn't meet their price.

Shahid Butt: 24:16

But there is a big issue with regard to sustainability as we move forward into the next century, because of the oceans, because of the ozone and the temperature of the earth and all that. I think that what's going to happen is the prices are going to have to go up from an environmental point of view. They should have gone up from an ethical point of view as well, they haven't. So what I mean by to say is look to run a company. You have to be compliant, you have to pay minimum wage, you have to pay overtime, you have to provide safety, you have to provide security, and all of that costs money. The difference between that and a run-of-the-mill company is, you know, something that's not following all those laws and rules and regulations is the cost. So either you want that to be enforced at your supplier level or you don't want that to be enforced, and you've got shoppers who are saying we want you to enforce it, but as soon as the customer tries to increase the price, the shopper gravitates away.

Shahid Butt: 25:13

And now that thing is that same energy is coming towards environment. Why are you producing so much? Okay, we'll produce less, but you have to pay a little more for what you are, and you need to then understand that your choices will be restricted somewhat and you need to reuse the garments that you are, which is kind of opposite to what has happened with Instagram and with Snapchat and with the fast fashion, which works for us because we have such a quick turnaround. We can make the fast fashion, but this is not the long-term solution to how the garment industry is going to run five to seven years from now. And with AI, ai is going to tell you what your environmental score is going to be and you're going to have to basically manage that.

Shahid Butt: 25:55

So what are we doing? We have a biofuel boiler. So from that perspective, we use recycled coal husk and rice husk to run our boiler, so we don't use gas. Secondly, we just put up solar that's now managing 20% of electricity costs. Very soon to increase that to at least manage 50% of our electricity costs on solar. And we're continuing to invest in that because the ROI on that is quite good as well from a business perspective. And we also have a wastewater treatment plant which basically whatever water effluent that we're putting out from our dyeing, it is turned into sludge.

Shahid Butt: 26:34

So the three main outputs that are coming from the factory, we are trying to manage them from an environmental point of view. We also, of course, selling our waste to be like a cutting waste and our garment waste to be reused and recycled. It's very easy in our countries. We are like we just sent you know, uh, around about 15 cartons to another, an orphanage yesterday, and then we also have to do that.

Shahid Butt: 26:58

With regard to, for our certain customers say, look our overages, we want you to basically use them for charity.

Shahid Butt: 27:05

We want you to use them in a different way.

Shahid Butt: 27:07

So that is already working and, again, because of the way the world works now, there's all mechanisms and checks and balances to ensure that we are using their overages in the right manner. But, frankly, we aren't the biggest and we aren't the smallest. We're quite. Our size is actually quite significant, but they're even bigger companies than us many, and I think that the way forward is that the entire fashion industry has to relook at what its relationship with sustainability is and how much of a utilization with regard to garment manufacturing is going to exist. The other thing is, you have to understand the garment industry provides a lot of jobs, low paying but upward mobility oriented jobs. So all these countries Korea and now Vietnam and Egypt and Laos and Jordan and Bahrain in the past and all these countries have used China, of course have used the garment industry as a stepping stone into second level manufacturing, and Pakistan is still in the process of that. With the population exploding, it's very important that people get people off the streets and get them to be working.

Abdul Sajjad: 28:22

So tell us more about the fact that. Don't you think that you see, I talk to you and I talk to other manufacturers, but don't you think there is this undue pressure only on the manufacturers when it comes to, all you know, being conscious about sustainability and all that, and how much of this responsibility do you think should the brands and the end consumer also own up to facilitate the manufacturer that they are able to participate in the sustainability but then also, you know, not be suppressed by either sides of it?

Shahid Butt: 28:51

Look, it's a business at the end of the day, right? Whether you think, oh, I'm going to take all the money and run away with it, the business has to pay its debts. It has to pay its labor. It has to pay its electricity. It has to pay its labor. It has to pay its electricity bill. It has to pay its taxes. It has to pay its suppliers. It has to function. It has to pay its shareholders.

Shahid Butt: 29:08

So what's going to determine peace in world? Peace in the world is determined by trade between companies right At countries. That is how you can establish long-term peace. If you want to establish a long-term environmentally sustainable trend in the market, then the marketplace has to dictate that we will eventually have to default to what our customer is telling us, which direction it should go to, and our customer was going to default to what their ultimate customer is telling you. So, yes, definitely. I do think the brands have to do a lot better with regard to communicating with their end consumer as to what their goals are and what their ethos is as to moving forward. And we, of course, we have red lines. Naturally, we're human beings, we have emotions and we have red lines. So there are certain things we're not going to do just for money. At the end of the day, and some people will go past those red lines.

