Bangladesh – the second largest garment exporting country – ships around 7-8 per cent of the world’s total garment requirement and the opportunities to tap the larger market share are massive. However, the fact can’t be denied that the country has been undergoing some fluctuations in its RMG business due to internal and external factors lately. Gas and electricity shortage is making the factory’s operations difficult, while drying foreign currency reserve is adding to the existing woes and these are just some of the persistent challenges.
Though the decision makers, policy makers and factories have always stayed afloat during the crisis period, the present situation looks different and difficult. Yet the industry is working aggressively as a cohesive force to sustain during odd times and Rupak Chakraborty, COO, NSL Textiles Limited believes the situation would take a positive turn soon.In an interesting conversation with Team Apparel Resources (AR)recently, Rupak shared the latest disruptions that Bangladesh’s RMG manufacturing sector is experiencing and the way forward for factories.Here are some excerpts.
- Trends that Bangladesh is witnessing currently in its RMG sector
Bangladesh’s RMG industry has always been competitive, has focused on faster delivery and has believed in capacity building. The only thing Bangladesh hasn’t been self-sufficient with for a long time now is raw material to produce garments as factories here have always imported cotton from India, China, USA, Brazil, Australia, Egypt and Pakistan. However, this isn’t becoming viable anymore as cotton prices have been fluctuating a lot for last two years or so, making it difficult for Bangladeshi RMG factories, even the spinners for that matter, to procure it, spin the yarn, and that too at a fixed or certain prices! This is something that has opened the eyes of the factories and now we can see substantial investment in vertical integrated factories, as well as in cotton farming.
Not just raw material, the garment sector is uncertain also. I don’t think the talks of rising inflation and recession should be anyway connected to the piled-up inventory levels at fashion warehouses as well as stores because that’s not the reason behind brands’ failure of selling inventories in themarkets. Buyers in major markets like USA have already bought 30-40 per cent more than what they usually buy before their festive season and, all through 2022, they actually struggled to clear the inventories due to their unplanned buying strategy. This additional inventory level at buyer’s end is not reflecting in fresh order bookings as we are receiving around 30-40 per cent less orders at this time for S/S 2023. This is a phenomenon not just with Bangladesh but with every other country such as India, Pakistan, Vietnam, Indonesia etc.
However, my assumption is that order bookings will pick up from December onwards. Now offices in major markets like North America, Europe, Australia and Middle East are operational at full capacities, so it is triggering the growth in formalwear. Suits and coats weren’t performing well in last two years but they are gradually picking up now. Similarly, home furnishing products were in massive demand during Covid-19 period but one can see just decent growth of such products in today’s time.
- Current headwinds may hurt Bangladesh’s efforts towards achieving US $ 100 billion export revenues by 2030!
It’s remarkable to know that Bangladesh has clocked over US $ 42 billion export revenues in RMG industry in FY ’22 for the first-time ever and the country is now aiming at US $ 100 billion target. Though I am all positive for it, one major problem that I can foresee is manpower shortage – not just at worker level, but at mid-management level also.
Secondly, the industry is also undergoing some headwinds due to fuel scarcity, drying foreign exchange, and electricity shortage. These all challenges may prove to be short-lived but, currently, these surely act as a setback and are causing deceleration of industry’s efforts. As far as gas is concerned, the country is dependent on Middle-East countries as Bangladesh doesn’t produce its own gas. Culturally similar country Saudi Arabia gives Bangladesh gas at discounted/subsidised prices but this transaction is also done in foreign currency, and as I said, our FOREX is draining. All these factors need to be closely observed by the Government and industry stakeholders, and I am sure they must be doing it.
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Amidst all this, NSL Textiles is exploring opportunities to grow its garment division in Bangladesh
NSL Textiles is over a billion-dollar conglomerate based out of India and we have started trading business in garments here in Bangladesh. Having said that, we are collaborating with the right and forward-minded factories to build the right perspectives around our collaboration. This means, we are in favour of giving the partnered factories the justified prices (on-time, every time) for the products we purchase from them. Being a part of such a huge textile group, we can utilise our own fabrics that we produce in our units and this is what gives us an edge when we ship finished goods to the markets like USA and Europe as we have a control in procurement.
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The way forward for Bangladesh!
Mid-management people are going to play a crucial role in Bangladesh’s growth in its RMG sector. We discussed mid-management a while back and I wish to emphasise on the fact that to keep the mid-management motivated and strong, a company has to be structured in its processes and operations.Over 70 per cent factories in garment manufacturing aren’t structured and this is the reason that mid-management is not flourishing in Bangladesh! The companies need to have an efficient HR department that finds employees, skills them and makes them aligned with the goals set by the organisation.
Despite so many challenges, Bangladesh isin safe hands and it will do much better in time to come because so many industry’s representatives and stakeholders are putting efforts in the right direction to keep things on track. Now that second-generation has started taking over the businesses, there seems to be a significant change that the country is witnessing in its factories.
