going global:Sarawagi Rugs' New Approach

Pioneering the art of rug-making for almost two decades, Sarawagi has gained the reputation of a leading, innovative exporter of handmade, designer Tibetan rugs. Learn how they are now redefining their approach to make themselves a global brand.

Artistic. Intricate. And, colorful. Tibetan carpets woven in Nepal have been able to establish a distinct identity in European and American markets over the last decade. With a wide appeal in the international market, Tibetan carpets have become a major income-generating Nepali export items.

Sarawagi Rugs is among the top manufacturers and exporters of Tibetan carpets in Nepal. It was formerly known as Surya Rugs. With colors and designs woven into their family business history, the Sarawagis have been able to carve a unique identity for themselves in the industry. But, with changing times, Sarawagi Rugs is gradually transforming its marketing approach to keep up with the growing global demand for Tibetan carpets.

The beginning
When Dev Anand Sarawagi (Founder and CEO of Sarawagi Rugs) first migrated from Jhapa to Kathmandu for business, he never imagined he would get into the carpet industry. As a child, Dev had always been an admirer of colors and he loved experimenting with various designs. Perhaps, this is why he forayed into the business of yarn dyeing in Jhapa in 1990. In two years, Sarawagi Rugs was born.

“I have always gotten an internal satisfaction out of colors and designs. So I started a dyeing business. But the thought of furnishing personal and commercial spaces around the world with beautiful hand-knotted rugs came to me only in the 1990s,” says Mr. Sarawagi
During the period, ties between Nepal and America were improving. Export businesses from Nepal to the American continent gradually boomed and he chose not to fall behind.

“We joined the trend and that was how we began our export business. I now find the carpet industry to be the most creative and fashionable sector to work in,” he says.

Despite its humble beginnings, Sarawagi Rugs received great support from its American customers. While other Nepali carpet industries were trying their luck in Europe, Mr. Sarawagi focused only on the US. He did want to give away the loyalty of his American customers. For the next 4-5 years, he ran the company with a break even business model.

“At that point, I was in no hurry. I had a side business in dyeing and more importantly, I wanted to learn more about the carpet industry. I knew that once we gained expertise and exposure, we would slowly gain momentum.”

And, so they did. In the next ten years, Sarawagi Rugs prospered gradually with support from its loyal customers across America and Europe. With the requisite infrastructure and a strong-knit employee base, they now proudly export their products all across the globe.

globalLike father, like daughter
Shally Sarawagi joined Sarawagi Rugs in 2009, took a break to go to business school and is back on board to help her father as the company’s Business Development Manager. A strong advocate of sustainable business practices, she aims to transform the way Sarawagi Rugs is doing business. More importantly, she feels that it’s now time for the Sarawagis to go global.

“We want to place ourselves as an international rug company, and not just a Nepali one. In a globalized market, that’s the correct way to do it. Once we expose ourselves as a global brand, the Nepali tag will follow eventually,” says Shally.

Good vision however, is not enough. Although Nepali carpet manufacturers have been able to carve a niche for themselves in the export industry, they are virtually unknown abroad. Since, Nepali carpet industries are mostly manufacturing industries, they are at the bottom of the carpet industry pyramid with the wholesalers and retailers at the top. As carpets are a niche luxury product for high end customers, the recognition trickles down as one goes down the pyramid.

“It’s really sad that Nepali carpet manufacturers are nowhere in the global scene. Since we are a B2B (business-to-business), the wholesalers and the retailers abroad whom we sell our products to get all the credit for the carpets we make.”

Identity crisis
One has to go to Domatex (an international rug show) to realize how marginalized Nepali carpet manufacturers have become, in the international market.

“Even though Nepal-made Tibetan carpets sell like hot cakes by foreign brands in the show, there is hardly a Nepali stall. Even if there is one, it is sandwiched somewhere around the corner between giant stalls of other brands, ” says Mr Sarawagi.

This is the reason why the Sarawagis are making efforts to transform from a B2B (business-to-business) model to a B2C (business-to-customer) model. Doing so will not only get them closer to their customers but also give them an opportunity to mark their own identity in a larger global market. But going global is a herculean task.

“If we want to go global, we must build our own distribution chain. That requires huge investment and workforce. We would have to cater to the needs and preferences of the international audience. We will also need to upgrade our designs and collections every year. The rug industry is very similar to the fashion industry. So we will have to keep up with the modern world and its demands,” says Shally.

The Government Factor
Nepali carpet manufacturers and exporters have played a major role in keeping Nepal’s deficit economy alive. But they have failed to expose themselves on the global stage. Mr. Sarawagi says that this is where the government can support them.
“The government can help us financially in setting up stalls at such trade shows, which is quite expensive. A good-sized stall costs you around 5 to 7 lakh rupees. We may be able to cover a portion of that cost but not all of it. At least we need to be represented out there.”

He points to India, where carpet manufacturers are widely represented at such trade shows. In fact the Indian Carpet Export Promotion Council helps them finance their stalls. The council even organizes international trade shows in Varanasi and Delhi every year.

Another reason why Nepali carpets have failed to expand their reach at the global stage is lack of innovation. Most carpet manufacturers have failed to diversify the types of yarn used in carpets.

“Currently, we use only two types of yarn for our carpets: Tibetan yarn and New Zealand yarn. If we could bring high quality yarn from countries like Afghanistan and Morocco, we would have an edge over other key manufactures in the international market. But that requires overcoming various political and diplomatic hurdles that prevent us from importing such yarn from those countries. The government can play a role in facilitating the imports,” says Mr. Sarawagi.

The problem of labor and skilled workforce is another concern for the industry. With thousands of Nepalis leaving the country as migrant laborers, the carpet industry, like other labor-dependent industries, is reeling under this shortage of manpower.
“It’s not just manual workers who are going abroad. We have difficulties recruiting even white and blue collar employees too because we are not sure if they are committed to stay,” says Shally.

Doing It Right
Despite such hurdles, the Sarawagis are hopeful about the future of the carpet industry.
“I am very optimistic about our future. But to reach there, we have to rethink the pattern we are following. Overall, carpet industries in Nepal just want to produce. We will have to innovate, conduct market research and keep up with the latest trends in order to get recognized.”

Shally adds that they are also trying to reach out to other countries as the European and American markets have been very unstable.

“We are now planning to expand our reach to South America and China whose buying potential has increased. Should we be able to use their progress to our advantage, we can prosper more.”

But for now, Sarawagi Rugs is concentrating all its efforts on streamlining its operations. As a firm believer of quality over quantity, Mr. Sarawagi says that it would be a big mistake for them to bulk produce as of yet.

“If we do so, we would be under pressure to sell our rugs. And when you sell items under pressure, you sell it at cheaper prices. If we continue to do that, our business will crumble in no time.”

It remains to be seen whether the renewed strategy of Sarawagi Rugs to identify themselves in the global market will yield them any good results. One thing is for sure, they will go above and beyond to keep the trust and loyalty of their existing customers.

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