The growth of Bangladesh’s RMG sector has been tremendous in the last 15 years, thanks to the strong foundation set by the industry’s stakeholders four decades ago as well as the resilience and determination of the companies that have weathered many challenges. The contribution of Pacific Jeans Ltd. (PJL) – the first jeans manufacturing company in the country – to this growth can’t be ignored. Founded in 1984 with just 500 workers, Pacific Jeans Ltd., today employs over 35,000 workers and has become synonymous with quality, innovation and sustainability in the global apparel market.
The success of Pacific Jeans Ltd., has not only benefited the company but also the country, by creating employment opportunities and earning foreign currency for Bangladesh, thus participating in the economic growth of the country. Started by visionary Late Md. Nasir Uddin, the group today is not just the leading denim garment manufacturing company but its newly diversified knit business under the name of Pacific Knitex is also being touted as an emerging ‘knit unit’ of the future.
Team Apparel Resources (AR) recently met Syed M. Tanvir – the Managing Director of Pacific Jeans Ltd., who has followed the legacy of his lineage to take the company to new heights with his sheet grit, perseverance and sharp business acumen. Tanvir spoke at length about Bangladesh’s growth in the global apparel market, key factors contributing to this growth, strengths, future outlook as well as Pacific’s plans going forward. He also took pride in being a spokesperson of Bangladesh RMG industry during the entire conversation and rightly so as he is better placed in the industry being a second-gen business owner of the largest denim apparel manufacturing company of Bangladesh.
AR: Bangladesh has set a target of achieving US $ 100 billion in the next seven years. Don’t you think it’s quite steep? How is the Bangladesh industry gearing to take up this challenge and how Pacific Jeans Ltd. is contributing in it?
Tanvir: Bangladesh currently holds 9 per cent share in global apparel export market, with the global share of cotton apparel being around 16 per cent and the share of MMF apparel being less than 5 per cent. Achieving the target of US $ 100 billion within a defined period is feasible if Bangladesh increases its share of cotton-based apparel to 20 per cent (from 16 per cent) and MMF-based apparel to 12 per cent (from 5 per cent). This is possible because factories in Bangladesh are expanding into MMF-based apparel and innovating in cotton apparel.
Apart from product/fibre diversification, the exporters are also looking at market diversification to bring in more export revenues from emerging apparel retail markets.
People may say here that we need more manpower to achieve our target but that’s an irrelevant proposition. In the last 10 years, we have almost doubled our exports with the same workforce strength (approximately 4-4.50 million) in the country. It has been possible with the right use of technology in processes and manpower skilling.
Education has also played a critical role in uplifting our RMG industry’s performance. Today, our workers are connected to the world through the internet as they are more educated and informed than ever. Grade A and B workers are fluent in communication, understand labour laws and have keenness to learn how businesses work. All these developments are certainly leading us to achieve the set target.
As far as our contribution to US $ 100 billion target is concerned, we do have some realistic growth plans. Being a conservative company, we aim at understanding market directions, dynamics and consumer demand and we work on our expansion plans accordingly. In knits, we have recently become a 100 per cent vertical company; while we have certain diversification plans in the future as well. We are also moving into formalwear – suits and blazers etc., and the production facility for these products, named Pacific Attires Ltd., will become operational by July-August this year. We are expecting to close 2023 by clocking US $ 600 million turnover, whereas the target by 2028 is to become a US $ 1 billion company. I am sure all progressive companies in Bangladesh are setting a roadmap within their businesses to get long-term success and see multi-fold growth that’s aligned with the country’s target.
AR: Has Bangladesh gained any advantage in light of its demonstrative resilience amidst political turmoil in countries like Ethiopia, Pakistan, Myanmar and Sri Lanka?
Tanvir: There are so many different factors that are still affecting the apparel business and pinpointing just one of many such factors would be difficult as different markets have different dynamics. Europe is affected in an entirely different way from the USA. There was a huge surge in orders coming from the US market post-pandemic, the retailers were optimistic and they kept a very high stock level; though the sales were not good enough as per their expectations! They couldn’t sell the inventories which pushed them to place less orders during two holiday seasons to make sure that they can clear the stocks.
As far as the EU market is concerned, there will be some challenges due to the effects of Russia-Ukraine war that have created a turmoil. Also, the winter season used to be a big factor for factories working with the European buyers; however, winter has not been very intense this time in Europe which impacted the outerwear market in the region and consequently the outerwear manufacturers in Bangladesh. Nevertheless, I think the retailers are well aware of the uncertainties and they must be strengthening their risk assessment strategies to plan things better. Order placement is picking pace now as figures suggest. I therefore think we will see an improvement in orders this year as compared to last year.
Another factor that stands true is that a significant chunk of business is moving to Bangladesh from Ethiopia, Myanmar, Pakistan and Sri Lanka as these countries are not able to withhold orders due to the ongoing political instability. However, I believe, the real competition is amongst the factories within Bangladesh only. In terms of sourcing strategy, the retailers work with different factories to source different products. They have a defined set of their own compliance and factory standards. For example, if buyers have to source high-end denim products, they know exactly which factory they are going to get it developed from and where they will place the order for the same. Placing orders is not just restricted to pricing anymore, it’s also about the quality and aesthetics of the product.
The edge that Bangladesh has over other countries is that the buyers can find different levels of factories here – category-specific factory, green factory, multi-product specialised factory, compliant factory and vertically integrated factory. We also have factories here that are compliant only with basic standards and I take it very positively because we need such basic factories as well in the business. There are a lot of orders, from small-level importers, resellers to small buying agents and small brands that cannot be executed in big factories. On the other hand, large capacity buyers obviously won’t place orders in smaller factories just for lower prices, as they know that quality, seamless order execution and integrity of products can only be maintained in factories with proven track records that have also gained the trust of big buyers all these years.
