Bangladesh should play off its already known strengths in the garment industry and attempt to capture more of the value in the entire chain by developing brands which are sold directly to a more affluent segment of global consumers.
So we’re told in a report in this newspaper and the idea seems just fine as a general ambition.
The devil, as ever in such plans, is in the detail. Brands are, for example, difficult things to create and expensive too – there are long lists of western designers who have tried and then spiralled into bankruptcy as they failed.
The biggest difficulty perhaps being that a brand isn’t something created so much as something emergent.
In the US the two big long running brands of soup are Heinz and Campbells; both started out in the 19th century, at a time when the new technology of canning wasn’t entirely understood.
There were a number of distressing incidents involving people dying due to badly canned foods: An entire British expedition to the Arctic died because of such failures and we still get the occasional case of botulism poisoning today from other manufacturers.
I exaggerate, of course, but not by much, when I say that the initial success of Heinz and Campbell’s comes down to their poisoning fewer consumers and this becoming known. Almost to the point that people would note they’d been eating the brand for a month, no one at the table was dead, why not keep using this brand?
The validity, the worth, of the brand comes from the worth of that solution, people associating the value added of the solution with the name of the brand. That is, a brand is emergent from the activity, not something created in and of itself
In fact, if we go back one step further to the mid 19th century in Britain this really was when brands started and how.
The newly massive urban populations, along with a better understanding of chemistry, had meant both a demand for and availability of processed foods that came from far away farms, and also the ability to adulterate it in interesting ways.
Those who determined to produce unadulterated food gained a reputation and thereby established their brands. So much so that food adulteration was pretty much beaten before the first major laws against it were enacted in the 1870s.
Food is different from clothing of course but the basic underlying lesson still holds. A brand is emergent from solving some other problem, not quite something established just by stating “Look! I’m a brand!”
Food that doesn’t kill the eater is solving quite a problem.
Zara, many of whose products are now made in Bangladesh, really worked initially by not running clothing in a “season.” Instead of four sets of clothes a year there was a constant stream of designs through the shops. Perhaps not a huge change but it was enough to start that process of brand creation.
Thus, if a brand is to be created, the question becomes, well, what is it that is going to be different?
It would be entirely possible to say: “Look, you’re buying direct, we pay the workers more,” and have some people buy your stuff purely because of that. Fairtrade works very much along these lines and that does gain some small portion of the market.
That’s not, quite, the way to the bulk market though and that’s the problem that needs to be solved.
What is it that will be different so as to create a brand? No, I’m not an expert in the industry itself so I’m going to be of no use as to divining that “what,” but I can point out that there must be a “what” in there somewhere.
One idea can be drawn from the general structure of the European industry today. Much of the Inditex etc stock is produced in Bangladesh, some smaller fraction of it in Northern Portugal and Spain. What happens is that the major orders are placed with you, then those items which sell out are produced quickly, at greater expense, closer to the marketplace. If production turnaround times could be reduced, shipping times improved, then some more of that Iberian production could be captured in Bangladesh.
Something I was laughed at for asking at a BGMEA meet was about t-shirts. There is a thriving business in taking Bangladesh-produced shirts and optimising them for certain groups. Screen printing them, embroidering them perhaps, with a club badge, or “Tommy’s Stag Trip,” or Vote Jeremy and the like.
The shirts are made in their thousands in Bangladesh, then small production runs, perhaps a dozen, perhaps a score, produced for each group. That local optimisation is done locally to the buyers for no producer in Bangladesh would ever dream of handling an order so small.
Well, perhaps that would be one way to create a brand. Solve those logistical problems which prevent a quick turnaround and the creation of small runs of optimised products.
It’s equally possible that the BGMEA people were right to laugh at my naiveté. That’s not really my point though. Rather, a brand is created by solving some problem.
The validity, the worth, of the brand comes from the worth of that solution, people associating the value added of the solution with the name of the brand. That is, a brand is emergent from the activity, not something created in and of itself.
It’s entirely true that creating brands which operate directly from Bangladesh will increase the amount of the value in the garment trade operating chain which is captured by Bangladeshis. But the creation of the brand itself is through solving some problem that others have not as yet.
When food kills people, making food that doesn’t kill seems like a pretty good method of brand establishment. But with clothing, finding that problem to solve might be a little more difficult.
Then again, it is still true that the next successful brands will be those that solve some problem that no one else is solving at present. The value of the brand, and thus the margins that can be charged for it, will depend upon the value to consumers of that problem being solved.
Hopefully, one or some of you will manage to do it.
Tim Worstall is a Senior Fellow at the Adam Smith Institute in London.