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course code: MKT-105 course title: Fashion Marketing Prepared for : MD. Idris ali Assistant Professor Department of business administration BUFT. Prepared by: Md. Shohag islam ID: 121-339-0-35 Batch:121(KMT-1)
BGMEA UNIVERSITY OF FASHION AND TECHNOLOGY
Date of Submission: 27-05-2013

Bismillahir Rahmanir Rahim

TITLE: challenges

and prospects of fashion industries in Bangladesh

ACKNOWLEDGEMENT
At first I desire to express my deepest sense of gratitude of almighty Allah.
With profound regard I gratefully acknowledge my respected course teacher Mohammed Idris ali Assistant Professor Department of business administration for his generous help and day to day suggestion during preparation of the report. He is so much an inspiration and guidance to me that I am, short of words in expression my gratitude.

I like to give thanks especially to our friends and many individuals, for their enthusiastic encouragements and helps during the preparation of this report us by sharing ideas regarding this subject and for their assistance in typing and proof reading this manuscript.

Once more time to sir, I owe more than I can mentionmostly for teaching us to see the silver lining in every hard work

Executive summary:
Worldwide Clothing Production Is a$335 Billion Business 11 Million Workers/75% Women Compared to 1960s, consumers are spending 50% less but buying twice as many garments (28.7 outerwear items per person in the US.) Labor Costs: China $0.93, India $0.55-0.68, Sri Lanka $0.46, Pakistan $0.37, Indonesia $0.35, Cambodia $0.24, Bangladesh $0.21

For a $100 dress.. Retailers get $50 Manufacturers get $12-$16 Fabric costs $22 Contractor gets $9 Garment Workers get $2-$6
The challenges facing Bangladeshi garment manufacturing firms. The cost components of a shirt that is sold at the wholesale price of $6.75: $4.75 is spent purchasing fabric, $1 is spent purchasing labels and accessories specified by the retailer, and the last $1 is divided among cutting and making (includes wages), capital expenses, securing credit for future inventory, and profits. Imagine an order for 400,000 shirts is spread over a four-line (meaning four rows of sewing machines, each row with 50 workers) factory of 1,600 square meters. Those 400 workers produce 3,077 pieces per day. The wage cost works out to about 38 U.S. cents per shirt. Another 15 cents goes to sending the shirt for a fine washing spin. Rent and utilities for the factory floor works out to about 11 cents per shirt, and head-office and marketing costs for the factory are 11 cents. As for the remaining 25 cents, that will just about cover repaying a 10-year bank loan at 18% interest, which the factory owner has used for set-up costs along with a home and car. All is at a delicate equilibrium, until the owner feels compelled to give in to a firmly worded request from the retailer for an additional discount, or a demand to air-freight, at the manufacturers expense, some boxes of shirts that suffered a two-week production delay and

now wont be accepted by the retailer if they are any later than they already are. In light of these very narrow margins. It can be suggested that a substantial increase in the statutory minimum wage will prove problematic. The Bangladeshi government has actually proposed a retroactive increase in the minimum wage, which will prove extremely burdensome to garment manufacturing firms locked into supply contracts. If Bangladeshi garment manufacturing firms didnt face competition from Indonesia and other low-cost locations, theyd presumably have enough pricing power to raise prices and to finance upgrades in safety standards and much else. Just such an outcome is possible, because there arent many good alternatives to Bangladesh as a hub for garment manufacturing: Many in Bangladesh fear that if the country becomes too expensive a place to make clothes, countless sewing machines will be sent to new factories in Nigeria, Kenya or Ghana. This outcome is unlikely. African countries may have a steady supply of unskilled labor, but a higher cost of living should keep them from competing with Bangladesh. We tried to figure out what countries might inherit Bangladeshs T-shirt phase. Other than Burma, a long shot, we couldnt think of any. For now, Bangladesh might be where this centuries-long T-shirt journey ends, which means that their race to the bottom may be rooted in a misunderstanding. The countrys manufacturers can afford to take a step or two up the value chain. Not only can they pay their workers more, treat them better and house them in safe and clean factories, but there is also a significant economic incentive to do so. However, is that countries more affluent than Bangladesh, like Indonesia, can also pick up the slack, as many of these countries are unevenly developed, and so they still have scope, and an appetite, for an increase in labor-intensive manufacturing. India, which has a GDP per capita (PPP) twice as high as that of Bangladesh, has many regions that are just as poor, and which are desperate for labor-intensive manufacturing work.Labor laws t match recent progress made by Vietnam and Bangladesh: With the wages in China reaching levels at which it is likely to be forced out of these sectors, India is well positioned to become the worlds manufacturing hub. But if the costs of employment remain as they are, that opportunity is likely to be seized by a large number of smaller countries, such as Vietnam and Bangladesh. These countries allow firms to hire and fire workers under reasonable conditions and maintain a balance between the rights of both workers and employers. As a result, large firms in sectors such as apparel can be found aplenty in both countries and both have also seen significantly faster growth of the sector and done extremely well on the export front.

