Though RMG export is the primary bread and butter for Bangladesh, accessories and packaging materials are also being developed as a significant export category. As per reports, there are more than 800 garment accessories and packaging material factories in the country. Apart from catering to the needs of the Bangladesh RMG industry, these units also have about US $ 1 billion worth of direct exports. Looking forward, the sector has set massive targets, aiming for export earnings of US $ 15 billion by 2030, in line with the country’s apparel export target of US $ 100 billion. Irrespective of its strengths and challenges, direct export of accessories is a growth area for Bangladesh.
Strengths making path for accessories exports
Bangladeshi accessories companies have some strong strengths as they offer an entire product range, follow compliance, are up-to-date with market trends and have complete know-how of accessories manufacturing. There is hardly any particular product in the accessories segment which is not being produced in Bangladesh, be it different types of tags, labels, barcodes, polybags, sewing threads, tapes, elastics, zippers, stickers, hangers, buttons, interlinings, embroidery thread and gum tapes etc. As the majority of the accessories companies are producing trims for top global brands and retailers, they have good infrastructure in place and they are following all the quality and compliance norms. At the same time, cost-effectiveness is also their core strength. They are not only familiar with global fashion trends but also with the type of demand for raw materials used for producing various accessories.
Many companies also have their vertical operations that enable them to have better control over quality and timely delivery. Though China is a preferred choice for its cost-effective aspect and good exposure in producing for global brands, reducing dependency on China is a significant factor that is emerging in favour of Bangladeshi accessories manufacturers.Some of the big groups which have enough capacities and resources as well as good network are not only witnessing major challenges but also expecting significant growth. One of them is Ha-Meem Accessories Ltd. (Ha-Meem Group). The company, having 9 factories for products like elastics, tapes, stickers, labels, tags and poly bags, is exporting them to the US and EU. “On the basis of our strong hold on quality and reasonable price, we are witnessing good growth in exports and the future seems to be optimistic,” says AKM Mahfuzul Haque, Consultant, Ha-Meem Accessories Ltd.
Despite the several advantages, the export of accessories is not as per the potential of Bangladesh. Some of the leading RMG exporters like Mondal Group, Envoy Group, Dekko Legacy Group and Well Group of the country have their own accessories verticals but their large share is consumed in-house rather than working as 100 per cent export-oriented units (EOUs). Industry gives multiple reasons for the same. Thriving domestic industry, unstable overseas demand, dollar crunch leading towards issues like letters of credit (LC) opening and issues in raw material import are some of the major challenges.
“Last year, there was less demand from various countries, so we had less focus on direct export. But since the beginning of this year, we have seen an overall improvement in demand, so exports shall increase,” says Mohammed Alamgir, Director, A.N. Accessories Industries. The 19-year-old company produces elastic, laces, twill tags and sewing threads. His opinion was also echoed by a few other accessories companies as they have almost similar experiences. Few of the emerging companies are also willing to explore the direct export segment but getting a licence for the same and the initial challenges of export especially good buyers are hurdles for them.
T&A Associates is one such company. Ashim Biswas of the company shares, “We have seen that few of the companies are exporting accessories directly and it seems to be a growth area but rather than putting efforts in getting an export licence and developing the market, it seems easy to serve the Bangladeshi RMG exporters.”
Steps required to increase export
To excel in exports, the industry needs to have better resources, explore new markets and reduce its dependency on China for raw material import. And few of the companies are working hard in this direction. Few accessories companies are changing their market strategies and expecting better export growth. Khaled Amin Rashed, MD, Amin Associates Ltd., underlines, “As far as direct export is concerned, many medium-level accessories companies are working with medium-size manufacturers and buyers which insist on very cheap price too. Rather than working with such clients, now we are targeting larger order inquiries.” The company has revenue of more than US $ 3.5 million and produces all kinds of elastics, tapes, drawstrings, jacquard elastics, laces, sewing threads and labels. On the other hand, some of the companies are also adding new markets, be it neighbouring country India or countries in Africa regions which have reasonable size of garment manufacturing like Ethiopia, Benin etc.
The accessories manufacturers are strongly of the view that to grow in accessories exports, the government should have more thrust on the domain and offer more export incentives. As per market reports, China offers cash incentives between 4 per cent and 12 per cent (depending on the product) to its accessory exporters.
And in the past few months, companies especially SMEs have faced difficulties in securing LC for importing raw materials, primarily attributed to the ongoing dollar crunch. Accessories manufacturers are dependent on China for certain kinds of raw materials, and with the dollar crisis, their challenges are increasing. Few of the companies are overcoming the import challenge with advanced planning, good financial resources and exploring good raw material suppliers in Taiwan. Accessories companies strongly believe that fixing the dollar crunch is the need of the hour and that will be pivotal for their growth.
“If the government can fix the dollar rate, then we can sell our accessories at a fixed price, but for the ups and downs of dollar rates, we too have to crumble with the price. Due to this scenario, buyers do not feel much attracted to buy from us,” says Shamsuzzaman Mintu, CEO of Masco Accessories Ltd., which produces mainly a large range of buttons and zippers. He further adds that whatever the strengths of Bangladesh, still China is very advanced in terms of bulk production and cost-effectiveness. Shamsuzzaman then concludes saying that Japan, Korea, USA and India have great potential for Bangladesh’s accessories.
