Nepal's handicraft exports flourish on demand from emerging markets

The handicrafts and gifts industry in Nepal is enjoying steady growth as demand from emerging economies continues to boost sales. The expansion of several domestic manufacturers in new markets in the Asia-Pacific region is a key factor behind this growth.

Shipments over the past three years have been steadily rising despite erratic economic conditions in traditional markets.

The sector is divided into two primary groups -- textile and nontextile products. Export data from the Federation of Handicraft Associations of Nepal or FHAN show that revenue from textile goods, which include pashmina, silk and woolen items, grew 4 percent to roughly $2 billion in the 2012-13 fiscal year. This was after the line recorded a 33 percent increase from the previous period.

Similarly, outbound shipments of nontextile items, which are mainly composed of metal, paper, wooden and ceramic crafts, went up 8 percent to $2.4 billion last year. In 2010-11, foreign sales reached $1.7 billion, marking an improvement of close to 31 percent from the period prior.

The US is the primary overseas destination for handicrafts, accounting for $14.2 million in turnover, down 17 percent from 2011-12.

The sovereign debt crisis in Europe has slowed down exports to some EU members last year. It directly affected sales of nonessential goods, particularly wooden and paper crafts, which declined 17 and 12 percent, respectively. Deliveries to the Netherlands plummeted 45 percent to $1.9 million. Income from the UK plunged 8 percent to $3 million. Despite the negative figures, suppliers are optimistic that the sector as a whole will bounce back in the next 12 months amid recovering demand from the bloc.

The bullish outlook is also buoyed by increasing orders from the Asia-Pacific region, particularly mainland China, where basic and midrange models are popular. Other key destinations in the region include Hong Kong, Australia and New Zealand. Enterprises are also looking into alternative markets such as Russia, Chile, Ecuador, Guatemala and Honduras.

The heavy reliance on imported materials is considered as the primary hurdle affecting the line. The thinning labor force and soaring manpower costs are also major concerns, as is insufficient electricity supply. An unstable political environment and intensifying price completion are likewise hurting the competency of the sector.

The heavy reliance on imported materials is considered as the primary hurdle affecting the line. The thinning labor force and soaring manpower costs are also major concerns, as is insufficient electricity supply. An unstable political environment and intensifying price completion are likewise hurting the competency of the sector.

Craftsmanship is an edge

One of the line’s strongest suits is the high degree of craftsmanship of artisans. The ability to incorporate indigenous materials in modern releases also helps local companies generate more overseas orders.

Suppliers continue to highlight conventional manual work even as modern designs emerge. Craftsmanship is particularly evident in wooden figurines and statuettes, which typically feature intricate handcarved patterns. The skill of local artisans is also apparent in metal items such as khukuri knives.

Production of this native weapon involves labor-intensive processes, from forming of the blade to attaching the handle using traditional glue known as laha. Embellishments, including glass beads and semiprecious stones, are also applied manually.

Aside from emphasizing indigenous methods, domestic makers adopt homegrown materials to spur demand. Most wooden models are assembled from native timber species such as sal and haldu. Notebooks and greeting cards normally employ lokta paper, which is obtained from the inner bark of evergreen shrubs in the forests of the Himalayas.

Another edge possessed by the sector is acceptance of small orders. Most companies allow an MOQ of five pieces for larger models such as statuettes and sculptures, and 20 pieces for promotional goods and souvenirs such as keychains, refrigerator magnets and mugs.