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Final

Final

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Published by: Shubro Barua on Oct 13, 2011
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Babylon Garments Limited
 Page | 1
n the field of industrialization, role of textile industry is found very prominentin both developed and developing countries. Economic history of Britainreveals that in the 18th Century the cotton mills of Lancashire in Britainushered in the first industrial revolution of the world. Moreover, during the last200 years or more many countries of the world have used textile and clothingindustry as an engine for growth and a basis for attaining economicdevelopment. Over the past few years garment industry is found to haveplayed such an important role in theprocess of industrialization and economicgrowth. This industry is infect trying to putthe wheel of her declining economic backto the track by giving essential life blood toit . The growth of garment industry inBangladesh is a comparatively recentone. In the British period there was nogarment industry in this part of the Indo-Pak-Sub-Continent. In 1960 the firstgarment industry in Bangladesh (ThenEast Pakistan) was established at Dhakaand till 1971 the number rose to give (Islam, 1984). But these garments wereof different type intended to serve home market only. From 1976 and 1977some entrepreneurs came forward to setup 100% export oriented garmentindustry. Both domestic and international environment favored the rapidgrowth of this industry in Bangladesh. By mid-seventies the establisheddeveloped suppliers of garments in the world markets i.e. Hong Kong, SouthKorea, Singapore, Taiwan, Thailand, Malaysia, Indonesia, Srilanka and Indiawere severely constrained by the quota restrictions imposed by their majorbuyers like USA, Canada and European Union. To maintain their businessand competitive edge in the world markets, they followed a strategy ofrelocation of garment factories in those countries, which were free from quotarestrictions and at least same time had enough trainable cheap labor. Theyfound Bangladesh as one of the most suitable countries. Available recordsshow that the first consignment of garments was exported from the country in1977 by Reaz and Jewel Garment. Desh Garment was the first biggest factorythat started functioning at Chittagong in 1977. In fact that was the humblebeginning of new joint venture garment factory in Bangladesh. Thereaftermany entrepreneurs became interested and started to setup garment factories
 
Babylon Garments Limited
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following the Desh garment and realizing the future prospects globally as well.Available records also show that one of the reasons of the growth of garmentindustry in Bangladesh is the collaboration of a local private garment industry,Desh garment with a Korean company, Daewoo. As part of its globalstrategies, the Daewoo Corporation of South Korea became interested inBangladesh when the Chairman, Kim Woo-Choong, proposed an ambitions joint venture to the Government of Bangladesh which involved thedevelopment and operation of tire, leather goods, cement and garmentfactories (Rock, 2001). South Korean Company, Daewoo, a major exporter ofgarments, was looking for opportunities in countries for using their quotassubsequent to the signing of MFA in 1974. Because of the quota limitation forKorea after MFA, the export of Daewoo became restricted. Bangladesh as aLDC got the opportunity to export without any restriction and for this reasonDaewoo interested to use Bangladesh for their market. The reason behindthis desire was that Bangladesh will depend on Daewoo for importing rawmaterials and at the same time Daewoo will get the market in Bangladesh.For this desire Daewoo signed a five years collaboration agreement with DeshGarment. It included collaboration in the areas of technical training, purchaseof machinery and fabric, plant setup and marketing in return for a specificmarketing commission on all exports by Desh (Rock, 2001). The outcome ofthe collaboration of Desh-Daewoo was significant. In the first six years of itsoperation, Desh export value grew at an annual average rate of 90 percentreaching more than $ 5 million in 1986-87 (Mahmood, 2002). Rahman (2004)argued that the Desh-Daewoo collaboration is an important factor to the
expansion and success of Bangladesh‟s entire garments export sector. In
such a context, following Table-01 shows the trend of growth anddevelopment of garment industry in Bangladesh.
Table 1.1: Growth of Garments factories in Bangladesh 
Year No. of Factory
 
Compound Growth Ratein %
 19711977198119831984-851989-901994-951999-002004-052005-0657781413847592182320041074250-5.7782.7034.4565.0314.6023.527.965.123.48
Source: Various articles and Annual Report of BGMEA
 
 
Babylon Garments Limited
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The Table-01 shows that the growth was very slow till 1977 and gotmomentum from 1977 to 2005-06 in terms of number of industry. But thecompound growth rate was highest till 1981 and the rate was very goodduring 1989-90 to 1994-95 and thereafter i.e. 1994-95 to 2004-05, theindustrial growth has been declined though the numbers of industries havebeen increased. The capacity as well as number of equipments is very goodindicator to examine the actual position of the garment industry as well as sizeof the industry. In such a context, the following Table deals in this regard.he international textile and garment industry has undergone several shifts inproduction and marketing since the 1950s. The first shift occurred in the1950x and early 1960s when productionmoved from North America and WesternEurope to Japan. The second supplyshift was from Japan to the Asian newlyindustrialized economics (NIEs)-HongKong, Taiwan, South Korea andSingapore- and this permitted the lattergroup to dominate global textile andgarment exports in the 1970s and 1980s.Over the past 10 to 15 years, there hasbeen a third shift as production withinAsia has moved from the NIEs to Chinaand South East and South Asianexporters and as exports from non-Asian countries, in particular controlAmerica, the Caribbean, Eastern Europe and North Africa, have increasedsubstantially. These production shifts have been influenced by a range offactors, including the distortions to international trade arising from MFA quotasystem and labor cost differentials. In this scenario, Bangladesh garmentindustry is well placed to withstand the increase in competition in its exportmarkets. Our export market for garments products is spread over a vastspace of more than 20 countries with USA, UK, France, Canada, Germany,Belgium and MiddleEastern countries being the major and notable ones. Initially, Bangladesh hasconcentrated only in a few markets. It has concentrated in USA, Canada andEurope. The competitors of Bangladesh, for example, India has continued toexpand its trade, diversify its markets and change product mix of its exports.As the recent performances indicate, the production and marketingcapabilities of Bangladesh have increased substantially. But still it lacks the

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