A Magic Carpet Slide

Carpet sales have been the center of Nepal’s exports for years (up to 1/3 of total exports), but recently sales have been on a steep decline. Many carpet firms in Nepal have gone under due to the extreme decline. There was once over 3,000 in operation but now only around 600 remain. While there are still hundreds of carpet companies in Nepal, they say that they will need help from the government in order to stay on top of this global market.

There are two major factors that have played a role in the decline of Nepal’s carpet exports. India has become more present in the market and is able to offer cheaper prices, along with the wages for their employees being much lower. Also, there were so many people entering into the industry in Nepal that quality began to suffer. Of course, the global recession is partly to blame. There has been a decline of exports in general not just for carpets; however the large decrease in sales is still a concern.

Germany and Switzerland used to be some of the main carpet importers from Nepal. Nepal carpet sales in Germany are down to about one fourth of what they were 10 years ago, which has forced these merchants to look to other countries for exports. Many of them have turned to the United States to improve their sales numbers. It is no secret that the global downturn hit the U.S. as well, but they have still brought higher quality carpets on average than other countries. In fact, Nepal’s carpet exports to the U.S. have actually risen over the past 10 years despite the hard economic times.

While India is posing a large threat to Nepal’s carpet manufacturers, they have been able to stay on top because of the quality of carpets they produce. They create a handcrafted product that currently cannot be matched. However, unless laws are put in place that encourage exports, India will continue to take away their customers.

Another way Nepalese carpet companies are looking to stay on top of the carpet market is by cutting costs and improving their supply chain. Most Nepal carpet manufacturers currently import their wool from New Zealand. One of their ideas is to begin to rear sheep at home to reduce those costs. Other carpet makers are opening factories in different countries to continue to expand international sales. Either way, efforts are being made to keep up with the global market. If these Nepali carpet companies can continue to modernize their processes and keep costs low, then their high quality products will certainly remain on top.