It should go without saying that not everyone believes that Bangladesh has done a good job of balancing the rights of workers and employers, yet it is true that employment in garment manufacturing has been a driver of poverty alleviation in Vietnam and Bangladesh alike, and that the unevenness of Indias economic development with growth concentrated in knowledge-intensive services and other sectors that are not very labor-intensive while most workers remain in a moribund agricultural sector is a profound problem. Garment manufacturing could facilitate the transition from low-productivity agriculture to higher-productivity exportoriented manufacturing, and its hard to imagine that India will keep screwing up on this front forever.An economic policy analyst who has long been critical of free trade, has an opened in Bloomberg View which makes the case that the best way forward for Bangladesh and other developing countries is a reimposition of the quotas established under the Multifibre Arrangement, which expired in 2005. His basic argument is that quotas took the pressure off of manufacturing firms in exporting countries, as they could be confident that they wouldnt be undercut by foreign rivals: Without quota-granted guaranteed market access, cost-cutting became all the more important for smaller exporting countries simply to preserve their new gains. As U.S. trade data demonstrate, most of the freed-up customers were won by the huge Asian producers that enjoyed big natural and government-created cost advantages. For example, Chinas share of U.S. apparel imports rose to 33.44 percent from 26.07 percent during the first two years of quota-free trade (2005-07) alone. Indonesian and Vietnamese sales boomed, too. Significantly, Bangladesh also excelled, and like China, Indonesia and especially Vietnam, its market share has continued to grow, reaching 5.25 percent last year, despite the sluggish U.S. economy. Unfortunately, however, much of the surge in Bangladeshi exports can be attributed to that countrys reliance on rock-bottom wages and firetrap factories, with the tragic consequences we recently witnessed. Worse, the dynamics of todays quotaless apparel trade practically guarantee that better, costlier work conditions in Bangladesh will simply drive much production and jobs elsewhere. That is what occurred in higher-cost garment exporters such as Turkey and South Africa, as well as smaller Western Hemisphere and African producers most of whose U.S. exports have fallen in absolute terms since the quotas ended in 2005. Extremely skeptical about the wisdom of this approach, which would, among other things, raise the cost of apparel in the consuming countries. No intrinsic problem with higher apparel costs, particularly if they reflect changing consumer tastes and preferences, but To nelson is explicitly counseling the re politicization of global trade in apparel, a process that can easily be gamed by, for example, domestic manufacturers seeking to raise prices. That said, Tonelsons op-ed

Acronyms
RMG GSP GDP LTA MFA WTO BTMA IBA R &D IBM BGMEA BKMEA Ready made garments

long-term arrangement Multi-fibre arrangement World Trade Organization Bangladesh Textile Mills Association Institute of Business Administration Research and Development International Business Machines Bangladesh Garments Manufacturers and Exporters association Bangladesh Knitwear Manufacturers and Exporters association Unilateral restriction, short-term arrangement

STA

Contents
1. Cover page 2. Title page 3. Acknowledgements 4. Executive summary 5. Acronyms 6. Table of contents 7. Introduction 8. Objective 0f the study 9. methodology 10. limitation 11. Overview of ready-made garments of Bangladesh 12. Reason behind the Growth of RMG in Bangladesh 13. Exporting Condition of Fashion Industry 14. Bangladeshs fashion Industry and its Challenge 15. Bangladesh Faces the Challenge of Globalization 16. Prospects of the Fashion Industry 17. Recommendation 18. Conclusion 19. References

INTRODUCTION : The ready-made garment (RMG) industry of Bangladesh


started in the late 1970s and became a prominent player in the economy within a short Period WE sew in california of time. The industry has contributed to export men's and boy's 8% earnings, foreign Other products 21% exchange Girl's and WOMEN's Children's earnings, Clothing 3% 68% employment creation, poverty WOMEN's Clothing Girl's and Children's Other products men's and boy's alleviation and the empowerment of women. The export-quota system and the availability of cheap labor are the two main reasons behind the success of the industry. Shirts, T-shirts, trousers, sweaters and jackets are the main products manufactured and exported by the industry. Bangladesh exports its RMG products mainly to the United States of America and the European Union. The Ready Made Garments (RMG) sector plays a pivotal role in the economy of Bangladesh. This sector accounts for approximately 79% of the total export earnings and nearly 10% of GDP. Like other 3rd world countries Bangladesh is a developing country. Her economic development depends firstly on Agriculture and secondly on Industry. Although Bangladesh is not developed in industry, it has been enriched in Garment industries in the recent past years. For Bangladesh, the readymade garment export industry has been the proverbial goose that lays the golden eggs for over fifteen years now. Traditionally, the jute industry dominated the industrial sector of the country until the 1970s. Since the early 1980s, the RMG industry has emerged as an important player in the economy of the country. In the field of Industrialization garment industry is a promising step. It is making significant contribution in the field of our export income and in the economical development of our country. At present the government of our country earns billions of dollars by exporting ready-made garments products to other countries. We have not achieved this success over night; we have some elements that help us to achieve this success. At present we are competing with our neighboring country; India and China. Though we are earning a handsome amount of profit each year from this sector, the ready-

made garment sector is suffering with a lot of problems. We should solve these negative situations by ensuring proper steps.

