1.

Conclusion and Recommendation

In order to sustain the smooth growth and development of the garment industry of
Bangladesh, Government should play a key role to offer a good export policy.
Otherwise the production, employment, earning of foreign currency and economic
development of the country will be affected seriously. Some recommendations have
been offered to face the problems of the garment industry of Bangladesh.
Regarding the problem of RMG sector I've identified some recommendation for
the betterment of this sector. The recommendations are as follows:
The Government of Bangladesh should play a key role for the expansion of the
market of garment by diversified items for manufacture and export. It is very
important fact that there are many items in the RMG product lines which
Bangladeshi entrepreneurs have not yet started production. Leather items, life
jackets, gloves, bags etc. are among few such items. Among other items are
umbrella, nylon school bags and jackets, ice sport kits and wears, staffed toys,
high competitive market fashion garments are examples. There are numerous
such items not yet touched by our entrepreneurs.
All out efforts would be made and steps taken for production and export of high
priced readymade garments in the light of the prevailing market demand.
Immediate steps shall be taken to establish a Fashion Institute pending
establishment of the Fashion Institute measures will be taken, under special
arrangements, to extend expert services to match the actual demand. Liberal
credit may be considered for capacity building and hiring technology for
producer of high quality garments.

Product-Specific decisions: Readymade Garments

Provisions have been made for the exporters of readymade garments to retain in their
respective foreign currency accounts the portion of their export earnings required for

meeting the expenses on importing fabrics and other accessories through back-to-back
letter of credit. The exporters that way shall be saved from incurring losses by first
converting their export earnings to Taka and then reconverting the same to foreign
exchange for payment of import bills on raw materials.
For making hand-woven sweaters of natural and synthetic wool imported under
customs and permission would be accorded to take up such wool outside the bonded
area, provided the concerned firm furnishes a bank guarantee for equivalent amount of
customs duty livable on such raw materials.
Labor Productivity Improvement.
However, it is to be noted that the lower material procurement cost may not be enough
for Bangladesh to maintain its competitive edge in international markets. Bangladesh
must increase productivity, which is lower than many of its competitors. It is true that
wages are low in Bangladesh, but it does not necessarily mean that relatively low
wages automatically lead to higher productivity. Wages are only one of the
determinants of labor productivity. Time required by the
Workers to perform a task are another important determinant. Available efficiencies
indicate that Bangladeshi workers are not as those of Hong Kong, South Korea and Sri
Lanka. The workers' skills and supervisors' managerial efficiency are higher in those
countries than in Bangladesh. In addition, those countries use the latest technology,
for example, computerize sewing machines, design facilities, etc. but Bangladesh uses
relatively older technology.
Other Strategic Implications
There are potential problems with supplies and financing. A conglomeration or
a strategic alliance of domestic firms or with foreign firms or both is the only
feasible solution. This tie-up-marketing will ensure long-term business interest
to the domestic producers.

Most of the exporters do not provide good post sales services or are bent on
relational marketing. The exporters and entrepreneurs have to take measures in
this context.
The exporters are willing to form joint ventures, but they are keener to get
financial benefits than technological benefits. Exporters should be taught or
given necessary counseling in taking the advantage of technology transfer. EPB
can take further progressive role and arrange training, workshop, interviews
and field works in various capacities.
Import of samples for each category of garments:
At present, facility exists for duty free import of 20 pieces of samples for each
category of garments subject to a maximum of 100 pieces. Imported samples are,
however, subject to mutilation at the customs paid.
Rationalizing the rate of value addition:
It has been found that keeping the rate of value addition flexible is congenial
for the growth of the country's export trade. Therefore a Standing Committee
will be formed for rationalizing the existing rates of value addition for all
commodities including readymade garments.
When a garment export unit relies exclusively on locally procured cotton and
accessories through back-to-back L/c the maximum amount of back-to-back
L/C in case of knitwear unit would be equal to the value of the master L/C.
Import of grey clothes:
With a view to expanding the base of backward linkage industries, permission is being
accorded for import of grey clothes, through usual procedure for use in the export
industries or for direct export against specific export orders. So long this facility used
to be given only to the dyeing, printing and finishing factories. Since value addition in
the readymade garments sector did not take place up to its potentialities inspire of this
facility the government has allowed the exporters of readymade garments to import
grey clothes.

