Fair pricing has been a long-standing demand of the apparel manufacturers. Recently, Commerce Minister reportedly asked ILO to play a role in the logical price hike for Bangladesh’s readymade garment items, while Bangladesh High Commissioner to the United Kingdom also called upon buyers to pay better so that higher compliance standards can be reached successfully. Here is what the industry stalwarts have to say about the issue of fair pricing.
Asif Ibrahim, Managing Director, Newage Group
My view is that there must be a floor price set for basic items below which price offer should not be made.
Companies have invested millions of dollars for ACCORD and ALLIANCE remediation process. However, they are not necessarily getting the ‘promised’ increase in prices from the retailers.
Due to wage hike in Bangladesh, the wage overheads of the factories have gone up on an average by 35 per cent. However, apart from a few brands, none have come forward to support on this front. Even the brands that have come forward have increased the price offers by 7 to 10 per cent only, which will not cover the overall wage increase.
Hence, it is a sincere call to the global brands to pay better and fair prices.
Abdul Wadud, Director, Team Scl
Our business is not only dependent on the workers’ salary alone; there are many other aspects associated with it. Supply chain, efficiency, cost reduction and so on are associated with the business and as such we are focusing on all these aspects.
In a way we are trying to reduce production cost in multiple ways. Many people talk about demanding increased price from the buyers to make up for the hike in salary, which I don’t agree upon much.
In today’s age of globalisation, when many other manufacturing hubs are emerging strongly, buyers always have the option to shift base in case they feel a particular destination has become expensive. So, asking for more from buyers does not seem to be a very feasible solution.
Hasnat Mosharraf, Director, Standard Group
Well, it is not possible for any manufacturer to cope with 50 per cent increase in the workers’ wages so soon. To deal with the same, we hope to attain more efficiency in the next few years.
As far as prices are concerned, I am of the view that in a competitive market, one cannot ask the buyer for increased price. There have been cases where competitors (other manufacturers) have been found to offer more competitive prices, thereby taking away the buyer from the existing supplier. Considering the fact that clients are not going to pay anything extra, we can only increase our own efficiencies to deal with this scenario.
Sanjay Dahiya, CEO, Laila Group
I would look at this scenario from a different perspective. Earlier, most of the factories used to take workers for granted, and perhaps, there were more workers than required.
However, now with this increase in wages, the aspect of man-to-machine ratio has become very important and manufacturers are adding manpower where it is absolutely necessary and in cases that ensure value addition.
Prior to the wage hike, there was talk about sharing this burden between stakeholders, but once implemented, there aren’t many coming forward. Many buyers/retailers have excused themselves by showing data as to how many have to shut shops or are shrinking due to lack of profitability, and on the pretext of the same, ask for more competitive pricing. Given the existing state of affairs, we are increasingly moving towards automation to cut on manpower while also feasibly allocating the existing labour.
As far as giving up a combined front to demand fair pricing from the clients is concerned, unfortunately in case of Bangladesh, there is no set standard as to what should be the minimum price that manufacturers need to stick to, as a result of which many consider coming down on the price quotients to bag orders. Besides, there are some upcoming destinations that are emerging strongly and could prove to be potent competitors to Bangladesh. As such, asking for more from the buyers in the current scenario is not possible.