L301

International
Business
Environment

Sakib Qamrul
Roll: 12
Section: B
Batch: BBA 26th

SME
Case Notes
ECO COLOUR CHEM:
SURVIVING IN A POST PANDEMIC MARKET
CASE SOLUTION

QUESTION 1
The Covid-19 pandemic posed a plethora of key problems to the Bangladeshi RMG sector which
would hamper any and all companies in the industry. Described below are some issues that could
potentially be a significant issue in Eco Color Chem’s future operations:

Supply Chain Disruption

The global supply chains have been disrupted during the COVID-19 pandemic. It is thus worth
considering the long-term impacts of the COVID-19 pandemic on the nature of clothing supply
chains. Clothing orders from the international brands/buyers have been canceled considerably
since the COVID-19 pandemic outbreak. The ‘Centre for Global Workers’ Rights’ and ‘Worker
Rights Consortium’ conducted a study on the impact of the COVID-19 crisis in Bangladesh
RMG sector on 27 March, with the participation of 316 Bangladeshi suppliers. The study
reported that international brands and retailers have suspended clothing orders from Bangladesh
for up to $3 billion.35 From a country-specific perspective, ‘Mosaic Brands’, one large
Australian retail company (which owns Katies, Rivers, Noni B, Rockmans, Millers, Autograph,
W.Lane and Beme) is holding or canceling orders and delaying payment worth a total $15
million. This outcome has the potential to create joblessness and lesser bargaining power for the
RMG workers about wages and other rights-related issues. It is already evident that >1 million
RMG workers have been dismissed from their jobs during the COVID-19 pandemic.
Impact on Workers

COVID-19 poses a serious threat to global public health in both developing and developed
countries.12 Bangladesh is at great risk from this public health emergency due to its insufficient
preparedness to manage this potentially fatal virus. Bangladesh, being a developing and
overpopulated country, has made a slow start toward COVID-19 preparedness only declaring its
first COVID-19 patients on the 8 March 2020.13 The late identification of COVID-19 infection
in Bangladesh not only delayed preparedness to prevent and treat COVID-19 infections, but it
also meant that those who are the most vulnerable and disadvantaged in the country have been
more impacted by the disease. The RMG workers of Bangladesh are one such group. These
workers have little or no education, are unskilled, have low socioeconomic and often rural
backgrounds, and possess less bargaining power, resulting in their identification as vulnerable.

The consequences of the COVID-19 pandemic for these RMG workers is dire and include
uncertainty about whether they will be entitled to wages during the COVID-19 pandemic and
related issues such as lack of money for essentials such as food, and concerns about the re-
opening of factories during COVID-19 infection peak times. Other concerns are the health risks
due to lack of preventative measures in the workplace, and the development of mental health
conditions due to the impact of the loss of employment and the fear of contracting COVID-19.

Perception Issues due to Foreign Collaboration

As stated in the case, Eco Color Chemicals is the sole representative of Global Chemicals
International Ltd., a Chinese company committed to the research, development and production of
eco-textile auxiliaries. Regardless to say, any and all collaboration with this foreign partner was
completely impossible during the pandemic situation. Now, as countries are on the process of
recovering from the crisis, business can once again resume with this foreign partner. Even so,
being associated with a Chinese company lead to considerable perception issues among potential
clients.
QUESTION 2
For Bangladesh to make a quick recovery from the effect of COVID-19 pandemic, the
Bangladeshi government must essentially lead economic diversification drive towards the
Bangladeshi textile industries. This would require the government to ramp up resilience planning
and deploy policy options discussed below to proactively revive the Bangladeshi textile
industries towards achieving sustainable development.

Provision of Intervention Fund to the Textile Industry

Government should channel more funds to the textile industry to enable it to lead the
diversification process. Government should provide a new intervention fund to the textile
industry by directing the central bank to come to the aid of the textile industry as part of strategy
to diversify the economy and achieve inclusive growth through job creation. This should be
backed with a ban on the importation of foreign textile and second-hand clothing to rejuvenate
production of local textile materials. Government should encourage local textile manufacturing
companies by providing them with soft loans and easy access to credit facilities through the
Bank of Industry.

