"In the colorful tapestry of Bangladesh's economy, the Ready Made Garments sector weaves a story of resilience and innovation. Like skilled artisans, ready made garment manufacturers thread the needle between tradition and modernity, stitching success in a dynamic global market."
Initial Communication:
Buyer (brand/retailer): Initiates the process by sending an inquiry to potential Bangladeshi garment manufacturers based on their capabilities, price competitiveness, and quality standards.
Manufacturer: Reviews the inquiry, assesses feasibility, and if interested, sends a quotation with estimated cost, lead time, and production capacity.
Negotiation and Clarification: Buyer and manufacturer engage in communication to clarify specifications, negotiate prices, and finalize the order details.
Development and Sampling:
Tech pack creation: Buyer provides a technical pack (tech pack) containing detailed garment specifications, design sketches, material composition, and size charts.
Sample development: Manufacturer produces prototypes based on the tech pack for buyer approval. This may involve multiple rounds of revisions and adjustments.
Sample evaluation and approval: Buyer thoroughly evaluates the samples for quality, fit, and adherence to specifications. Upon satisfaction, they formally approve the samples for production.
Order Confirmation and Production:
Purchase order (PO): Buyer issues a purchase order (PO) to the manufacturer, outlining the final agreed-upon quantity, price, delivery date, and payment terms.
Purchase order (PO) for garment manufacturing:
Bulk production: Once the PO is received, the manufacturer begins mass production of the garments, adhering to the approved samples and quality standards. This involves cutting fabric, stitching garments, applying trims and accessories, and conducting quality checks at various stages.
Mid-production review: Both parties may conduct mid-production inspections to ensure everything is on track and address any potential issues.
Quality Inspection and Finishing:
Re-inspection: Garments with minor issues like stitching errors or color variations are repaired in the factory and re-inspected to ensure they meet export standards, allowing them to be included in the original shipment.
Refurbishment and Repurposing: Garments with more significant defects, such as fabric flaws, can be repurposed into smaller items like accessories or cleaning cloths, reducing waste, and utilizing materials that would otherwise be discarded.
Pre-shipment inspection: Before shipment, an independent inspection agency or the buyer conducts a final quality inspection to ensure garments meet all agreed-upon specifications.
Finishing and packaging: Garments are ironed, labeled, packed according to buyer's instructions, and prepared for shipment.
Shipment and Delivery:
Shipping logistics: Manufacturer arranges shipment based on the agreed-upon terms (FOB, CIF, etc.), ensuring proper documentation and adherence to customs regulations.
Delivery and Payment: Upon arrival at the designated destination, the buyer inspects the goods and releases payment to the manufacturer as per the agreed-upon terms.
There is a contribution of more than 13% to Bangladesh's GDP from the textile industry of Bangladesh. As mentioned in Mordor Intelligence, textiles and products related to textiles account for more than 84% of the total earnings from exports. The country made approximately 15 billion US dollars in investments in the core textile industry. Around 85–90% of the yarn demand for knit RMG is satisfied by the Primary Textile Sector (PTS), whereas 35–40% of the yarn demand for woven RMG is satisfied by the PTS. In the private sector of the Bangladesh economy, the Bangladesh Textile Mills Association (BTMA) is the national trade organization that represents makers of yarn and fabric as well as processors of textile products.
Role in Earning
Bangladesh is the second largest exporter of ready-made garments globally, exporting to 167 countries and catering to major fashion brands worldwide. BGMEA President Faruque Hassan highlighted the importance of research-driven strategies to sustain competitiveness in a dynamic global market. The potential impact extends to potentially creating 20 million more jobs, which means 12-15% of the population may depend on the RMG sector. Beyond direct employment, the RMG sector indirectly supports related industries, including raw materials, logistics, and services. An insight from LightCastle reports that the RMG sector directly employs over 4 million workers in Bangladesh, making it one of the largest sources of employment in the country. Approximately 60% of these workers are women. The industry’s growth trajectory has been impressive, with exports valued at USD 46.99 billion in the fiscal year 2022-23, representing a CAGR growth of 10.27%. With over 4,600 RMG units, it constitutes the largest industrial sector in the country, contributing 36% of manufacturing employment. The UNDP and BGMEA have collaborated on sustainability reporting, emphasizing private sector impact management in Bangladesh’s RMG sector.
Key Strengths
i. Cost competitiveness: Competitive labor costs and efficient production processes make Bangladesh a preferred destination for budget-conscious brands.
ii. Production capacity: The presence of over 8,000 garment factories equipped with advanced technology facilitates large-scale production.
iii. Government support: Proactive government policies through tax incentives, export promotion initiatives, and infrastructure development bolster the industry.
iv. Skilled Workforce: Bangladesh boasts a vast pool of experienced and trained garment workers, ensuring quality and efficiency.
Emerging Grating report about RMG Industry of Bangladesh published that in the fiscal year 2022-23, Bangladesh's Ready-Made Garment (RMG) exports achieved a record-breaking total of USD 46,991.61 million, marking a substantial rise from the previous year's USD 42,613.15 million.
Furthermore, RMG Bangladesh mentioned that in July of FY 2023-24, RMG exports reached USD 3.95 billion, significantly higher than the USD 3.37 billion during the same period in FY 2022-23, illustrating a notable year-on-year growth of 17.43%. Foreign clothing brands are increasingly present in Bangladesh, meeting the demand for international fashion.
Market Players
The textile manufacturing sector in Bangladesh is somewhat fragmented and highly competitive, characterized by a mix of regional and international entities. These companies frequently engage in strategies such as product innovation, business expansion, and mergers and acquisitions to maintain their market presence. Prominent players in this industry include:
Launching Local Brands for Higher Profits
Transparency International Bangladesh recognized the slim profit margins of 5% to 15% from producing solely for foreign labels in the competitive Ready-Made Garment (RMG) sector, Bangladeshi manufacturers are now pivoting to create their own brands. This strategic shift aims to capture higher profits, akin to the 20-50% margins enjoyed by foreign brands on their sales. These new local brands, like AARONG and PRIDE, uphold international quality standards and are successfully tapping into both domestic and global markets, praised by BBC news. They leverage diverse distribution channels for effective promotion and sales, mirroring the strategies of their foreign counterparts but with potentially greater financial returns.
The circular economic report, emphasizing the sustainability model, is gaining traction in the textile industry as an alternative to the traditional 'take, make, dispose' linear economy. This model encompasses several key practices:
1. Rethinking Production: Designing textiles for easier recycling and using sustainable materials.
2. Reducing Waste: Minimizing waste in manufacturing processes.
3. Reuse and Repair: Promoting the repair and second-hand use of garments.
4. Recycling: Transforming old clothes into new products.
5. Reselling: Facilitating the sale of second-hand clothing.
6. Rethinking Consumption: Encouraging consumers to buy fewer, higher-quality items or to consider renting instead of purchasing.
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