Saurabh Gupta | 18 Sep, 2012
Beside the challenge of rising costs of raw materials and entry of cheap Chinese products in the market there are many other major hurdles in the whole system, which is eating the profit of micro and small entrepreneurs in the handicraft sector...proprietor of A. K. Handicrafts, Ashok Kumar tells his sad story to SME Times.
Excerpts of the interview...
How are you and your business coping with the current market dynamics?
Ashok Kumar: We are in this field of making hand made fashion jewellery like hand bands, hair pins, earrings, necklaces etc. since three generations. My grandfather has started this leather business from a single product of 'Kolhapuri Chappals'. Then my father an now I took charge of making Kolhapuri Chappals in 1991. Along with this, today I'm manufacturing other handicrafts goods too, like designer belts, leather wrist bands, bead items, other ornamental jewelry and accessories, etc.
When I got my first assignment from an export house in Delhi, I found that there were vast opportunities in this sector. And even I did good business till the last 2 to 3 years. But now since 2005 things have changed continuously. I don't know why...may be my destiny or something else. I have a family of eleven members and I have to take care of them. Now from my business it is hard to arrange bread and butter for me and for my family.
Who do you think is responsible for this situation?
Ashok Kumar: Rising input costs and decrease in demand had affected me a lot. Few of my friends, who were in the same business, have now left this field and started some other work like opening Dhabas (food junctions) or confectionery shops. I am a very small manufacture of handicraft items, how could I point a finger on who is responsible for this situation.
You can see the fine and intricate work involved in these handicraft items. The material costs have doubled in the last two years and labour costs have also increased. But the price of finished products have remained almost stagnant.
Is there any competition from Chinese products in this sector?
Not only me, the whole of Delhi is worried due to flooding of lots of
cheap Chinese products. These Chinese products are far cheaper than our
products and are good in quality too because these are machine made
products. Our product which costs Rs 20, the same Chinese product is
available in market at Rs 5 only.
Previously we buy glass beads
from Moradabad, the same Chinese product is now available in Delhi at
half of the prices and the finishing and quality are far better than
those of Moradabad.
So you too are using Chinese raw materials in your products?
Why not, and what can we do? If we use high-priced products with low
quality and when these products reach the shop I am sure you too will
not buy because they will be priced higher but will be low on finishing.
And these Chinese products are very easily available in Delhi. So why
should I waste my money to go out to buy my raw materials from far away
places like Moradabad.
I think if our government can't put a
leach on the Chinese dragon, they can at least do one thing - put all
exporters in a single warehouse and appoint us as employees with them on
profit sharing basis.
How do you approach to your clients?
Ashok Kumar: See...my clients are exporters and traders. I have old relations with them and only on that basis I am getting assignments from them.
How do you approach new clients?
Ashok Kumar: The major aspect in this business is relation and approach. If I have a direct approach or you can say direct link to the merchandiser or a new client then only I can get the order from that client otherwise it will take a year to develop a good rapport with him.
You can see these photographs (he shows some pics of designs of one of his new clients)...I have to prepare these designs as sample for one of my new clients. You can't imagine how costly it is to develop a new sample. These 10 samples will cost me around Rs. 20,000 and client will not share this amount I had to bear. And even after preparing them, there is no guarantee of getting the order from him. When I asked the client to bear at least half the cost of the samples he flatly refused and said that whatever money I will get is from the final order. The whole process right from manufacturing till I get the order and subsequently my money takes about a year. So for an entire year I have to operate on credit. However if an old client or exporter refers the new client to me things become easier. But hardly anyone does so.
After getting an order do you get any advance money from the client?
Ashok Kumar: After getting an order we dodn't get any advance money, and that's why we have to buy the raw material at our own cost. Leather comes from Kanpur or Kolkata, bones from Loni, Glass beads from Kinari bazaar and adhesive from Karol Bagh. Then our workers give shape to the products according to the pre-decided designs. However in many cases when the consignment reaches the supplier, he usually asks us to make some alteration in the products. To avoid this, we take utmost care to deliver what the exporter wants. Now see, to maintain the high standards set by the exporters we are very meticulous about the entire production process so as to maintain the quality of products. However, despite that we are unable to get the right price for the products.
If I am quoting a price to the supplier then he will definitely cut the price as per his convenience. And not only this, the exporter will sell this product to the foreign buyer at the rate of 10-12 times more than ours. So it is simply exploitation of us and we are helpless because if we don't do the work as per the price quoted earlier then someone else will, who is a worker and waiting for his chance.
Firstly I have to search the market then find a supplier, supply them the products and then after ask them for our money as if we are beggars.
Why don't you participate in various handicraft fairs or join Dilli Haat?
These fairs are meant for big manufactures, suppliers and for exporters
only. Two of my friends had entered into this retail sector. They
thought that they will manufacture and will sell the products on their
own. They also put a stall in some trade fair. Then what happened...the
exporters and suppliers too had seen their stalls and rejected their
assignments. The exporter said, 'now you can sell your products, go and
sell why are you coming to us.' And now they don't get any work from
Delhi. So I don't want to lose my market in Delhi. I am fine in what I
Have you heard about the government initiatives to your sector. Have you registered with the export promotion council?
Ashok Kumar: No sir I haven't registered yet and even don't have any idea about how it's done.
aware of B2B (business-to-business) portals to market your products and
find buyers? Do you ever use the Internet to find your prospective
Internet...B2B? I am not computer literate. Even in my family nobody knows how to
operate a computer. I don't know how one can find buyers over the
computer. Some body from an IT company came to me and was telling about
this concept. He told me to invest Rs. 7000 and they would advertise my
products on net for the period of one year. He also told me that this
would increase my profits and help me in making new buyers or clients.
However I told him that I didn't have money to spend on advertisement. I
have a big list of exporters and suppliers, but are of no use. So I
thought the 7000 too will go to waste.
Sometimes I thought of
getting a computer and Internet, but it is a big investment for me as I
have to buy a computer and net connection. Then I need to appoint a
merchandiser to look after the process and need to pay him/ her the
salary of at least seven to eight thousand rupees a month, which I can't
I have addresses of exporters whom I need to contact for
selling my products, but in more cases than once they too don't have
work to offer. And in case, suppose I get an assignment from some
foreign buyer from the internet or by some other way then I don't have
enough money to visit their place and don't have money to buy air