China Pakistan Economic Corridor
China Pakistan Economic Corridor (CPEC) is one of the most significant projects presently underway in Pakistan. Its impact on local businesses is two-edged, and the threats and opportunities it presents vary across industries and sectors.
On the positive side, CPEC’s investment in highway, port, and energy projects improved trade efficiency. Supply chains have become more efficient, shipping costs have reduced, and exporters can access foreign markets better. Textile factories in Faisalabad, for instance, report that the improved access to China and the Middle East markets makes them more competitive.
But these advantages do not cut across the board. Chinese companies have intensified competition in the technology, energy, and construction sectors. Foreign competitors are usually in no position to level the pricing and high-level skills of foreign competitors. Additionally, the increase in land prices near strategic project locations has raised costs for local businesses and service providers.
At the same time, CPEC has stimulated the emergence of new businesses. Warehousing and logistics startups are cropping up in the country to meet demand, which is also seeing e-commerce sites reap rewards from shorter delivery routes. Technology companies are also leveraging opportunities to fill gaps by offering solutions to automate customs and trade.
Through the establishment of industrial parks and export-oriented clusters, CPEC will transform Pakistan’s economy in the future. The test will be whether the market grows in a way that enables smaller businesses as well as larger ones to prosper. To remain competitive, companies will need to adapt to new ways of trading and innovate.