Prospects and challenges of ready-made garments sector of Bangladesh and role of cf agents and...

Prospects and Challenges of RMG Sector of Bangladesh and Roles

of C&F Agents and Buying House

Specified Cluster/Situation of the factories

Dhaka Region (Savar, Asulia, GajiPur)Narayanganj Region

Chittagong Region

1

Bangladesh RMG

DFQF facility

From 49 Countries

4.2 m Worker

75% Women Workers

2nd Position in Knitwear just behind China3rd position

in Woven following China and Italy

Plummy Fashion

1st LEED Platinum Knit Factory in the

world.Vintage Denim

1st LEED Platinum

Denim factory in the

world

Almost 82% of Total National Export

Current Scenario of Bangladesh RMG

3700 Active FactoriesBKMEA

& BGMEA sole trade Body

total export Jul-Feb

18.12b with target 27.37 b (last FY $25.49b )

USGBC registered 156& Certified

28

Continued….

2

Bangladesh works for3

Prospects of RMG

4

Employment Generation: RMG

2004-05

2006-07

2008-09

2010-11

2012-13

2014-15

00.5

11.5

22.5

33.5

44.5

2.122.4

3.53.63

3.99 4.2

Continued….

5

Bangladesh has great opportunity to catch the market share of Chinese RMG in world (420 billion USD without China) as well as domestic market of China (About 300 billion USD) as China is going to divert from RMG production

The growth of Knitwear export in China is 42% where overall export growth is 9.2%

Continued….

6

Improving Standard of Living

Earning income for their family

Having treatment for own and family members

Ensured Food Security

Education to their Children

Continued….

7

Substantially Decreasing Social Cost e.g. crime,

violence, moral decadents, wastage of potential labor force

Continued….

8

EU and other Importers are willing to move

from China to Bangladesh to establish big enterprises

Continued….

9

The geographic location of Bangladesh

is ideal for global trade, with very convenient access to International seaports and air routes

3 Sea

Ports1. Chittagong2. Mongla3. Payra

3 Internationa

l Airport22

Land

PortsContinued….

10

Pangaon River port Komlapur

ICD

Trained, enthusiastic,

hardworking and low-cost (even by regional standards) labor force suitable

for any labor-intensive Industry

Continued….

11

Bangladesh is producing & may expand the export of High Value Added Products through product diversification.

Continued….

12

Implication of Dhaka-Chittagong 4 lane Highway will be helpful to reduce the transportation lead time

13

Challenges:14

Confrontational Politics(Reoccurrence of political unrest will hamper the export

earnings badly)

Export EarningContinued….

15

Lack of marketing Tactics and

Negotiation & Bargaining skills regarding price setting

Continued….

16

Somewhat long lead-time of Export or Import

Continued….

17

Banking Assistance• Interest rate for the foreign Investor is just

3%• Interest rate for the Domestic Investor is more than

10%

These types of sick competition for different financial aspects are really a challenge in the development of

RMG

Shortage of uninterrupted Power & quality Utility services

18

Skilled Workers to produce High Value Added Products of Ready Made

Garments

Continued….

19

Some countries in Africa have had zero-tariff facility under AGOA act (Agreement on Agriculture) which helps them to compete

with Bangladesh RMG sector

Continued….

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Lack of development of Backward Linkage of RMG

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Role of Clearance & Forwarding (C&F)

Agent

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Clearance & Forwarding Agent

An entity /company responsible for undertaking export/import cargo arrangements on clients/shippers behalf at a seaport, airport and so on. At seaport it would include collection of freight; collection and issuing bills of lading; notification of arrival and loading of goods; customs, import & export documentation; certificates of shipment; arranging sorting of cargo, cold storage, warehousing, transport to destination including near continent; cargo or damage surveys.Routine tasks e.g. loading, unloading, customs brokerage, storage, local transport services

Continued….

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The position where a Clearing & Forwarding agent perform

Continued….

