Woven fabric sector of Bangladesh- opportunities, challenges and techniques

Md. Meherul Islam Sohel,  Manager, Fabric Sourcing & Development,  Kenpark Bangladesh   
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Bangladesh is the second largest garment exporter in the world. In the year 2016 Bangladesh’s RMG export was 28.668 billion USD.  It is one of the biggest pillars of the economy.  Government has set a goal to achieve 50 billion exports by 2021. The key raw material of making a garment is fabric. It is mainly divided in two categories woven and knit. This article is going to put some light on the woven fabric sector in Bangladesh as backward linkage of the woven garments exported from Bangladesh in a view to achieve the 50 billion USD target. The article looks at world trend on sourcing of fabric, current situation of Bangladesh’s local woven sector and the area of opportunity where the woven sector can grow a lot.

Woven-Fabric-Processing+Opportunities:

Demand and supply of the woven Fabric:

There is a demand of approximately three billion meters of woven fabric considering the current consumption for export per year. In context of that local mill can only produce around 45 million meters fabric which is around 14-15% of the demand.   Every year the country is spending almost 4 billion USD to import fabric.

So, there is huge gap in the supply and demand in woven fabric. It shows that how big opportunity the country have in this sector.  Where market is ready and it is just catering that only. Investing in woven fabric manufacturing means saving of huge foreign currency, which will give big boost to the economy of the country.

Not only the demand and supply gap, if we look at the world market key sourcing strategy trends  in a view of that also we can see lots of opportunity for the local supply.

Shorter lead time for development and bulk fabric

Shorter lead time is the key of the sourcing now-a-days. Retailer wants to see the reaction of sales on product and press the order button for the color or quality at the last moment to have the product just on time. For that case there is no other option then shorter lead time. And customer sometimes ready to pay more due to shorter lead time. UK or European retailers still buying lots of fashion product from Turkey only for the quick response fast fashion.  Now-a-days most of the fashion retailers want to have product in 60 days.  That means 30 days for fabric production and 30 days for garments manufacturing. So for garments produced in Bangladesh has as high demand of local fabric to meet shorter lead time issue.  It straight way can save 4-6 weeks in order cycle.

Not only the bulk lead time shorter, development lead time also plays a major role to grab an order. If there is strong support from local mill a product can be develop 2-3 weeks faster in comparison with fabric of foreign origin. And this is a huge advantage to win a new business.

There are many other factors in the business why garments manufacturers will more looking for local fabric supplier to work with.

Ease of business: 

Working with local mills is very easy whoever is working in garment manufacturing specially the merchandisers.  Any time any issue they can just pick up the phone and discuss the issue and sort it. Even for any fabric quality issue or merchandise issue, it can be sorted out with a very minimum time. Just for an example, if there is quality issue with a Chinese origin fabric, it takes almost 3-4 weeks to come to solution of considering the email communication, sending evidence or visiting by the supplier representative etc. but in case of local mills it’s a matter of one week.  Same thing happen in merchandise issue as well.

Better and easy communication: 

Communicating in same language is certainly easier and smooth. A merchandiser who deals a so called Chinese supplier, will understand how easy to do business with a native mills.

Less complicity:

When it is about importing fabric there are number of commercial processes involve but if it is from local source, things are very easy and smooth. For an example if you have some quantity fabric which is rejected and you need to return it back to source and need to get replacement fabrics, in that kind of scenario it takes only couple of days for local mills but for foreign mills it take months of time.

Less risk:

When there is an issue in business and you are in the same country the risk management is very easy. But if the counter part or the fabric supplier is from different country it is not that. Sometimes you will find fabric supplier from abroad, who will just wash off their hand and will not do any further business if there is any big claim.

Figure: Bangladesh is having strong backward linkage industry for knit garments. But it heavily depends on import of woven fabric.
Figure: Bangladesh is having strong backward linkage industry for knit garments. But it heavily depends on import of woven fabric.

Challenges:

Let`s look at the other key point of sourcing, where Bangladesh needs considerable improvements. These are the challenges to exploit the above mentioned opportunities.

