The apparel sector has always been an important industry in the economic thread of Bangladesh and practically all business houses in the country have a foothold in the sector that is the second largest exporter of apparel globally with a turnover of US$ 30 billion in 2020.
What is interesting is that now many of the bigger garment exporters have diversified into other industries that are fast coming up in Bangladesh like pharmaceuticals, real-estate, IT, power generation, healthcare, banking to name a few. Even the private airline sector has players from the garmenting industry with Novoair from Tusuka Group and Regent Airways owned by Habib Group The major groups that have diverse business interests in Bangladesh are names such as Square Group, DBL, Ha-Meem Group, Sinha Group, Standard Group, KDS Group, STS Group, Epyllion, Energypac, Jamuna Group, Tusuka Group and the numbers are growing. In fact, today all major industries in the country are led by former garment exporters!
Does that mean the apparel industry, which has always been the most dominant sector creating the biggest business houses in the country,is no longer the focus industry for the business community?
There is no doubt that the business houses built on the base of the garment industry have the financial clout to invest in new businesses, more so as the country graduates to being a developing nation, laying the stepping stone for greater opportunities in sectors that are just emerging within the country as customers’ needs and aspirations increase. Or is the increasing number of diversifications just a classic case of not risking all the eggs by keeping them in one basket especially as the apparel industry in the country stabilises with no longer huge opportunities for growth?
Among the earlier groups to diversify was the Mohammadi Group, which was started by late Anisul Huq, a pioneer of the apparel industry and a former president of BGMEA before taking up politics and becoming the Mayor of Dhaka North City Corporation.“It was in 1990s when discussions began pertaining to lifting quota system in Bangladesh for apparel exports. It was then that my father wondered what could be done as it would not be right to keep all the eggs in one basket. That’s when business diversification started through investing in the IT sector, followed by gradual investment in housing and power,” underlines Navidul Huq, who is currently the Managing Director of the Group.
Apart from apparel sector, power is one sector, which is the focus area for the Mohammadi Group, especially in renewable energy.“We have investment plans for renewable energy in the future… We want to do healthy business in the sectors we have already invested in,” says Navidul while adding Mohammadi Group considered investing in the power sector way back in 2007-08 when the country was facing severe power crisis.
It’s not that Bangladesh is self-sufficient in terms of power generation now and as per some estimates, the country will need around US $ 35 billion investment in power sector by 2041 to meet its energy goals, which makes this sector a much sought after one for those looking to diversify business.Energypac, which is known in the apparel industry for its structured suits, is also heavily investing in Energy one of their core business areas. “We are the pioneers in the Energy industry in Bangladesh and have a very wide and deep root in the industry, but garmenting is our passion,” says Humayun Rashid, Managing Director & CEO of Energypac Power Generation Ltd.
Many business houses see diversification as a way to mutated risks, as apparel exports becomes a very competitive industry. “Our diversification approach comes from the trading concept that helps build a balanced business,” maintains Abdullah Hil Rakib, the Managing Director of Team Group, which started its journey in 2009 with a lone garment factory only to diversify into businesses such as real-estate, retail, sourcing, pharmaceuticals even as the group operates the largest buying house in the country as well.“My business model is very simple. I train my employees and try to empower them. Once they are empowered, they take the lead in operating the businesses,” explains Abdullah Hil Rakib on how Team Group diversified into so many sectors with equal success.
Endorsing the viewpoint that diversification is a smart business strategy, the Vice Chairman of DBL Group MA Rahim Feroz says, “Businesses should be diversified to make them sustainable…Since the clothing business will not always be good, there is a need to keep a second option.” Popularly known as Dulal Brothers Limited, DBL Group is one of the largest garment exporters in Bangladesh, which traces its inception in 1991. DBL, which started with only 300 workers almost two decades ago, now has about 40,000 employees and recorded turnover of around US $ 600 million in the 2018-19 fiscal year having diversified into sectors including ceramic tiles, pharmaceuticals, dredging, semiconductor design, ICT, telecommunications, etc.
“The philosophy to start new business beyond apparels was to support other businesses if one faces any trouble,” says Kutubuddin Ahmed, Chairman of Envoy Group, explaining the group’s reasons of diversifying into other sectors.Starting its journey in 1984 -’80s was the formative of the Bangladesh garment industry — from a small factory, Envoy Group has expanded drastically over the years even as it boasts of 15 apparel manufacturing units today, which makes Envoy one of the largest apparel exporters in Bangladesh.
It has over the years diversified into energy and power sector, information technology, healthcare, banking, freight forwarding, etc.It may be mentioned here that Envoy Textiles Limited also owns the world’s first platinum certified denim textile mill.
“…we achieved a lot with apparels. But it is more stressful. And my father always wanted to be involved in business related to quality living. That is why he has focused on health, education and housing…,” maintains Saif Khondoker, Director of Shanta Holdings Ltd., explaining why Shanta Holdings Limited moved into other businesses.Starting with Shanta Garments in 1986, the group started diversifying in the late ’90s even as the head of the group, Khondoker Monir Uddin, has invested in housing, health and education sectors.
Shanta Holdings Ltd has already handed over 30 projects, with 25 more ongoing.Shanta Group further merged with Tropica Group and Sepal Group to form STS Group while subsequently Sepal Group also started its business with apparels, led by the current Commerce Minister Tipu Munshi.
Even as the trend of business diversification continues in Bangladesh unabated with latest reports suggesting there are at least 100 apparel makers who have expanded their business into other sectors, which is just not remarkable but unmatched as well, if one considers the other garment manufacturing entities within the sub-continent, not many of whom can boast of such a wide array of diversified business interests. The credit for the same to a large extent goes to the unparallel business acumen of the Bangladesh garment manufacturers, who are at once ingenious, farsighted and competent, ready to capture the opportunities that are in offer in other sectors in the days to come.
Another very important quality of the entrepreneurs which has aided successful diversification is the corporate structure of companies which allows each industry/ business venture to grow as independent profit centres by capable professionals while the owners play strategic roles in expanding business and exploring new areas for investment and diversification. Having seen all the rough and tumble in the realm of apparel manufacturing and exports to make Bangladesh the second-biggest apparel exporter globally, they are now primed to touch new heights in other businesses as well!
