Blogger Widgets
Sponsored Link:
Best sources for quality Bedspreads amazing Doona covers and outstanding Quilts in Australia.

Opportunity of Ready-Made Garments Industry in Bangladesh

Print Friendly and PDFPrintPrint Friendly and PDFPDF

The hundred percent export-oriented RMG industry has experienced phenomenal growth during the last 15 years. Within a very short period of time, it has attained great importance in terms of its contribution to GDP, foreign exchange earnings and employment and also as a vehicle of social changes. The export earning data of Bangladesh, shows that in 19884-85, ready-made garment sector earned 12.39%( $116 million) of the total export. This was raised to 36.46%($471 million) in 1989-90. This share rapidly went up to 53.36%($1064 million) in 1991-92. Surprisingly, the share showed no increase for the last three years. Bangladesh garments products are facing various barriers and difficulties in the international market. Garments’ contribution to the total export earning remained constant at around 52% for the last two years (52.84%) in 1994-95 and 52.63% in 1995-96. This stagnant situation demands immediate attention of the international market researcher and the government as well. This research therefore, attempts to assess the present status of the RMG sector and suggests strategies to overcome the present crises.

The most youthful export sector in Bangladesh, the RMG industry, has been earning over 60% of the foreign currency for the country during the last few years. In 1995, it contributed 66% to the nations total earning from export. The membership of BGMEA, which started with 19 (Nineteen) in early 1983, has reached 2383, as on August 31, 1996, increasing by 25% each year. The growth of garment exports in dollar terms is in harmony with the growth rate of factories that depicts a healthy steeper growth of the industry. Garment export in value has been increasing on an average by 27% each year. As the rate of increase (20%) per year, is expected to continue through the MFA phasing out transition, growth prospect of Bangladesh’s apparel industry looks brighter (The Daily Sangbad: 1996).
 
Bangladesh has opportunities of expanding the market through the following strategies.

i) Cost Effective Strategy
ii) New Product Development and Diversification Strategy
iii) Market Diversification Strategy

Combined together these three strategies calls for total quality management (TQM) approach. I have discussed them individually.

1. Cost Reduction Strategy

a. Backward Integration
The cost reduction strategy should begin with assigning the higher priority to establishing backward linkages. The establishment of backward linkages will reduce our dependence on foreign sources and in turn will reduce total and average production cost of garments. This will make our products more competitive in the world market. Our textile industry is not capable of producing the types of fabrics which the apparel industry needs. This means that we must develop our ability to manufacture quality yarn and fabrics supported by dyeing and finishing facilities by establishing composite mills with adequate capacity to meet the demand of the growing RMG industry. The backward integration will not only reduce our dependence on foreign sources but it should also decrease the total and average unit cost of production. Currently our exporters buy fabrics at international prices with the support of back-to-back L/C. Prices are not necessarily competitive. Besides, while procuring through back-to-back L/C, the importers (our exporters) pay a high charge of interest for a certain period, almost for 120 days. In addition to this interest payment , the charges, commissions, fees for the services of the middlemen involved are also to be paid. All these add up to the total unit cost of garments. If we can operate our composite mills efficiently, the cost should be lower than that of procuring fabrics from foreign sources. Besides improving the cost advantages, the establishment of the composite mills will increase value addition and employment which will increase its contribution to the GNP. Recently, the Government declared the textile sector as the “Thrust” sector. This is a good step. It is assumed that the policies announced by the Government will be implemented in time. All these will help RMG industry to maintain its position in the world market.

Our present position is very weak; but potentials are very encouraging. The projected demand for 1995-96 was estimated to be around 2800 million yards. Currently our mills can produce around only 115 million yards or about 4% of the total demand. Fortunately, some 10 sophisticated modern composite mills are being established by local entrepreneurs and will be in operation in near future to increase the supply of fabrics to 239 million yards. However, we need more mills to be self-sufficient. If the government and the political leadership can ensure a peaceful and congenial business environment, our entrepreneurs can effectively go for backward integration and thereby can successfully compete in the world market (Haque : 1993, Ahmed : 1994).

b. Labour Productivity Improvement

However, it is to be noted that the lower material procurement cost may not be enough for Bangladesh to maintain its competitive edge in international markets. Bangladesh must increase productivity which is lower than many of its competitors. It is true that wages are low in Bangladesh, but it does not necessarily mean that relatively low wages automatically lead to higher productivity. Wages are only one of the determinant of labour productivity. Time required by the workers to perform a task is another important determinant. Available efficiencies indicate that Bangladeshi workers are not as those of Hong Kong, South Korea and Sri Lanka. The workers’ skills and supervisors’ managerial efficiency are higher in those countries than in Bangladesh. In addition, those countries use the latest technology, for example, computerise sewing machines, design facilities, etc. but Bangladesh uses relatively older technology.

c. Productivity of Bangladesh RMG Industry Increasing

A survey research in 1994-95, aimed to determine the productivity trend of the RMG industry, revealed that the workers needed significantly shorter time to produce a shirt of a given specification than the time presented in another study completed by Khan and Chowdhury in 1986 (Siddiqi : 1995). This means that labour productivity in RMG factories has improved during the last 9 years.

