It is widely held in Bangladesh’s RMG industry that buyers are not paying a fair price, given the focus on high-value-added apparel, the nation’s reputation as a low-cost manufacturing destination and outside influences. Despite Bangladesh’s notable achievements over competitors in terms of product diversity, quality and compliance, business leaders in the garment and textile sectors consistently face difficulties in securing equitable pricing.
Bangladesh has long been recognised for its meticulous and passionate approach to producing goods at lower costs of manufacturing. Over time, its RMG business has grown and achieved unprecedented levels of cross-border product exports. According to recent sources, 206 Bangladeshi garment factories have obtained LEED certification from the USGBC and over 500 more are in the process of accomplishing so. This demonstrates how the industry upholds sustainability and establishes itself as one of the safest in the world. Nevertheless, it hardly ever seems to be able to secure an appropriate cost from buyers.
Industries investing huge to ‘go green’ but unfair prices put them in debt
The RMG industry in Bangladesh has embraced the challenge of having not only green factories but also other environmentally compliant facilities with an emphasis on waste reduction, energy conservation and upholding better standards of worker safety and well-being. The industry is putting a significant amount of personal money into these compliances. However, the challenges in achieving fair prices from buyers make businesses tougher for manufacturers, alongside maintaining the debt of these investments. Ramin Saleh, Proprietor of High Deen Sourcing shared with Apparel Resources, “Although manufacturers of clothing follow buyer guidelines, maintain sustainable practices in their infrastructure, they are nevertheless unable to obtain fair prices from buyers. Bangladesh receives little prices from buyers in terms of Cost of Making (CM).”
| “Though the prices have dropped not only in Bangladesh but also across the world, we all have to be more efficient to survive in business.” MI Bappy CEO , Dellvidi Sourcing BD |
‘Mostly we are responsible for not getting fair price’
“Even though, unfortunately, we do not get paid fairly, we are the ones who have to bear the consequences. There are many buying house people around the nation and the majority of them give buyers lower offers than others, which benefits only the buyers rather than us. Therefore, I believe that in this instance, the BGMEA or international law must secure a fixed price. Then again, there is no certainty whether the business magnates of this country will maintain it or not!” stated AB M Monwarul Islam Bhuiyan, CEO of Glister Tex Sourcing. Aligning with his thoughts, a great number of buying house people believe that Bangladeshi businessmen are to be majorly blamed for not receiving fair prices from buyers. Prices have remained lower due to unhealthy, covert competition.
| “Yes, industry doesn’t receive a fair price and for that we only are responsible. The fair price may have been secured if the BGMEA or international law would have taken proper initiatives in this regard.” Shahin KD Sourcing International Ltd. |
What role is the government playing?
According to the International Trade Centre (ITC), rates that local apparel producers receive are 32 percent to 83 percent less than the highest prices offered to foreign suppliers.
The President of the BGMEA, Faruque Hassan has demanded fair prices from consumers in protest of wage hike. In a letter, the BGMEA President stated that international retailers and brands should pay a fair price, considering the workers’ standard of living, cost of living and inflation.
| “To get a fair price, one of the most important things is proper communication with buyers, to convince them about our ground realities so that they can understand.” Ramin Saleah Proprietor, High Deen Sourcing |
| “Majority of buying houses give lower offers to buyers, which benefits the buyers rather than our industry and nation,” AB M Monwarul Islam Bhuiyan CEO, Glister Tex Sourcing |
Many industrial people seek government or BGMEA’s intervention to secure a fair price whereas many others believe that there is nothing the government can do until or unless the businessmen of these industries stop the unhealthy competition.
“At the moment, I think the government does not do much than it used to do in the past, or if it had done something before setting the policy, this problem might not have arisen now. As people from the private sector, we’re trying to bring in a fair price by convincing the buyers. In the meantime, garment exporters should also coordinate with their employees to increase efficiency at work because prices have dropped not only in Bangladesh but also in the whole world. We all have to be more efficient if we are to survive in business,” MI Bappy, CEO of Dellvidi Sourcing BD shared with Apparel Resources.
| “Buyers always seek low prices and for that they distribute their spec sheet around to many manufacturers across the globe and whichever company quotes less is given the orders.” M Habib TASCO |
| “It is difficult to assert that the exporter is not receiving fair price because the buyer is not pressuring for price; instead the agreement is reached when both agree.” Shahalam Molla MD, AVS Fashion |
In order to achieve more equal cooperation between buyers and manufacturers, the manufacturers propose improving pricing transparency and cultivating a deeper comprehension of the value proposition offered by green clothing factories as useful strategies. Levelling the playing field may also be achieved through regulatory measures, such as international standards for fair pricing, but they must be the result of concerted efforts by everyone concerned.
