Production cost in the apparel industry has already been increased by around 20%. In addition, the Bangladesh government has increased workers minimum wage up to 51% that triggers the production cost to go higher.
However, the pressure to reduce product price from foreign buyers are ongoing like previous time whenever apparel manufacturers are raising their voice for a fair price. Apparel manufacturers are also crying out that the apparel industries cannot fully comply with a higher standard without a fair price of their garment products.
How can buying houses contribute to secure the fair price? And what is the buyer’s role to ensure the new minimum wage for their product makers (workers)?
Syed Kamrul Hassan, Managing Director, Top Tailor BD Pte Limited
I think first of all it’s not only the issue of a buying house or trading house. Trading or buying house and manufactures both need to think in the same way, need to work with the same mentality. I try my best to increase the price at least in a minimum range which will be profitable and sustainable for manufacturers’ that never pressurizes any factory to work for me without the minimum profit.
I gave my best to convince the buyers about our new technologies which we are using. Our support areas and our recently increased wage.
Finally, I want to say that production cost reduction is one of the prime objectives of a retailer. If a buyer gets the product with the best quality and good support then I think the buyer will agree to increase the price. Bangladesh is 100 percent export-oriented manufacturing country so we should also walk with pride.
Tanjin A. Romeo, Managing Director, Cotton Sourcing
Production cost is increasing for many reasons and internal circumstances are there. Workers’ salary and tax rate increase, factory transformation, increased operation costs, etc. are remaining behind the cost rising. This year, the worker wages have increased more than 50 percent and 20 percent of the factory’s expenditure has also increased. Despite the applause of the buyers, they do not agree to increase the prices of the products. In that case, the garment business in Bangladesh is becoming ever challenging. There is a strong emphasis on increasing productivity among the factory owners.
Due to the inability of value-added branding, buyers do not recognize the transformation to compliance and expenses of the factories. BGMEA should, therefore, take the fastest branding initiative in the global apparel market, which could help raise admiration as well as raising manufacturing prices.
Nurul Amin Mahmood Tuhin, Country Manager, Golden Touch Imports Inc
Bangladesh RMG sector is facing incredible uncertainty as in the competitive global market most of the retail brands are facing lots of challenges in price issues. Though after 5 years of Rana Plaza incident, the RMG industry is now more safe and green due to brands and national initiatives. As a buyer’s representative, we could not increase product price though the worker’s wages and production costs have increased significantly. Buyers always give the right product price to manufacturers depending on their efficiency level. Our RMG workers efficiency is very poor compared to India and China. I think RMG manufacturers should focus on improving their worker’s efficiency and saving their own resources.
Engr. Shubhankar Dwari, Manager, Gloria Jeans
The textile and garment industrial sector has been the driver of growth and the country has moved from low to middle-income status. However, as the labor cost has increased the garment industry needs to reduce the production cost else it will be very difficult to survive in long run. Due to an increase in workers’ wages manufacturers and buyers both are facing mammoth challenges. I think manufacturers should implement automation, increase workers efficiency to sustain their business.
Ahsan Mahmood, Country Manager, Gina Tricot
No doubt this is a great initiative of the government to increase the worker’s salary. And this is also true now manufacturing units are in a struggle with this increased cost to survive.
In this situation, all the stakeholders of this sector need to share and dialogue with each other for identifying what is the suitable way and how to sustain in textile business. Cooperation, trust between each other and sustainable business policy I feel is the only way to grow.
Only asking to increase the price, I don’t feel is a comfortable demand when retailers are also facing big challenges in the market. Sales Policy, competition about the price to attract customers and consume capacity over the world now a big question for brands.