Wage Rate and Productivity

Cost competitiveness and availability of an adequately skilled workforce will be critical to continued
sustainability of Bangladeshs competitiveness in the US market. According to the USITC report,
wages of workers in Chinas apparel industry in the coastal belt is USD 0.88 per hour; in the noncoastal
area, the average hourly wage rate is USD 0.68 (Table 13). To compare, the wage rate of
Bangladeshs workers was USD 0.39 per hour prior to the recent increase in the level of minimum wage.
To the extent the recent upward revision could push up the wages in the RMG sector,
Bangladeshs relative competitiveness situation is likely to change. In addition, productivity is relatively
high in China, making its overall labor cost lower than her competitors.

Productivity Enhancement
The analyses presented in the paper clearly bear out Chinas advantage in terms of
technology used
in the apparels sector and the resultant productivity gain and advantage in terms of
per worker value
addition. In recent years, Chinas strategy in the textiles/apparels sector had
primarily focused on technological upgradation. As was pointed out in the paper, Chinas average
wage rate in the
apparels sector is higher than Bangladesh. However, higher productivity (revealed in terms of lower
capital-output ratio and higher labour and capital productivity) is what provides China her competitive
advantage in the US market as against Bangladesh. It is true that some technological upgradation has
been taking place in Bangladesh in recent years. The textile technology fairs, being held regularly in
the recent years, and their success also allude to a growing demand for improved technology from the
apparels/textiles entrepreneurs of the country. This is also reflected in the dynamics of machinery
imports for the textiles/apparels sector of Bangladesh. However, in view of the ongoing upgradation in
Chinas apparels sector, the pace of restructuring ought to be speeded up. If Bangladesh is to
diversify along the value addition chain of the products in which it has comparative advantage,
technology will be the key to her success. A Technology Upgradation Fund could be set up to
provide financial and technical support to support and promote technological upgradation for
apparels/textile sector48. Import tariff on machineries for export-oriented industries in Bangladesh was
waived several years back. Couple of years back tariff on spare-parts for those machineries have also
been removed. However, to compete with China, Bangladesh can ill-afford to leave productivityenhancing
technology upgradation only to the forces of market. This issue becomes all the more
important also in view of the need for encouraging the establishment of backward linkages in the
apparels sector, particularly in the woven sector.
Reducing the Lead Time
In global apparels market, along with price it is the lead time that decides whether the international
buyers will place an order or not. One major advantage of China is the short lead time she requires to
meet an export order. Not only is China a major producer of cotton, her ports are also capable of
working speedily when import of cotton is called for. For Bangladesh, lead time is fast emerging as a
serious bottleneck to her continuing competitiveness in the US and the global market. Whilst the
demand in the mass-produced, volume-driven segment of the apparels market is quite stable, the
more value-added part of the demand curve is characterized by frequent changes in fashion and
design. A transition and graduation to this segment will invariably call for shorter lead time, particularly
also taking cognizance of the fact that the duration of fashion seasons in the USA have come down

considerably in recent years49. Two factors will be important for Bangladesh in terms of reducing the
lead time: strengthening of the backward linkage in woven-textiles (where there is comparative
advantage) and substantial improvement in port clearance and infrastructure. In recent years, the idea
of the central bonded warehouse has been floated as a way to reduce the lead time. The debate here
is pretty well known50. However, Bangladesh should get on with addressing this not so easy to decide
policy question by carefully balancing the interests of the apparels and textile sector. For a start,
import of man-made synthetic grey fabrics (where domestic capacity is limited) under such.
Compliance Assurance
Current global trading regime in apparels is increasingly being characterized by a rising demand with
regard to compliance with various standards. One of Chinas advantages in the global apparels
market emanate from the support the sector receives from the state, both explicit and implicit, to
implement the stringent requirements of the buyers, and demands of consumers in the developed
world. Although Bangladesh has gone some way in this respect, many factories are yet to fully carry
out the necessary measures to comply with buyer requirements. Doing the needful requires allocation
of substantial resources which raises cost. However, to remain in competition all apparels units in
Bangladesh must strive to be compliant as early as possible. Private entrepreneurs will need to do
their part of the deal particularly in the area of ergonomics, creating conducive working environment,
and protecting workers rights. However, government support is also called for in this regard,
particularly by way of setting up clusters, establishing affluent treatment facilities (particularly for
knitwear-sector), and providing common facilities. Bangladesh will also need to strictly implement
factory inspection and other regulatory measures to ensure that compliance requirements are strictly
followed by the apparels enterprises.
Preferential Market Access
Bangladeshs apparels could have enjoyed a significant advantage over the Chinese exports had
there been preferential market access for her products in the US market. As is known, the US GSP
scheme for the LDCs does not include apparels. Moreover, regrettably, the Hong Kong Ministerial
Decision of the WTO on the duty-free, quota-free market access for the LDCs allows Bangladesh and
other LDCs to have preferential (zero-tariffed) access only for 97 per cent of their product 51. In all
likelihood, the USA will take advantage of this flexibility to include all (or almost all) apparels items in
the 3 per cent exclusion list. Bangladeshs strategy in view of this should be to negotiate with the US
in a manner that allows exclusion of at least some of the apparels items of her major interest from the
3 per cent exclusion list of the US and to gradually work towards an all embracing DF-QF decision
within the ambit of the WTO52. Given that, many of the apparels items of Bangladesh face tariff peaks
in the US53 such DF-QF market access will provide her with considerable competitive edge vis--vis

