Overview of Textile Industry

1.1
Country Profile
Official name : Peoples Republic of Bangladesh
Area : 144 000 sq km
Population : 150 million
Language : Bengali, English
Geographical Location: South Asia
Main Industries : Textiles, jute, Leather, Frozen
Foods, Agriculture, etc.
 Garments is the second needs of
human. Once man used leafs, barks
and animal skin to protect their body
from environment condition. It is
difficult to say the exact time of the
use of fabric for human clothing.
 1755, the first sewing machine
developed by Charles Fredric of
England but the stitch of that
machine was like hand stitch.
1851, commercially successful
sewing machine developed by Issac
Merit Singer.
1829, the first garments factory was
established at Paris with 80 sewing
m/c to produce uniform for military
forces.
 History of Apparel Industry in Bangladesh

There were only 9 export oriented garment

manufacturing industry in 1978, earned only 1
million dollar.
Some of them were very small, produced RMG for
local market as well.
Four such small and pioneer garments were Reaz
garments, Paris garments, Jewel garments and
Boishakhi garments.
Reaz garments established in 1960, as a small
tailoring outfit, named Reaz store in Dhaka.
Served only domestic market of its initial 15 years.
In 1973, it changed its name to Reaz Garments
Ltd and started to export by selling 10 000 pieces
of shirt to France, valued 13 million franc in
1978.That was the first direct export of apparel.
 History of Apparel Industry in
Bangladesh
Desh Garments Ltd., first joint venture in
Bangladesh, Technical and marketing
collaboration with S. korean Daewoo Corporation,
established in 1979.
First 100% export oriented company.
In 1980, Youngone (49%) and Trexim (51%
equity) formed a company named younone
Bangladesh exported first consignment of
padded and non padded jackets to sweden in dec
1980.
It had trained 120 operators including 3 women
in S. korea Went to the production in 1980.
History of Apparel Industry in Bangladesh

Till to the end of 1982, there were only 47

garment manufacturing units.
Break through occurred in 1984-85 when
numbers of garment factories increased to
587.
In 1999, there were 2900 garment factory in
the country.
Average growth rate of garment export is 22%.
Now, the numbers of garment manufacturing
units in Bangladesh is 5500.
 Textile Production
Mainly Two Sub-sector:
a. Woven:
Horizontally Integrated
75% woven fabric imported
Requires comparatively higher investment.

b. Knit:
Vertically Integrated
Almost self-reliant - 95% Collected
Locally.

Annual Increment of Consumption of fabric :

20%
Backward Linkage for Knit
 Value Addition & Net Retention

Year 1994 2000 2008

Value Addition 50% 70%
75%
Net Retention 40% 55%
61%
 Value Chain:
Michael Porter in 1985 introduced in his book
The Competitive Advantage: Creating and
sustaining Superior performance the concept of
the Value Chain.
Michael Porter suggested that the organization is
split into primary activities and support
activities.
Primary activities: Operation, Logistics,
marketing, Service,
Support Activities: Procurement, Technology
development, Human resource mgt,
Infrastructure.
 Value Chain: Knit
Almost complete value chain
Some of the factories fully vertically integrated : Spinning to
finished garment.
Competitive wage, Easily trainable workforce, Expanding supply
side capacity, government supporting policy helped to gain
competitive advantage.
Core strength is backward linkage.
95% knit fabric produced locally
Net export is higher than woven.
In FY 2006-07, Export share of knit and woven were 37.39% and
38.25% respectively.
Cumulative average growth of knitwear is 27%.
Advantages of Bangladeshi Knitwear:
Self sufficient 95% fabric and accessories collected
Locally.
Integrated
Good capacity exists
Unbeatable in price
Cheap labor with high stitching capability
Good reputation of Bangladeshi Knit apparels all over the world.
 Value Chain : Woven
Only a few weaving factories that offer
quality product.
So, majority of fabrics has to be imported
higher purchasing cost, dependency on
external supplier, pricing disadvantages,
No GSP facilities for imported fabrics.
Can meet only 25% of fabric demand.
More than 220 modern weaving mill need
to be set up, each with an annual
capacity of 10 million yards.
Annual Consumption of fabric: 3 billion
yards.
Consumption Increasing @ 20% per year
 Backward Linkage
To produce garment we need fabrics and
accessories. To produce fabric we need
yarns and fabrics. To finish the fabric we
need dyeing. Printing and finishing mill.
If we want to increase the retention
money we must have to increase
backward linkage industry, like export
oriented spinning mill, weaving mill,
knitting, dyeing, printing and finishing
mills. Side by side we have to increase
high quality cotton fiber cultivation.
Without it, we have to develop
communication system. So all these
process related before making garments
is backward linkage.
 SWOT Analysis
Strength:
Competitive price advantage due to
cheap labor and Governmental
Assistance
Skilled Human Resource
Duty and Quota free access and GSP in
EU
Integrated Supply Chain, Specially in
Knitwear
International Image of a reliable
supplier of basic Products.
 SWOT Analysis
Weakness
Weak Structure, in particular production
efficiency, product development,
marketing skill, customer service,
controlling, planning, management skill,
technical know how
Producing mainly low cost basic
products,
Heavily depend on others for outsourcing
raw material, low value addition
Poor image of adapting international
and Corporate social standards
Political, Social and worker unrest.
 SWOT Analysis
Opportunities:
Potential for higher value addition by
developing backward linkage.
Reduce lead time by developing
infrastructure of transportation, faster
custom clearance, strong backward linkage
Improved image by adapting environmental
and social standards
Diversifying apparel product; switching from
basic product to fashionable product.
May get preferential access in USA and
Canadian market in near future.
 SWOT Analysis
Threats:
Risk of loosing competitive advantages-
development steps required.
Poor political and investment climate
leading declined interest of importers
Poor capital formation
Totally depend on others for raw materials
as Bangladesh produce neither natural fiber
nor MMF.
Increased international competition
Woven sector requires huge investment
Single market concentration.
 Distribution Structure
Direct Contact: Contact Directly to the
apparel producers regarding price,
samples, delivery schedule etc more
dependency on manufactures regarding
quality.
Production Agencies/Buying house: Take
care of product development, purchase
of fabrics and accessories, follow up
production, conducting inspection,
scheduling shipment date etc.
Satellite office: Has own QC dept. and
other staffs to conduct the operations.
 BIG ADVANTAGE

Low wages The success of the Bangladeshi

apparel industry is mainly attributed to its low
production costs, in particular its cheap labour.
The average monthly wage for a garment
factory worker is about $43, whereas in China
it's more than a $100.
"The closest to the Bangladeshi wage is in
Cambodia, where garment workers get around
$61 per month.
"That's almost 50% more than the Bangladeshi
wages. So, the labour advantage for
Bangladesh is quite huge."
 Average Hourly Wages (including Fringe Benefits)
in RMG Industry
COUNTRY HOURLY WAGE(US$)
SINGAPORE 3.56
MEXICO 2.40
MALAYSIA 1.20
THAILAND 1.04
PHILLIPINES 0.78
INDIA 0.56
PAKISTAN 0.49
INDONESIA 0.43
VIETNAM 0.40
SRILANKA 0.39
CHINA 0.40
BANGLADESH 0.23
Western brands such as H&M, Wall Mart, Gap
and Next buy their clothes from Bangladesh