Ready Made Garments (RMG) industry is one of the oldest and largest export industries. It is a springboard for national development and often a starter industry for countries engaged in export-oriented industrialisation because of its low fixed costs and emphasis on labour-intensive manufacturing.
RMG industries need more labour and these industries are growing at a faster rate mostly in the populated countries. Bangladesh is a pioneer country in this regard. This sector provides employment to five million people, mostly women workers, and earns 81 per cent of the total export earnings of the country. RMG industries have been swaggering in the country since long acting as a catalyst for sustainable development and growth. Despite the stupendous growth of the RMG industry, and its bright prospects, challenges are still there. One of the biggest challenges currently faced by our RMG industry is the long lingering political unrest that pose to seriously threaten production as well as marketing.
Most of the RMG industries in Bangladesh and other developing countries are export-oriented. The main markets of RMG products of Bangladesh are the EU and North America. Although thousands of RMG industries in Bangladesh are engaged in manufacturing RMG products, they have to face fierce competition from India, Sri Lanka and Vietnam in the neighbouring region for their market share in the predominant markets of the USA, EU and Canada.
RMG producing countries offer various economic and fiscal inducements to the manufacturers that help bolster production at national levels and sales at international levels. Bangladesh has been offering incentives to the RMG exporters as cash benefit, low-interest credit facility like EDF and reduction of tax deduction at source. Recently, the government of Bangladesh allowed 3 per cent cash incentive for exporting of RMG products to all countries except EU, USA and Canada. It's known to all concerned authorities that EU, USA and Canada are the most important destination of Bangladesh RMG products. The 3 per cent cash incentive policy should have been applicable to all destinations including the said three. This policy will create marketing problems for the Bangladesh RMG manufacturers who have to survive fighting with the exporters of other competing countries.
Bangladesh's export to the USA is currently experiencing a decline as evidenced by recent statistics. The political turmoil, labour situation coupled with the compliance factors as regards workplace safety etc., are believed to have left a dent in the momentum of exports. Compared to Bangladesh's exports to the USA in January 2014, exports in January 2015 experienced a downslide of 7.16 per cent. This reflected not only in value but also in volume. In January 2015, Bangladesh exported 15,200,000 square meters of garments which is 8.38 percent less than the corresponding month of previous year.
The RMG sector of Bangladesh has been confronting some structural problems like inadequate and uninterrupted energy supplies, low gas pressure, poor road and transport facilities etc. Political conflicts, continuous strikes (hartals) and uncertainty have had a cataclysmic effect on RMG industries in 2014. The RMG manufacturers are expecting a serious fall out from the current political unrest, uncertainties and destruction of properties and human lives. The sluggish growth of the country's overall exports at a rate of 0.9 per cent over July-November, 2014 was mainly accounted for by the dismal performance of the RMG exports. RMG exports will experience fluctuating fortunes and some volatility in the first five months of FY 2015. Export earnings from RMG sector was quite sluggish in this period by any comparison with recent past years. As is known, RMG sector faced several compliance related challenges and associated consequences in FY2014-15.
On March 2, 2015, Buyers Forum had a meeting with the representatives of the Bangladesh Garments Manufactures and Exporters Association (BGMEA). According to the reports of the meeting, the buyers are not placing full orders, due to the on-going political onslaughts. Buyers have already down-sized their orders by 30 per cent during the summer season and these orders have been diverted to Vietnam, Cambodia and India. RMG exporters are afraid of the present belligerent political situation that may affect the orders for winter season as well. The situation is feared to be worse after June 2015. Several global RMG retailers have recently canceled trips to Bangladesh as the political impasse continues, which analysts say could result in shifting of orders to other competitors.
Success of all types of business -- export, import and manufacturing-- is largely dependent on the demand and supply of products. The ongoing impasse affecting the Bangladesh RMG industry has severely affected the production of the RMG products and backward linkage companies. As a consequence, many industries in this sector have retrenched a large number of workers and some are in the process of reducing their workforce to save the factories from further losses. The employees and workers of this sector are of unanimous opinion that the role the leaders of BGMEA and BKMEA to bring this sector under good footing, to save this sector from the wrath of politics, are not satisfactory. They should have played a vigorous role by fruitful discussion with the GOB and the concerned political parties.
Recent reports by various analysts and researchers divulge that Bangladesh RMG industry is suffering from the dearth of professional and highly skilled marketing personnel and has to rely on the expatriate personnel who are very expensive to hire. Marketing of products is not an easy job. It needs qualification, experience, professionalism, updated knowledge about local and international markets, proficiency in foreign languages like English and French. The GOB, BGMEA and other stakeholders may undertake long term training programmes to make professional marketing teams to meet the marketing challenges.
RMG marketing is basically divided into three segments: woven and denim, fine knit and heavy knit (sweater) and non-oven. The type and style of products vary from place to place depending of consumers' tastes and preferences. The marketing professionals need to know the taste, choice and culture of the consumers by applying marketing tools and techniques, surveys, research, analyses, feasibility studies on the demand and supply of RMG products.
A major strategic factor which contributes to a company's success and exposure is marketing. Individual companies often adopt certain marketing techniques and methods which will complement their brand and image. Marketing determines how the consumer views a particular company or product. The dynamics of the apparel industry is changing day by day. To succeed amid the shifting tides, apparel companies need to build up competence and proficiency in conformity with market trends. The destination of RMG products need to be scattered to other destinations like Japan, Middle East, Australia, New Zealand, and South Africa since the current markets in EU, USA and Canada are almost at the stage of saturation.
It is the responsibility of the stakeholders, business leaders and the government to protect the interest of the RMG industry which has given our economy a strong foothold, created jobs for millions of people, especially for women, freeing them considerably from the shackles of poverty.
The writer is the CFO of a
private group of industries. [email protected]
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