Impact on society:
RMG has changed Bangladeshi society, changed the workplace condition.in the past men were
the mostly worker but with the rise of garments industry the situation has changed reversely. In
RMG sectors, not men, women are the major participants.80% of the garments workers are
women.

WOMEN EMPOWERMENT:

The garment sector is the largest employer of women in Bangladesh.[3] The garment sector has
provided employment opportunities to women from the rural areas that previously did not have
any opportunity to be part of the formal workforce.

STADARD OF LIVING:
RMG has dramatically increased the standard of living in Bangladesh. People with low income
are improving their condition with the money they earn. Though their money is not sufficient
enough but have been able to increase their standard of living.

EDUCATION GROWTH:
Educational rate has been risen as an impact of RMG in society. Garments worker are mostly
women. So, they dont get enough time to look after their child. As a reason, they get their
children admitted into school. Another reason is improved financial condition of garments
worker.

URBANIZATION:
A statistical report says that In 1985, urbanization level in Bangladesh was only 13.4% while it is
expected to be dramatically risen 37.3% in 2025.This statistical report proves that RMG has a
sweeping effect for the urbanization in Bangladesh. By urbanization, there has been major
changes in our country.

Technology
A firms quick response to compete in the global market depends on the extent of
manufacturing technology adopted and its integration of this technology into business operations
(Mechling, et. al, 1995). Constant innovation and adoption of new technology becomes
an essential element for competitive advantage in the global market because firms can
maintain quick and flexible responses to market demand using the technologies (Cooper, 1996;
Mechling et al., 1995; zelik & Taymaz, 2004). While developing countries have
disadvantages in developing and exporting advanced technologies due to capital
intensiveness, adoption of the technologies can increase their manufacturing industries
performances (Kumar & Siddharthan, 1994). A firm may adopt or borrow technology
already in use within the industry (Gopalakrishnan & Damanpour, 1994).

There are two groups of technologies in the manufacturing industries (Wiarda, 1987):
Hardware technology and
Software technology.
Typically, the hardware technologies include: automated identification stations; automated
inspection stations; automated material handling devices; computer aided design work
stations; computerized numerical control machine tools; numerical control machine tools;
programmable production controllers; robots; and shop-floor control systems (Wiarda,
1987). Example of software technologies include: computer-aided manufacturing;
computer-aided
engineering;
statistical
process
control;
production
planning/inventory management software; engineering data management; computer
aided process planning; local area networks; and group technology (Wiarda, 1987).
Traditionally, high technology and R&D activities have been less prioritized in the
garment manufacturing industry. The industry runs on three basic operations: cutting, stitching,
and pressing/finishing. While the typical production is a combined process of various specialized
and/or general machines operated by manual/mechanical/electronic devices by skilled and
unskilled labor of diversified organizational production activities (Bhavani & Tendulkar, 2001).
However, in many instances, the production involves manual operations of machines and
materials of automated assembly. Since the material need proper feed through the
machines, automation is limited (Bailey, 1993). Therefore, the technology adoption in the
industry has primarily been mass-production focused, and technology development and
usages have been limited.
In recent days, however, the change in the market trends and fast fashion styles reduced demands
for mass production models. It has been reported that apparel executives believe that industry
competitiveness depends upon the ability to quickly respond to demand with a variety of
practices and better engineering practices (Bailey, 1993). Desired levels of production and
quality can be achieved by adoption of newer technologies and techniques. Apparel
makers strive to cope with ever-changing fashion styles by reducing the time it takes to design,
produce, and deliver the goods (Bailey, 1993). In this environment, technology to support
such needs emerged as an important source of competitiveness. Accordingly, the industry
began to place greater emphasis on advanced technologies to fulfill the extended demand for
production, speed, and quality requirements for the competitive export market. Recent
technology changes in clothing manufacturing include: development of robotics for automation
assembly line for garment making; high-speed sewing machines; new pressing and fusing
techniques; computer-aided design; computer-aided manufacturing; and computer- aided
marketing. These technologies can be used individually or in combination with other
technologies to achieve the desired economies.

