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3 ways to tackle challenges of Bangladesh RMG sector

Bangladesh RMG sector is in a deep crisis in the current year and it is also not sure how the sector will see a prosperous growth in the future as well. The sector is experiencing a downturn apparel export of 67.74% in July-November, so Industrialists forecast that the sector will see negative growth in the coming months also. In this context, both the government and readymade garments (RMG) leaders should set the survival strategy to implement a series of reforms that will open immense opportunities for the apparel industry.

In an analytical view Textile Today found there are three major areas that the Bangladesh RMG sector can patch up as the survival tools. Industrialists and experts opined the three tools can be the ultimate option for the industry to move on in the global competition.

survival tools for Bangladesh RMG

Product development 

The forty years old Bangladesh RMG industry is still young in product development and still could not gain enough maturity. New concept generation, evaluation and commercialization of new products could be the biggest strength for the country today if they are really focused on them in the 80’s or early 90’s era.

Industry insiders believe the RMG sector should focus and invest in product development to survive in the unstable apparel market. The below factors have to be considered by the Bangladesh apparel exporters why product development is important and how it could be designed to survive in the coming seasons.

Brands strategy to reduce their design cost: Nowadays the buyers are reducing their design costs due to various reasons. Instead of going to the seasonal designers they are now approaching the manufacturers – it reduces design cost immensely as in Europe or the US. A study found, to create a tech pack retailer has to pay around $200-$300 range that makes generally agencies and freelancers across the globe.

Cost of Clothing Tech Pack
Figure1: If Bangladeshi manufacturers are able to provide design and Tech Pack. Surely, they can attract brands. Because each season hundreds of Tech Pack requires and they need to spend for them.

Helal Mohammed Nuri, CEO of Silver Line Group shared his views to Textile Today in this regard, he said, “To sustain in the market, manufacturers should develop new designs/concepts with their R&D team. And this one-stop service is a lifeline for buyers, who are desperately looking to reduce the price to stay in the retail business.”

Design studio is the way to attract brands and retailers: A design studio is a workplace for the designers and artisans who are engaged in conceiving, designing and developing new products or objects. In this regard, Bangladesh apparel manufacturers should focus on the creation of an entirely new product or modification to an existing product in a new concept.

BD RMG factories own design studio
Figure 2: To survive in the global market many Bangladeshi RMG factories are developing their own product studio. MBM Group enriched its studio by innovation and by diversification of products.

Asif Ashraf, Managing Director of Fakhruddin Textile Mills Ltd. (FTML) said, “A design studio will add value to your industry but you have to know enough your customers, their buying pattern, their thinking, etc. then you can approach to design studio rightly.”

“Concepts mainly come from the value-added aspect and another thing is that now many buyers and retailer brands are shutting down their own design studios to reduce the cost and they want support from us in this regard. So, establishing a design studio should be the supreme task to stay competitive,” he added further.

Foreign tours for concept development: To obtain cultural immersion, increased confidence, and of course to widen mindset Bangladeshi industrialists and designers should frequently travel the new markets. In this regard buying the latest fashion trending products from abroad, where innovation could be driven for the next trend can help to understand the pulls of the people.

Mohammed Shahinul Haque, Executive Director, Badsha Group said, “Foreign tours can be a good way to get concepts and new ideas. Apparel manufacturers can visit some industries in other countries and learn more knowledge practically. Training by the manufacturer of the machinery company also can help to make technically sound.”

Fakir Kamruzzaman Nahid Managing Director, Fakir Fashion Ltd said, “Industrialists and designers should participate in international textile fairs, seminars, workshops, etc. Because there is no other option to give second thought other than product diversification, automation, digitization and previsions if we want to explore more in this industry.”

Product diversification

Product diversification is the major area where Bangladesh stands far behind from the competitors in the apparel market. This is due to the overall mindset and lack of investment for product diversification.

New RMG product export growth countries
Figure 3: New product export growth of different countries. Source: The Daily Star (2018)

The biggest barrier in the diversification of the product is to change the complete machine set up and expertise development. Industry experts suggest considering below issues –

Development of mindset for product diversification: Many of the apparel manufacturers believe doing the basic product can give better efficiency and this will maximize their profit. But global retailers are moving towards versatile products.

