Bangladesh RMG needs corporate management for diversification

by Apparel Resources

30-July-2018  |  10 mins read

corporate management
Image Courtesy: ahooraltd.com

Bangladesh’s apparel makers and exporters understand that within product diversification lies the key to sustainability and market expansion. And, with the industry growing every day, and factories getting bigger, some fundamental structural limitations are still hindering a congenial overhaul in the industry.

It is not that apparel makers are not already engaged in practice of product diversification, but they are still bound within the minimum stride of product modification in most cases, and are not concentrating enough on product innovation, where the industry is getting beaten by competition.

And also, the country is taking great strides into process innovation, building forward linkage and, encouraging skill capacity of its workers. But, a major shortcoming is the factory management system itself – the lacking of a corporate culture that would divest the old forms of management system and introduce collaborative leadership, integrate the long and short-term strategies, invest in research and product innovation, to take the apparel industry forward.

There are variants, but overall, the internal management system of the growing factories in Bangladesh reflect a mixed and hazy outlook. But, in a holistic overview, there have been some advances in both the woven sector, under Bangladesh Garment Manufacturers and Exporters’ Association (BGMEA), and the knitwear division, under Bangladesh Knitwear Manufacturers and Exporters’ Association (BKMEA).

GREATEST SHORTCOMING

Export statistics show, Bangladesh is gradually losing its competitiveness in global apparel export to newcomers Vietnam and India. In case of the United States, Bangladesh’s single biggest export market, the number for Bangladesh has come down while that of Vietnam and India have gone up.

Former President of Bangladesh Knitwear Manufacturers and Exporters’ Association (BKMEA), Fazlul Hoque says Vietnam’s secret lies within its innovative product designs. He added, India too is boosting its apparel industry with government incentives.

Bangladesh Knitwear Manufacturers and Exporters’ Association’s (BKMEA) Second Vice President Fazlee Shamim Ehsan tells Apparel Resources that product innovation is where Bangladesh lacks its strength. The manufacturers are regularly modifying their products from time to time.

“Our manufacturers are regularly tweaking the products from time to time – they add a pocket, or make a different combination of colors and patterns to make what they call a new design. It is required from all if they want to keep up with the buyers’ satisfaction of product variety,” he said.

Apparel Resources finds that towards product innovation, one major limitation of Bangladesh’s industry is that it is majorly reliant on natural fibre – primarily cotton. It is yet to tap into the vast and flourishing world of man-made fibers made from polymer – such as polyester, acrylic, and synthetic polymer. However, some factories are planning to invest in polymer fabric now.

Though there are no concrete statistics as to how much does cotton fibre occupy Bangladesh’s apparel production, Bangladesh Garment Manufacturers and Exporters’ Association (BGMEA) Vice President Mahmud Hassan Khan tells Apparel Resources that it is somewhere around 80 per cent.

“Buyers are under the impression that Bangladesh is a source of natural-fibre clothing. They come to buy from Bangladesh because it produces natural fibre-made clothing,” he says in defense to why the country has not moved towards more prolific manufacturing by international standard.

This is where BKMEA Vice President Fazlee Shamim, also the proprietor of Fatullah Apparels, wants to differ, “For this limitation, Bangladesh is behind in manufacturing sportswear, swimwear, and tracksuits. We don’t have the industry tapping into polymer clothing and reaping the benefit of an increased market share.”

WHAT IS BEING DONE

Though, there is no concrete move towards a major shift in fibre use, Bangladesh has understood that barely modifying the product is not a sustainable solution for the growth. It will not come of use to increase market and attract more customers worldwide. It is the innovation of new products and product designs that hold the key towards growth.

Centre of Excellence for Bangladesh’s Apparel Industry (CEBAI), a specialised collective platform consisting of industry stakeholders, manufacturers and exporters working for about a year now, is working on research and development (R&D) into the apparel industry to come out with product and process innovation in the supply chain.

Atiqul Islam, President of CEBAI and former President of BGMEA, has been constantly pushing for more integrated research and design for the betterment of Bangladesh’s apparel industry. He says, Bangladesh is lacking in forward linkage – a factor he has identified as a major curbing factor at the present-day situation of the country’s apparel industry.

BGMEA President Siddiqur Rahman has lauded the initiative of such a dedicated research organisation for the apparel industry. He has asserted that BGMEA will extend its support towards CEBAI in its work towards increasing the capacity, efficiency, and skill of the garments industry.

Also, there has been much thought on bringing in young leadership into the business. Apparel leaders are speaking repeatedly of including wooing the young generation and incorporating fresh blood in the industry. They say, it is out of the need to give the apparel industry a new direction.

THE ‘FAULT’ IN MANAGEMENT

However, as much as there are developments and a number of initiatives taking place towards bringing product diversification, one structural limitation within the apparel industry is still proving to be a real obstacle – the internal management system that is in play.

Apparel Resources has learned that the bigger groups driving the bulk export in the woven group are already on the way to incorporate corporate style management, however, there is a big room for improvement in the sectors of collaborative leadership and corporate culture. The knitwear group, on the other hand, which has undergone majority of the automation and machinery advancement in the recent years, is more bent towards old-school management systems.

“The entrepreneurs in our (Bangladesh) apparel industry practice traditional form of leadership,” BKMEA second Vice President Fazlee Shameem says. “They are not accustomed to corporate management system, which is much needed to overhaul the industry and drive it towards sustainability and profitability. In one word, the management we have in our industries is not compatible, it needs to change.”

He, however, thinks that the change will come gradually over time – overcoming the general resistance towards change. “It will take time, but I believe it will change gradually, because it will be the demand of the coming times.”

Prof. Shibli Rubayat Ul Islam, a professor at University of Dhaka, Department of Banking & Insurance, and a director at CEBAI, told Apparel Resources that most of the bigger groups – who rack up the majority of export volume – are already moving towards corporate management.

“There’re about 200 factories belonging to the woven group who are already moving towards corporate management. They have to. Their size demands the need of such management practices. The others are not yet self-sustaining. So, it won’t be possible for them to switch to corporate management immediately,” he says.

A recent discussion on ‘Driving Transformation in Bangladesh’s Apparel Industry’, held on July 25 in Chittagong and hosted by the PwC Bangladesh, also underlined that Bangladesh needs to adopt efficient management practices to improve productivity and efficiency to increase its global competitiveness.

Whatever steps Bangladesh’s apparel industry takes toward diversification, it would require strategic planning, market planning, and adequate research into product design and innovation – which will not be possible without proper implementation of corporate management.

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