Peter Jeun Ho Tsang: 30:04

Talking about the customers, are you just able to give some context to our listeners? What types of customers do you work with globally and some of the demands they might be making?

Shahid Butt: 30:14

Well, look, one of the main customers we're working with this year. So we've worked with all the customers. You have to understand we've been in the market for 30 years. So we've worked with the sports teams, the 30 years. So we've worked with the sports teams, the local athletics, the starters, the Reeboks, and then we've worked with the urban wear, the Iniche, echo and that type of fashion, and we've worked with the urban outfitters, like you mentioned before. We've worked with the big mass market retailers Macy's, kohl's, sears, gap. We've also worked with American Eagle. So we've worked with them.

Shahid Butt: 30:46

We've been through the progressions as you move around looking for clients and customers, a lot of the customers sometimes leave the nation itself, so that's caused us to then reposition and find new customers, the GSB Plus, which you kind of alluded to earlier when you said. The buyers want to basically reposition themselves and the supply. They don't want to get stuck with supply supply chain dependency. So Pakistan is a very good hedge against Bangladesh for the European customers. There's a lot of product coming from Bangladesh to Europe and they basically gave Pakistan duty-free access so that they could create benefit Pakistan as a nation as well, get better prices from it and also create a rival slash hedge against Bangladesh. Because of that, we now have gravitated towards more European customers and within that, we're doing a lot of work with Inditex. So, when I alluded earlier to the changing nature of the future of business, look, when you're talking Inditex, you're talking Massimo Dutti, zara, pull Bear, bershka, lefties or Yoshio, and you're one of the biggest retailers, if not the biggest fashion retailer in the world, and very popular and huge fast fashion as well.

Shahid Butt: 32:02

A lot of the conversations we've had with them are about sustainability. They need traceability on our cotton and on our yarn as well, and they want recyclable fabric and yarn as well, and they have certain targets, actually, and those targets have to be met before anything else. So you have to provide this particular amount of recyclable fabric in the order, in the pricing, you have to provide these type of traceability certificates which are verified by independent agencies to ensure that your cotton is contamination free, etc. Etc. Whatever the wide range of requirements are. And they also have started conversing about what I alluded to earlier, which is we. We went back to them we said, listen, this, listen, this is the price, okay, and this is it. And we said, listen, we can't reduce it anymore. Okay, we have to pay our people, we have to pay them a fair wage and we have to maintain all the requirements that you have. And they said look, we kind of understand that and we are now also looking to increase our ASP, our average selling price, and reducing our quantities, because we know that we are contributing a lot of garments in the world and we are now looking at maybe capping that and providing different types of value slash, different types of benefits to our customers.

Shahid Butt: 33:31

And I think that push is already coming and it will come. It will come in the next few years even more so. So manufacturers have to be prepared for that. They have to innovate, they have to do their R&D, they have to be. They might again have a glut of too many manufacturers and too less quantity, so it's going to be the ones that embrace the challenges of a new fashion world order would be the ones who will survive. So this is always a challenge that exists, but I'm really hoping that price is not the only determining factor between your decision-making about where you are going to place an order.

Shahid Butt: 34:12

As we move into the second part of this decade, there has been a lot of ups and downs, but it's disappointing and disheartening when the buyer falls back to their age old. Well, I'm going to go for the best price strategy. I think that and I think, being a retailer now myself, that has to be communicated to the ultimate customer. You know you have to tell the ultimate customer when we started doing garment dyeing, so each garment, when you do garment dyeing, each garment provides different types of shade. It's not going to be the same thing and we tried to explain it to them again and again. You're never going to get the same type of continuity in this garment that you will if you did fabric dyeing, because that's a bigger lot when you put it in the machine. Only in the last six to seven years I'm talking early 2000s- we had a disaster.

Shahid Butt: 34:58

Well, we weren't that good at it as well, but the shade band was wider. But now the customer understands it and they say listen, we understand, if we want garment dyed, we need to accept a bigger shade band. And we need to educate our customer that these are individual garments that have a different shade band. That same type of understanding about pricing has to be given to the customer as well. That, look, this is where we're getting our goods from. This is the standard at which we're receiving them.

Abdul Sajjad: 35:19

I think we've had a lot of serious talk. Now I'd like to know more about your love for Liverpool. Tell us a bit about that, and how did it get developed in the first place?