Improvement of the Obsolete Technology in the Textile Industry

There is no doubt that textile industry globally is largely labor intensive and the Bangladesh
textile industry requires new and advanced technology to achieve a higher level of productivity
and competitiveness. For example, due to modern technology, the Chinese spindle produces
twice as much as local spindles. However, most textile mills in Bangladesh are still using old and
obsolete technology (COMESA, 2011). This has an adverse effect on mills' productivity and
product quality. Bangladeshi textile mills depend heavily on foreign technology (machines) and
accessories. This practice becomes problematic and costly to the nation’s economy due to high
cost of importation of materials and tools, non-availability of spare parts for the replacement of
worn-out or damaged tools, coupled with poor maintenance culture arising from inadequate
knowledge of its components. Often, these machines wear out with use and age while the
unserviceable ones are often vandalized in an attempt to put the working machines in good
shape. This invariably affects production and quality of products and this often leads to
abandonment of local textiles for the imported ones as better substitutes. The federal government
should establish the Bangladesh machines tools industry to boost the fabrication of spare parts
and the modification of the existing machines

Development of Basic Infrastructure

Government should provide necessary infrastructural facilities especially power supply to local
textile manufacturing companies. The socio-cultural challenges are daunting in that there is a
dearth of basic infrastructure to support industrialization. According to Global Competitiveness
Index (2016-2017) Bangladesh ranked 106th out of 180 countries in overall infrastructure
development. This includes energy crises, poor transport facilities, poor communication network
and bad roads etc. The problem of power supply has worsened, in spite of privatization of the
power sector, and this has forced many textile companies to relocate to other countries like
Ghana, Benin Republic, Cameroon etc. The local refineries cannot meet local demand and the
importers cannot sell at control prices without subsidy which had been tinted with corruption
have been used to reap the country off over the years. Even fuel pipelines are not spared of
vandalization by the enemies of the government in the Niger Delta. When we come to road
network, we see that Bangladeshi roads are not industry friendly. They are riddled with potholes
that regularly make trailers carrying industrials raw materials and merchandize to fall over and
destroy their wares. Again, railway lines that provide cheap means of transport in the
industrialized countries of the world are not readily available any more in Bangladesh in spite of
the billions of naira regularly sunk to rehabilitate what the colonialist left for the country.
Government should promote and protect the Bangladesh textiles industries to ensure that

KIU Journal of Humanities64basic infrastructure such as power supply, poor communication

network, poor transport facilities and bad roads etc. are made to be industry friendly, by putting
them in order.

Adequate and Regular interaction between Industry and Academia

One of the major problems faced by the textile industry in Bangladesh is the lack of interaction
between industry and the academia. Universities are places where researches are conducted on
regular basis on current issues which are very much helpful in solving problems and providing
innovative policies that will bring drastic changes to be used in addressing current situations. But
unfortunately, there is no linkage between the textile industry and Academia. Government should
ensure that there is regular linkage between the textile industry and the academia (University,
Polytechnic and Research institute) in the area of research and training in order to come out with
new designs and modern marketing strategies that will ensure better ways of improving sales of
textile products.

Creation of Stakeholder’s Support Policies

Government should spearhead the signing of a Memorandum of Understanding (MoU) between
the Armed Forces of Bangladesh, Bangladesh Police, Paramilitary Institutions and National
Youth Service Corp on one side and the Bangladeshi Textile Manufacturers Association
(NTMA), Ginning Companies and National Cotton Association of Bangladesh (NACOTAN) on
the other side to supply textile fabrics to these government agencies. This policy directive to
these agencies to source their uniforms locally would have positive impact on the industry if it
would be well implemented. The utilization of local fabrics by government agencies would be
favorable to the textile industry in that it will help to mop up stocks because companies are
producing and have mass stock in line with the and will also create a market and provide an
outlet to sell part of the products produced by the textile industries.
References

The Financial Express. Clothing Brands Abandon BD Workers in Pandemic: HRW. 1 April
2020. Retrieved from https://www.thefinancialexpress.com.bd/trade/clothing-brands-abandon-
bd-workers-in-pandemic-hrw-1585735159

ABC News. Suppliers Under Pressure as Australian Retailers Ask for Discounts, Hold Orders
During Coronavirus Pandemic. 13 May 2020. Retrieved from
https://www.abc.net.au/news/2020-05-13/australian-retailers-delay-supplier-payments-amid-
coronavirus/12236458

BRAC Institute of Governance and Development. Effect of COVID-19 on RMG Sector and
Trade Union Efforts to Mitigate Fall Out. 2020. Retrieved https://bigd.bracu.ac.bd/study/effect-
of-covid-19-on-rmg-sector-and-trade-union-efforts-to-mitigate-fall-out/

Fouad NA. Editor in chief ’s introduction to essays on the impact of COVID-19 on work and
workers. Retrieved from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7205668/

Schwab, K. World Economic Forum. The Global Competitiveness Report 2016–2017. Retrieved
from http://www3.weforum.org/

The Daily Prothom Alo. Physical Distance is not Being Observed in Most of the Garment
Factories. (2020). Retrieved from https://www.prothoma lo.com/economy/article/1655466/

Fair Wear. Covid-19 Impact and Responses: Bangladesh. 4 May 2020. Retrieved from
https://www.fairwear.org/covid-19-dossier/covid-19-guidance-forproduction-countries/covid-19-
impact-and-responses-bangladesh/