Why P&G is leaving Pakistan

However bad you think Procter & Gamble leaving Pakistan is, we suspect after reading this story, you will see that it is worse. There are no two ways to say it, so we will start with the uncomfortable truth first: P&G is important for Pakistan, but Pakistan is not important enough for P&G.

P&G’s presence in Pakistan is perhaps one of the best examples of how a global multinational started off in the country with a miniscule presence and barely any resources and ended up becoming one of the largest manufacturers in the nation. Indeed, P&G had gone from being mainly an importer, to a domestic manufacturer, and had already begun to be an exporter.

It was one of the best examples of attracting foreign direct investment into the country: allow imports to start with, let them build up their market, and slowly they will start manufacturing, technology transfers, and even exports. It was working.

Until it stopped.

This is one of those stories where there is not one person or party to blame. Did the government’s policies drive away the company? They certainly did not help, and we will explain the specific policies that hurt P&G’s business. But a detailed examination of the company’s financials indicates a much more complex story, one that indicates that Pakistan’s consumer goods market may be a lot smaller, and growing a lot slower, than the headline numbers may indicate.

In this story, we take a look at what P&G built in Pakistan, and how they moved from importers to manufacturers and net exporters. We then examine the recent downturn in the company’s performance in the Pakistani market, as well as its generally sluggish growth globally. Finally, we take a look at reasons why P&G may have made the decision to leave the country.