Innovation necessary for sustainable growth of Bangladesh's RMG industry
By innovating and adding value, the factories need to diversify their product offerings, shifting to man-made fiber products as well as newer products such as jackets, outwear, lingerie, suits etc, which are still uncommon on our production floors.
Vietnam overtaking Bangladesh as the world's second largest apparel exporting country has shocked and surprised many of us.
One of the main reasons Vietnam, despite having half the number of apparel factories and workers as us, has seen growth in apparel exports even during the pandemic, is innovation.
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Vietnam's apparel product basket is much more diverse than ours, and the country has also demonstrated its mettle in the use of technologies in the apparel production process.
Vietnam's share in global readymade garments (RMG) exports reached 6.40 percent in 2020, which was 6.20 percent in 2019. Conversely, Bangladesh's share in the global RMG market plummeted to 6.30 percent which was 6.80 percent in 2019.
It is worth noting that ten years ago, in 2010, Bangladesh's share of the global clothing market was 4.20 percent, while Vietnam's share of the global market was only 2.90 percent.
Even though Bangladesh's apparel export volume from January to June of this year exceeded Vietnam's (according to the Export Promotion Bureau (EPB) of Bangladesh), there is no alternative to innovation for a sustainable growth of our RMG industry. By innovation I mean products as well as process innovation.
Bangladesh's apparel exports remain concentrated in the top five products. Trousers, T-shirts, men's shirts, women's shirts, and sweaters, mostly made of cotton, account for roughly 73 percent of Bangladesh's total apparel export.
Though the global market scenario has changed, Bangladesh's concentration in manufacturing cotton-based clothing remained the same.
Previously, in the global market, the market share of cotton fiber products was 75% and the market share for man-made fiber products was 25%. But, the global market share for cotton fiber products is at present only 25%, whereas the market share for man-made fiber products is 75%.
As a result, Bangladesh has a lot of room to grow and explore, in the field of man-made fiber products. Bangladesh's shift to more high value man-made fiber products will also boost margins for the exporters.
So, by innovating and adding value, the factories need to diversify their product offerings, shifting to man-made fiber products as well as newer products such as jackets, outwear, lingerie, suits etc, which are still uncommon on our production floors.
For process innovation factories need to focus on installing technologies and adopting practices that increase efficiency but decrease dependency on people.
To elaborate, many of our apparel factories are still overly reliant on a few individuals, similar to how we are overly reliant on cotton in the case of products.
We've all heard stories about super successful factories failing after the transfer or resignation of an Executive Director or General Manager (GM). Despite a particular factory having grown over time, the shift from people to process did not happen.
So, in addition to going for value-added products, another obvious concept to support the sustainable growth of Bangladesh's apparel industry is to shift from people-centric to process-centric.
The good news is Bangladesh Garment Manufacturers & Exporters Association (BGMEA) is going to open a Centre for Innovation, Efficiency and OSH (CIEOSH).
The objective of establishing the first of its kind innovation center in Bangladesh is to bridge the knowledge gap in the industry connecting stakeholders as critical partners of the knowledge hub and driving innovation in product and process of Bangladesh apparel industry.
We hope that by shifting our product basket from basics to high-end, the center will be able to significantly assist Bangladesh's apparel industry in moving to the next level. The innovation center is expected to be launched at the newly-built BGMEA building at Uttara in December this year.
With over 40 years of experience, Bangladesh's apparel industry has established a strong foothold. We have an experienced workforce, a strong backward linkage, and resilient entrepreneurs who have contributed to the growth of this approximately USD 31 billion industry, by swimming against the tides and overcoming numerous challenges.
However, with the nation preparing for elevation from the Least Developed Country (LDC) status, it's not a time for us to rest on our laurels. Now is the time to think about what steps need to be taken to ensure the long-term growth and success of our beloved RMG industry.
Abdullah Hil Rakib is the Managing Director of Team Group and a Director of Bangladesh Garment Manufacturers & Exporters Association (BGMEA). He is also the current Director-in-Charge of Research Development and Trade Information (RDTI) Cell of BGMEA.
