Innovation, sustainability, and technology will be the keys to progress
Let us start with some good news, as we look ahead to the coming year. The most recent figures available show that ready-made garment exports soared from Bangladesh in the six months to December 2018, seeing a 15.6% increase over the corresponding period to December 2017. Export earnings increased to $17.08 billion over the six-month period, compared to $14.7bn for the six-month period to December 2017.
These positive figures might have come as a surprise to some, as exports from Bangladesh struggled earlier in the year. What they illustrate, however, is that there is now an in-built resilience within the Bangladesh economy which allows it to weather storms - and there have been plenty of those
in the past 18 months.
The country has established itself as the second largest apparel export hub in the world in the apparel sector, despite what the detractors of Bangladesh might say. In fact, it has arguably become the default go-to destination for many of the world’s leading fast fashion brands when they consider their “China plus one” strategy. Could “China plus one” become “Bangladesh plus one” in the future? In theory, yes, but there are still many challenges - which could also be viewed as huge opportunities - to address.
Perhaps, the most notable challenge right now is uncertainty created by the “will they won’t they” situation with regards to the future of the Bangladesh Accord. A decision on the future continuation of the Bangladesh Accord was recently delayed - for a sixth time - to February 18. This issue has been discussed in-depth so will not be dwelt on here.
Apart from that, through a business perspective, all we want is a certainty. It is not for me to say whether the accord leaving is good or bad, but like many business owners, I want some certainty and clarity on this issue. So let us hope that those involved in negotiations reach an agreement as soon as possible, so business owners can begin to plan accordingly.
Another challenge is finance and investment. International apparel brands are in a price war like never before right now, and this has major impacts on supply chains. Brands and retailers will always drive a hard bargain on price - they have little choice. Expect this situation to become more pronounced in 2019, as some brands - who are in financial difficulties perhaps - unilaterally alter their trading terms and conditions.
RMG factory owners in Bangladesh are price-takers and, as such, have little bargaining power in situations such as this. The challenge for all owners is to continue to innovate, diversify, and future-proof as much as is possible - only the fittest will survive in 2019, and beyond. Those that do survive, however, will reap huge rewards.
Of all the textile and garment manufacturing hubs, it is Bangladesh which has become a lightning rod when it comes to issues around the welfare of workers, low wages, and other CSR issues in apparel supply chains. It is an unfortunate fact of life that bad news sells, and that international news agencies tend to focus on such negativity instead of other stories - such as that Bangladesh is now the safest garment exporting country in the world; and that the reason why wages are low in many cases is because the end price of clothing is so low which means that margins for factories from brands are very low.
Nevertheless, despite the negative publicity, the Bangladesh business community has a wonderful, compelling story to tell. It is up to business owners and industry leaders to tell it. This is a challenge they can begin to address in 2019.
There are many more challenges which could be mentioned here, but let us focus on just one: sustainability. The RMG industry is the engine room of the Bangladesh economy, creating millions of jobs, and continuing to transform lives and improve living standards.
But this is, at times, also polluting industry (and this is, of course, also the case with all other textile hubs globally). So, sustainability is one area which should always be high up the priority list. Yes, this is a challenge but it is also a huge opportunity. For businesses in Bangladesh, this means implementing technology that can provide for cleaner production, more efficient use of water and energy, better effluent treatment facilities and all manner of other investments. Of course,
all of this requires money, and in some cases, significant capital outlay in the short term.
Western brands want and demand to know how sustainable their suppliers are, and one day soon, being a clean, efficient operation will be a pre-requisite to doing business with apparel brands. Investment in this area, then, is a way to benefit the planet, as well as, ensuring the longevity of a business. The pleasant fact is Bangladesh has already taken a lead in the sustainable apparel business. The presence of 82 United States Green Building Council (USGBC) certified LEED garment factories in the country is telltale evidence of the fact.
Strive to move up to high-end products through R&D and development of skills should be the priority for the industry not only in this year but also for some more years to come. Indubitably innovation, sustainability and technology will be keys for the progress of Bangladesh apparel industry. The industry being at a crossroads now, 2019 is a very important year to strengthen our footings in these areas in pursuit of an impressive future.
Mostafiz Uddin is the Managing Director of Denim Expert Limited. He is also the Founder and CEO of Bangladesh Denim Expo and Bangladesh Apparel Exchange (BAE). He can be reached at [email protected]