The intensified global competition has pushed the firms to meet demands and standards quickly
and effectively. Flexibility, quality, inventory reduction, efficient production cycle, and shorter
lead time in manufacturing became essential for firms to achieve global competitiveness
(Mechling et al., 1995). The adoption of advanced technology is a way to improve these areas
and meet the export standards.
One expert referred to a study conducted by the Ministry of Commerce, Cambodia (2004) and
explained further that there are three levels of technology in the garments sector. The most
superior technology is termed as Level 3 Technology, which entails fully automated operations
wherever possible and advanced handling methods and equipment. Germany, Italy etc. are the
users of such technology. The next level is labeled as Level 2 Technology, which encapsulates
automated features on sewing machines (for quality consistency), engineered work places (for
smarter working) and designed handling methods (for efficiency of handling). Mexico,
Thailand, Turkey etc have the use of this type. The lowest level is identified as Level 1
Technology. This type indicates manual laying and cutting with basic sewing machines without
work aids (for quality consistency) or labor saving sewing features (for efficiency of handling).
This level of technology is to be found, for example, in Cambodia, Bangladesh, and Pakistan. A
study conducted by Gherzi Textil Organization presented by the Ministry of Commerce,
Cambodia (2004) showed labor productivity of some textile and garments producing countries
while setting the productivity of the garments and textile labor productivity of Germany, a user
of Level 3 Technology, at 100. The results of the study for the labors of woven garments of
Bangladesh and its competing countries are displayed below.
Level of Technology of Competing Woven Garment Supplier:

Germany

100

Italy

95

USA

90

Hong Kong

90

Portugal

85

Turkey

85

Mexico

75

China South
Thailand

75
65

South Korea

65

Brazil

60

Indonesia

50

India

40

Pakistan

30

Cambodia

25

Bangladesh

20

Another measure on the basis of installed capacity in woven garments for several countries
is given belowCountry

Shuttleless
Loom

Shuttle Loom

Total

Year

661300
5040
6800
22020
7900
141200
27600
12500
227000
5200
9500
130000
49500
1100
650

Level of
Technology*
(%)
12.54
92.66
26.47
94.46
40.51
8.36
63.41
12
11.89
76.92
26.32
40
29.29
9.09
23.08

China
Hong Kong
Korea
Taiwan
Bangladesh
India
Pakistan
Srilanka
Indonesia
Malaysia
Philippines
Thailand
Mexico
Costa Rica
Domican
Republic
El Salvador
Colombia
Egypt
Turkey

82900
4670
1800
20800
3200
11800
17500
1500
27000
4000
2500
52000
14500
100
150

578400
370
5000
1220
4700
129400
10100
11000
200000
1200
7000
78000
35000
1000
500

200
4000
2600
16000

3000
8500
8000
3000

3200
12500
10600
19000

6.25
32
24.53
84.21

2014
2014
2014
2014

2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014

Table - Percentage of shuttle less looms in the total numbers of looms.

E-Competency for woven sector of Bangladesh.

The use of information technology has been extensively increased over the last few years. Usage
of information technology and its associated tools within Bangladeshs woven sector is growing,
but from a very low base. Followings are the characteristics of IT usages of Bangladesh: e-mail
is extensively used as a communication tool. Several of the larger woven garments exporters
have introduced computer-based systems for book-keeping and accounting, inventory control,
payroll, production accounting and costing/pricing. A sizeable number of woven garments
enterprises have developed web-sites for marketing and promotional purposes A few woven
enterprises have installed computer design and manufacturing (CAD/CAM) systems. There is
wide use of computer-controlled embroidery machines; and several exporters are planning to
install a digital camera system to enable foreign buyers to monitor the status of orders.

Political environment
The key points about the political environment of the market destination countries of Bangladesh
are the following. The countries are democratic. As for EU market political risk is low as the
changes in rules and regulations do not occur suddenly. However, the US market poses a
significant risk as changes occur suddenly.

Dominant Economic Features

Market size and growth rate
Market size and growth rate are the two most leading economic features for any industry.
Especially in the woven garments sector market size and growth rate relate all the other features
in a very meaningful manner. These two important features are discussed below.

Market size
To understand the market size of the woven garments industry of Bangladesh, it is likely to have
a birds eye view earlier. So, first, the focus will be on the global scenario of the garments
industry. Second, the focus will be up on the garments industry of Bangladesh where woven
versus knit industry will be illustrated. Third, the focus will be wholly upon the woven industry
of Bangladesh.