Shahid Butt: 35:29

Look the thing is, working in in the garment industry is very difficult, and working in Pakistan, like I said, it's a challenge. I've always had a huge passion for football, even when I was growing up, and so everybody needs an outlet and everybody needs, like a hobby or something that they love. So, as Moez just mentioned, I'm a huge Liverpool fan.

Peter Jeun Ho Tsang: 35:50

Not too far from where I actually grew up, growing up in the north of England. You do actually don't realise how big the world and obviously we are recording this across different time zones in different countries and the fact that you know Liverpool is so small compared to Lahore, for example, and I always am amazed when people like yourself start telling stories about where you're, where you're from. Um, I just want to finish off this episode with a quick fire round of questions. The first answer that comes to your head are you ready? I think so. I hope so.

Shahid Butt: 36:25

Favorite department in your production facility I actually like sewing the most because I like the hum of the machines, I like the the uh, the activity and the speed. I really like it. Do you know how to sew? No, I don't, I don't.

Peter Jeun Ho Tsang: 36:40

Maybe your next hobby then Maybe, yeah, yeah, why not? The hardest thing about being the CEO of a garment factory?

Shahid Butt: 36:51

It's the hardest thing. I don't think there's anything that is more harder than anything else, but I guess making sure that everybody matches your vision for the company, that is the hardest thing. Convincing people that your vision is going to lead them to the right direction.

Peter Jeun Ho Tsang: 37:07

What comes first sustainable mindset or sustainable design and practice?

Shahid Butt: 37:12

Very easy, Sustainable mindset. For sure. You first have to understand what you're going for and where you place in the whole world before you can actually start any of these processes.

Peter Jeun Ho Tsang: 37:24

Name the best thing about working with WeMetrics, that's not a quickfire answer.

Shahid Butt: 37:29

To be honest, wemetrics has played a huge role in transforming our ability to become a better company because of the data orientation that they provided us. To be honest with you, it's actually I could go as far as to say before Wometrics and after Wometrics are two different types of time zones for our company. Before we were agents of chaos and we were chasing our own tail, and now we have control and we have organized production numbers and organized production goals and organized work. That doesn't mean that I have not had huge clashes with Moise over delivery and sketching and pricing. Part of transformation and getting things on time and because we're in a rush is when you see something good, then you want it really fast, right? If, when you see something that you know that's going to make a big difference and it's going to benefit you, you want it fast. So my urgency and Moise's urgency don't always match right. Because I'm in a rush, I want to fix things in my company now, right now, and Moiz is still learning these things.

Peter Jeun Ho Tsang: 38:36

He's younger than me. You're an agent of chaos, nature coming out there. I love that term. And finally, one piece of advice for anyone looking to work with a Pakistani manufacturer.

Shahid Butt: 38:48

I would say that Pakistan is a hidden gem and the customers who have worked with Pakistani manufacturers have benefited greatly because of that. Look, it's a growing industry. Still, the top 100 factories are the best in the world. Top 50 factories are the jewel of Asia. I mean, I can mention them. They win all the vendor of the year awards and they have the best machinery you can imagine. All the vendor of the year awards and they have the best machinery you can imagine.

Shahid Butt: 39:15

These are some unbelievable vertically integrated companies that even I look at I'm like wow, and I've been in the industry for 30 years or 28 years. And I look at some of the companies quote, unquote my competitors or companies that we aspire towards. They are best in class in Asia and the world. That's the first thing. So if you can get capacity in one of these top 50 companies in Pakistan, you should be snatching that capacity. Second thing is the other companies that are growing and the small and medium enterprises that are coming up. They actually have a lot of potential as well, because there's a lot of room for growth. They're not jaded.

Shahid Butt: 39:53

But the thing is, if you want to work in Pakistan, you have to do it with your commitment. You have to go all in, you have to believe in it, you have to visit it. It's safe, it's beautiful, it's friendly, it's nice. It's nothing like what the media says at all. And you should come to Pakistan, you should work one-on-one with the company and the manufacturer, you should understand them and you should develop the trust with them. And you should keep an eye on them too, because that's your due diligence and you should go for it. I've told my customers so many times that you're leaving so much on the table. If you develop a vendor and then you move on to another one because of some sort of nation state strategy. You're really underestimating the Pakistani manufacturing industry. There's a lot of potential and a lot of benefit in that and the quality is amazing in these factories.

Peter Jeun Ho Tsang: 40:46

You're like a tourist advert basically shot in that moment. Yeah, I believe in it today.

Abdul Sajjad: 40:55

Okay, thank you, peter thank you so much for your time, guys, and would love to see you again.