Bangladesh apparel millers did not set any bottom price or they have no standard benchmark as buyers can’t order under a certain amount. This situation is creating unnecessary competition with local millers and it is an obstacle to getting the proper price for their products from buyers.
Retail expert in Bangladesh, Mohammad Abdur Rouf is leading the Dekko Accessories Ltd from March 2017 as Executive Director, who was former Chief Operating Officer (COO) at BRAC-Aarong (Dec 2013 – March 2017).
He completed Doctor of Business Administration (DBA) from IBA of Dhaka University. Recently Abdur Rouf shared his colorific experiences and visions about Dekko Accessories Ltd in a recent discussion with Textile Today.
Dekko Accessories Ltd. is the second largest accessories manufacturer locally and one of the pioneer garments accessory companies in Bangladesh operating over the last 21 years. They are the largest metal and plastic button manufacturer in Bangladesh.
Dekko Accessories Ltd. produces finest varieties of accessories like woven and printed labels, different types of buttons, poly bags, plastic items, printed hang tags, woven labels, care labels, heat transfer sticker, woven belt, screen printing, embroidery with state-of-the-art technology. With a yearly turnover of USD 40 million.
Textile Today: You worked a long time as the Chief Operating Officer in Bangladesh’s largest retail chain Aarong. Now operating business as Executive Director at Dekko Accessories Ltd, please share some experience from your professional life for the Textile Today readers.
Abdur Rouf: I started my career in the local retail sector and worked in many organizations along with the biggest retailer in Bangladesh Aarong that has a yearly turnover of almost 75 million USD.
I worked at Aarong for almost 8 to 9 years and during my 5 years period as COO, Aarong achieved 110% sales and increased profit margin by 5%.
When I joined, Aarong had 80,000 square feet compared to 250,000 square feet when I left! That was a glorious journey with Aarong, where leadership capability is a must to manage the large group of people.
Basically, the retail business is B2C but I also wanted to learn the B2B business and that’s why I’m here. I have joined Dekko on 15th March, 2017.
Here, challenges are different and quality is the most important issue. In retailing, we always had to study the customer behaviors but now mostly business are nominated by buyers. Study on customer behavior is now done by buyers and we supply the products according to the buyer requirement.
As 95-98% time we make the products according to buyers’ sample, we have to go through many challenges to ensure accuracy and quality. So, I am enjoying the challenges and it is a great learning opportunity for me I think.
Textile Today: What drives you to come in this sector?
Abdur Rouf: Bangladesh RMG is the biggest economic sector in Bangladesh and almost 84% of export earning comes from this sector. Our total RMG export is now about $33 billion. So, it has more opportunities and my vision is to explore this biggest and challenging sector.
Another thing which inspires me to come in the garments sector is the leadership gap.
We always import experts from India, Pakistan, Sri-Lanka and China in top management. What I feel is we should lead our own companies. But we are importing foreign experts and they are bringing their deputies. In this way, we are losing our leadership growth in the RMG sector.
Previously our pioneers and entrepreneurs gave more value in experience now they are giving value in skills. Our new generation is also coming to this sector which is very positive.
Unfortunately, we still can’t present ourselves in the international platform spontaneously, maybe our factory is better than India but their presentation is better than ours. So, the first impression is always the best impression.
We are losing orders because of our poor leadership and communication skill. So, there is a leadership gap in this RMG sector and I think I have an opportunity to work in it.
Another objective is to create a learning culture to develop others. It must be started from somewhere and I think some are doing it.
If a newbie joins the retail or RMG they must know there is a good future and career in this sector. Top management should also look into it.
Textile Today: Right now what are the action plans to make Dekko Accessories more superior?
Abdur Rouf: First two years I have worked to make the factory fully compliant. Now we are working on technology and good working environment. Because the factory should be like a peaceful place to work. The worker should have a comfortable workplace so that they can work with their dignity.
The worker mustn’t think workplace as a punishment. Especially, top management, mid-management, lower management’s leadership should be set in a string wheeling system.
If you want to give your best output, you must enjoy your work. The best way to get output from your worker is to give dignity. The worker is a human being, he/she isn’t a slave.
Everyone has human value. If someone does wrong, he/she could be disciplined or resigned but one should not misbehave with him/her.
Textile Today: After implementing the new wage board, garment manufacturers are struggling to secure a minimum profit margin. In this situation, how the accessories sector could help the garment manufacturers?
Abdur Rouf: Dekko had some meeting with garment manufacturers. Actually, our wage percentage also grew in the same way as the garment sector. Accessory factories are also in pressure because the accessory sector is the backward linkage of the garment sector.
Buyers are squeezing garment makers and they are giving pressure on their suppliers to reduce the price but we have no place to release the pressure.
We are more involved in cost maintaining processes for supporting the garments manufacturers. We are also trying to be a more efficient and developing process. We are also absorbing additional expenditure. This is how we are co-existing in the business.
Manufacturers can’t afford to import accessories from China, so they are looking for local suppliers. We can’t do much about price as we have to think about ourselves too. But we are trying to reduce the price whereas we can.
Textile Today: How China is dominating the Bangladeshi accessories market?
Abdur Rouf: In terms of accessories, our main competitors are Chinese companies. Around 60% of accessories still come from abroad. Once we had some limitation and that’s why buyers used to prefer them. But now they are doing irregular manufacturing because of Chinese government policy change. Some of the companies shifting their factory in Bangladesh and Bangladesh government is offering them many facilities which actually will hamper greatly our local accessories manufacturers.
As we know, China is the best at metal factories and if they build a button factory here and bring their system, they can easily reduce their global cost. 75% of work is done in China and the rest 25% of finishing they are doing in our country and exporting. The product we are giving for $5 they are giving it for 3-$4.5.
Many Chinese illegal companies conducting their business from here. Our government should take immediate steps against them.
“Globally most of the green factories are in Bangladesh. Bangladesh has 13 LEED Platinum green factories and around 350 companies are in the pipeline for LEED certification. But we can’t do price bargaining and we are stuck by expenditure. If we expect 40 cents more, for sure buyer will cancel the order. Garment manufacturers have to admit the price whatever it is because at the end of the month they have to pay the loan.”
Textile Today: Globally Bangladesh has achieved a positive image but yet manufacturers don’t get a satisfying price what they always claim. What will be your suggestion to get out from this loop?
Abdur Rouf: I have visited many factories in China. They don’t let any buyers in their factory. Just you want the product, get the product and leave! There is no compliance issue. They have unity and strong policy what we don’t have.
But, globally most of the green factories are in Bangladesh. Bangladesh has 13 LEED Platinum green factories and around 350 companies are in the pipeline for LEED certification. But we can’t do price bargaining and we are stuck by expenditure.
If we expect 40 cents more, for sure buyer will cancel the order. Garment manufacturers have to admit the price whatever it is because at the end of the month they have to pay the loan.
Actually, we created the situation on our own because we didn’t set any bottom price. If we see Vietnam, they have a standard benchmark that buyers can’t order under a certain amount.
Also, we don’t have the correct accounting system. Some use black money so they don’t have to worry about repayment.
So, if we really want to get out from this bad loop we all should think collectively. Our textile bodies like BGMEA, BTMA, and BKMEA, etc. should work more actively then one day we will control the market.