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Time for RMG makers to think globally
Mostafiz Uddin
is Managing Director of Denim Expert Limited, and Founder and CEO of Bangladesh Apparel Exchange (BAE) and Bangladesh Denim Expo.
WHEN it comes to the geography of apparel production, the rules are changing, and this is something all Bangladeshi RMG manufacturers need to be aware of.
The first issue to consider is nearshoring. There are growing calls in some quarters for fashion retailers to shift production closer to their key markets in order to reduce the carbon emissions associated with moving clothing around the world.
Talk of nearshoring has been around for many years, but is yet to take off significantly, with the vast majority of clothing still being produced in Asia. Most recently, however, German apparel retailer C&A commenced the production of jeans in Germany. C&A sells around 12 million pairs of jeans annually, so if the business hits its 800,000 target after 2022, this would constitute 6.6 percent of total annual production.
Should we, as manufacturers, feel threatened by this? Yes and no. On the one hand, this is the kind of production we would like to see in Bangladesh. Although small by comparison to the huge volumes produced in our country, 800,000 is still a significant amount. It would also be a concern if other retailers followed suit.
On the other hand, C&A has stated very clearly that its German jeans production will be very bespoke, with a focus on sustainability and use of the latest cutting-edge production technology.
In fact, whenever a fashion retailer moves production closer to home, it is often with a focus on niche production and high added value. This way, the business is not so dependent on the economies of scale that can be gained by moving to low-cost countries in Asia.
However, reading the story about C&A also got me thinking about whether Bangladeshi garment-makers should be taking a more global view when it comes to apparel production.
Ours is a specialised industry, and therefore efforts to nearshore textile production have proven difficult in the past. When the likes of the US and UK sent production abroad, they decimated their respective textile industries and waved goodbye to a lot of skilled workers in the process.
As such, why don’t we, as clothing producers, take our expertise abroad and produce closer to our main global markets? This offers us, as manufacturers, an excellent opportunity to leverage our brand as manufacturers and is also a great marketing exercise.
In fact, some of our competitors are already adopting this approach, opening up exciting new business opportunities in the process. Last year, Pakistani denim specialist Artistic Milliners, a vertically integrated producer with spinning, weaving, dyeing and garment manufacturing capabilities, purchased a garment factory in California under a new name, with a declared output capacity of 100,000 units per month. Meanwhile, the Vietnamese sustainable denim producer, Saitex, last year announced the opening of Saitex USA, a “factory of the future” which is said to be equipped with state-of-the-art manufacturing technology and energy and resource-efficient machinery. This is Saitex’s first facility outside of its Vietnam base.
Will the manufacturers mentioned above establish more facilities abroad? And what can Bangladeshi RMG businesses learn from this? My hunch is that such facilities are branding and marketing exercises first and foremost—for now, anyway.
We have to remember that investments in foreign markets do constitute a high risk, given one has to adapt to local customs, the logistical costs of setting up and so on.
Perhaps a more pragmatic approach in the short term is to initially establish one-off “showcase” facilities, and then look at the possibility of setting up consortiums or “virtual supply chains.” This way, manufacturers can join together across multiple locations to provide a single virtual manufacturer offering made up of different segments of the garment supply chain, all complementing each other. This can offer the opportunities of nearshoring without financial risk and uncertainty.
Is there an opportunity for Bangladeshi manufacturers to establish mutually beneficial connections with like-minded supply chain actors in other markets? Surely, we would have nothing to lose by taking initiative and making a few connections with similarly progressive businesses. These partnerships also provide the benefits of vertical integration, economies of scale, and joint sales and marketing opportunities.
It’s a win-win all round, which is why I think our own manufacturers need to adopt a more flexible, open and responsive approach when it comes to the geography of where clothing is made.
Why don’t we, as clothing producers, take our expertise abroad and produce closer to our main global markets? This offers us, as manufactur-ers, an excellent opportunity to leverage our brand as manufactur-ers and is also a great marketing exercise.