Alexander the Great, Soccer, and Child Labor

You’ve never heard of Sialkot, Pakistan, but you’ve almost certainly seen their product – and maybe even kicked it a couple of times. Sialkot produces half of the world’s soccer balls, including those used in last year’s World Cup. The story of how the city has been shaped by markets serves as a testimony to their transformative power. More importantly, Sialkot serves as a reminder of how profoundly interconnected and interdependent we are, and of how history, politics, culture, and economics can combine in unexpected ways to produce surprising results.

Local tradition holds that it all started in 1889, when a British officer stationed in Sialkot punctured his soccer ball. He took it to Syed Sahib, an enterprising cobbler who repaired the officer’s ball exceptionally well for exceptionally little, and was soon producing soccer balls for the local regiment. While it’s compelling, this apocryphal story wasn’t unique to Sialkot, and it’s easy to imagine British soldiers across central Asia relying on the local leather worker to repair their soccer balls.

Instead, Sialkot’s predisposition for industry may go back even further, to 326 BC, when Alexander the Great conquered Sialkot, then known as Sagala, and established it as the easternmost outpost of his empire. Sagala went on to serve as the capital of an Indo-Greek Kingdom that lasted until 10 AD, and thrived as a center for trade and industry long after the Kingdom had faded away.

For whatever reason, Sialkot remained the local hub for soccer ball production long after Sahib’s death, and as capital barriers came down around the world in the wake of World War II and advances in Pakistani infrastructure allowed land-locked Sialkot to export at low costs, the industry seemed poised to take off. Two factors, however, held it back: protectionist Pakistani policies designed to insulate local industry from the global market, and wars between India and Pakistan in 1965 and 1971. The latter made Sialkot, which is only five miles away from Indian controlled Kashmir, an extremely risky investment. In the mid 1970’s, as the diplomatic situation stabilized and Pakistan began to open it’s economy, Capital finally began flooding in.

Investors were drawn to Pakistan’s cheap labor, and Sialkoti businessmen were able to capitalize on their history with industry and soccer ball production to convince companies like Nike and Adidas to shift production to their city. By 1982, all balls used in the World Cup were produced in Sialkot. The success of soccer ball production in Sialkot led more manufacturing business to the city, and today Sialkot remains the world leader in the production of leather gloves and surgical equipment.

These industries have transformed Sialkot and made it one of Pakistan’s most prosperous and safe cities. The average Sialkoti makes twice as much as the average Pakistani and, perhaps as a result, Sialkotis are particularly uninterested in radical Islam – though its distance from Taliban controlled areas can’t hurt either.

What’s perhaps more surprising is how the industries have changed local laws and culture. Soccer balls are a product of profound cultural relevance to much of the world, and Sialkoti manufacturers have been exposed to more intense scrutiny than the producers of almost any other item. In 1996 European journalists exposed the routine employment of children as young as five years old by Sialkoti soccer ball producers. Faced with the threat of its largest clients switching to their competitors the Sialkot Chamber of Commerce signed the Atlanta Agreement with UNICEF and the International Labor Organization in 1997, ensuring that children younger than 15 were never forced to miss school to produce soccer balls.

This process repeated itself when Nike pulled out of a seven million-ball contract in November 2006 amid rumors of violations of the Atlanta Agreement. Domestic pressure from Sialkoti businesses afraid of losing buyers forced the Pakistani government to draft national policies protecting child laborers and disallowing abusive employment practices. The Pakistani prime minister went so far as to arrange a meeting with CEO of Nike in Davos to persuade him to resume Nike’s business in Sialkot. He was successful.

While child labor remains prevalent in small businesses that produce goods for domestic consumption, labor standards have improved significantly in larger companies that rely on exports, demonstrating the potential power of markets to, for better or worse, impose values. Unfortunately, Sialkot’s recent history also serves as a reminder of the fickle nature of markets. That’s because, after 40 years of global dominance, Sialkot’s soccer ball producing industry is dying.

Chinese manufacturers are systemically out-competing Sialkoti industry, and have wrested roughly a third of the market away from Pakistan. Whereas most Pakistani balls remained hand stitched, relying on the low cost of Pakistani labor, capital saturated China is investing in high tech manufacturing processes.

The Sialkoti company that produced the 2014 World Cup ball, Forward, is a notable exception. It invested early in the thermal bonding technology necessary to produce World Cup-quality balls, and was thus able to step in when Adidas’ Chinese supplier backed out. It was, however, an investment born of passion, not market analysis – the company’s CEO, Khawaja Akhtar, had long dreamed of producing a World Cup ball – and it remains to be seen if his gamble will pay off in the long term.

In the short term, however, the world’s soccer fans owe Sialkot a debt of gratitude – the Brazuca was roundly considered to be one of the best World Cup balls in recent memory. Pakistan may not have been in the World Cup, but in some ways, they were behind every goal scored.

*Photo from “Child labor, surgical instruments production. Jharian Wala, Sialkot District, Punjab, Pakistan, 2013. © ISCOS/Laura Salvinelli.