Objective of the study


Followings were the objectives of the study. Broad objective: To gather knowledge about the overall scenario of ReadyMade Garments (RMG) Sector in Bangladesh. Specific objectives: To attain the broad objective following specific objectives were pursued. To know briefly about economic significant of RMG. To identify what factors are affecting an entrepreneur To identify the performance of an entrepreneur To know Overview of a organization of readymade Current scenario of ready-made garment industry. Reasons for a healthy growth Reasons for having comparative advantages in the world market. Economical and financial contribution of this industry in Bangladeshi economy. Beside these, we also brought several foreign benchmarks and statistics for doing the research work in a better way.

Methodology
This report has been prepared on the basis of experience gathered through learning annual report. For preparing this report, I have also get information from website of BGMEA, BKMEA Export Promotion Bureau and many Government and non government organization. I have presented my experience and finding by using different tables, which are presented in the analysis part. The details of the work plan are furnished below: Relevant data for this report has been collected primarily by direct investigations of different leasing companys annual report and website. The information and data for this report have been collected from secondary sources. The secondary sources of information are annual reports, websites and different manuals Data collected from secondary sources have been processed manually and qualitative approach in general and quantitative approach in some cases has been used throughout the study.

Qualitative approach has been adopted for data analysis and interpretation taking the processed data as the base. So the report relies primarily on an analytical judgment and critical reasoning.

Limitations
Since our study is based on secondary data, there is a possibility of getting fake information. If the surveyed personnel provide us with any fabricated information about their opinion of their organization, then the report findings may be erroneous. Above all, this study is weak in some points. The notable ones are as under: Conducted in a very short time so we were not able to collect more information. Made on crisis situation of Bangladesh, so it was difficult to collect more samples. Only the big and the reputed Garments Company cons ider here as sample. Lack of experience on study. Lack of proper authority to conduct the fashion industry

Overview of the Bangladesh fashion Industry


History: Once upon a time the cloth of Bangladesh achieved worldwide fame. Maslin and Jamdani cloth of our country were used as the luxurious garments of the royal figures in Europe and other countries. The British rulers in India didnt develop our cloth industries at all. Rather they destroyed them and imported cloths from England. After the emergence of Bangladesh radical change has come to our garment sector. Garment industries started working from the 10's of the late century.

Bangladesh fashion industry: The RMG industry is the only


multi-billion-dollar manufacturing and export industry in Bangladesh. Whereas the industry contributed only 0.001 per cent to the countrys total export earnings in 1976, its share increased to about approximate 80 percent of those earnings in 2010. Bangladesh exported garments

worth the equivalent of $12348 Million in 2010, which was about 3.00 percent of the global total value ($276 billion) of garment exports. The countrys RMG industry grew by more than 15 percent per annum on average during the last 15 years. The foreign exchange earnings and employment generation of the RMG sector have been increasing at double-digit rates from year to year. Some important issues related to the RMG industry of Bangladesh are noted in table 1 Table 1. Important issues related to the Bangladesh ready-made garment industry
Year(s) 1977-1980 1982-1985 1985 1990s 1993-1995 2003 2005 Issue Early period of growth Boom days Imposition of quota restrictions Knitwear sector developed significantly

Child labor issue and its solution Withdrawal of Canadian quota restriction Phase-out of export-quota system

Source: Compiled by the author from Quddus and Rashid (2000), Mainuddin (2000) and databases of the Bangladesh Garment Manufacturers and Exporters Association, and the Export Promotion Bureau, Bangladesh

Currently, there are more than 5,000 RMG firms in Bangladesh. More than 95 percent of those firms are locally owned with the exception of a few foreign firms located in export processing zones (Gonzales, 2002). The RMG firms are located mainly in three main cities: the capital city Dhaka, the port city Chittagong and the industrial city Narayangonj. Bangladesh RMG firms vary in size. Based on Bangladesh Garment Manufacturers and Exporters Association (BGMEA) data, Mainuddin (2000) found that in1997 more than 75 per cent of the firms employed a maximum of 400 employees each. Garment companies in Bangladesh

form formal or informal groups. The grouping helps to share manufacturing activities, to diversify risks; horizontal as well as vertical coordination can be easily found in such group activities. Ready-made garments manufactured in Bangladesh are divided mainly into two broad categories: woven and knit products. Shirts, T-shirts and trousers are the main woven products and undergarments, socks, stockings, T-shirts, sweaters and other casual and soft garments are the main knit products. Woven garment products still dominate the garment export earnings of the country. The share of knit garment products has been increasing since the early 1990s; such products currently account for more than 40 percent of the countrys total RMG export earnings (BGMEA website). Although various types of garments are manufactured in the country, only a few categories, such as shirts, T-shirts, trousers, jackets and sweaters, constitute the major production-share (BGMEA website; andante, 2001). Economies of scale for large-scale production and export-quota holdings in the corresponding categories are the principal reasons for such a narrow product concentration.

Reason behind the Growth of RMG in Bangladesh


The prime reason why garment industries have come out to be the champion in the field of xport is obviously the cheap labor. Women contribute to the working force in these garment factories, as they are relatively cheaper than men.