AR: Pacific is producing over 40 million pieces of denim garments per annum and that’s a huge number. What is driving Pacific’s number story?
Tanvir: Since we work with retailers and brands as strategic partners and believe in creating values, we generally don’t categorise our products into basic and premium, being a very customer-focused company. Asking them the number of designs, order quantities and price point isn’t our approach at all. Instead, we see what values we can create in the products within our capabilities – be it basic collection or premium collection – within a certain price range.
Pacific is more of an institution than a factory where we harness creativity and innovation and that too with an intention to give better solutions to our customers as we strongly believe that innovation is not about creating premium products only but about giving solutions to customers across all product categories.
AR: The denim manufacturers have to constantly work on finishes for value addition. Why Pacific has gained competence where most others have lost out in the game, despite it not having a vertical set-up in its denim division?
Tanvir: As far as Pacific is concerned, people always keep on asking me why don’t we have our own mill, being one of the largest denim apparel manufacturers in Bangladesh! Even if 55-60 per cent of the required denim fabrics is being produced in Bangladesh only, I endorse the fact that we need some quantity of imported fabrics as well to really evolve further. We partner with denim fabric suppliers across geographical locations which gives us price, quality and helps in timely delivery. Additionally, variety, flexibility and agility have become the key to success in denim business. Therefore, I think adding a vertical set-up just to save a few dollars on the fabric doesn’t make sense at a time when the focus should be on having a more diverse supplier portfolio and we have been able to leverage their expertise for our business effectively.
I think the Bangladeshi denim industry has come a long way. The kind of local fabrics that denim mills are producing today and the fabrics which they were making around five years ago has a huge difference – thanks to factories’ investment in R&D, innovations, machinery, skilled people and improvement metrics. This has also been realised and acknowledged by apparel retailers. It is not about producing large quantity of denim fabrics locally, it’s about the value creation that the mills have been able to do within the fabrics produced locally out of overall demand.
I give a lot of credit to the fashion brands who are working in tandem with the Bangladeshi mills to develop right kind of fabrics and now they have increased the sourcing of products made out of the local fabrics by at least 60 per cent. That’s a huge shift! And, it’s not just the number, it’s also the confidence that the local fabric mills have gained over the years.
AR: What role, according to you, do technology and automation play in Pacific’s business operations as well as in Bangladesh’s RMG industry?
Tanvir: Automation is RMG industry’s reality today in Bangladesh. If you look at the transformation that we’ve had in the last 10-15 years, a huge shift can be seen in the mindset of the owners. Bangladesh is one of the biggest markets for global technology companies as factories here are heavily investing in high-end machinery and software. Some of the technology implementations are customer-driven because only a handful of buyers ask for these technologies; however, most of the implementations are driven by the factory owners only. Reason? The factories have understood that, to survive, be profitable and be efficient, they need to invest in technology that can make them more efficient, reduce their cost and add value to their products. Whatever technology we talk about, falls under these three categories.
Look at the use of automation in the following context. Bangladesh still heavily relies on cotton-based products. Of total exports, we ship around 85 per cent cotton products, while MMF-based products share just a miniscule chunk of 15 per cent! Our global share has increased substantially in cotton apparel and Bangladeshi factories are performing really well in terms of efficiency, quality, cost optimisation and features added to the cotton-based products. Why? Because the factories are adopting the right technology and making great balance between automation and human workforce. All the machines that we are buying are operated by local technicians only as they have gained the required intellect level to run a machine effectively.
As far as MMF-based apparel is concerned, our share is gradually increasing. Bangladesh is setting up a lot of outerwear factories, jacket factories and lingerie factories. These products aren’t easy to produce and the support of technology is inevitable once these units become operational.
So, if you look at the whole ecosystem of technology in Bangladesh, it has evolved like no other country. It is a ‘Silent Revolution’ which we don’t really talk about much.
AR: Denim and sustainability go hand-in-hand. What are Pacific’s sustainability goals and objectives?
Tanvir: I believe sustainability, as a whole, is a subjective term. Your explanation of sustainability may be different from mine. For us, sustainability initiatives revolve around reducing CO2 emissions in the supply chain, enabling energy conservation, renewable energy usage, recycled water usage and sustainable sourcing among others.
I would say that Pacific’s approach to sustainability is more target-driven rather than being concept-based. Presently, the buyers in EU and USA are under tremendous pressure from their respective governments to reduce their carbon emissions. If the retailers are not reducing the carbon emission, the country’s goal of reduction in carbon footprints can’t be met. And, when retailers set targets of certain initiatives to ensure sustainability in their businesses, they give targets to their suppliers as well. At Pacific, our main target is to reduce CO2 emissions by 65 per cent by 2030, from the 2018 baseline. To reach that goal, we have taken many ‘realistic’ initiatives. All these goals are aligned with our customers’ goals.
Syed Md Tanvir is carrying forward the legacy set by his visionary father and Founder Chairman of Pacific Group, Late Md Nasir Uddin, who is hailed as THE FIRST PERSON in Bangladesh to have produced denim jeans 40 years ago. Giving him the highest regard and credit for taking the company to the heights where Pacific stands today, Syed says, “We all have grown with his leadership. He had been our mentor and teacher. In our core values, we always keep his vision at the centre stage. He wanted us to become a global lifewear solution company by adopting 5 core pillars – Speed and Agility, Quality, Integrity, Sustainability and Innovation. Growth is not always about expanding but it’s about strengthening our pillars too, which was something my father always worked for. More than working as an entrepreneur, he worked as a policy maker and think tank with the primary objective to create succession plans and help us evolve in the RMG industry at the global level.”
