A unique RMG factory: When small is beautiful
Cute Dress Industries Ltd, a high-value knitwear manufacturer, located at Dhamrai, is blazing its own trail dealing exclusively with smaller orders while also charting a pathway for western startups to establish their own brand
When every garment factory around the world is eagerly waiting to do business with big brands, a Bangladeshi factory has opted for the opposite.
Cute Dress Industries Ltd, a high-value knitwear manufacturer, located at Dhamrai, is blazing its own trail dealing exclusively with smaller orders while also charting a pathway for western startups to establish their own brand.
The factory is a LEED (Leadership in Energy and Environment Design) certified one in the Platinum category under the US Green Building Council (USGBC).
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Talking to The Business Standard, its Managing Director Sheikh HM Mustafiz said, "No entrepreneur in Bangladesh can say they have the capacity to take an order of a minimum 500 pieces for a startup company. We proudly declare that only we have the capacity to also only do five pieces for a brand.
"We have been providing this service to European and American startups since the beginning of our journey," he said, adding that his burgeoning reputation now meant entrepreneurs were now reaching out to him.
Cute Dress Industries Ltd, which employs 600 people, currently has about $5million in apparel exports. According to Mustafiz, a large factory would have to produce at least $20million in order for a profit margin as he has currently.
In 2008, when the factory employed a mere 90 people, its export earnings were $0.8million.
"At the start, I searched for new buyers every day, but now the situation is totally different. Buyers are knocking me," he said.
Mustafiz said he travels to different countries four months a year to meet buyers, and attend fairs and conferences.
For him, patience is key. "I don't receive orders at every meeting; sometimes I get one a year later.
"Before travelling, I set up meetings with current buyers and do some networking. I inform prospective clients of my capacity. I even try to meet buyers with whom I did business decades ago," he said.
The factory owner said he is currently working with 40 brands which had not dealt with Bangladeshi companies before, adding only three of those have liaison offices in Bangladesh.
Further explaining, he said, "Of them 10 are new, which I helped develop as I started business with them taking orders of 50 pieces. Now, they have the capacity to order 500 pieces at a time."
Currently, Cute Dress has businesses with Denmark, the USA, Sweden, Japan, Germany, Canada, Norway and Australian buyers.
Seeing an opportunity where others didn't, he said he has a business worth $1.2 million with his oldest client. "It started 18 years ago with 3,000 pieces. He is presently my biggest buyer.
He also said he did not do business with buyers, but dealt exclusively with brands.
Charting the uncharted
Sheikh HM Mustafiz, in a few words, credits his success to his nuance for going where others have not gone before.
"It is my business strategy to explore untapped markets. Everyone wants to do business with large brands like H&M as it will give them an order of 1 lakh pieces at a time," he said.
But he pointed out that working with large brands yields a minimum profit range as their pricing is at its lowest, while small brands offer higher margins. "The price is the same whether someone orders 300 pieces or 500 pieces. They pay for the full line," he said.
Citing another advantage, he said most of his buyers paid up to 50% in advance, while other factories would only get their payment after shipment.
"I wanted to give a scope for startups to grow. I do not have the capacity to do business with big brands who order in bulk," Mustafiz said.
"Bangladesh has about 200 factories who deal with big brands and to compete they lower their prices to get orders. I know my strength, that's why I'm not in such a competition; my target group is small-scale businesses."
He also said that the RMG industry was littered with examples of how risky a factory's dependency on large buyers was, as if the contract was suspended then the factory could be ruined.
Speaking of his factory, he mentioned that its efficiency was higher as its production lines were smaller.
Generally, Bangladeshi garment factories have 40 to 50 machines in a sewing line. Cute Dress only has 4-16 machines, with a single operator running three to four machines.
The factory also has a large number of multi-process operators and owing to their skills Mustafiz plans to convert at least 50% of his lines to single operator ones by 2021, another advantage of receiving smaller orders.
Mustafiz, a former director of the Bangladesh Knitwear Manufacturers and Exporters Association, highlighted the importance of research and development in Bangladesh. "I spent $20-25lakh on research and development of new fabrics," he said.
"I have a passion to develop new fabrics, which is my strength. We are developing new fabrics every year," he said, giving an example of another competitive advantage his company had.
Sustainability above all
Despite having Accord certifications, Mustafiz feels his selling point isn't that but rather sustainability.
Mustafiz said, "After 2030, we will produce sustainable premium brands, which is why we are now trying to educate our buyers on sustainability and having a roadmap which aligns with the UN Sustainable Development Goals."
In this pursuit, Cute Dress also became one of the first Bangladeshi garment factories to publish a sustainability report.
The report focused on people, planet and profit as the main parameters of sustainability.
"As I claim to be a responsible entrepreneur, the sustainability report documents my factory's efficiency, carbon emissions, wastage, its workers and environment-friendly activities."
But sustainability isn't just an environmental concern at Cute Dress, with Mustafiz also focusing on a "Happy business model". The factory also has agronomic furniture and up to Tk25,000 annual health insurance, which can be availed with a contribution of Tk150.
The factory also has an inclusive recruitment policy, providing work to persons with disabilities and the elderly.
