The traditional approach to selling in Pakistan has been through personal contact with a major wholesaler, which serves a network of retailers throughout the country. However, this trend is changing. Advertising is now a growing industry, and some of the large consumer manufacturers extensively promote their products through print and electronic media, as well as the internet. Some of the banks regularly contact their potential customers through direct marketing. Nonetheless, personal relationships are very important, especially when selling non-consumer items to the government or large corporations. Since personal relationships take time to nurture, U.S. firms are advised to invest time in the market, preferably with a local presence or at least very frequent trips to the area. Face-to-face contact is the business norm; however, under the current environment, this poses a significant challenge. U.S. business travelers may face delays in acquiring a Pakistani visa. Some U.S. corporations strictly adhere to the State Department Travel Advisory recommending that U.S. citizens reconsider travel to Pakistan, and this may also pose a challenge for U.S. business visitors to the country. To overcome this challenge, U.S. firms sometimes meet with their Pakistani counterparts in a nearby third country, such as the United Arab Emirates.
In addition to personal relationships, price generally remains the dominant buying factor. Government procurement also places heavy emphasis on the selection of the lowest bidder, provided the bidder meets the technical specifications and has relevant industry experience. Some foreign companies have mastered the art of providing initial lower bids and revising them later to a more realistic level, usually in coordination with “consenting” officials. Some U.S. firms have expressed their frustration in dealing with government contracts, especially in situations when they were technically qualified and submitted the lowest bids yet were not awarded the contract or were asked to re-bid for a re-advertised contract.
U.S. products and services enjoy an excellent reputation in the local market, especially for their quality and durability. However, U.S. companies face tough competition from Chinese, Japanese, and Korean companies, which generally have a larger presence in the country and are able to offer their products and services at competitive prices. Providing after-sales services is also essential and U.S. firms are advised to establish this service either through a local/agent distributor or through their own presence in the local market.
Sales Service/Customer Support
In Pakistan, the end-user generally requires comprehensive and reliable after-sales support on all durable and non-consumer items, accompanied by quality product documentation and instructions for product installation, operation, and repair. Many purchasers choose a complete turnkey package, which often includes employee training. Foreign sellers generally require local agent/distributors to maintain a certain minimum inventory and availability of spare parts. Most agents provide a warranty and “free maintenance” for one year, building the cost of maintenance into their overall price. It is a common practice for end-users to demand a guarantee that the supplier will respond to questions or rectify faults in the equipment within a specified period of time. The time period may vary from a few hours to several days, depending on the nature of the product and possible faults in the equipment.
Trade Financing
Imports of goods into Pakistan generally require a Letter of Credit (L/C) unless a special exemption is obtained in advance. Revolving, transferable, and packing letters of credit are not permissible. In general, letters of credit should provide for the negotiation of documents within a period not exceeding 30 days from the date of shipment.
Payment to the beneficiary (stipulated in the L/C) may be made either in the country of origin or in the country of shipment of goods. Other payment terms are subject to approval by SBP. Remittances may be made soon after goods have been cleared by Customs.
Pakistan Customs authorities require a commercial invoice and a bill of lading (or airway bill). Exporters should forward documents separately if the shipment is by sea but should include them with air shipments. Until recently, “Certificates of Origin” were not legally required but recently there have been cases where the Customs authorities have asked for it. Also, a statement of country of origin should appear on the invoice. Consular invoices are not required.
The exporter should also be sure to ascertain from the importer the precise number of copies of each document that will be required. Importers, depending on the specific circumstances as insurance certificates and packing lists, also may request other documents. Customs authorities require special certificates for imports of plants and plant products and used clothing (e.g., a U.S. Food and Drug Administration certificate for foods and pharmaceuticals). In order to expedite the process and avoid potential delays and penalties, exporters should request detailed instructions from the Pakistani importer before shipping.
For information about the methods of payment or other trade finance options, please read the Trade Finance Guide.
For additional information, visit the U.S. Department of State Investment Climate Statements.