Low cost labor:As Bangladesh is an overpopulated country it is very easy for the
garment industries to hire labors at a lower rate. At present the government of our country has announced minimum wage to the garment workers but the industries can still earn a handsome amount of profit by exporting their product. Although it has increase but comparatively it is still low.

Export-quota system:The export -quota system in trading garment products played


a significant role in the success of the industry. However, that quota system came to an end in 2004. Therefore, the competitiveness issue needs to be addressed, with special attention given to the long-term sustainability of the industry. Unilateral restriction, short-term arrangement (STA), long-term arrangement (LTA), Multi-fibre arrangement (MFA) and finally the WTO Agreement on Textiles and Clothing (ATC) are the

chronological steps through which the export -quota system was administered until it was finally abolished on 31 December 2004, making worldwide textile and garment trade quota-free.

Easy Communication : It

is very easy industries to collect raw materials from

other countries and they can easily export their produced goods to the other countries.

Government Support: Government is supporting directly and indirectly the


industries and monitors their activities so that they can perform properly. Government reduces tariff and supply production factors like electricity and water to them.

Product Tree: Bangladesh exports about 63 items to different apparel markets. Ready-made
garments manufactured in Bangladesh are divided mainly into two broad categories: woven and knit products. Shirts, T-shirts and trousers are the main woven products and undergarments, socks, stockings, T-shirts, sweaters and other casual and soft garments are the main knit products. Woven garment products still dominate the garment export earnings of the country. The share of knit garment products has been increasing since the early 1990s; such products currently account f or more than 40 per cent of the countrys total RMG export earnings (BGMEA website).Although various types of garments are manufactured in the country, only a few categories, such as shirts, T-shirts, trousers, jackets and sweaters, constitute the major production-share (BGMEA website; and Nath, 2001). It needs to be mentioned here that Bangladesh produces a very limited categories of expensive and fashion oriented garments. Economies of scale for large-scale production and export-quota holdings in the corresponding categories are the principal reasons for such a narrow product concentration. Main apparel items exported from Bangladesh is shown in the tree diagram drawn below:

VALUE AND QUANTITY OF TOTAL APPAREL EXPORT CALENDAR YEAR BASIS (VALUE IN MN. US$ QUANTITY IN '000 DOZEN) TOTAL APPAREL EXPORT IN MN.US$ TOTAL APPAREL EXPORT IN MN DZ YEAR WOVEN KNIT TOTAL WOVEN KNIT 1994 1544.89 341.53 1886.42 41.64 13.77 1995 1976.40 512.18 2488.58 49.38 19.83 1996 1942.37 686.27 2628.64 47.54 26.11 1997 2621.33 810.49 3431.82 60.56 27.99 1998 2871.06 976.29 3847.35 64.23 34.59 1999 2987.73 1169.90 4157.63 64.93 41.3 2000 3376.49 1448.22 4824.71 71.63 51.58 2001 3162.28 1432.72 4595.00 67.72 50.18 2002 3076.28 1573.40 4649.68 83.44 70.71 2003 3398.84 1850.36 5249.20 85.83 80.50 2004 3686.78 2532.62 6219.40 94.22 104.90 2005 3689.60 3210.48 6900.08 96.39 138.19 2006 4544.79 4388.72 8933.51 125.65 190.60 2007 4608.40 4741.93 9350.33 133.62 212.08 2008 5654.12 6222.95 11877.07 161.51 272.17 2009 5695.42 6196.58 11892.00 163.27 279.91 7067.04 7787.76 14854.80 203.48 357.76 2010 9251.62 9961.36 19212.98 42.36 51.84 2011 Data Source Export Promotion Bureau & Bangladesh Bank Compiled by BGMEA

TOTAL 55.41 69.21 73.65 88.55 98.82 106.23 123.21 117.90 154.15 166.33 199.12 234.58 316.25 345.70 433.68 443.18 561.24 94.20

Exporting Condition of Garments Industry :


Garments (RMG) industry occupies a unique position in

The Ready-Made the Bangladesh

economy. It is the largest exporting industry in Bangladesh, which experienced phenomenal growth during the last 20 years. By taking advantage of an insulated market under the provision of Multi Fibre Agreement (MFA) of GATT, it attained a high profile in terms of foreign exchange earnings, exports, industrialization and contribution to GDP within a short span of

time. The industry plays a key role in employment generation and in the provision of income to the poor. Nearly two million workers are directly and more than ten million inhabitants are indirectly associated with the industry. Over the past twenty years, the number of manufacturing units has grown from 180 to over 3600. The sector has also played a significant role in the socioeconomic development of the country.

