Introduction:

Bangladesh is a developing country with a population of about 152.5 million in

a total area of 147 570sq.km., making it one of the most heavily populated
countries of the world. Dhaka has been the capital city of Bangladesh since it
achieved independence in 1971. The overall economy of Bangladesh has
registered a steady improvement with more than 6% average growth during the
last five years. The industrial sector has been an important contributor to the
countrys GDP,1 its share standing at 28.6% in 2011.
The Industry As A Whole:
Leather is a durable and flexible material created via the tanning of putrescible
animal rawhide and skin, i.e. the conversion of raw hide or skin, a putrescible
material, into leather, a stable material, and finishing it so that it can be used
in the manufacture of a wide range of consumer products.

The leather industries are differentiated by the manufacturing importance of

the raw materials used to make the wares. In the leather industry, the skin
and rawhide is commercial valuable product. It is an intermediate industrial
product, with applications in downstream sectors of the consumer goods
industry.

Leather industry is an old manufacturing sub-sector in Bangladesh with a

long heritage of over five decades. This is an agro based bi-product industry
integrated with locally available indigenous raw materials (hides and skins)
having tremendous potentials for export development and sustained growth
along a considerably long duration of time length.
Sub-segments of this industry are -

1.

Finished Leather

2.

Leather Goods

History Of Leather Industry In Bangladesh:

In the year 1940, a person named R.P Saha has set the first leather
industry of Bangladesh near Narayangonj area. It was later shifted to
hazaribag area of Dhaka. During the period before partition of Bengal
(1947), almost all the raw hides and skins available in East Bengal were
exported to West Bengal, particularly to Calcutta and processed there.
Development of tannery industry in former East Pakistan started after
the partition with an influx of tanners displaced from India and
subsequently, with the establishment of subsidiaries of some companies
of the then West Pakistan.

The Key Player in The Arena Of Leather Industry In Bangladesh:

There are over a 150 of leather factories in Bangladesh, which produce huge
amount of leather products in a year.Among them Apex Tannery Ltd.
Bata Shoe
Awal Leather Complex,
ABC Leather,
Model Trade International,
Bengal Leather Complex Ltd.,
Chowdhury Leather & Com.Ltd.,
Crescent Tannery Ltd.,
Helena Enterprise Ltd.,

H & H Leather Industry Ltd.,

Janata Tanning Industries Ltd.,
Kalam Brothers Tannery Ltd.,
Kid Leather Industry Ltd.,
Karim Leathers Limited.,
Ruma leathers Limited.,
Dhaka Hide & Skin lmited
Lexco Limited etc
Market Capitalization:
In Bangladesh, most of the industries are export oriented and about 95% of
leather and leather products such as shoes, slippers, leather jackets, hand
gloves, bags, purses, wallets, and belts in the form of crushed leather,
finished leather, leather garments, and footwear are marketed abroad.Value
addition in these exports averages 25% local and 75% foreign.About 150
modern tannery units are now in Dhaka city.

Bangladesh produces approximately 100-150 million sq feet of raw hides and

skins, about 85% of which is exported in crust and finished form.The rest is
used for producing leather goods to cater to the domestic market.
Tanning In Bangladesh:
A number of tanneries took the opportunity in 1990s for the production of
crust and finished leather. There are reportedly around 220 tanneries in
Bangladesh but, in fact, only 113 tanneries are in effective operation, out of
these 20 units are reported to be fairly large (7 units very large), around 45
units are considered of medium size and around 48 units are considered small
groups . 105 of the tanneries are positioned arbitrarily in the Hazaribagh area
in Dhaka where 84 per cent of the total supply of hides and skins are
processed in a highly congested area of only 29 hectares of land.

Livestock In Bangladesh:
Bangladesh has a fairly large livestock population to support a strong and
growing tanning industry. Table II shows that cow hides account for 56% of the
production, goat skins for 30% and buffalo makes up the rest. 5 The current
output in Bangladesh is about 200 million sq.ft. of leather annually. Apart
from bovine hides, buffalo, goat and sheep; a good quantity of kangaroo hides
(pickled condition/wet-blue) are imported from Australia and finished in
Bangladesh, shoes are made of this kangaroo leather for export, mostly to
Japan. Some ostrich leather is also imported from Australia for production of
high quality and high priced bags and wallets for re-export to Australia.
Export Scenario:
At present leather and leather products are exported to about 53 countries of
the world. The major importing countries are: Italy, Brazil, Germany,
Singapore, China and the USA. EPB sources report that export earnings from
leather goods was US$ 287.78 million in 2004-2005, out of which, about 80%
are from leather and the rest is from finished leather goods.

