The vast majority of firms in this city are family owned and managed. There are few professionals; firms are staffed by craftsmen who learned their trade by serving as apprentices to other craftsmen. Sialkot has a high degree of exposure to the international economy with entrepreneurs participating in numerous trade fairs abroad and hosting visits of foreign buyers. Even the smallest of exporters is likely to boast of a fax machine and a mobile phone to maintain contact with the outside world. This exposure to the international environment is gradually leading to the realisation that firms will have to become more professional in order to compete favourably in years to come. Issues like ISO 900 certification have led to a realisation that local industry has to spend a greater effort on worker training and quality assurance than what has been done historically.

Firms typically prefer to subcontract rather than make investments in equipment and manpower, which would be necessary for in-house manufacturing. Even among the workers working within the firm, many are piece-rate craftsmen rather than salaried employees. Firms subcontract anywhere from 20% to 80% of their manufacturing to vendors. For instance soccer ball exporters often subcontract upto 90% of their value-added to cottage industries with only material cutting , final testing and packaging being performed in-house.

The preference for subcontracting and piece-rate workers over vertical integration and the development of a loyal workforce is the natural outcome of the fierce entrepreneurial spirit, which is characteristic of the citizens of this city. When asked about his ambitions, a young craftsman stated that " I would like to own my own workshop and become an exporter or maybe get exported[ i.e. migrate ] ". This entrepreneurial spirit results in low company loyalty; not many want to remain as employees in someone else’s organisation. As soon as a person has saved enough to buy the most rudimentary equipment, he wants to get started in exports. Wide spread sub-contracting, strong socio-economic networks of support, and the entrepreneurial spirit in the city results every year in the birth of hundreds of companies such as the Suddle Group described below in the boxed insert.

Sialkot’s industries are in many ways typical of industrial clusters in many parts of the world. Clusters are defined as geographical concentrations of related industries. Growth results from agglomeration effects as specialised skills and services are developed within and attracted from without the cluster. The presence of numerous final firms and multiple sources for ancillary services and inputs results in fierce competition and local rivalries. It also results in pool of specialised manpower, in rapid diffusion of information, and in low barriers to entry due to easy access to the resources within the cluster. As Marshall put it " The mysteries of the trade become no mystery; but are as it were in the air...if one starts a new idea, it is taken up by the others and combined with suggestions of their own; and thus it becomes the source of further new ideas.

Sialkot is very much a city at work, energetic and chaotic. Weiss [ 1991, pa 48] describes her impressions as :

Three industries dominate Sialkot. Of the Rs.24.4 billion exported from the city in 1996-97, 36 percent came from leather goods, 30 percent from sports goods and 18 percent from surgical instruments While clusters of leather goods manufacturers and exporters exist in several other parts of the country as well, the surgical and sports goods clusters are uniquely located in Sialkot. In 1988 about 93 percent of the 2565 surgical goods manufacturers in the country were located in the city of Sialkot. Similarly over 98 percent of the 3559 sports goods manufacturers in the country are located in Sialkot and its neighbouring localities.

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