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Shipping documents ask by C&F Agent

Sea:Standard Shipping Order Mate’s Receipt Bill of Lading Shipper’s Declaration of Dangerous Goods Stowage Plan and Stowage Order Certificate of OriginCharter Party

Air:Shipper’s Declaration of Dangerous Goods Cargo ManifestCommercial InvoiceCargo Arrival NoticeAirway Bill

Continued….

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The role of C&F agent for further development of RMG sector

Continued….

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• Lead time depends on C&F Agent performance• Coordination between Import C&F Agent and

Export C&F Agent• Execute minimum import lead time to facilitate

in export lead time• C&F agent can facilitate in the steps taken

Bangladesh :-National Single Window-ACYCUDA-Custom Modernization

Continued….

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Role of Buying House

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A buying house is a media between buyer and

manufacturer. It can be a buying agency or a buying

office. 

Continued….

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Normally a buying house has to do the following functions

• Order collection from the buyer

• Finding fittest and complaint suppliers (local factory) to complete the order,

• Order processing from local factories,

• Making product development samples for buyers,

• Contacting with buyers for necessary approvals,

• Forwarding all the comments and approvals to the factories,

• Follow-up order processing according to buyers demand,

• Maintain desired product quality from sample to production,

• Should follow inspection terms and conditions according to buyers demand,

• Shipping the goods.

Continued….

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Flow Chart of Buying HouseContact with the Buyer 

↓ Communicate 

↓ Meeting 

↓ Send L/C to the Garment 

↓ Develop the product 

↓ Inspection by Buying House 

↓ Complete working paper or document for shipping 

↓           Send one copy to the bank ↔ Attach one copy with the

product ↓ 

Shipment Continued….

31

Organogram of a Buying house

Managing Director

1 •Marketing Merchandiser

2 •Development Merchandiser

3 •Production Merchandiser

Marketing & Merchandising Manager

Technical and Quality Control Manager

Lab In-charge

1• Quality

Controllers

1 • Technologist

Continued….

32

70%

6%

8%

16%

Fabrics Accessories Printing and EmbroideryCost of Making (CM)

Continued….

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**Profit ,Commission Overseas and Some other issues are included in CM

Costing framewor

k

Different sample required to execute an order

Fit Sample Salesman samplePhoto sampleApproval sample Pre-production sample

Production/Gold seal sample

Shipping sampleContinued….

34

Various Lab-tests ask by buying house:

• Fabric test Base test

• Weight (GSM) • Composition • Dimensional stability (wash & dry clean) • Spiraled test (for knitted fabric) • Stretch recovery • Bursting strength (knitted fabric) • Tensile strength (Woven fabric) • Pilling resistance • Surface flash (Brush) • Seam performance (Woven) • Stretch properties (elasticity)

Bulk test • Color fastness to light • Color fastness to wash • Color fastness to water • Color fastness to rubbing • Color fastness to chlorinated water • Color fastness to sweating etc.

• Garment tests: Dimensional stability Print durability Abrasion resistance

• Trims tests Button: Pull test Bow: Pull test Metal: Nickel test Elastic: Latex test etc.

Continued….

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Buying House should do for further development of RMG

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Ethical roles of buying house to get export order

Buying house depends on exporter: If there is no RMG exporter they have no role to perform Least profit margin: if exporter get loss they cannot able to supply.Work in favor of exporter:Buying House can avoid some unnecessary test that only expand the lead timeBranding Bangladeshi Products to the importer or BuyersBuying house costing framework should be ethical or standard cost framing and an identical cost framework for all. Positive issues and regulations taken by Bangladesh government should be forwarded to importersBangladesh’s trade facilitation signatory branding

Continued….

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Recommendations

• Skills Development of Worker• Infrastructural Development• Ethical Buying Practices• Enhance Efficiency of workers• Prioritize World Market Demand

Any Queries?