COMPARATIVE STATEMENT ON EXPORT OF RMG AND TOTAL EXPORT OF BANGLADESH TOTAL EXPORT OF EXPORT OF RMG BANGLADESH YEAR (IN MILLION US$) (IN MILLION US$) 1983-84 31.57 811.00 1984-85 116.2 934.43 1985-86 131.48 819.21 1986-87 298.67 1076.61 1987-88 433.92 1231.2 1988-89 471.09 1291.56 1989-90 624.16 1923.70 1990-91 866.82 1717.55 1991-92 1182.57 1993.90 1992-93 1445.02 2382.89 1993-94 1555.79 2533.90 1994-95 2228.35 3472.56 1995-96 2547.13 3882.42 1996-97 3001.25 4418.28 1997-98 3781.94 5161.20 1998-99 4019.98 5312.86 1999-00 4349.41 5752.20 2000-01 4859.83 6467.30 2001-02 4583.75 5986.09 2002-03 4912.09 6548.44 2003-04 5686.09 7602.99 2004-05 6417.67 8654.52 2005-06 7900.80 10526.16 2006-07 9211.23 12177.86 2007-08 10699.80 14110.80 2008-09 12347.77 15565.19 2009-10 12496.72 16204.65 2010-11 17914.46 22924.38 2011-12 19089.69 24287.66 Data Source Export Promotion Bureau Compiled by BGMEA

% OF RMG'S TO TOTAL EXPORT 3.89 12.44 16.05 27.74 35.24 36.47 32.45 50.47 59.31 60.64 61.40 64.17 65.61 67.93 73.28 75.67 75.61 75.14 76.57 75.01 74.79 74.15 75.06 75.64 75.83 79.33 77.12 78.15 78.60

Contribution in National Income:


When the garment industries 1st started to export, the sector was not paid much attention but the situation has changed and at present it is earning the highest amount of foreign currencies in our country. Major Product Export from Bangladesh

Year

Product
Frozen Food

Export
12347.77

%
79.33

Tea

2008-09

Raw Jute Chemical Product

12.29 148.17 421.58 373.18 177.32 122.3

0.08 0.95 2.71 2.40 1.14 0.79

Jute Goods
Leather
Agricultural

Products Others

Total

1508.06 15565.19

9.69 100.00

Source: Export Promotion Bureau, Bangladesh (Value in Million US$)


These three steps are integrated into each other as shown in table 1. It shows that these three steps are essential for backward linkage integration (BGMEA, January 2005)

Bangladeshs fashion Industry and its Challenge

The casualties at Rana Plaza have prompted a far-reaching discussion of the economics and the ethics of the global garment manufacturing supply chain. The scramble among retailers to identify new low-cost garment manufacturing locations in the developing world, a scramble that has taken on new urgency as Bangladeshs reputation has been tarnished. Indonesia, which has a GDP per capita (PPP) two-and-a-half times as high as that of Bangladesh and a government that has improved markedly in recent years Garment factories in Bangladesh provide employment to 40 percent of industrial workers. But without the proper laws the worker are demanding their various wants and as a result conflict is began with the industry. Labor unrest is a great problem in the RMG sector. Low working salary is another r vital fact which makes the labor conflict. Workers made strike, vandalize industry

After Bangladesh, seeking new sources: Garment manufacturing makes up a


fifth of the economy in Bangladesh and four-fifths of its exports, which means that one of the worlds poorest, most densely populated countries is desperately dependent on continued export orders to stave off soaring unemployment and possibly further political unrest. Some executives say that many multinationals will continue buying from Bangladesh, although some may diversify their orders to more countries

Heavy Dependence on a Few Export Market :Heavy dependence on quota markets is a major concern in the textiles and garments industry
Bangladesh's RMG Export to World (Jul-Mar, FY11-12 & FY 12-13 )
Million US$ Woven Knit Total JulJulGrowth JulJulGrowth JulJulGrowth Mar Mar % Mar Mar % Mar Mar % JulJulJulJulGrowth Growth Mar Mar Mar Mar Jul-Mar Jul-Mar % % 2011-12 2012-13 2011-12 2012-13 2011-12 2012-13

Major EU Countries

Total (EU) EU % of World USA % of USA Canada % of Canada

3277.43 46.11 2,617.90 36.83 355.26 5.00

3805.50 47.04 2,825.49 34.92 383.96 4.75

16.11 7.93 8.08

5149.58 73.60 739.40 10.57 286.05 4.09

5352.28 70.55 803.43 10.59 343.60 4.53

3.94 8.66 20.12

8427.01 59.75 3357.30 23.80 641.31 4.55

9157.78 58.42 3628.92 23.15 727.56 4.64

8.67 8.09 13.45

Low working salary is another vital fact which makes the labor conflict. Worker made strike, layout to capture their demand. Some time bonus and the overtime salary are the important cause of crisis. Insufficient government policy about this sector is a great problem in Garments Company.

Picture: Labor- Management conflict in Garments Industry According to our survey in five leading Company we found some problem which are given in a chart with their percentagePrimary Problems Problems high 3 medium 2 low 0 total 5

01.Raw-materials

60% 1

40% 3 60% 0 2 40% 1 20% 1 20% 2 40% 0 -

1 20% 0 0 3 60% 0 0 0 -

100% 5 100% 5 100% 5 100% 5 100% 5 100% 5 100% 5 100%

02. Marketing problems

20% 5

03. Machinery problem

100% 3

04. Inefficient workforce

60% 1

05. Licensing problem

20% 4

06. Quota problem

80% 3

07. Poor government policy

60% 5

08. Labor unrest/strike

100%

Chart: Primary problems of Garments Industries Secondary problems Problems high 1 01.Middle man affect 20% 0 02. Sluggish business linkage 40% 60% 100% medium 3 60% 2 low 1 20% 3 total 5 100% 5