However, productivity increase may result in wage increase. But this should not be a matter of concern if productivity increase is more than wage increase. The experiences of Japan, Hong Kong, Singapore, South Korea, and other suppliers of RMG confirm this kind of relationship between productivity and wages. Unlike in the public sector in Bangladesh, in the RMG sub-sector, wages have increased during the last 9 years, but productivity has increased more than wages.

ii) Product Diversification Strategy

An analysis of the product mix of the apparel industry reveals that, so far, Bangladesh has been able to export very limited categories of products. The factories of Bangladesh produce shirts, jackets, trousers and other garment; the shares of these categories in the total production are estimated as follows:

Category Share (%)
  • Shirts 60.00
  • Jackets 11.00
  • Knits 10.00
  • Trousers 7.00
  • Others 11.50
As the above figure indicates, Bangladesh has concentrated in the production and export of shirts. This means that there is a scope and actually a need of structural change in product mix. Exporters are producing mostly those items on which quotas are available. Besides, the products served mainly low and medium end markets. The reason for this is the buyers’ decision to buy low priced items from Bangladesh. This relatively narrow base of products may in future limit the market share and the competitive edge of Bangladesh. Most of its competitors have much broader product mix. Product diversification will call for developing capability of product development and product design especially in response to fast changes in fashion. For this reason the private entrepreneurs will need government support in establishing and strengthening technical institutions involved in fashion design and market intelligence. The competitors of Bangladesh, namely, Thailand, China, India, Pakistan, Hong Kong, Singapore, Malaysia, Indonesia and others are already ahead of Bangladesh in these areas.

iii) Market Diversification Strategy

Bangladesh has concentrated only in a few markets. It has eyed for mostly USA, Canada and Europe. About 46% of its total apparel exports go to the US markets and 14% to Canada. The rest 40% go to EU and other European markets. The competitors of Bangladesh, for example, India has continued to expand its trade, diversify its markets and change product mix of its exports. As the recent performances indicate, the production and marketing capabilities of Bangladesh have increased substantially. But still it lacks the core competence necessary to stay in a highly competitive market which one can anticipate in post MFA period. If it wants to maintain its world market share and competitive edge, it needs to diversify its products and markets. To formulate and implement the interdependent product diversification and market diversification strategies, the following activities must be undertaken:
  • Market research on product design and development,
  • Market promotion through trade fairs, exhibition, etc.  
  • Human resources development through training.

5 comments:

Gokakmills said... Best Blogger Tips

Technical Textiles Manufacturers
Gokak Mills places a high premium on employee welfare. The company hospital, residential complex, educational institutions are one of the best in the region. More than half the company's employees were born and educated at these facilities.

For more details :- http://www.gokakmills.com

Unknown said... Best Blogger Tips

Gokak Mills places a high premium on employee welfare. The company hospital, residential complex, educational institutions are one of the best in the region. More than half the company's employees were born and educated at these facilities.
Yarn Exporters, Yarn Manufacturers, Technical Textiles, Dyed Yarn Manufacturers.

For More Details Visit http://www.gokakmills.com

Unknown said... Best Blogger Tips

Gokak Mills places a high premium on employee welfare. The company hospital, residential complex, educational institutions are one of the best in the region. More than half the company's employees were born and educated at these facilities.
http://www.gokakmills.com/
Yarn Exporters, Yarn Manufacturers, Technical Textiles, Dyed Yarn Manufacturers.

Motherearthindia said... Best Blogger Tips

Readymade garment in Bangalore /a> Mother Earth provides good and quality goods of natural fiber in Bangalore and readymade garment in bangalore.

Surabhi Agarwal said... Best Blogger Tips

Readymade garment in Bangalore is good and very qualitative and people do prefer it the most

Comment here

Textile Learner is the largest Textile Blog over the net. It is an ultimate reference for textile students. It describes textile articles in comprehensive. It also supplies news on latest textile technology, educational institute news of the world.