Team Group is one of the largest RMG conglomerates in Bangladesh. The leading RMG Group of the country–comprised of 6 apparel and backward linkage factories– started its venture in 2009 and within a short span of time it has curved out its niche in the industry.
However, the success of Team Group didn’t come all on a sudden. From its initial days, the Group made very clear strategies on how it aims to have impacts to the country and the world.
Throughout the journey, Abdullah Hil Rakib led Team Group being at the helm of it. The Managing Director of Team Group, who is also a Director of Current BGMEA Board has recently been awarded with Dhaka University Marketing Alumni Association (MAA) Award for his outstanding contribution to the country’s economy.
Recently in a conversation with Textile Today Abdullah Hil Rakib talks about his business journey and the secrets of his successes.
Journey of Team Group
Abdullah Hil Rakib: It is a journey of 12 years. The best part of it was that I got good suppliers, customers and colleagues who helped me in coming to today’s position. The support was phenomenal from all aspects. I am thankful to Allah, my parents, colleagues and everybody who have been a part of this successful journey.
My vision was to establish a global business entity. So, immediately we set up two offshore offices to accomplish trading business (Team Sourcing). The trading business perspective was to serve those customers who do not have offices in Bangladesh and to represent them.
When we felt the necessity of manufacturing to cater to all global customers who have their offices in Bangladesh – I realized we have to set up a vertical company. We entered into manufacturing by taking over 2-3 sick factories that were good in terms of infrastructure but management-wise not performing well.
Our business is not about commodity and volume rather we focus on manufacturing value-added products. In order to do so, we have set up 3 design offices across the globe. We also have a good design team here in Bangladesh who work closely with the designers of customers to co-create designs. This is why we focus on niche customers – not just the larger customers who sell on volume.
Of course, our trading business always complemented the manufacturing business in terms of supporting the lean period.
Last year, the Team Group’s turnover was $360 million. It plans to reach the $1 billion turnover-mark by the next five years. It will also start a new denim factory with zero discharge washing plant at the end of 2022.
Secret of this mammoth growth
Abdullah Hil Rakib: I always put emphasis on building relations and confidence of the customers – who really believed in me and supported me continuously and unconditionally.
Primary challenge as a trader
Abdullah Hil Rakib: First of all, being a trader – one has to keep adding values so that the buyers choose traders instead of manufacturers. Having said that, good manufacturing factories nowadays are also reducing this gap with buyers with a direct approach, which poses a big challenge for traders.
Yes, from the industry and country economy index perspectives, it is good. But it’s challenging for the traders. To overcome this challenge, the traders have to constantly add values.. Then the traders could complement the manufacturers and thus increase the value of their products to the customers.
Another major challenge for the traders in Bangladesh at present is exorbitant tax and vat. As traders, when our margin of profit has already squeezed, then if that too is eaten up by banks and the administration then what is the ultimate scope for a trader?
As traders, we need to convey to the government that for a balanced business environment a trader’s presence is required in the country. A trader brings new retailers and buyers and adds value to bring additional business.
If we look from the global perspective — for instance, shipping companies take the assistance of agents instead of setting up their own offices. Similarly, trading houses like Team Sourcing is working for bridging the gap between buyers and manufacturers to secure the business. Traders are not eating up the manufacturers’ profit margin. This negative perception regarding traders needs to be wiped out.
Main growth area and way to approach new market
Abdullah Hil Rakib: For more than one and a half years, BGMEA and the industry have been giving emphasis to focus on manmade fiber-based apparel products, as share of non-cotton apparel in the $550 billion global apparel market is increasing. But Bangladesh mostly manufactures cotton-based products. So, we have to grab more manmade fiber-based apparel segments through product diversification. This is an opportunity for traders as well as manufacturers. As a manufacturer or a trader, we need to expand our manmade fiber-based apparel product range. Last year, Team Group started an 80-line factory for manufacturing outerwear, athletic wear, sportswear and special wear fashion products.
When we see the market is growing– we have to be ethical, sustainable and traceable. Traceability is a must in today’s sustainable apparel business with fashion consumers are getting more aware of the type of chemicals used, wastage produced and its management in the RMG products. For us, these sustainability measures pose challenges and opportunities at the same time.
Major challenges for manmade fiber-based apparel products
Abdullah Hil Rakib: Manmade fiber manufacturing have a lot of challenges. We import raw materials from China where they have recently reduced factory operating days to 5 in their bid to lessen carbon emission. This is resulting in an uncertainty for us to secure the inputs on time; and it implies that raw materials arrival lead time will only increase. It will hamper our products delivery on time.
On the other hand, investment is a major hurdles for local apparel manufacturers as a non-cotton vertical setup needs more than $100 million investment. As a new investor in this sector, manufacturers can invest $5 to $10 million at best. So, the mammoth size of the investment, technology are shackling our ability to invest in the non-cotton sector.
Ways to mitigate these challenges
Abdullah Hil Rakib: BGMEA is working tirelessly with various ministries and the concerned government authorities to ensure tax holiday for 10 years and incentives to factories in EPZs. This will encourage foreign companies from China, Korea, Japan, Taiwan, etc. to come and invest in private partnerships. It will aid us in bridging the existing gaps and growing vertically, and producing all the high-end manmade fiber raw materials locally.
Current export growth-is it price growth only or there is profit growth as well?
Abdullah Hil Rakib: It depends on manufacturers’ capacity, identity and how he/she is managing their clients, operational costs and how much they have optimized processes with digitalization. Profitability depends on these things. And apparel manufacturers are evaluating these things daily to make it happen. Having a strong focus to build robust mid-level management is the key to ensuring a process-driven system to cruise a manufacturer to profitability.
The ways to build strong mid-level management and process-driven factory
Abdullah Hil Rakib: It is high time for associations, industry partners, the government and all relevant stakeholders to come forward and invest more in awareness building, capacity building and training mid-levels to turn the ultimate challenge into an opportunity.
If we do not wake up now and invest to optimize and digitalize to build a process-driven system and train the mid-level, then in the next 5 to 7 years the RMG business may cease to exist here as we will perpetually lose profitability.
It needs to be addressed immediately by manufacturers. So, the smaller grows into medium and the medium grows into larger. If we can deal with mid-level management training and process-driven RMG industry well – by clustering these smaller and medium factories – then we can bring this industry to $100 billion export.
Most importantly, the 4IR and optimization will create more opportunities for our graduates. Having said that, on the academia aspect more industry and university-level collaboration are needed.
Extraordinariness of Team Group
Abdullah Hil Rakib: We have some set-in-stone values – and the number one value is ownership. Every individual in the Team Group has ownership. It makes every individual in the company independent and capable to deliver his/her responsibility. There are more three values we uphold within the Team Group — Excellence, Social Responsibility and Recognition & Reward. We practice these values to make Team Group a role model for the industry.