2 03. Unloading(RM) takes time 40% 2 04. Time consuming schedule 40% 1 05. Communication gap 20% 5 06. Dependency on foreign market 100% 0 07. Trade block 2 08. Credit problem 40%

2 40% 3 60% 2 40% 0 2 40% 3 60%

1 20% 0 2 40% 0 3 60% 0 -

5 100% 5 100% 5 100% 5 100% 5 100% 5 100%

Chart: Secondary problems of Garments Industries

150 100 50 0 1

Primary Problems

Percentage (%)

2 High

3 Medium

4 5 Problems Low

Graph: Secondary problems of Garments Industries

Safety Problems; Safety need for the worker is mandatory to maintain in all the organization. But without the facility of this necessary product a lot of accident is

occuincurred every year in most of the company. Some important cause of the accident are given below Routes are blocked by storage materials Machine layout is often staggered Lack of signage for escape route No provision for emergency lighting Doors, opening along escape routes, are not fire resistant. Doors are not self-closing and often do not open along the direction of escape. Adequate doors as well as adequate staircases are not provided to aid quick exit Fire exit or emergency staircase l acks proper maintenance Lack of proper exit route to reach the place of safety Parked vehicles, goods and rubbish on the outside of the building obstruct exits to the open air Fire in a Bangladesh factory is likely to spread quickly because the prin ciple of compartmentalization is practiced Lack of awareness among the workers and the owners But now the situation is much improved and we found, all the surveyed garments are fulfilling the requirement of emergency exit. It is provided in all the cases, signage is present and fire fighting equipments are up to date, a departure from the past. Even fire drill is held once in a month..

Bangladesh Faces the Challenge of Globalization Bangladesh faces the


challenge of achieving accelerated economic growth and alleviating the massive poverty that afflicts nearly two-fifths of its 135 million people. To meet this challenge, marketoriented liberalizing policy reforms were initiated in the mid-1980s and were pursued much more vigorously in the 1990s. These reforms were particularly aimed at moving towards an open economic regime and integrating with the global economy.

The relentless search for new locations has taken on more urgency after the deadliest industrial accident in the global garment industrys history, a multistory factory collapse in Bangladesh that left 1,127 people dead. Buying from Bangladesh, Bangladesh has been politically incorrect ever since problems started there, so a lot of major players had already been looking for alternatives

Prospects of the Fashion Industry


Despite many difficulties faced by the RMG industry over the past years, it continued to show its robust performance and competitive strength. The resilience and bold trend in this MFA phase-out period partly reflects the imposition of safeguard quotas by US and similar restrictions by EU administration on China up to 2008, which has been the largest supplier of textiles and apparel to USA. Other factors like price competitiveness, enhanced GSP facility, market and product diversification, cheap labor, increased backward integration, high level of investment, and government support are among the key factors that helped the country to continue the momentum in export earnings in the apparel sector. Some of these elements are reviewed below.

Low cost labor:As Bangladesh is an overpopulated country it is very easy for the
garment industries to hire labors at a lower rate. At present the government of our country has announced minimum wage to the garment workers but the industries can still earn a handsome amount of profit by exporting their product. Although it has increase but comparatively it is still low

Country
United States United Kingdom

Hourly Wage
$8.25-14.00 $7.58-9.11

Venezeula Costa Rica Guatemala Colombia Honduras Philippines China Peru El Salvador Jordan Malaysia Nicaragua Bahrain Thailand India Mauritius Vietnam Egypt Mexico Sri Lanka Pakistan Indonesia Cambodia Bangladesh

$2.73 $2.19 $1.21 $1.20 $1.02 $0.94-1.00 $0.93 $0.92 $0.92 $0.74 $0.73 $0.65 $0.57 $0.56 $0.55-0.68 $0.55-0.65 $0.52 $0.50-0.87 $0.50-0.53 $0.46 $0.37 $0.35 $0.24 $0.21

US retailers bear responsibility for BD tragedy: The factories housed in


the collapsed Rana Plaza produced clothes for numerous global retailers, and suppliers and retailers around the world bear much of the responsibility for this outrageous health and safety disaster.

Market Diversification : Bangladeshi RMG products are mainly destined to the


US and EU. Back in 1996-97, Bangladesh was the 7th and 5th largest apparel exporter to the USA and European Union respectively. The industry was successful in exploring the opportunities in markets away from EU and US. In FY07, a successful turnaround was observed in exports to third countries, which having a negative growth in FY06 rose three-fold in FY07, which helped to record 23.1 percent overall export growth in the RMG sector. It is anticipated that the trend of market diversification will continue and this will help to maintain the growth momentum of export earnings. At the same time a recent WTO review points out that Bangladesh has not been able to exploit fully the duty free access to EU that it enjoys. While this is pointed out to be due to stringent rules of origin (ROO) criteria, the relative stagnation in exports to EU requires further analysis.

