Clothing Industry, Branding, Integration, Sweatshop, and Types of Clothing Firm.
I would like to address the industry, which manufactures dresses from textile material (fabrics) we put on as ‘Clothing industry’. The performance of Bangladeshi Clothing industry can be appreciatedbecause of its export values and employment of more than 35 million people, around 80% of which are women. The previous year exports value of Bangladeshi made clothing is in the second positionafter china globally. McKinsey&Company, US based consulting giant has addressed Bangladesh the ‘next China’ and the firm predicted that Bangladesh clothing export might cross more than 43 billion USD by 2020. Research report from Nielsen Bangladesh revealed that Bangladesh needs extensive branding at home and abroad for long-term sustainability of the clothing sector. Many industry experts believe that it is the appropriate time tobrandcountry’s clothing sector. Clothing branding is important for Bangladesh for three important reasons: to create safe guard against increased price competition and transform backbone industry of the country into global image as France created image in fashion, Germany in automotive industry, Japan for consumer electronics industry.The second reason is:clothing brands addvalue in products and generate revenue for high price.The third reason is:people across the world will know Bangladesh as the country of choice for clothing items.The export of our clothing items in the global market has been increasing since its inception. As the country is becoming as an exporter of textile-clothing goods, the country should produce quality branded goods under its own name. It will raise reputation and do country branding too. Philip Kotler globally known as marketing guru, in the world marketing summit-2012, advised Bangladesh to brand herself through clothing branding.
Brand and Branding:
Though ‘Brand’ is mentioned to be a trademark connected with a product or producer, it is indeed a perception created at consumers mind against that trademark or that particular product. A brand can be described as a marketing identity created for a generic product in order to distinguish its competitors(Penman, Textile Branding). Earlier mankind began leaving a mark to signify ownership of property, membership in a group or clan, or to identify political and religious power that leads today as brand. Brand name always silently bears a bundle of intangible attributes and among many attributes quality and reliability are there undera brand name. A country, a place or product can be branded individually, but all are interrelated and finally can be contributed in country branding. A product branding is always more flexible than that of country or place branding. After a product has been launched, companies are free to make modifications in response to consumer demand but in case of place or country branding, a country can’t replace its beaches with mountains.Products can be discontinued, modified, withdrawn from the market, re-launched and re-positioned or replaced by improved products.
In the textiles and clothing sector, branding can be applied at various levels, most typically at the clothing level. Global textile brand IKEA and clothing brand Nike have larger revenues than the GDPs of some small countries. Indian origin Raymond, Sitaram, Arvindand etc. are well known global textile fabric brands for shirt, suiting and other form of formal clothing. In some countries, Indian clothing- textiles and fabrics are considered as fashionable.
Positive clothing branding create positive country image. Armani and Gucci premium clothing brands add value to Italian country image, in the same way Nike for the USA, H&M for Sweden, Zara for Spain, Hugo Boss for Germany and etc.
Bangladesh’s status in clothing branding locally and internationally:
Leading local clothing brand manufacturer and retailer, Cat’s Eye first introduced branded clothing in 1980. Since then, several brands have come into the clothing market and the brands are doing good business. There are 56listed fashion brands in Bangladesh. Few of them have crossed the boarder and doing branded clothing business like Yellow, Artistic, and Kay Kraft. International exposure of our consumer-clothing brand is yet to get mark. Some are doing business with high-risk mode of doing business (self-entry), but successful.
Structure of clothing industry of Bangladesh:
Bangladeshi clothing is not yet in the brand business. Most of our production is focused to deliver the market with buyers’ brands. Bangladesh is getting win-win business where the brands invest in the necessary marketing to bring customers to their shops, and we produce quality apparel in a compliance environment.In the last few decades, the structure of Bangladeshi clothing industry has changed from only CM (Cutting-Making) to FOB (free on board). FOB clothing firms are capable of sourcing and financing inputs and providing all production services, finishing, and packaging for delivery to the retail outlets.One and a half decade ago, most of the clothing firms were CM and the rests were CMT (Cutting-Making-Trimming). A World Bank study (World Bank 2005b) states that in 2005, two-thirds of apparel firms in Bangladesh were involved in CMT production. Following table describes the types of clothing firms in Bangladesh:
Data on the different types of clothing firms are not available but it can be concluded easily that there is not more than 2% ‘Collection’ clothing firms in Bangladesh.Lion share of the firms are composed of CM, CMT and RTS (FOB). CMT business is less risky and generates fewer margins than FOB business or Collection business. The value addition in exported clothing items, at present, may not be greater than 25% of export value.
Textile industry is important backward linkage for clothing industry. As we know that textile-clothing industrial chain is one of the longest and complex industrial manufacturing chains, interrelation among different processes and sub-processes are complex. I like to explain relations among the different process in Bangladesh perspective by following figure:
There are three different types of textile clothing manufacturers in Bangladesh: (1) integrated manufacturing, where factories import the cotton/fiber and do the rest of the production process (spinning, weaving/knitting, cutting and sewing) on their own; (2) factories importing yarn and then completing the rest of the manufacture; and (3) factories importing fabric and sewing the garment in CMT factories. Most of the knit factories belong to the first two categories and woven factories belong to the third category (World Bank, 2005b)
Supports to Bangladeshi Clothing industry:
There are several factors behind the success of the industry. Bangladesh belongs to Least Developed Country (LDC) category, which ensures international favors to Bangladesh in doing international business in clothing sector; like Generalized System of Preferences (GSP) and/or GSP Plus facilities, Everything But Arms (EBA) agreement, and Duty-Free- Quota-Free Market Access (DFQFMA) initiative. Apart from this, government has imposed top priority in clothing industry through cash incentive/return on export clothing items and tax reduction. Huge abundant cheap labors, and cheap utilities are two important local factors have been contributing in creating competitiveness for our clothing industry.Thus international buyers are flocking in Bangladesh creating situation like ‘less honey, more flies’.