Export Earning from leather goods

Million US

200
15
0
100

50
0

The above graph exhibits that the export growth rate of Bangladesh leather
sector declined initially in the year 1998-1999 because there was economic
recession in Bangladesh due to massive flood. During this period (from 1998 to

2005), the growth rate was highest in 2000-2001 (16.32%). In the year 20022003 export growth rate was negative because of the global economic recession
as a consequence of the War in Iraq, the Twin Tower (9/11) incident, rise of
international terrorism, fundamentalist orientations, etc. Export growth rate
for the year 2004-2005 was 8.22%. Foreign investment to the industrial leather
sector of Bangladesh has been very limited. Till March 2010, the total foreign
investment in the industrial leather sector was $116.12 million, which is only
1.33 per cent of the total foreign direct investment into the country.
Industry Life Cycle: Growth Potential
The leather industry with over Taka 160 billion annual export earnings is the
countrys biggest third foreign exchange earner after the RMG and the frozen
food sectors. Local and foreign experts believe that this sector could replicate
the successes of the Readymade Garment (RMG) sector if the government and
genuine entrepreneurs join hands for effective cooperation and develop the
sector with a comprehensive strategic plan. Leather industry is growing all over
the world both in market potentials and in installed capacity. For Bangladesh,
export earning only from leather was US$ 160 million in 2010- 2011 and it is
expected to reach US$ 235 million in 2015-2020 as the demand for quality raw
material for finished leather goods is increasing in developed countries. The
size of the global footwear market is enormous as well. A thorough analysis of
the historic data shows that factors like demographic composition, depth and
reach of urbanization and distribution of wealth have consistently shaped the
growth of the footwear industry. Though till now Bangladesh has shown poor
performance in the leather goods sector, it has a good growth potential if
entrepreneurs can avail modern technology to diversify their products and
designs according to international market trends and apply modern tools for
marketing & promotion.
Realizing this sectors growth potential, Bangladesh Government has reiterated
its decision to treat the industry as one of the thrust sectors and reduce
interest rates for industrial credit to this sector to seven percent (7%). The
government has already decided to develop a leather industrial area at Savar,
outside Dhaka where tanneries from Dhaka would be shifted to free the
Hazaribagh area and the river Buriganga in general, where most of the

tanneries are concentrated, of pollution.

Competitor Scenario:
China
China is today globally the undisputed leader in footwear manufacturing and
also has a highly developed components and accessories industry. This
development was favoured by the opening up of the Chinese economy, which
enabled the influx of Taiwanese investment amounting to billions of dollars as
well as the transfer of Taiwanese know-how in this sector.
The North-South migration of various industries, which began from the
industrialised USA and West European countries to the newly industrialised
countries such as Japan, Taiwan and Hong Kong continued with the rise of
labour costs in those countries to the new cheap labour countries like China,
Indonesia, Thailand, Vietnam and India. In this respect China was certainly
favoured by foreign investors because of its political stability, reliability,
infrastructure, qualified and cheap labour forces and big local market.

India

Like China, the leather and leather goods sector of India has benefited the
most from a long-term development policy. Obviously it capitalises on its
natural advantages of abundant raw materials, plentiful and low-cost labour, a
large pool of skilled and trained human resources, a strong artisan shoemaking tradition as well as an immense domestic market. Certainly India
remains far behind China because it has in the last decade been more

reluctant to open its market and liberalise the economy.

Conclusion:
Developed countries are treating Bangladeshs leather sector as secure for
investment. However, the sector has a rather constrained demand structure in
the domestic market due the limited national purchasing power. Nevertheless,
industry insiders are expecting a growth in the domestic market in
consideration of the fact that approximately 10% of Bangladeshs total
population (around 15 million) is estimated to have an income level comparable
to that of the developed countries. Hence, there appears to be a large
unexplored domestic market for footwear and other leather products for
Bangladesh with an estimated demand for 30 million pairs per year.
The footwear sub-sector of Bangladesh earned revenues in excess of US$250
million in 2010-2011. The European Union (EU) is the biggest destination for
footwear exports with a 60% share, followed by Japan with 30%, and the rest
of the world accounting for 10%. Bangladesh has only a 1% share of the world
footwear market.

Reference:
https://www.scribd.com/doc/200188840/Introduction-to-bangladeshLeather-Industry
www.researchgate.net/...Bangladeshi_leather_Industry_An_overview_of Recent
Sustainable Developments
http://edupedia.educarnival.com/analysis-of-leather-industry-of-babgladesh/