Product Diversification:The growth pattern of RMG exports can be categorized


into two distinct phases. During the initial phase it was the woven category, which contributed the most. Second phase is the emergence of knitwear products that powered the recent double digit (year-on-year) growth starting in FY04. In the globalized economy and ever-changing fashion world, product diversification is the key to continuous business success. Starting with a few items, the entrepreneurs of the RMG sector have also been able to diversify the product base ranging from ordinary shirts, Tshirts, trousers, shorts, pajamas, ladies and childrens wear to sophisticated high value items like quality suits, branded jeans, jackets, sweaters, embroidered wear etc. It is clear that value addition accrues mostly in the designer items, and the sooner local entrepreneurs can catch on to this trend the brighter be the RMG future.

Backward Integration :RMG industry in Bangladesh has already proved itself to


be a resilient industry and can be a catalyst for further industrialization in the country. However, this vital industry still depends heavily on imported fabrics. After the liberalization of the quota regime some of the major textile suppliers Thailand, India, China, Hong Kong, Indonesia and Taiwan increased their own RMG exports.

Figure: Trend to back-to-back linkage If Bangladesh wants to enjoy increased market access created by the global open market economy it has no alternative but to produce textile items competitively at home through the establishment of backward linkage with the RMG industry. To some extent the industry has foreseen the need and has embarked on its own capacity building. Flow of Investment It is plausible that domestic entrepreneurs alone may not be able to develop the textile industry by establishing modern mills with adequate capacity to meet the growing RMG demand. It is important to have significant flow of investment both in terms of finance and technology. Figure 3 indicates that the investment outlook in this sector is encouraging, although the uncertainties before the MFA phase-out period caused a sluggish investment scenario. In part the momentum in the post-MFA phase-out period is indicative of the efforts underway towards capacity building through backward

integration. This is evident in the pace of lending to the RMG sector and in the rising import share of RMG related machinery. However further progress would be necessary to improve and sustain competitiveness on a global scale. Policy Regime of Government Government of Bangladesh has played an active role in designing policy support to the RMG sector that includes back-to-back L/C, bonded warehouse, cash incentives, export credit guarantee scheme, tax holiday and related facilities. At present government operates a cash compensation scheme through which domestic suppliers to exportoriented RMG units receive a cash payment equivalent to 5 percent of the net FOB value of exported garments. At the same time, income tax rate for textile manufacturers were reduced to 15 percent from its earlier level for the period up to June 30, 2008. The reduced tax rates and other facilities are likely to have a positive impact on the RMG sector.

Infrastructural Impediments :The existence of sound infrastructural facilities is


a prerequisite for economic development. In Bangladesh, continuing growth of the RMG sector is dependent on the development of a strong backward linkage in order to reduce the lead time. However, other factors constraining competitiveness of Bangladeshs RMG exports included the absence of adequate physical infrastructure and utilities.

Labor Productivity : The productive efficiency of labor is more important


determinant for gaining comparative advantage than the physical abundance of labor. In Bangladesh, the garment workers are mostly women with little education and training. The employment of an uneven number of unskilled labors by the garment factories results in low productivity and comparatively more expensive apparels. Bangladesh labor productivity is known to be lower when it compared with of Sri Lanka, South Korea and Hong Kong. Bangladesh must look for ways to improve the productivity of its labor force if it wants to compete regionally if not globally. Because of cheap labor if our country makes the labor productivity in the apex position, then we think the future of this sector is highly optimistic.

Research and Training : The country has no dedicated research institute related
to the apparel sector. RMG is highly fashion oriented and constant market research is necessary to become successful in the business. BGMEA has already established an institute which offers bachelors degree in fashion designing and BKMEA is planning on setting up a research and training institute. These and related initiatives need

encouragement possibly intermediated by donor-assisted technology and knowledge transfer. A facilitating public sector role can be very relevant here.

Supportive Government Policy : In contrast to the public


sector-led import-substituting industrialization strategy pursued during the first few years after independence, the industrialization philosophy of the government changed rather dramatically from the late 1970s when the emphasis was on export-oriented growth to be spearheaded by the private sector. Towards this end, various policy reforms were implemented in the 1980s and 1990s. Some of these reformed policies contributed considerably to the growth of the RMG industry in Bangladesh. During the 1980s, a number of incentives were introduced to encourage export activities. Some of them were new like the Bonded Warehouse Facility (BWF), while others like the Export Performance License (XPL) Scheme 37 were already in operation and were improved upon. Also, rebates were given on import duties and indirect taxes, there were tax reductions on export income, and export financing was arranged. Under the XPL scheme, exporters of non-traditional The discussion in this section clearly points to the positive contribution made by policy reforms to the growth of the RMG industry in Bangladesh. In particular, two policies the SBW facility and the back-to-back L/C system- led to significant reduction in cost of producing garments and enhanced competitiveness of Bangladeshs garments exports. It also allowed garment manufacturers to earn more profit which, when necessary, could be used to overcome difficulties arising from weak governance. Furthermore, poor governance, reflected in the leakage of duty-free imported fabrics in the domestic market, paradoxically enough also helped the garment manufacturers to earn extra profit and thereby enabled them to absorb the high cost of doing businesses a fall out of bad governance. Recommendation Bangladesh economy at present is more globally integrated than at any time in the past. The MFA phase-out will lead to more efficient global realignments of the Garments and Clothing industry. The phase out was expected to have negative impact on the economy of Bangladesh. Recent data reveals that Bangladesh absorbed the shock successfully and indeed RMG exports grew significantly both in FY06 and (especially) in FY07. Due to a number of steps taken by the industry, Bangladesh still remains competitive in RMG exports even in this post phase-out period.

