Garment makers court foreign partners despite opposition from BGMEA
Sunday, 22 March 2009
Mushir Ahmed
An increasing number of Bangladeshi garment manufacturers is joining hands with foreign textile groups to introduce new management technique and tread a high-value growth strategy that have eluded them for decades.
Sweater giant SQ Group first set the trend two years back when it tied up with Quantum of England. It later roped in Crystal in another tie-up, setting a trend that is now being replicated by more and more garment manufacturers.
Late last year Ananta joined two Hong Kong textile barons and a top apparel retailer of Japan to invest some US$80 million in an integrated knitwear plant-- possibly the biggest in the country.
Industry sources said at least a dozen other Bangladeshi top garment firms have struck joint ventures agreement with Indian, Sri Lankan and European groups despite the BGMEA's vehement opposition to any such deals.
As the trend slowly catches the attention of the bosses at Bangladesh Garment Manufacturers and Exporters Association (BGMEA), it has divided the group's top members, many of whom are now busy charting a way out of global recession.
While some leading manufacturers have argued that the clothing export from Bangladesh can easily hit $25 billion by 2013 without outside help, some top garment makers have openly challenged the view.
"We exported garments worth $11 billion last year on our own. We used to export one billion dollar even a decade ago," said Ex-BGMEA president Anwar-ul Alam Chowdhury Parvez, a leading critic of joint ventures.
"Even without foreign partnership many of us have graduated and emerged as top manufacturers. If we have favourable global trade environement, we can easily hit the $25 billion export mark without any outside help," he said.
"Garment manufacturing is not a rocket science that you need to have foreign partner to accelerate your growth. A foreign partner eats up a big slice of your profit and leaves a country as soon as things go wrong," he said.
During Parvez's tenure, the BGMEA continued its policy to oppose any foreign or joint venture investment in garment sector outside the country's eight Export Processing Zones (EPZs).
As a result, local companies had to sell their stakes to the foreign companies to make the partnership work. BGMEA usually does not object when a company sells its shares to foreign partners.
SQ's chief executive Golam Faruq rejected the BGMEA's protectionist views, calling for a change in the trade group's stand on foreign tie-ups.
"When a foreign company comes, it comes with superior technology, superior management and production tecniques. They add value to everything you do," Faruq, also an ex-BGMEA vice president said.
"I have tied up with two foreign companies. And these partnerships have changed the way I have been doing manufacturing for years. They brought in most modern lean manufacturing, meaning you can produce goods with fewer number of workers," he said.
"They also have better knowledge on market and how it works in time of crisis. They usually operate in higher value-added products, which ensures sizeable profit margins," he said.
Thanks to the two foreign partnerships, SQ's exports have defied global recession as it planned to double its shipment to about $100 million in 2009 from $60 million last year.
ZI Chowdhury, a top expert in garment sector, said SQ's growth strategy should be adopted by leading manufacturers to stave off an export plunge and growing shortage of garment workers.
"We need foreign expertise, their better management-worker relationships, their productivity-driven growth to boost our growth," Chowdhury said.
"Many garment factories don't have enough manpower. So we need better technology and management expertise to use limited number of people to maximise gains."
He said many Sri Lankan and Turkish companies --- who have better market access and technologies -- are now looking for joint venture opportunities in Bangladesh and the BGMEA should embrace them.
"It's a choice we should not ignore."
An increasing number of Bangladeshi garment manufacturers is joining hands with foreign textile groups to introduce new management technique and tread a high-value growth strategy that have eluded them for decades.
Sweater giant SQ Group first set the trend two years back when it tied up with Quantum of England. It later roped in Crystal in another tie-up, setting a trend that is now being replicated by more and more garment manufacturers.
Late last year Ananta joined two Hong Kong textile barons and a top apparel retailer of Japan to invest some US$80 million in an integrated knitwear plant-- possibly the biggest in the country.
Industry sources said at least a dozen other Bangladeshi top garment firms have struck joint ventures agreement with Indian, Sri Lankan and European groups despite the BGMEA's vehement opposition to any such deals.
As the trend slowly catches the attention of the bosses at Bangladesh Garment Manufacturers and Exporters Association (BGMEA), it has divided the group's top members, many of whom are now busy charting a way out of global recession.
While some leading manufacturers have argued that the clothing export from Bangladesh can easily hit $25 billion by 2013 without outside help, some top garment makers have openly challenged the view.
"We exported garments worth $11 billion last year on our own. We used to export one billion dollar even a decade ago," said Ex-BGMEA president Anwar-ul Alam Chowdhury Parvez, a leading critic of joint ventures.
"Even without foreign partnership many of us have graduated and emerged as top manufacturers. If we have favourable global trade environement, we can easily hit the $25 billion export mark without any outside help," he said.
"Garment manufacturing is not a rocket science that you need to have foreign partner to accelerate your growth. A foreign partner eats up a big slice of your profit and leaves a country as soon as things go wrong," he said.
During Parvez's tenure, the BGMEA continued its policy to oppose any foreign or joint venture investment in garment sector outside the country's eight Export Processing Zones (EPZs).
As a result, local companies had to sell their stakes to the foreign companies to make the partnership work. BGMEA usually does not object when a company sells its shares to foreign partners.
SQ's chief executive Golam Faruq rejected the BGMEA's protectionist views, calling for a change in the trade group's stand on foreign tie-ups.
"When a foreign company comes, it comes with superior technology, superior management and production tecniques. They add value to everything you do," Faruq, also an ex-BGMEA vice president said.
"I have tied up with two foreign companies. And these partnerships have changed the way I have been doing manufacturing for years. They brought in most modern lean manufacturing, meaning you can produce goods with fewer number of workers," he said.
"They also have better knowledge on market and how it works in time of crisis. They usually operate in higher value-added products, which ensures sizeable profit margins," he said.
Thanks to the two foreign partnerships, SQ's exports have defied global recession as it planned to double its shipment to about $100 million in 2009 from $60 million last year.
ZI Chowdhury, a top expert in garment sector, said SQ's growth strategy should be adopted by leading manufacturers to stave off an export plunge and growing shortage of garment workers.
"We need foreign expertise, their better management-worker relationships, their productivity-driven growth to boost our growth," Chowdhury said.
"Many garment factories don't have enough manpower. So we need better technology and management expertise to use limited number of people to maximise gains."
He said many Sri Lankan and Turkish companies --- who have better market access and technologies -- are now looking for joint venture opportunities in Bangladesh and the BGMEA should embrace them.
"It's a choice we should not ignore."