Nepali Times: The industry has gone through a boom and bust cycle. How have you fared? Puspa Man Shrestha: My main market has always been Europe. The boom started in 1997, when we were still small. The orders began coming in 1998, and hit the roof the following year. In fact, the boom caught us completely unprepared. In 1997 it used to be difficult even to operate one or two looms. Then I came in touch with my first major client through the Internet in 1998. He used to buy from someone I sold to locally, and ordered 300 shawls. I was euphoric, it was my first real order. A month later he asked for another 1,000 pieces to be delivered in a month. I did. Within two months, he wanted me to supply 3-4,000 pieces each month. After three months, he wanted me to supply 10,000 pieces. There were buyers from other countries Hong Kong, South Korea, Japan, Germany, Switzerland and everywhere. We had so much demand that we even had to turn some down. During the boom, there were about 150 people producing pashmina for me, and another 50-60 working on a piece-rate basis.
How did the silk mixing start?
In the early 1990s there was a company in Balaju that began to use silk threads for weaving. Prior to that we used cotton threads. The product was better and caught on quickly with customers. The manufacturers imported yarn directly from China, and used to sell shawls for $100-120. It took some years for the market to be aware of the Chinese yarn. I visited China in 1994 to survey what was available and began importing yarn. Until then we used to extract pashmina from the hides, and then card and spin it manually.
What is the state of the industry now?
Despite the slump, there are still 200 companies exporting pashmina. In 1997, Nepal exported Rs 30 million worth of pashmina. In 1998 exports reached Rs 280 million, in 1999, Rs 5.66 billion and it was about the same in 2000. These are only official figures and do not include goods hand-carried by people. At its boom period, Nepal was said to be exporting about 20,000 pieces of pashmina products to India every day, most of which was unrecorded.
Was it falling quality or over-supply that killed the industry?
Demand declined after fashion trends changed. Early in the boom we used to sell more to Indian parties than third-country exports in a ratio of 70-30. Later, we began exporting 60 percent overseas and 40 percent to India. We used to sell only raw fabrics to India, and even now we sell only unprocessed fabric to Indian buyers. They did the finishing and re-exported. Some businesses also compromised, pure wool was passed off as pashmina. Indian traders also came to Nepal in large numbers and went house-to-house looking for pashmina, many compromised quality in the race to sell more.
But I don't think the industry is dead. I was in Europe earlier this year and saw that pashmina is still popular. In Paris a shawl that would cost about $50 in Nepal was selling at about $350. Only the latecomers who tried to cash in on the boom have been hit. Trust in the Nepali product remains.
Is there any diversification?
We have begun making sweaters but have not begun exporting them yet. Making sweaters is difficult because the lack of skilled weavers and also expensive because if a piece is damaged, it is a write-off. Our weavers cannot weave the necks and ribs properly, but we're selling sweaters locally. We make shawls, blankets, stoles and scarves, of which the stole is most demanded abroad.
So the quality of Nepali pashmina has not gone down?
Those that were in the pashmina business before the boom are still producing and selling quality goods. Some who had moved into pashmina from carpets and garments are still doing well, but the overnight speculators and traders have quit. The prices have also crashed by half, but mainly because raw materials have become cheaper. In a way we have come back to the pre-boom days, both in terms of quality and also in terms of sales. From Rs 30 million in 1997 we are still selling about Rs 1.3 billion worth pashmina annually.
How can locals and tourists be assured that they are buying genuine pashmina?
The best way would be to go to established businesses because they have both history and credibility that they have to protect. The prices may be expensive in such outlets, but the quality is guaranteed.
Are there any industry-specific problems besides the slump?
Our problem is of design and styling, and getting the right colour combinations. This is a critical issue because we don't have institutions surveying foreign markets and advising us on designs and styles. Our customers taught us what quality means. Diversification has not been possible because of designing and styling problems. There are also the routine bureaucratic hurdles: especially at the customs. The government has fixed the floor price of the raw material at $95. Now you can get that for $70, but custom officials insist that it should be $95, and charge duty based on that. We pay about 13.5 percent as customs and VAT, which is refundable. However, getting refunds on time is very cumbersome.