Our Garments Industries can improve their position in the world map by reducing the overall problems. Such as management labor conflict, proper management policy, efficiency of the manager, maintainable time schedule for the product, proper strategic plan etc. Government also have some responsibility to improve the situation by providing- proper policy to protect the garments industries, solve the license problem, quickly loading facility in the port, providing proper environment for the work, keep the industry free from all kind of political problem and the biasness. Credit must be provided when the industry fall in need.To be an upper position holder in the world Garments Sector there is no way except follow the above recommendations. We hope by maintaining proper management and policy strategies our country will take the apex position in future. Suggestions Regarding Fire Safety We need to remember that when there is a fire, the first thing one should do is to run away from it. And this is what everyone does in such a situation. But the situation become dangerous and tragic when the escape doorways and gates are found locked. Precautionary should need to be adopted are given below: Building should be constructed with fire resisting materials Adequate exits and proper escape routes should be designed Protection against fire and smoke should be ensured Electrical wiring must be properly designed, installed and main tained Escape routes should be lighted at all times, kept clear, be indicated by signs Regular fire drills should be held Doors should be protected and should open along the direction of escape Doors should not open on the steps and sufficient spac e should be provided. Smoke/Fire alarm systems must be installed adequate number of extinguishers should be provided Prior relationship with local Fire services should be established

Conclusion
First-world consumers have been the chief beneficiaries of the growth of garment manufacturing in Bangladesh and other developing countries. Americans are reaping bargains by importing more than 97 percent of what they wear.

Since 1998, womens clothing costs have fallen 7 percent, and mens have fallen 8 percent. In the U.K., costs have dropped 20 percent since 2005. The relentless search for new locations has taken on more urgency after the deadliest industrial accident in the global garment industrys history, a multistory factory collapse in Bangladesh that left 1,127 people dead. Buying from Bangladesh, Bangladesh has been politically incorrect ever since problems started there, so a lot of major players had already been looking for alternatives. When a senior executive from one of the largest American mass-market retailers called him last week with worries about suppliers in Bangladesh and plans for a trip to Vietnam and Cambodia to seek alternatives. Many Western executives are taking such trips this spring. A lethal factory fire in Bangladesh last November, 33 regional or national strikes there since January, hundreds of deaths in factional street fighting there since February, and the Rana Plaza collapse in late April have left multinational corporations scrambling for other options.Right now, the name of Bangladesh just gives a bad rep to a company the dapper chief executive of Joseph Model Associates, which designs and distributes the Annabelle New York brand of high-end apparel and also makes private-label brands for various department store chains. Western executives are checking on potential new suppliers in southern Vietnam, central Cambodia and the hinterlands of Java in Indonesia. Yet safety problems could exist anywhere. The ceiling of a small factory that makes shoes in central Cambodia collapsed on Thursday morning, killing at least two people and injuring nine, three of them severely. A Western garment buyers, is nonetheless so full these days that it is hard to book a room on short notice. Indonesian garment executives say they have seen a steady procession of arrivals in recent weeks and months, always asking the same questions about political stability, labor laws, safety compliance and wages. At first it was because of China getting too expensive, then came the Bangladesh fire tragedy, and then there have been so many steps in Bangladeshs troubles .Some buyers feel uncomfortable placing orders in Bangladesh. Many multinationals are exploring their options in case street clashes and politically motivated national strikes worsen in Bangladesh, which is the worlds second -largest garment manufacturer after China. A new faction in the countrys Islamist movement has staged more violent protests lately that have sometimes resulted in the temporary closure of factories.

Garment manufacturing makes up a fifth of the economy in Bangladesh and four-fifths of its exports, which means that one of the worlds poorest, most densely populated countries is desperately dependent on continued export orders to stave off soaring unemployment and possibly further political unrest. Some executives say that many multinationals will continue buying from Bangladesh, although some may diversify their orders to more countries. Bangladeshs export target for FY 2011-12 is $26.5 billion. The market is forecasted to be developed at an annual rate of 7 to 9 percent resulting in ten years time to an export value of approximately US D 36 to 42 billion,

References
http://www.bgmea.com.bd/ http://www.bkmea.com/ http://www.epb.gov.bd/ http://www.bbs.gov.bd/ http://www.bangla news 24.com./ http://www.btmadhaka.com/ http://www.epzbangladesh.org.bd/ http://www.bangladesh-bank.org/ http://www.bangladeshknitwear.com/ http://www.nbr-bd.org/ http://www.fbcci-bd.org/ http://www.bdgarments.wordpress.com/history/ http://www.ideas.repec.org/p/pdb/opaper/50.html http://www.en.wikipedia.org/wiki/Bangladeshi_RMG_Sector

http://www.libcom.org/tags/bangladeshi-garment-workers https://www.cia.gov/library/publications/the-world-factbook/geos/bg.html