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

1. Prospects and Challenges of RMG
Sector of Bangladesh and Roles of C&F
Agents and Buying House

2. Specified Cluster/Situation of the
factories
Dhaka Region (Savar, Asulia,
GajiPur)
Narayanganj Region
Chittagong Region
1

3. Bangladesh
RMG
DFQF facility From
49 Countries
4.2
m
Worker
75%
Women
Workers
2nd Position in
Knitwear just behind
China
3rdposition in
Woven following China
and Italy
Plummy Fashion
1stLEED Platinum
Knit Factory in the
world.
Vintage Denim
1stLEED
Platinum Denim
factory in the
world
Almost 82%of
Total National
Export
Current Scenario of Bangladesh
RMG
3700 Active
Factories
BKMEA &
BGMEA sole
trade Body
total export Jul-Feb
18.12bwith target
27.37 b (last FY $25.49b
)
USGBC
registered
156
& Certified
28 Continued….
2

4. Bangladesh works for
3

5. Prospects of
RMG
4

6. Employment Generation: RMG
2.12
2.4
3.5
3.63
3.99 4.2
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Continued….
5

7. 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

8. 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

9. Substantially Decreasing Social Cost e.g.
crime, violence, moral
decadents, wastage of potential
labor force
Continued….
8

10. EU and other Importers are
willing to move
from China to
Bangladesh
to establish big enterprises
Continued….
9

11. The geographic location of
Bangladeshis ideal for global
trade, with very convenient access to
International seaportsand air
routes3Sea
Ports
1. Chittagong
2. Mongla
3. Payra
3
International
Airport
22
Land
Ports
Continued….
10
Pangaon
River
port Komlapur ICD

12. Trained, enthusiastic,
hardworkingand low-cost(even
by regional standards) labor force
suitable for any labor-intensive Industry
Continued….
11

13. Bangladesh is producing & may
expand the export of High Value
Added Products through product
diversification.
Continued….
12

14. Implication of Dhaka-Chittagong 4
lane Highway will be helpful to
reduce the transportation
lead time
13

15. Challenges:
14

16. Confrontational Politics
(Reoccurrence of political unrest will hamper the
export earnings badly)
Export Earning
Continued….
15

17. Lack of marketing Tactics
and Negotiation&
Bargaining skills regarding price
setting
Continued….
16

18. Somewhat long lead-time of Export
or Import
Continued….
17

19. 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

20. Shortage
of uninterrupted Power & quality
Utility services
18

21. Skilled Workers to produce High Value
Added Products of Ready Made Garments
Continued….
19

22. 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….
20

23. Lack of development of
Backward Linkage of RMG
21

24. Role of
Clearance & Forwarding (C&F)
Agent
22

25. 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….
23

26. The position where a Clearing &
Forwarding agent perform
Continued….
24

27. 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 Origin
Charter Party
Air:
Shipper’s Declaration of
Dangerous Goods
Cargo Manifest
Commercial Invoice
Cargo Arrival Notice
Airway Bill
Continued….
25

28. The role of C&F agent for further
development of RMG sector
Continued….
26

29. • 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….
27

30. Role of Buying House
28

31. A buying house is a media between
buyer and manufacturer. It can be a
buying agency or a buying office.
Continued….
29

32. 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….
30

33. Flow Chart of Buying House
Contact 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

34. 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

35. 70%
6%
8%
16%
Fabrics
Accessories
Printing and Embroidery
Cost of Making (CM)
Continued….
33
**Profit ,Commission Overseas and Some other
issues are included in CM
Costing
framework

36. Different sample required to execute
an order
Fit Sample
Salesman sample
Photo sample
Approval sample
Pre-production sample
Production/Gold seal
sample
Shipping sample
Continued….
34

37. 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….
35

38. Buying House should do for further
development of RMG
36

39. 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 time
Branding Bangladeshi Products to the importer or Buyers
Buying 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 importers
Bangladesh’s trade facilitation signatory branding
Continued….
37

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

41. Any Queries?