According to Asif Ashraf, Managing Director of Fakhruddin Textile Mills Ltd. (FTML), “Bangladesh is working slowly on product diversification concept and we are clearly lagging behind in product positioning. The key success factor to adopt effective design studio and product development is a mindset and willingness to take the risk. Because here you have to work with the high-end product if you want to sustain in this business.”

RMG Product diversification in BD RMG
Figure 4: Product diversification is the ultimate way-out for BD RMG industry.

Should break the myth of cotton base product: Bangladesh is the hub of cotton products because 96% of its knitwear fabric is produced locally that completely based on cotton.

But development in producing the synthetic fabric, local manufacturers are really not in the big quantity that RMG exporters can purchase. For specialized fabric Bangladesh still fully dependent on the outside source that requires long lead time.

According to Fakir Kamruzzaman Nahid, “Bangladesh mainly produces cotton products and that is why we should do something that is out of the mainstream, as it will make us more sustainable in the market.”

Mohammed Shahinul Haque said, “Our main challenge is product diversification. We are producing the same category of products by almost every manufacturer. For example, Bangladesh has 400 spinning mills and almost every spinning mill is producing the same cotton or cotton-blend yarn. There is no special yarn producer. 150+40D ACR (Air covering yarn) yarn is used for super stretch denim fabric, which, is not available in Bangladesh. Some entrepreneurs should start working on it.”

No diversified product: Some of the apparel manufacturers are exporting goods in a loss just to survive in the market let alone the margin to keep. So other suppliers also have to offer the same product price otherwise they cannot grab order because the devaluation of RMG products have already done by the other Bangladeshi apparel exporters.

In this regard, product diversification can help to be unique from the basic-product manufacturer.

Mohammed Shahinul Haque said, “We have become our own competitor in the product category. This is damaging to our business. Buyers are taking this opportunity. They have many options to choose from and then they are playing with a price. We are getting very low margin, which is the main struggle for our business.”

Efficiency improvement

What efficiency Bangladesh could gain in the apparel sector is not truly discovered. But experts opined it could be between 40-50% which is really below the other Bangladesh competitors. For a country that passed more than four-decade in the industry, the level of efficiency is not really satisfactory. To improve efficiency, the industry insiders suggest some area to take care –

Need proper training: Training is the key tool to strengthen those skills that the RMG sector needs to improve. Any development program will bring the employees to a higher level of efficiency so they all can achieve similar skills and knowledge.

Shahinul Haque added, “There is no alternative than training to convert our population into assets. We need to arrange training to increase the efficiency of our local people. Training can be provided by foreign experts or combined with local experts.”

Develop cost-effective processes: With a process improvement approach, manufacturers can eliminate wasteful spending and make the organization more effective from top to bottom.

Fakir Kamruzzaman Nahid said, “Every single day there are significant changes in this industry, buyers continuously trying to reduce the cost and yearly it reduces by about 5% from the previous year. So, to survive this industry, it is regularly needed for cost-effective process and machinery.”

Reducing consumption: Reducing resource consumption and waste will allow RMG manufacturers to step further towards sustainability and for a longtime business target.

Engr. Mahasinuzzaman Shishir, Assistant General Manager of Natural Denim (Wash & Wear Ltd) said Textile Today, “Laser technology is capable to enhance productivity, reduce water and energy consumption and diminish damaging emissions and waste, guaranteeing ZERO contamination, which allows sustainable eco- friendly denim production.”

Improving efficiency in communication: Effective communication skills are fundamental to success in any organization. Market efficiency always depends on good communication skills.

Uzzal Dakua, Merchandising Manager of Echotex Ltd expressed, “We all should break the myth that we are not good at communication. Factory owners should also focus on increasing their efficiency level, waste minimization and they should think long-term in case of purchasing new technology. Besides investing in technology, also owners should invest in human capital to sustain in the business.”

Technological development for efficiency: Applications of technology will improve and help to grow in the businesses. Despite having a top-notch production house that produces international standard products, Bangladesh is lagging behind than India or other rival countries only for the poor marketing efficiency.

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

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