Scope of competitive of rivalry

Competitive rivalry in an industry or sector concerns who the present and potential competitors
are, and how intensive the competition is between them. This competition may take place inside
the country or outside the country. So, the competitive rivalry must be viewed from international
and national perspectives.

International Competition
In the context of textile, a clothing export, international competitiveness had often been
evaluated by using such indicators as growth or capacity or export supply, employment,
infrastructure, economic power, political stability, government support, and clear strategy. These
indicators will be discussed in the following paragraphs. First, growth, as an indicator of
competitive rivalry, will be discussed. The following table shows the percentage growth of the
different countries garments industry.

Percentage Growth of Different Countries Garments Industry:

Country
China
EU

Percentage of World Garments Export

26.90%
8.20%

Turkey
India
Mexico
Bangladesh
Indonesia
USA

4.30%
3.00%
2.60%
2.30%
1.90%
1.80%

The Table above shows that Turkey, India, Mexico, Indonesia, and USA have lower than 5%
share in world garments export, where as Bangladesh has a share of 2.30%. So, the above
mentioned countries are competitors of Bangladesh in terms of growth.
Employment is another vital issue that plays crucial role in competitive rivalry. But as
Bangladesh is a developing country with high rate of unemployment, this factor is not crucial
here. On the other hand, in USA, the employment or the labor issue is the most critical issue that
creates rivalry among the US companies producing garments for export. Infrastructure and
economic power are the two major components of competitive rivalry. If two different countries
have same level of infrastructure, both physical and social, and also have same economic power,
which can be measured as GDP, the two countries will fight in the same market irrespective of
their market share and growth in the industry.

Domestic Competition
The picture of domestic competition was fully illustrated in the focused group discussion
conducted by the authors. In the discussion the following key points about the domestic
competition were identified.
Bangladesh, the established industries enjoy some extra benefits while conducting the business.
These benefits include mainly the different features.
Established companies do have very good relationship with the financial institutions and they get
loan when they need. Big companies can easily open an LC. Large companies can provide their
employees with some extra benefits and they can easily attract skilled workers in their
companies. As new days are coming up, new industries are also coming up. The following figure
illustrates the scenario. The most important thing that was discussed in the focused group was
that some of the politically biased companies in this industry get illegal benefits from the
governments and hence can compete in the market and enhance rivalry without having any kind
of competitive advantage over the other companies.

Buyer needs and requirements

According to the discussion organized by BGMEA, there are six major needs to be fulfilled by
the company to meet the need of the customers. These are:
Low price: Usually the customers like customers of all other sectors prefer low price and they
found that this is the only major component that determines sales.
Quality of the fiber content: The quality if the fiber is a very important issue for our country. In
the focused group, discussers also pronounced their avocation with these top level mangers.
Laundry Instructions: There are some other laundry instructions provided from the buyers. All
these instructions must be done properly or the company must lose its image and goodwill in the
market.
Country of origin: The country of origin matters significantly while going for new buyer. The
buyers usually do not come to this subcontinent, when the order is much more realistic and
meaningful.
Brand name: As, Bangladesh exports almost all the woven garments, the brand name is not a
very good concern.
Environmental Friendliness: Environmental friendliness is getting more and more important now
a days. The companies with an ISO certificate get preference in the world market.

Production capacity

The most important factor that contributed to the growth RMG specially is the competitive
advantage Bangladesh enjoys in garments production because of low labor cost and availability
of almost unlimited number of quickly trainable cheap labor. The domestic policies of the
government contributed to the rapid growth of the garments sector.
Bangladeshi suppliers need to increase factory productivity to uphold long-term competitiveness.
Experts estimate that an average factory in Bangladesh runs at 50%60% of its potential
productive capacity. This can be improved with process reengineering, investment in modern
technology and machinery, and labor skills development. Bangladesh currently equals or
outperforms India in flexibility with orders, quality, and price. But India surpasses Bangladesh in
innovation and design services, compliance with labor standards, consistency and reliability, and
delivery time. To improve in these areas, Bangladesh needs an adequate supply of skilled

managers and workers, and investments in textiles, the critical backward linkage industry for
woven garments. Regional cooperation among South Asian countries can play a pivotal role in
training managers, quality control and technical personnel, and designers. An average knitwear
firm in Bangladesh has 10% higher productivity than a woven firm and 17% more productive
than a sweater firm.

Pace of technological change

because of increasingly integrated world economies that are

necessitating further improvements in the competitiveness of the
economic organizations and partly due to its fast changing nature
that is shifting its own frontiers radically, technology per se has
moved centre stage