Price Challenge:

Price is one of the biggest challenges at this moment in front of garment manufacturers and as well as to the fabric suppliers. Things make it more difficult in currency depreciation in UK and Europe after the Brexit referendum. Customers are under huge pressure to achieve their margin. So, ultimate pressure is coming in to reduce the garment FOB and fabric price. In compared to our competitors like India, Pakistan and China our fabric prices are high, as we don’t have our own cotton. But Bangladesh have comparatively cheaper labor cost. So the country needs to trade off with that and need to keep its fabric cost as low as possible to be in the market.

Sustainability:

This is one of the other areas now that every customers or retailers are focused on. Everybody wants to have some attributes of sustainability in their product. So, we need to do some research and development on this, and need to offer fabric with more sustainability feature- organic, recycle, less water or less chemical consumed or any other feature.

Diversity of the product:

In terms of fabric variety in local mills Bangladesh mostly does very basic products mainly cotton based in solid, print and yarn dyed and denims. Out of that also we don’t do much of products like high stretch.

Bangladeshi woven fabric manufacturers’ product range is very narrow. There is huge demand for different kinds of fabric what we are currently not doing. More of this will be discussed little bit in details in later part of this article.

More technical or functional fabric:

In current trend of world market, retailers are looking for more technical fabric with different functional properties. Demand of this kind of fabric is increasing day by day. So, Bangladeshi fabric manufacturers need to be ready for this and diversify their products in those areas as well.

Let`s have a look at the current woven product category what we are currently doing:

Woven fabric types what local mills do:

  • Mainly cotton and cotton/elastane based product in solid, prints and yarn dyed. Out of this most of the mills are not doing high stretch products. They are doing very basic products in this category. Actually, mill`s capacity is so limited that they are full with basic volume product, they don’t need to go and try to innovative products and sell them.
  • One of the other main products we do is Denim fabric. Bangladesh is doing very good in this sector and lots of investment is also coming. We have grown up in this industry very rapidly.

Now there are in total 30 denim mills, which produce 25 million meters fabric per annum. Bangladesh denim washing is coming up very first also. So combining both Bangladesh is considered to be future denim hub of the world. Bangladesh is now number 1 jeans exporter in Europe and number 3 in USA. We all hope that shortly we will be in number 1 in USA also.

So, other than above two types of woven fabric, we are almost doing nothing. Whereas world has a high demand for lot other types of products. If we look at below picture of our import category things will be very clear.

In the year 2015 we have imported 5.1 billion USD cotton based material or fabric. Let’s look at some break down of it.

– Woven fabrics (85%+ cotton): US$1.3 billion (up 17.4%)

– Woven cotton fabrics: $1.1 billion (down -24.5%)

– Woven fabrics (mixed): $497 million (up 393.1%)

– Woven fabrics (under 85% cotton): $282.5 million (up 213.2%)

– Other woven fabrics: $43.5 million (down -81%)

Among imports, Bangladeshi purchases of mixed woven fabrics (up 393.1%), and woven fabrics under 85% cotton (up 213.2%) grew at the fastest pace from 2011 to 2015.

Now let`s point out some of the fabric type what world fashion market has high demand but we are currently not doing and we expect future entrepreneurs will look at these sector and invest on it.

  • Synthetic woven especially Nylon and Polyester based. World has a very high demand of this kind of product for outer wear.
  • Formal wear fabric like Polyester, Viscose or its blend
  • Functional fabric
  • Linen and Linen blend
  • Corduroy
  • Viscose blends fabric for dress material
  • Wool blends
  • Technical fabric other than apparel field, like textile automobile etc.

So, finally we can say still we need huge investment in the woven sector in Bangladesh as backward linkage of garment industry to achieve 50 billion USD by 2021. Without strong support of raw materials we cannot achieve this goal. And we need to invest in diversified products, not everybody will invest in same things and create unhealthy competition. We need to train up the manpower to work in this sector also. And to survive in the market we need to ensure competitive price, quality and excellent sales service to RMG sector. And finally need to do good branding of Bangladeshi fabric to the customers, so that they use Bangladeshi fabric to make garments in Bangladesh. And that’s how we will achieve our goal of 50 billion.

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