Roles of clothing manufacturer and brand developer-seller:
The following simple figure shows the relation between clothing manufacturer and clothing brand developer-seller.
Clothing manufacturing and its exports are predominantly marketing activities (selling of products before those manufacture) while branding company is involved in selling manufactured items to the consumers. The roles of manufacturer (present status of Bangladeshi Clothing sector) and brand manufacturer (proposed status in future of Bangladeshi Clothing sector) are given table:
Mode of doing business of Bangladeshi clothing sector:
Bangladeshi clothing sector is dominating country’s economy through export mode. The export mode of doing business is the safest business strategy among different modes of doing international business. The advantages of doing export business is low risk, high flexibility, but at the same time low profit margin. The self-entry mode (i.e. own branded clothing sells) of doing international business is highly profitable, recognition, better control over business, but at the same time high risky and low flexibility. Branding clothing items globally needs mode of self-entry.
Following figure explain different modes of market entry in international market. Depending on market opportunity and own manufacturing and marketing strength, a country chooses its mode of doing business.
Fast growth of international and local buying house or sourcing offices and satellite offices in Bangladesh indicate a major difficulty for clothing companies’ ‘marketing performance’. About more than 1200 buying offices are operating in Bangladesh. It is estimated that 90% of the clothing companies are tied up to buying houses/agents. Following figure explains the present clothing business structure of Bangladesh:
Due to lack of skilled human resources for marketing, the buyers and some skilled human resources groups have been successfully running middleman business in Bangladesh.
Following table is composed taking important criteria for branding issue, which is integral part for running successful branding business in international market. Bangladeshi clothing industry’s present status in the following:
Global consumers know Bangladeshi clothing production as ‘sweatshop’. Deadliest blazes in clothing industry, labor unrest, strike in the industry, death of labor union leader, low wages, and other compliance issues are burning question to international clothing arena. Branding of clothing items from any country at the first stages ensure social and environmental issues locally.
Proposed strategies for launching own branding in the global market:
The global market economy is changing faster than ever before and intense competition caused mainly dueto enlarged globalization. As our natural resources are becoming scarce and costlier, the hunting tool of low costs for doing business is losing importance. Thus the importance of introducing new technique like branding own product will play vital role keeping competitive business in the global market. Introducing own brand and know how to keep its image will not only bring good image for the products and the country, but also capture higher share of profitability. Formulating appropriate brand strategy is important tools for introducing brand and its image.
Before going to be global in clothing branding, the specific country has to ensure its brand power in the country, and this is considered as the ‘laboratory test’. The pass-fail result will further provide guidelines and instruction what to do in corrective measures, before entering in global market. The acceptance of the clothing products by own people boost international acceptance of the products, because, these citizens are ultimately be your brand ambassador and clients when travelling and residing in other countries.
Bangladesh is not in a position to initiate own branded clothing items in the global market. There is long list of international supports that Bangladesh has been enjoying as Least Developing Country (LDC) that deeplycontribute on our export. Government supports are also playing vital role in booming of clothing export. Cheap manpower and utilities (gas, electricity, etc.) are also helpingdirectly in export growth. But this cheap manpower and utilities will not remain cheap and government support will not remain forever; as well the international support will be taken back soon after the country graduates from LDC to DC status. The Bangladeshi industry should prepare in the way to remain competitive after all the supports would be taken back. Simultaneously the industry should concentrateon the above-mentioned table (present status of Bangladesh) and tries its best to improve status in the mentioned areas.
A good brand is always connected with high quality, competitive price, reliability and services and in order to introduce brand, first of all one must know the specifics of the consumers on that market. Accordingly the country has to formulate branding strategies. To introduce branding clothing items in international markets, the experiences in locally grown clothing markets and associations may play important role in the start of branding activities.
Strategies should be formed in such a way that should ensure: accumulating national capacity through cooperation amongst the people, corporations, and government; managing national clothing brands through a master plan and developing brand index; creating a national brand motivating force through the expansion of a common national response;the government works together with the association by promoting investment and working toward better enhancing the business climate.
Clothing branding without any distinct features, without a clear vision or specific mission, or without permanent values, will sink in the mass market. Thus, the mission and vision of the introduced branding should be formulated in the right way. Usually mission and vision are based on powerful intuition or a strongly held conviction.
Government, associations of clothing manufacturers and exporters, as well as local associations of branded clothing manufacturers and retailers can worker together to introduce and popularize our clothing items in international markets. Their team may recognize few international zones, and open a common superstores to display own created clothing designs, product developments, branded clothing and meeting with prospective retailers who would go for sale of our branded clothing.
Bangladesh is a lucrative destination for clothing manufacturing due to international supports, government’s favor, and comparatively cheap resources. Bangladesh has never taken initiative to popularize/create own brands and strategies for brand awareness in global clothing business. But experts have been advocating Bangladesh for clothing brand business. But on the other hand,if Bangladesh takes initiative for brand business, the international supports may be withdrawn or take different forms. Branding Bangladesh through clothing branding is very crucial issue for Bangladesh. It is not the right time to initiate any such concept right now; rather Bangladesh should concentrate more on burning issues like compliance in social and environmental issues, resource efficiency & productivity improvement. After coming out of basic compliance issues, the country should concentrate on ‘fair trade’ business in the clothing sector that may bear higher country brand value and revenue than branding of clothing. ‘Fair trade’can beone of the ‘home works’ before introducing clothing brand ininternational market.
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