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International Business

Course title: MGT 372.11 Journal 1 Submitted By: Nafis M. Zaman Md. Abdulla al mamun fahim 0910263030 1120366030

Submitted to: Shahid Hossain (ShH)
Senior Lecturer School of Business North South University

Date of Submission: June 3, 2012

‘H&M to buy more RMG products from Bangladesh’

Renowned cloth and the world's second-largest clothing retailer --Hennes & Mauritz (H&M) wants to buy more products from Bangladesh despite growing unrest and violence prevailing in the country. They want to build a strong foothold in the Ready-made garment product outsourcing from Bangladesh. Currently they are outsourcing nearly 25% of their total demand. Despite of the political unrest and frequent power outage our garments industry is doing fine and we are progressing at a rapid pace. H & M has over 2500 retail stores worldwide in 44 markets employing 94000 personnel, and is one of the major buyers of ready-made garments in Bangladesh. They are now planning to increase their outsourcing from Bangladesh because despite the political unrest because Bangladesh has now emerged as reliable sources for all leading retailers for its competitive prices. Due to the cheap labor force we have we can produce the garment product at a very competitive price . The ready-made garment industry accounts for more than 80 per cent of Bangladesh's exports and employs over 3.4 million people mostly women. Actually, they (retailers) have no other suitable substitute to Bangladesh to source clothing at competitive prices," said Anwar-ulAlam Chowdhury Parvez, managing director of Evince Group. "Our industry is now matured enough and Bangladesh manufactures quality products at competitive prices," Mr. Anwar added. According to Leading US research company McKinsey in its recent study found that apparel exports from Bangladesh will be double by 2015 and triple in 10 years, as big buyers move from China as capacity constraints and wage inflation erode profit margins. And in the recent past our RMG sector is growing very fast. Despite the clutch of global rescission, increasing labor unrest and political stability, frequent load-shedding and inadequate infrastructure in Bangladesh In a interview with Dow Jones Newswires, a financial news agency owned by Dow Jones the Head of the Swedish company, H&M, Helena Helmersson said that "The often-recurring strikes and demonstrations disrupt production and cause delays. We want to grow in Bangladesh she also added that a stable market will benefit us buyers, the suppliers and the workers,” About 25 per cent of H&M's products are made in Bangladesh. It wants to increase this volume. H&M said it aims to use its influence to exert pressure on its suppliers in Bangladesh to improve working conditions. The H & M head said: "We told them (government representatives, and manufacturers) how we would like to grow in Bangladesh." She said the ongoing instability in Bangladesh makes it difficult for them to plan production. She added that H&M wants suppliers to set up democratic

labour committees that can negotiate wages and working conditions with factory owners, and a programme will be rolled out and tested this year and next, according to the news web site. We can conclude that our economy is in turbulence when the political parties are giving hartal thus hampering the productivity and damaging the reputation of our RGM maker, this move will build confidence among the foreign buyer. And it also proves that we are surely becoming a power house in ready-made industry because of our cheap labor and effective allocation & utilization of our limited resources. Also it is the single largest foreign currency earning sector. Bangladesh exported goods worth $22.93 billion in fiscal 2010-11, registering a 41.47 percent growth in the past year. But in this year our country will miss the annual export target by around three billion US dollar because of continuous slump in outbound shipments. The export earnings in the first 10 months stood at $19.77 billion against the annual target of $26.5 billion. We need government support to make this industry survive and make sustainable growth.

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